Managerial Decisions Flashcards
List the steps in the decision-making process.
- Identify the problem
- Note all the criteria related to the problem (timing, resources, and priority
- Generate options (Note all the potential options must be listed)
- All the options advantages, and disadvantages must be weighted.
- Take the decision that has the best potential outcome
- Implement it
- You will receive feedback on the decision evaluating its sucess
List factors involved in individual decision-making.
Individual decision-making depends on a number of different factors. Some of these enhance decision-making, while others are obstacles to effective choices:
- Individuals values: for instance aesthetic, political, ethical, economic, or religious.
- Personality, gender, and social status; in some cases, a person’s background can skew his or her perspective.
- Risk tolerance: the degree to which a manager can afford to make a risky decision. The assessment of risk will depend on the manager’s evaluation of advantages and disadvantages.
- Cognitive Dissonance: the difference between the situations as it is and the manager’s perception of the situation. When there is a great degree of cognitive dissonance, decision-making tends to be poor
Different decision making styles: Analytical decision making
Rational measure approach. The focus is obtaining as much information as possible. You make the decision having solid data and information basically. Note, this is problematic when time is of the essence
Different decision making styles: A directive decision maker
Rational and autocratic. Using your own knowledge experience and judgement to chose the best alternative. Note: This tends to be short term thinking. Another problem is that rarely the leader has all the ingredients to make the right decision.
Different decision making styles: Conceptual decision maker
You make a mental image of the model. Conceptual style decision makers like to look at problems from an artistic angle. They are extremely creative and like to look for solutions that are outside the box. They are achievement oriented and like to think far into the future when making important decisions. A conceptual style decision maker will take risks and try to make decisions that take a broad vision in problem solving.
Different decision making styles: behavioral decision making
Essentially reaching decision while considering multiple different outlooks.
Discuss some aspects of managerial decision-making.
- When you make decision is good to have as much info as possible.
- It’s also good to bring creativity, experience, and knowledge to the process.
- Certainty plays another important role in reaching decisions in terms of what info you have on the table.
Tactics within decision making
Much more concrete and tend to be oriented toward smaller steps and a shorter time frame along the way.
Strategy within decision making
Defines tour long-term goals and how you’re planning to achieve them. Big picture organization level stuff.
One of the biggest factor associated with manager decision making.
The lack of predetermined structure. Essentially, you’re dealing with issues that have not been answered before. You have to come up with innovative solutions. Note: This introduces a high degree of uncertainty.
THE BEST MANAGER MINIMIZES THE AMOUNT OF RISK. (feeling conflicted internally as a result is a nature of the work). You should also get comfortable with getting negative feedback, precisely when making unpopular decisions.
Intuitive decision-making
A decision making process that relies on rapid, non conscious recognition of patterns and associations to derive affectively charged judgements. Note: This is faster and does not follow a linear, logical reasoning that can be thoroughly reconstructed and explained post.
Rational decision-making
Follows a linear, logical reasoning process that can be thoroughly reconstructed and explained post. The manager uses all of the available data to select the most logical option. This model is good for situations with very little risk. Furthermore this style works better for individual decision
systematic decision-making
It is characterized by logical and organized decision. By taking an organizational approach you are less likely to miss important factors. In this approach you weight all the different alternatives before reaching a decision. You also need to have all of the information available before you’re able to make the call. In this way of doing things you also need to have logical counter arguments for the decision reached. Finally, this also requires the capacity.
Administrative decision model
The belief that decision makers often settle for a less than ideal solution because of time and motivation shortages. Instead of seeking the best solution that maximizes the value of the decision, the decision maker accepts the first available ‘good enough’ alternative producing a value above the minimally acceptable. The concept of settling for a less than perfect solution is called satisficing.
Judgement errors that can occur in decision-making
- Heuristics
- Availability heuristics
- Representative heuristic
- Anchoring and adjustment model
- Escalation of commitment to heuristic
heuristics
Problem solving method that uses shortcuts to produce good-enough solutions given a limited time frame or deadline. Essentially a flexibility technique for quick decisions. Note these decision might not be optimal because it fails to truly grasp all of the circumstances involved.
Availability heuristics
A manager relies on his or her own memory rather than available information to make a decsion
Representative heuristic
Usage of similar precedents to make a decision rather than looking at the facts available
Anchoring and adjustment model
Decision makers reliance on obtained information becomes the foundation for future decision making.
Escalation of commitment to heuristic
This is when managers failed to recognize that they’re decision in not optimal and stick with it despite evidence that shows otherwise. Essentially an egoistic complex
Barriers to effective decision-making
An illusion of control that prohibits the managers to truly asses the risk. They can’t see thing that they cannot control. This is basically overconfidence..
In some instances, the manager makes bad decision because he fails to frame them well. THE INFORMATION IS PRESENTED CAN BE INFLUENTIAL TO DECISION MAKING AS THE CONTENT OF THE INFORMATION.
Some managers have too much of a short vision and fail to see long term.
In some instances if the managers feels rushed he might make the wrong decision.
