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Week Six: Managing Information and Decision Making (Managing and Decision…
Week Six: Managing Information and Decision Making
Managing and Decision making
The execution of the managerial functions of POLC results in decision making, often daily.
Big Data and its associated analytics changing contemporary debates and arguments around decision making.
As organisations decisions become more data driven, managers need to consider inclusiveness of data (ie. who uses it) in addition to the use of data for productive purposes.
Decision making is influences by sources, quality and reliability of information.
Methods of Managerial decision making
Rationality
Rational decisions describes choices that are consistent and value maximising
Rational decisions made by managers maximise benefit for the organisation
Rationality assumes that:
The problem is clear and unambiguous
A single, well defined goal is to be achieved
All alternative and consequences are known
Preferences are clear
Preferences are constant and stable
No time or cost constraints exist
Final choices will maximise payoff
Bounded rationality
Decisions made within the parameters of a simplified model that captures the essential features of a problem
Bounded by the limitations and constraints, managers attempt to behave rationally
"Good enough" decisions - "Satisficing"
Intuition
Intuition is a product of:
Previous experience
Gut-level feeling
Accumulated judgement
Types of problems and decisions
Well structured problems and programmed decisions
Structured problems are easily defined
Programmed decisions are those handled by a routine approach
Unstructured problems and non- programmed decisions
unstructured problems are new or unusual
non - programmed decisions need a custom approach
Group Decision Making
Advantages
More complete information and knowledge
More diverse alternatives
Increases acceptance of a solution
Increases legitimacy
Disadvantages
Time consuming
Minority domination
Pressure to conform
Ambiguous responsibility
Conditions of decision making
Certainty
A Manager can make accurate decisions because the outcome of every alternative is known
Risk
A manager can estimate the likelihood of certain outcomes
Uncertainty
A manager has neither certainty nor reasonable probability estimates
Decision making styles
Linear
Preference for using external data and facts
Process information through rational, logical thinking
Non- linear
reference for internal sources of information
Process information through internal insights, feelings and hunches