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. Modern Management 9 th edition. Ü Objectives. A fundamental understanding of the term decision An understanding of each element of the decision situation An ability to use the decision-making process An appreciation for the various situations in which decisions are made
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. Modern Management9th edition
. Ü Objectives • A fundamental understanding of the term decision • An understanding of each element of the decision situation • An ability to use the decision-making process • An appreciation for the various situations in which decisions are made • An understanding of probability theory and decision trees as decision-making tools • Insights into groups as decision makers
FUNDAMENTALS OF DECISIONS . • Definition of a Decision • Types of Decisions • Programmed • Nonprogrammed
FUNDAMENTALS OF DECISIONS . Traditional and Modern Ways of Handling Programmed and Nonprogrammed Decisions Table 7.1 Decision-Making Techniques Types of Decisions Traditional Modern Programmed: Routine, repetitive decisions 1. Habit 1. Operations research: Organization develops specific 2. Clerical routine: Mathematical analysis models processes for handling them Standard operating procedures Computer simulation 3. Organization structure: 2. Electronic data processing Common expectations A system of subgoals Well-defined information channels Nonprogrammed: One-shot, ill-structured, 1. Judgment, intuition, 1. Heuristic problem-solving novel policy decisions and creativity techniques applied to: Handled by general makers 2. Rules of thumb Training human decision problem-solving processes 3. Selection and training Constructing heuristic of executives computer programs
FUNDAMENTALS OF DECISIONS . Decision programming continuum Figure 7.1
FUNDAMENTALS OF DECISIONS . • The Responsibility for Making Organizational Decisions • Scope of the decision • Broader scope • Consensus
FUNDAMENTALS OF DECISIONS . Level of managers responsible for making decisions as decision scope increases from A to B to C Figure 7.2
FUNDAMENTALS OF DECISIONS . How scope of decision affects management level making decision at DuPont Figure 7.3
FUNDAMENTALS OF DECISIONS . • Elements of the Decision Situation • The Decision Makers • Goals To Be Served • Relevant Alternatives • Ordering of Alternatives • Choice of Alternatives
THE DECISION-MAKING PROCESS . Model of the decision-making process Figure 7.4
THE DECISION-MAKING PROCESS . • Identifying an Existing Problem • Managers learn of problems by: • Orders from superiors • Situations relayed by subordinates • Normal activity • Listing Alternative Solutions • Authority factors • Biological or human factors • Physical factors • Technological factors • Economic factors
THE DECISION-MAKING PROCESS . Additional factors that limit a manager’s number of acceptable alternatives Figure 7.5
THE DECISION-MAKING PROCESS . Selecting the Most Beneficial Alternative Implementing the Chosen Alternative Gathering Problem-Related Feedback
DECISION-MAKING CONDITIONS . Complete Certainty Condition Complete Uncertainty Condition Risk Condition
DECISION-MAKING TOOLS . Probability Theory Expected value (EV = I × P) Decision Trees
DECISION-MAKING TOOLS . Expected values from locating surfboard rental store in each of three possible locations Figure 7.6
DECISION-MAKING TOOLS . A basic decision tree illustrating the decision facing Stygian management Figure 7.7
GROUP DECISION MAKING . • Advantages and Disadvantages of Using Groups to Make Decisions • Advantages: • More and better alternatives than individual • Implementation supported more fervently • Disadvantages: • Takes longer • Costs the organization more • Lower quality if contaminated (Groupthink)
GROUP DECISION MAKING . • Processes for Making Group Decisions • Brainstorming • Nominal Group Technique • 1. Writes down individual ideas • 2. Presents individual ideas orally • 3. Entire group discusses ideas • 4. Secret ballot is taken
GROUP DECISION MAKING . • Processes for Making Group Decisions (con’t) • Delphi Technique • 1. Identify problem • 2. Offer solutions anonymously • 3. Compile and send responses • 4. Generate new solutions • 5. Repeat 3 and 4 until consensus reached • Evaluating Group Decision-Making Processes
GROUP DECISION MAKING . The brainstorming process Figure 7.8
Chapter Seven ? Questions