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Identify the two types of decision problems and the two types of decisions that are used to solve themDefine heuristics and explain how they affect the decision-making processIdentify four decision-making styles
How are decisions madeHow are decisions madein organizations?in organizations?
Steps in systematic decision making.
Recognize and define the problem or opportunity.Recognize and define the problem or opportunity.
Identify and analyze alternative courses of action, and estimate their effects Identify and analyze alternative courses of action, and estimate their effects
on the problem or opportunity.on the problem or opportunity.
Choose a preferred course of action.Choose a preferred course of action.
Implement the preferred course of action.Implement the preferred course of action.
Evaluate the results and follow up as necessary.Evaluate the results and follow up as necessary.
What are the usefulWhat are the usefuldecision making models?decision making models?
Decision making realities.Managers face complex choice processes.Managers face complex choice processes.
Decision making information may not be available.Decision making information may not be available.
Bounded rationality and cognitive limitations affect Bounded rationality and cognitive limitations affect the way people define problems, identify the way people define problems, identify alternatives, and choose preferred solutions.alternatives, and choose preferred solutions.
What Makes Decision What Makes Decision Making so Difficult? Making so Difficult? ComplexityUncertainty Organizational & Environment PressureIndividual Decision Making LimitationsExperience, Beliefs & Perceptions of the Decision Maker
How do intuition, judgment, and How do intuition, judgment, and creativity affect decision creativity affect decision making?making? Judgmental heuristics.
Simplifying strategies or “rules of thumb” used to make Simplifying strategies or “rules of thumb” used to make decisions.decisions.
Makes it easier to to deal with uncertainty and limited Makes it easier to to deal with uncertainty and limited information.information.
Can lead to systematic errors that affect the quality and/or Can lead to systematic errors that affect the quality and/or ethics of decisions.ethics of decisions.
How do intuition, judgment, and How do intuition, judgment, and creativity affect decision creativity affect decision making?making?
Types of heuristics.Availability heuristic Availability heuristic — bases a decision — bases a decision on recent events relating to the on recent events relating to the situation at hand.situation at hand.
Representativeness heuristic — bases a Representativeness heuristic — bases a decision on similarities between the decision on similarities between the situation at hand and stereotypes of situation at hand and stereotypes of similar occurrencessimilar occurrences
How do intuition, judgment, and How do intuition, judgment, and creativity affect decision creativity affect decision making?making?Creativity factors.
Creativity in decision making involves the development of Creativity in decision making involves the development of
unique and novel responses to problems and opportunities.unique and novel responses to problems and opportunities.
Creativity is especially important in a dynamic Creativity is especially important in a dynamic
environment full of nonroutine problems.environment full of nonroutine problems.
Decisions are classified as:Unstructured: Non-routine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision making
Structured: Repetitive, routine, handled using a definite procedure
Programmed and Non-Programmed and Non-programmed Decisionsprogrammed Decisions
Programmed DecisionRoutine, virtually automatic decision Routine, virtually automatic decision making that follows established rules making that follows established rules or guidelines.or guidelines.
Managers have made the same decision many times before.There are rules or guidelines to follow based on experience with past decisions.Example: Disciplinary action to be taken concerning a tardy employee.
Programmed and Non-Programmed and Non-programmed Decisionsprogrammed Decisions
Non-Programmed DecisionsNon-routine decision making that occurs in Non-routine decision making that occurs in response to unusual, unpredictable response to unusual, unpredictable opportunities and threats.opportunities and threats.
The are no rules to follow since the decision is The are no rules to follow since the decision is new.new.
Decisions are made based on information, and a manager’s intuition, and judgment.
Example: Deciding to invest in additional production equipment to meet forecasted demand.
How can the decision-makingHow can the decision-makingprocess be managed?process be managed?
Reasons for decision making failure.
Managers too often copy others’ choices and try to sell Managers too often copy others’ choices and try to sell them to subordinates.them to subordinates.
Managers tend to emphasize problems and solutions Managers tend to emphasize problems and solutions rather than successful implementation.rather than successful implementation.
Managers use participation too infrequently.Managers use participation too infrequently.