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MANAGING INFORMATION AND DECISION MAKING (DECISION MAKING STEPS (Step 1.…
MANAGING INFORMATION AND DECISION MAKING
HOW DO MANAGERS ARRIVE AT DECISIONS
Rationality
Choices that are consistent and value-maximising, they maximise economic value for an organisation
Problem is clear and unambiguous, single well defined goal is to be achieved, all alternatives are known, no time/cost constraints
Bounded rationality
Decisions made within parameters of a simplified model that captures the essential features of a problem
Bounded by limitations and constraints
Good enough decisions
Intuition
A product of previous experience, gut level feeling, accumulated judgement
A Framework for Improving Decision
Identification
Manager should begin listing the decision that must be made, and deciding which are most important
Inventory
In additional to identifying key decision, factors that go into each of them should be assess.
Such an examination helps and organisation understand which decisions need improvement and what processes might make them more effective, while establishing a common language for discussing decision making.
Intervention
The key effective decision interventions is a broad, inclusive approach that considers all methods of improvements and addresses all aspects of the decision processes
Including execution of the decision, which is often overlooked
Institutionalisation
Organisations need to give managers the tools and assistance to "decide how to decide" on an ongoing basis.
Companies that are serious about institutionalising better decision making often enlist decision experts to work executives on improving the process.
MANAGERIAL PROBLEMS
Types of problems and decisions
Well structured problems and programmed decisions
Structured Programes are easily defined
Programmed decisions are those handled by a routine response
Un-structured problems and non-programmed decisions
Unstructured problems are new or unusual
non-programmed decisions need a custom response
GROUP DECISION MAKING
Advantages
More complete information and knowledge
More diverse alternatives
Increase acceptance of a solution
Increase legitimacy
Disadvantages
Time consuming
Minority domination
Pressure to conform
Ambiguous responsibility
DECISION MAKING STLYES, CONDITIONS AND ERRORS
Conditions of decision making:
Risk
A manager can estimate the likelihood of certain outcomes
Uncertainty
A manager has neither certainty nor reasonable probability estimates
Certainty
A manager can make accurate decisions because the outcome of every alternative is known
Decision making styles
Linear
Non-linear
DECISION MAKING STEPS
Step 1. Identify a problem
Step 2. Identify decision criteria
Step 3. Allocate weights to criteria
Step 4. Develop alternatives
Step 5. Analyse alternatives
Step 6. Select alternative
Step 7. Implement alternative
Step 8. Evaluate decision effectiveness