MANAGERIAL DECISION MAKING

MANAGERIAL DECISION MAKING

1. DECISION MAKERS

   • Strategic or others (human resources, control, environment)
   • VITAL- Define how organization: allocates resources, accomplishes goals and solves problems

2. DECISIONS

   • TYPES
     • Decision: Choice made from alternatives
     • Decision making
       • Process of identifying problems and solving them, there's effort before and after choosing
   • CATEGORIES
     • Programmed
       • Situations that occured enough to enable decision rules for the future
     • Nonprogrammed
       • Response to unique, poorly defined situations
         • Important consequences, involve strategic planning, high uncertainty
           • ANA PAOLA GUERRERO ALCARAZ A01630863 8/10/15
   • Certainty/ Uncertainty
     • Scale: According to possibility of failure
       • CERTAINTY
         • All information available: Operating conditioins, resource costs and course of action
       • RISK
         • Clear goals and information available, outcomes subject to chance, use statistical analysis
       • UNCERTAINTY
         • Managers know which goals to achieve
           • Information incomplete (alternatives and future events), rely on creativity and experience
       • AMBIGUITY/ CONFLICT
         • Goal is unclear, alternatives undefined, wicked decision problem (Conflict over goals and alternatives)

3. DECISION MAKING MODELS

   • CLASSICAL MODEL (Rational)
     • Rational economic assumptions
       • 4 ASSUMPTIONS
         • Beliefs about ideal decision making
         • Operate to accomplish goals
         • Certainty (complete info.)
         • Maximize economic return
         • Rational decision maker
         • NORMATIVE (How decisions should be made), ideal unattainable
   • ADMINISTRATIVE MODEL
     • Descriptive
       • Decisions in complex situations, recognize limitations
         • HERBERT A. SIMONS
           • BOUNDED RATIONALITY
             • People have limits on how rational they are
           • SATISFICING
             • Choosing first solution, satisfy minimal criteria
           • INTUITION
             • Quick decision based on past experience, not arbitrary, recognize patterns, without consciousness
       • ASSUMPTIONS
         • Vague decisions, Not always rational, Limited alternatives, Satisficing
   • POLITICAL
     • Nonprogrammed decisions, uncertain, limited information
     • COALITION: Informal alliance that supports a goal
       • COALITION BUILDING
         • Forming alliances among managers
           • ASSUMPTIONS
             • Managers disagree, Information is ambiguous, managers talk to each other, managers debate

4. DECISION MAKNG PROCESS

   • STEPS
     • 1. Recognition of decision requirement
       • Problem (Insatisfactory performance) or opportunity (Enhanced performance)
     • 2. Diagnosis and analysis of causes
       • Analyze underlying factors, Kepner &Tregoe: Ask questions
     • 3. Development of alternatives
       • Reduced differences between organization's current and desired performance
     • 4. Selection of desired alternative
       • Best alternative fits goals and values, few resources
     • 5. Implementation of chosen alternative
       • Managerial, administrative and persuasive abilities
         • Success: Alternative made action
     • 6. Evaluation and Feedback
       • How well the decision was implemented

5. DECISION STYLES

   • Analytical
     • Complex solutions based on data they gather
   • Conceptual
     • Broad information- socially oriented, creative
   • Behavioral style:
     • Deep concern for others
   • Directive
     • Simple solutions, rational

6. BAD DECISIONS

   • Influenced:
     • Initial impression, Justify past decisions, see what you want, status quo, problem framing, overconfidence

7. GROUP DECISION MAKING

   • Brainstorming (Interactive group)
   • Rigorous debate (Constructive conflict)
   • No groupthink (Supress contrary opinions)
   • Know when to bail (no failing decisions)

8. INFORMATION TECHNOLOGY (IT)

   • Store data and knowledge management
   • Management Information Systems
   • Enterprise resource planning systems (Optimize processes)
   • Blog, wiki, Social networking, Peer to peer file sharing
   • INTERNET
     • E-Business (digital processes) and E-Commerce (electronic transactions)
       • Market expansion: Increase sales with target group, and Increasing efficiency (Creativity and reducing costs)
     • INTRANET (Internal communications)
     • EXTRANET (External communications system)