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Decisionmaking 130124025858 Phpapp02 PDF
Decisionmaking 130124025858 Phpapp02 PDF
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The Nature of
Decision Making
Making effective decisions, as well as recognizing when
a bad decision has been made and quickly responding to
mistakes, is a key ingredient in organizational
effectiveness.
Some experts believe that decision making is the most
basic and fundamental of all managerial activities.
Decision making is most closely linked with the Planning
function.
However, it is also part of Organizing, Leading and
Controlling.
Decision-Making Process
Decision-Making Process includes:
recognizing and defining the
nature of a decision situation
identifying alternatives
choosing the best [most
effective] alternative and
putting it into practice.
Decision-Making Process. . .
(continued)
Decision-Making Process. . .
(continued)
Types of Decisions
Programmed decision is
one
that
is
fairly
structured or recurs with
some frequency (or both).
Nonprogrammed decision
is one that is unstructured
and occurs much less
often than a programmed
decision.
Programmed Decisions. .
Many decisions regarding
basic operating systems
and
procedures
and
standard
organizational
transactions fall into this
category.
McDonalds
employees
are
trained to make the Big Mac
according
to
specific
procedures.
Starbucks, and many other
organizations, use programmed
decisions to purchase new
supplies [coffee beans, cups
and napkins].
Nonprogrammed Decisions. ..
Most of the decisions made by
top managers involving strategy
and organization design are
nonprogrammed.
Decisions about mergers, acquisitions
and takeovers, new facilities, new
products, labor contracts and legal
issues are nonprogrammed decisions.
Managers
faced
with
nonprogrammed decisions must
treat each one as unique,
investing great amounts of time,
energy and resources into
exploring the situation from all
views.
Intuition and experience are
major factors in these decisions.
Decision-Making Conditions
Decision Making Under
Certainty
Decision Making Under
Risk
Decision Making Under
Uncertainty
A View of Decision-Making
Conditions
Lower
Moderate
Higher
Rational Perspectives
on Decision Making
Keys to Decision Making
Classical
Decision
Model
Rational
Decision
Making
(continued)
(continued)
2) Identifying alternatives
a) Managers must realize that their alternatives may
be limited by legal, moral and ethical norms,
authority constraints, available technology,
economic considerations and unofficial social
norms.
(continued)
3)
Evaluating alternatives
a)
b)
c)
Rational
Decision Making.
..
(continued)
4) Selecting an alternative
a) Choosing the best alternative is the real test of
decision making.
b) Optimization is the goal because a decision is likely
to affect several individuals or departments.
c) Finding multiple acceptable alternatives may be
possible; selecting one and rejecting the others
may not be necessary.
(continued)
(continued)
6) Following up
and evaluating
the results
a) Managers
must
evaluate
the
effectiveness of their decisions did the
chosen alternative serve its original
purpose?
b) If
the
implemented
alternative
appears not to be working, the
manager has several choices:
1. Another
previously
identified
alternative might be adopted or
2. Recognize that the situation was not
correctly defined and start the
process all over again or
3. Decide that the alternative has not
been given enough time to work or
should be implemented in a different
way.
Behavioral Aspects. . .
(continued)
Behavioral Aspects. . .
(continued)
Behavioral
Aspects. . .
(continued)
Relationships
of
the
employees to the firm
Relationships of the firm to
other economic agents