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Management Decision-making - Coggle Diagram
Management Decision-making
HOW DO MANAGERS ARRIVE AT DECISIONS?
Rationality
choices -->
consistent
and value-maximising
assumes
problem clear
preferences clear
single defined goal
final choice maximises payoff
Bounded Rationality
essential features of a problem
bounded by limitations and constraints
"good enough" decisions - "satisficing"
Intuition
product of
previous experience
"gut-level" feeling
accumulated judgement
POLC, INFORMATION & DECISION-MAKING
influenced by
sources
quality
reliability of info
determines how well one makes decisions based on available info
execution of the managerial functions of POLC
Big Data and its associated analytics changing
contemporary debates and arguments around
decision-making
PROBLEMS + DECISIONS
Well structured + programmed
unstructured + non-programmed
GROUP DECISION-MAKING
Advantages
More complete information & knowledge
More diverse alternatives
Increases acceptance of a solution
Increase legitimacy
Disadvantages
Time consuming
Minority domination
Pressure to conform
Ambiguous responsibility
CONDITIONS, STYLES AND ERRORS
Conditions
Certainty
accurate decisions
outcome of every alternative known
Risk
can estimate likelihood of certain outcomes
Uncertainty
no certainty / reasonable probability estimates
Styles
Linear
external data + facts
Non-linear
internal insights, feelings + hunches
Errors
Overconfidence
Hindsight
Randomness