decision making process

TASK DESCRIPTION: 

 

As a manager in an organization, find a problem need to be solved and apply your decision making skills to solve this problem. You have to identify the problem, the problem type, and use the decision making process to solve the problem. Use info-graphic to show the progress of the decision making process. 

 

Deliverables: 

 

Well written Report of the solution 

Info-graphic figure 

 

Info-graphic links: 

 

www.canva.com/create/infographics/ 

www.venngage.com 

the answer should be in hard copy and you are required to follow the given format: 

Font Type: Times New Roman 

Font size: 12 

Margin: 1.5 inches left and right  

Double spacing 

MGT 2

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PRINCIPLES OF MANAGEMENT

CHAPTER 02

Foundation of Decision Making

YANBU UNIVERSITY COLLEGE

Management Science Department

© Yanbu University College

© Yanbu University College

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Describe the steps in the decision-making process

Explain the three approaches managers can use to make decisions

Identify the two types of decision problems

Describe the types of decisions and decision-making conditions managers face

Describe group decision making and explain the advantages and disadvantages of group decision making

Learning Objectives

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How Do Managers Make Decisions.
What Is Rational Model.
What Is Intuitive Decision Making.
Types Of Decision And Problems.
What Is Group Decision Making.
Outline
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How Do Managers Make Decisions?
Decision-Making Process
A set of eight steps that includes identifying a problem, selecting a solution, and evaluating the effectiveness of the solution.

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Step 1: Identifying the Problem
Problem
A discrepancy between an existing and desired state of affairs.
Characteristics of Problems
A problem becomes a problem when a manager becomes aware of it.
There is pressure to solve the problem.
The manager must have the authority, information, or resources needed to solve the problem.

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Step 2: Identifying Decision Criteria
Decision criteria are factors that are important (relevant) to resolving the problem.
Costs that will be incurred (investments required)
Risks likely to be encountered (chance of failure)
Outcomes that are desired (growth of the firm)
If a decision maker does not identify a particular factor in the second step, it’s treated as irrelevant
Step 3: Allocating Weights to the Criteria
NOT all decision criteria are equally important
Assigning a weight to each item based on the priority order/degree of importance – to use personal preferences.

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Step 4: Developing Alternatives
Identifying viable alternatives
Alternatives are listed (without evaluation) that can resolve the problem.
Step 5: Analyzing Alternatives
Appraising each alternative’s strengths and weaknesses
An alternative’s appraisal is based on its ability to resolve the issues identified in steps 2 and 3.

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Step 6: Selecting an Alternative
Choosing the best alternative
The alternative with the highest total weight will be chosen.
Step 7: Implementing the Decision
Putting the chosen alternative into action.
Conveying the decision to the persons who will be affected by it and getting their commitment to it.

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Step 8: Evaluating the Decision’s Effectiveness
The soundness of the decision is judged by its outcomes OR to see whether the problems has been corrected.
Did the alternative chosen in STEP 6 and implementation in STEP 7 achieved the desired results?
If the problem was not resolved, what went wrong?
(For further reading please refer to :Pg 84-88)

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What is the Rational Model of Decision Making?
Rationality
Managers make consistent, value-maximizing choices with specified constraints.
Assumptions of Rationality for decision makers:
Are perfectly rational, fully objective, and logical.
Have carefully defined the problem and identified all viable alternatives.
Have a clear and specific goal
Will select the alternative that maximizes outcomes in the organization’s interests rather than in their personal interests.

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Assumptions of Rationality

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Bounded Rationality
Managers make decisions rationally, but are limited (bounded) by their ability to process information.
Assumptions are that decision makers:
Will not seek out or have knowledge of all alternatives
Will satisfice—choose the first alternative encountered that satisfactorily solves the problem—rather than maximize the outcome of their decision by considering all alternatives and choosing the best.
Influence on decision making:
(culture, internal politics, etc).

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Slide 18
What Role Does Intuition Play in Managerial Decision Making?
Intuitive Decision Making
making decisions on the basis of experience, feelings and accumulated judgment
described as “unconscious reasoning.”
Exhibit 3.7 : Five different aspects of intuition

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How Do Problems Differ?
Structured
Problems Unstructured
Problems
Straightforward & the familiar problem New or unusual situations faced by managers
Information about the problem easily defined & complete Information about such problems is ambiguous or incomplete
The goal of the decision maker is clear
Problems that will require custom-made solutions

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Slide 21
What Are Programmed and Nonprogrammed Decisions?

Programmed
Decisions Non-programmed
Decisions
A repetitive decision that can be handled by a routine approach Decisions that must be custom-made to solve unique & non-recurring problems (Different from previous organizational decisions because the issue is new, a different set of environmental factors & other conditions have changed)
The problem is well structured The problem is unstructured
Relatively simple & tends to rely heavily on previous solutions Involves creation of a new organizational strategy

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Programmed Decision-Making Aids
Policy
A general guide that establishes parameters for making decisions about recurring problems.
Rule
An explicit statement that tells managers what they ought or ought not to do (limits on procedural actions).
Procedure
A series of interrelated sequential steps that can be used to respond to a well-structured problem (policy implementation).

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EXAMPLE : Policy, Procedure & Rule
Policy
Accept all customer-returned merchandise.
Rules
Managers must approve all refunds over SR5,000.
No credit purchases are refunded for cash.
Procedure
Follow all steps for completing merchandise return documentation.

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(For further reading please refer to :Pg 95,96)
How are problem, types of decisions, and organizational level integrated ?

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Group Decision Making

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Group Decision Making
Advantages
Group decisions provide more complete information
Diversity of experiences and perspectives are higher
Groups generate more alternatives
Group decisions increase acceptance of a solution
Disadvantages
Group decisions are time consuming
May be subject to minority domination
Subject to pressure to conform
Responsibility is ambiguous
Subject to Groupthink which undermines critical thinking

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Groupthink
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When a group exerts extensive pressure on an individual to withhold his or her different views in order to appear to be in agreement.
Groupthink has Negative impact on Decision Making

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When Are Groups Most Effective?
Groups are more effective for decisions requiring
Accuracy (G)
Speed(I)
Creativity (G)
Acceptance (G)
Ideal Group Size
5-15
(For further reading please refer to :Pg 98,99)

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Slide 29
How Can You Improve Group Decision Making?
Brainstorming
An idea-generating process that encourages alternatives while withholding criticism
Nominal Group Technique
A decision-making technique in which group members are physically present but operate independently
Electronic Meeting
Participants are linked by computer

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END OF LECTURE
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