Decision Making, Creativity and Innovation

Topic: Nature of Managerial Decision Making

Dr. Kumaran Rajaram

College of Business
Nanyang Business School
 LEARNING OBJECTIVE

At the end of this topic, you should be able to:

• Explain what decision making entails for the
manager.

• Explain the four characteristics for

managerial decisions.

Content Copyright Nanyang Technological University 2

WHAT IS DECISION MAKING?

Process by which managers

respond to opportunities and
threats

Making decisions
Analysing about specific
options goal or course of
action

Content Copyright Nanyang Technological University 3

CHARACTERISTICS OF MANAGERIAL DECISIONS

Lack of
structure

Conflict Characteristics Uncertainty

Risk

Content Copyright Nanyang Technological University 4

DECISION MAKING STRUCTURE

• Routine, repetitive
or routine
Programmed
• Depend on
Decisions established
policies, rules or
procedures

• Non-routine, novel
or complex
Non-
programmed • Depends on
Decisions intuition and
reasoned
judgment

Content Copyright Nanyang Technological University 5

 CERTAINTY OR UNCERTAINTY

Certainty

Accurate and comprehensive

information

Uncertainty

Insufficient information to:

• Know consequences of different
actions; future outcomes
unknown
• Determine probabilities of
alternative outcomes

Content Copyright Nanyang Technological University 6

 RISK

Taking Managing
risk risk

• Manage risk by accepting that decisions have

consequences which entail risks
• Do everything to anticipate, minimise and
control risks

Content Copyright Nanyang Technological University 7

 CONFLICT

Outside pressure between

different aspects of an
organisation
Conflict
between
individuals or
groups

Psychological
conflict
within
decision
maker
Cognitive dissonance
(turmoil between what
one thinks should be
and what is in reality) Opposing pressures
from different sources

Content Copyright Nanyang Technological University 8