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Economics

The document discusses management decision making. It describes the characteristics of management decisions, including programmability, uncertainty, risk, conflict, and decision scope. It outlines the six steps of the decision making process: identifying problems, generating alternatives, evaluating alternatives, choosing the best alternative, implementing decisions, and evaluating results. It also discusses decision quality and acceptance criteria, group decision making benefits and challenges, and developing time management and delegation skills.

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Wassan Alyas
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13 views

Economics

The document discusses management decision making. It describes the characteristics of management decisions, including programmability, uncertainty, risk, conflict, and decision scope. It outlines the six steps of the decision making process: identifying problems, generating alternatives, evaluating alternatives, choosing the best alternative, implementing decisions, and evaluating results. It also discusses decision quality and acceptance criteria, group decision making benefits and challenges, and developing time management and delegation skills.

Uploaded by

Wassan Alyas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 32

Management

Gomez-Mejia & Balkin

Chapter 6
Decision Making
Copyright © 2012 Pearson Education, Inc. 6-1
publishing as Prentice Hall
Decision Making

• The process of identifying problems and


opportunities and resolving them or
taking advantage of them

Copyright © 2012 Pearson Education, Inc. 6-2


publishing as Prentice Hall
Characteristics of Management
Decision Making

 Programmability  Conflict

 Uncertainty  Scope

 Risk  Crisis

Copyright © 2012 Pearson Education, Inc. 6-3


publishing as Prentice Hall
Programmability

• Programmed decisions
– Established routines and procedures exist
for resolving company problems
• Nonprogrammed decisions
– The situation is unique and there are no
previously established routines or
procedures that can be used to resolve the
problem

Copyright © 2012 Pearson Education, Inc. 6-4


publishing as Prentice Hall
Uncertainty

• Certainty
– All information needed is available
• Uncertainty
– Incomplete information is available to make
a management decision

Copyright © 2012 Pearson Education, Inc. 6-5


publishing as Prentice Hall
Risk

• The degree of uncertainty about the


outcome of a management decision

Copyright © 2012 Pearson Education, Inc. 6-6


publishing as Prentice Hall
Conflict

• Management decision making is often


characterized by conflict over opposing
goals, utilization of scarce resources,
and other priorities

Copyright © 2012 Pearson Education, Inc. 6-7


publishing as Prentice Hall
Decision Scope
• Strategic decisions
– Long-term perspective
– Focus on entire organization
• Tactical decisions
– Short-term perspective
– Focus on subunits of the organization
• Operational decisions
– Extremely short-term perspective
– Focus on routine activities
Copyright © 2012 Pearson Education, Inc. 6-8
publishing as Prentice Hall
Crisis Situations

• Risk
• Uncertainty
• Nonprogrammability

Copyright © 2012 Pearson Education, Inc. 6-9


publishing as Prentice Hall
Stages of Decision Making

Copyright © 2012 Pearson Education, Inc. 6-10


publishing as Prentice Hall
Identifying and Diagnosing
the Problem

• Opportunity
– Requires committing resources to improve
company performance
• Problem
– When performance is below expected or
desired levels of performance

Copyright © 2012 Pearson Education, Inc. 6-11


publishing as Prentice Hall
Generating Alternative Solutions

• Generate possible solutions based upon


perceived causes

Copyright © 2012 Pearson Education, Inc. 6-12


publishing as Prentice Hall
Evaluating Alternatives

• Examine alternative solutions using a set


of decision criteria
• Decision quality
– Costs, revenues, product design
• Decision acceptance
– Based on people’s feelings

Copyright © 2012 Pearson Education, Inc. 6-13


publishing as Prentice Hall
Decision Tree

Copyright © 2012 Pearson Education, Inc. 6-14


publishing as Prentice Hall
Choosing the Best Alternative

• Optimizing

• Satisficing

Copyright © 2012 Pearson Education, Inc. 6-15


publishing as Prentice Hall
Implementing the Decision

• Put the solution into practice


– Provide resources
– Exercise leadership
– Develop communication systems
– Recognize and reward individuals

Copyright © 2012 Pearson Education, Inc. 6-16


publishing as Prentice Hall
Evaluating the Results

• Gather information and try to learn if


the implemented decision achieved
its goals

Copyright © 2012 Pearson Education, Inc. 6-17


publishing as Prentice Hall
The Limits of Rationale
Decision Making

• Organizational politics
• Emotions and personal preferences
• Illusion of control
• Intuition and escalation of commitment

Copyright © 2012 Pearson Education, Inc. 6-18


publishing as Prentice Hall
Nonrational Decision-Making
Models

• Administrative Model

• Garbage Can Model

Copyright © 2012 Pearson Education, Inc. 6-19


publishing as Prentice Hall
Personal Decision-Making Styles

• Directive
• Analytical
• Conceptual
• Behavioral

Copyright © 2012 Pearson Education, Inc. 6-20


publishing as Prentice Hall
Decision Making in Groups

• Benefits
– Increased acceptance
– Greater pool of knowledge
– Different perspectives
– Greater comprehension
– Training ground

Copyright © 2012 Pearson Education, Inc. 6-21


publishing as Prentice Hall
Decision Making in Groups

• Problems
– Social pressure
– Minority domination
– Logrolling
– Goal displacement
– “Groupthink”

Copyright © 2012 Pearson Education, Inc. 6-22


publishing as Prentice Hall
Managing Group
Decision Making

• Leadership styles
– Decide and persuade
– Discover facts and decide
– Consult with individuals and decide
– Consult with group and decide
– Group decision

Copyright © 2012 Pearson Education, Inc. 6-23


publishing as Prentice Hall
To Stimulate Creativity

• Brainstorming
• Storyboarding
• Nominal group technique
• Delphi technique

Copyright © 2012 Pearson Education, Inc. 6-24


publishing as Prentice Hall
Decision-Making Skills

• Time management skills


– Proactive
– Reactive

• Delegation skills

Copyright © 2012 Pearson Education, Inc. 6-25


publishing as Prentice Hall
Learning Objective 1

• Recognize the nature of management


decisions
– Programmability
– Uncertainty
– Risk
– Conflict
– Decision scope
– Crisis
Copyright © 2012 Pearson Education, Inc. 6-26
publishing as Prentice Hall
Learning Objective 2

• Utilize the six steps of decision making


– Identify and diagnose the problem
– Generate alternative solutions
– Evaluate the alternatives
– Choose the best alternative
– Implement the decision
– Evaluate the results

Copyright © 2012 Pearson Education, Inc. 6-27


publishing as Prentice Hall
Learning Objective 3

• Apply the criteria of quality and


acceptance to a decision
– Decision quality
– Decision acceptance

Copyright © 2012 Pearson Education, Inc. 6-28


publishing as Prentice Hall
Learning Objective 4

• Reap the benefits and avoid the


problems of group decision making
– Use a group when employee commitment is
critical
– Include people with diverse perspectives to
enhance the quality of the decision
– Avoid issues of groupthink

Copyright © 2012 Pearson Education, Inc. 6-29


publishing as Prentice Hall
Learning Objective 5

• Develop time management skills to


generate adequate time to make
decisions
– Eliminate or minimize time wasters
– Anticipate problems

Copyright © 2012 Pearson Education, Inc. 6-30


publishing as Prentice Hall
Learning Objective 6

• Know when to delegate and how to do


so wisely
– In delegation, employees make the
decisions
– Delegation can provide the manager with
more time to spend on other tasks and
decisions

Copyright © 2012 Pearson Education, Inc. 6-31


publishing as Prentice Hall
Copyright Notice

Copyright © 2012 Pearson Education, Inc. 6-32


publishing as Prentice Hall

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