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Managing Information and Decision-Making (Decision making conditions,…
Managing Information and Decision-Making
Managerial 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
decision making is influenced by sources, quality and reliability of information
Decision making conditions, styles and errors
Conditions
Certainty- can make accurate decisions, outcome of alternatives is known
Risk- estimate likelihood of outcomes
Uncertainty- manager has neither certainty nor reasonable probability estimate
Styles
Linear- uses external data, process info through rational, logical thinking
Non linear- internal sources of info, processes info through internal insights, feelings and hunches
Errors
Over confidence: decision makers think they know more than they do
Selective perception- mng attributes successes to themselves and failures to others
Hind sight- falsely believe they would have accurately predicted the outcome of an event once it is actually known
the execution of the managerial functions of POLC results in decision making
Methods of Managerial Decision Making:
rationality
bounded rationality
intuition
bounded rationality: behaviour that is rational within the parameters of a simplified decision process that is limited by an individuals ability to process information
managers satisfice rather than maximise
intuition: decisions made on the basis on experience, feelings and accumulated judgement
rationality: describes choices that are consistent and value maximising
Group Decision-making
Advantages
More complete info & knowledge
More diverse alternatives
Increases acceptance of a solution
increase legitimacy
Disadvantages
Time consuming
Minority domination
Pressure to conform
Ambiguous responsibility