DECISION MAKING.pptx(2)

• Decision Making is the process by which managers respond to opportunities and threats by analyzing options
• Decisions in Response to Opportunities where managers respond to ways to improve organizational performance
• Decisions in response to threats is when managers are impacted by adverse events to organization
• Types of Decision Making: Programmed Decisions and Non-programmed Decisions
• Programmed Decisions are routine, almost automatic process
• Non-programmed Decisions are unusual situations that have not been often addressed
• Classical Model of Decision Making is a prescriptive model that tells how the decision should be made
• Administrative Model of Decision Making challenges the classical assumptions that managers have and process all the information
• Bounded Rationality where there is a large number of alternatives and information is vast so that managers cannot consider it all
• Incomplete Information where most manager do not see all alternatives and decide based on incomplete information
• Evaluating Alternatives: Is it legal?, Is it ethical?, Is it economically feasible?, and Is it practical?
• Types of Cognitive Biases: Prior Hypothesis, Representativeness, Illusion of Control, and Escalating Commitment
• Prior Hypothesis Bias is where the manager allows strong prior beliefs about a relationship between variables and make decisions based on these belief even when evidence shows they are wrong
• Representativeness where a decision maker incorrectly generalizes a decision from a small sample or one incident
• Illusion of Control where the manager over-estimates their ability to control events
• Escalating Commitment where the manager has already committed considerable resource to project and then commits more even after feedback indicates problems
• Improved Group Decision Making: Devil's Advocacy, Dialectical Inquiry, and Promote Diversity
• Devil's Advocacy is where one member of the group acts as the devil's advocate and critiques the way the group identified alternatives
• Dialectical Inquiry is where two different groups are assigned to the problem and each group evaluates the other group's alternatives
• Promote Diversity is by increasing the diversity in a group, a wider set of alternatives may be considered
• Organizational Learning is where managers seek to improve member's ability to understand the organization and environment as to raise effectiveness
• Creativity is the ability of the decision maker to discover novel ideas leading to a feasible course of action
• Several Steps to Build in Learning: Personal Mastery, Mental Models, Team Learning, Build a Shared Vision, and Systems Thinking
• Personal Mastery is where managers empower employees and allow them to create and explore
• Mental Models challenges employees to find new, better methods to perform a task
• Team Learning is more important than individual learning since most decisions are made in groups
• Build a Shared Vision in which people share a common mental model of the firm to evaluate opportunities
• System Thinking knows that actions in one area of the firm impacts all others
• Brainstorming is where managers meet face to face to generate and debate many alternatives
• Production Blocking is a potential problem with brainstorming
• Nominal Group Technique provides a more structured way to generate alternatives in writing
• Delphi Technique provides for a written format without having all managers meet face to face