session 7 groups bba g-i - introduction to management - decision making and inforamtion technology...
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MAN1006: Introduction to Management
Lecture 7: Managerial Decision Making and Information Technology
Oswy GayleWednesday October 8, 2008
University of Technology, Jamaica
School of Business Administration
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What have you been learning so for?
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1. Decision Characteristics2. What is a decision? What is decision
making? and two define (2) categories of decisions
3. Three (3) Types of Decision-making Models
4. Six Steps Managers Take in Making Important Decisions
5. Participative Decision Making6. Techniques for Improving Decision
Making in Today’s Organizations
Objectives of Session
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Every organization grows, prospers, or fails as a result of decisions by its managers. Managers are often referred to as decision makers.
Good decision-making is a vital part of good management.
Decision Making in Organizations
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Decisions determine how the organization solves its problems, allocates resources, and accomplishes its objectives.
Decision-making is not easy
The better the decision making, the better the strategic planning
Decision Making in Organizations
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What is a Decision? and what is Decision Making?
Decision = a choice made from available alternatives
Decision Making = the process of identifying problems and opportunities and resolving them
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Two (2) Categories of Decisions Programmed Decisions
Situations occurred often enough to enable decision rules to be developed and applied in the future
Made in response to recurring organizational problems
Nonprogrammed Decisions – in response to unique, poorly defined and largely unstructured, and have important consequences to the organization
Ethical Dilemma: The No-Show Consultant
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Decisions and Decision Making
Many decisions that managers deal with every day involve at least some degree of uncertainty and require nonprogrammed decision making May be difficult to make Made amid changing factors Information may be unclear May have to deal with conflicting points of view
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Certainty, Risk, Uncertainty, Ambiguity
● Certainty● all the information the decision maker needs is fully available
● Risk● decision has clear-cut goals● good information is available● future outcomes associated with each alternative are subject to chance
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Certainty, Risk, Uncertainty, Ambiguity
● Uncertainty● managers know which goals they wish to
achieve● information about alternatives and future
events is incomplete● managers may have to come up with
creative approaches to alternatives● Ambiguity
● by far the most difficult decision situation● goals to be achieved or the problem to be
solved is unclear● alternatives are difficult to define● information about outcomes is unavailable
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Conditions that Affect the Possibility of Decision Failure
OrganizationalProblem
ProblemSolution
Low HighPossibility of Failure
Certainty Risk Uncertainty Ambiguity
ProgrammedDecisions
NonprogrammedDecisions
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Selecting a Decision Making Model
Depends on the manager’s personal preference
Whether the decision is programmed or non-programmed
Extent to which the decision is characterized by risk, uncertainty, or ambiguity
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Three Decision-Making Models
Classical Model Administrative Model
Political Model
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Classical Model
Assumptions Decision maker operates to accomplish goals
that are known and agreed upon Decision maker strives for condition of
certainty – gathers complete information Criteria for evaluating alternatives are known Decision maker is rational and uses logicNormative = describes how a manager should and
provides guidelines for reaching an ideal decision
Logical decision in the organization’s best economic interests
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Administrative Model
Two concepts are instrumental in shaping the administrative model
● Bounded rationality: people have limits or boundaries on how rational they can be
● Satisficing: means that decision makers choose the first solution alternative that satisfies minimal decision criteria
How nonprogrammed decisions are made--uncertainty/ambiguity
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Administrative Model● Managers actually make decisions in difficult
situations characterized by non-programmed decisions, uncertainty, and ambiguity
● Decision goals often are vague, conflicting and lack consensus among managers;
● Rational procedures are not always used● Managers’ searches for alternatives are limited● Managers settle for a satisficing rather than a maximizing
solution● intuition, looks to past experience
● Descriptive = how managers actually make decisions--not how they should
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Political Model – closely resembles the real world
● Closely resembles the real environment in which most managers and decision makers operate
● Useful in making non-programmed decisions● Decisions are complex● Disagreement and conflict over problems and
solutions are normal● Coalition = informal alliance among
manages who support a specific goal
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Characteristics of Classical, Political, and Administrative Decision Making Models
Classical Model Administrative Model Political Model
Clear-cut problem and goals Vague problem and goals Pluralistic; conflicting goals
Condition of certainty Condition of uncertainty Condition of uncertainty/ambiguity
Full information about Limited information about Inconsistent viewpoints; ambiguous
alternatives and their outcomes Alternatives and their outcomes information
Rational choice by individual Satisficing choice for resolving Bargaining and discussion among
for maximizing outcomes problem using intuition coalition members
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Six Steps in the ManagerialDecision-Making Process
Evaluationand
Feedback
Diagnosisand Analysis
of Causes
Recognition ofDecision
Requirement
Development ofAlternatives
Selection ofDesired
Alternative
Implementationof ChosenAlternative
Decision-MakingProcess
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Six Steps in the ManagerialDecision-Making Process1. Recognition of Decision Requirement2. Diagnosis and Analysis of Causes 3. Development of Alternatives 4. Selection of Desired Alternative 5. Implementation of Chosen
Alternative 6. Evaluation and Feedback
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Diagnosis and Analysis of Causes Diagnosis = analyze underlying
causal factors associated with the decision situation
Managers make a mistake if they jump into generating alternatives without first exploring the cause of the problem more deeply
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Underlying Causes - Kepner /Tregoe
What is the state of disequilibrium affecting us? When did it occur? Where did it occur? How did it occur? To whom did it occur? What is the urgency of the problem? What is the interconnectedness of events? What result came from which activity?
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Development of Alternatives
Develop Alternatives solutions that will respond to the needs of the situation and correct the underlyning cause
For a programmed decision, feasible alternatives are often available within the organization’s rules and procedures
Nonprogrammed decisions require developing new courses of action that will meet the needs of the company
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Selection of Desired Alternatives The best alternative is one in which the
solution best fits the firm’s overall goals and values and achieves the desired results using the fewest resources
Risk Propensity = willingness to undertake risk with the opportunity of gaining an increased payoff
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Implementation
The implementation of a chosen alternative involves the use of managerial, administrative, and persuasive abilities to cause the decision to be carried out.
The success of the chosen alternative depends on whether or not it is translated into action.
Implementation = using managerial, administrative, and persuasive abilities to translate the chosen alternative into action
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Evaluation decision makers gather information
or feedback to answer the following: How well was the decision implemented? Did the decision achieve its goals?
Feedback is important because decision-making is a continuous, never-ending process.
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Decision Styles Differences among people with respect to
how they perceive problems and make decisions
Not all managers make decisions the same Directive style Analytical style Conceptual style Behavioral style
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Personal Decision Framework
Situation:· Programmed/non-
programmed· Classical, administrative,
political· Decision steps
Decision Choice:·Best Solution to Problem
Personal Decision Style:·Directive·Analytical·Conceptual·Behavioral
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Directive Style People who prefer simple, clear-cut
solutions to problems Make decisions quickly May consider only one or two
alternatives Efficient and rational Prefer rules or procedures
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Analytical Style Complex solutions based on as
much data as they can gather Carefully consider alternatives Base decision on objective, rational
data from management control systems and other sources
Search for best possible decision based on information available
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Conceptual Style Consider a broad amount of information More socially oriented than analytical style Like to talk to others about the problem
and possible solutions Consider many broad alternatives Relay on information from people and
systems Solve problems creatively
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Behavioral Style Have a deep concern for others as individuals Like to talk to people one-on-one Understand their feelings about the problem and
the effect of a given decision upon them Concerned with the personal development of
others May make decisions to help others achieve their
goals
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Participation in Decision Making
Helps gauge the appropriate amount of participation for subordinates in process
● Leader Participation Styles Five levels of subordinate participation in
decision making ranging from highly autocratic to highly democratic
Vroom-Jago Model
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Leader participation styles Decide: the leader decides alone Consult Individually: presenting the problem to
subordinates individually for their suggestions and then making the decision.
Consult Group: sharing the problem with subordinates as a group, collectively obtaining their ideas and suggestions, then making the decision
Facilitate: sharing the problem with subordinates and acting as a facilitator to help the group arrive at a decision
Delegate: delegating the problem and permitting the group to make the decision within prescribed limits.
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Participation in Decision MakingDiagnostic Questions Decision participation depends on
the responses to seven diagnostic questions about
● the problem ● the required level of decision quality ● the importance of having subordinates
commit to the decision
Vroom-Jago Model
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Seven Leader Diagnostic Questions
How significant is the decision? How important is subordinate commitment? What is the level of the leader’s expertise? If the leader were to make the decision alone at
what level would subordinates be committed to the decision?
What level is the subordinate’s support for the team or organization’s objectives?
What is the member’s level of knowledge or expertise relative to the problem?
How skilled or committed are group members to working together? (Team Competence)
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Read up on Selecting a Decision Making Style
Information Technology
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New Decision
Approaches for Turbulent
TimesLearn, Don’t Punish
Know When to Bail
Practice the Five Whys
Engage in Rigorous Debate
Brainstorming
New Decision Approaches for Turbulent Times