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Managing Information & Decision-Making: Week 6 : (LO2: How do managers…
Managing Information & Decision-Making: Week 6
:
LO3: Managerial problems and decisions
2 types of problems and decisions:
Structured problems and programmed decisions
Un-structured problems and non-programmed decisions
Structured problems and programmed decisions
Structured problems are easily defined
Programmed decisions are those handled by a routine approach
Un-structured problems and non-programmed decisions
Un-structured problems are new or unusual
Non-programmed decisions need a custom approach
LO2: How do managers arrive at decisions?
Rationality
Bounded Rationality
Intuition
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
A product of:
Previous experience
"Gut level feeling"
Accumulated judgement
Rationality
Managerial decision making is assumed to be rational
Rational decisions describe choices that are
consistent and value-maximising
Rational decisions made by managers “maximise” economic benefit for the organization
Assumes:
– The problem is clear and unambiguous
– A single, well-defined goal is to be achieved
– All alternatives and consequences are known
– Preferences are clear
– Preferences are constant and stable
– No time or cost constraints exist
– Final choice will maximise payoff
LO1: POLC, information and decision-making
Managing and decision making
Decision-making influenced by sources, quality, and reliability of information
Ability to engage in critical thinking, analysis, and reflection determines how well one makes decisions based on available information
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 organizational decisions increasingly become more data driven, managers need to consider inclusiveness of data (i.e. who uses it) in addition to the use of data for productive purposes
LO4: Group Decision-making
Pros of group decision making
More complete information & knowledge
More diverse alternatives
Increases acceptance of a solution
Increase legitimacy
Cons of group decision making
Time consuming
Minority domination
Pressure to conform
Ambiguous responsibility
LO5: Decision-making conditions, styles and errors
Conditions of group decision making
Certainty
Risk
Uncertainty
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
Linear
Preference of using external data and facts
Process info through rational, logical thinking
Non-linear
Preference for internal sources of info
process info through internal insights, feelings and hunches
Decision making errors
Over confidence
Selective perception
Self serving
Hindsight