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Lect 9: Decision-Making involves choice among available alternatives…
Lect 9: Decision-Making
involves choice among available alternatives
Types of Decisions
Programmed Decisions
routine and simple decisions made to tackle frequently
events which are recurring problems and opportunities
A
define approach
to be developed and applied in future
policies and procedures
rules and regulations
Non-programmed Decisions
made in response to situations that are unique, poorly defined, largely unstructured, and have important consequences for the organisation
unique
poorly defined
largely unstructured
have important consequence
unique, there is no cut-and-dried method for handling the problem
-custom-tailored treatment
Conditions under which decisions are made
a) Availability of information for decision making
b) Possibility of failure
Certainty
needs is full required
outcome from every alternative is known
Risk
clear-cut goals
good information is available
subject to chance of loss or failure - estimate the possibility of successful
Uncertainty
clear goals (objectivity achieve)
information about alternatives and future events are incomplete
Ambiguity
most difficult decision situation
no information (goals achieved is unclear)
outcomes is unavailable
Steps in Decision Making Process
Recognition of Decision Requirement
decision require ment in the form of either a problem or an opportunity
awareness of a problem or opportunity requires a scan of the internal and external environment
Diagnosis and Analysis of Causes
causes the problem or opportunity
understand the situation more deeply
what, where, when, why did it occur?
who is/are involved?
how did it happen?
Development of Alternatives
develop alternative solutions
respond to the needs of the situation and correct the causes
Selection of Desired Alternative
best meets his decision criteria
fit the overall goals and values of the organisation
Implementation of Chosen Alternative
success of the chosen alternative depends on whether or not it is translated into action
Evaluation and Feedback
How well was the decision implemented?
Was the decision effective in achieving its objective?
Decision Biases To Avoid
Being Influenced by Initial Impressions
too much weight given to first information received
first impressions act as an anchor to subsequent judgement
Justifying Past Decisions
justify past decisions, even if they are no longer valid
Danger of
"Decision Escalation"
Seeing What You Want To See
error of
"selective perception"
biased towards information that supports their existing instincts or point of view (avoid contradictions)
Perpetuating The Status Quo
decisions of past may lead to failure to explore new options, search for additional information, or investigate advanced technologies
Being Influenced By Problem Framing
decisions are based (wrongly) on how we define the problem
e.g. one may look at profit while others look at loss
Overconfidence
overestimating abilities to predict and understand risk
Advantages and Disadvantages of Group Decision-Making
Advantages
broader perspective
provides member support for decision
provides member support for decision
Disadvantages
time consuming
wasted resources if used for programmed decisions
compromise decisions may satisfy no one
group think - pressurised to conform
no focus - good or bad, no one to praise or blame