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CHAPTER 3 DECISION MAKING (TYPES OF CONDITIONS UNDER DECISION MAKING…
CHAPTER 3 DECISION MAKING
DEFINITION
The process through which managers identify and resolve problems and capitalize on opportunities
The process by which a course of action is selected as the way to deal with a specific problem
DISADVANTAGES GROUP DECISION MAKING
The process takes longer than individual decision making, so it is costlier
Compromise decisions resulting from indecisiveness may emerge
One person may dominate the group
Groupthink* may occur
TYPES OF
CONDITIONS
UNDER DECISION MAKING
Certainty
Decision maker know exactly what will happen & able to predict the outcome precisely
Uncertainty
A condition under which there is not full knowledge of the problem & reasonable probabilities for alternative outcomes cannot be determined
A situation in which a decision maker has neither certainly nor reasonable probability about outcome
Risk
Refer to future conditions that are not always known in advance
Decision maker is able to estimate likelihood of certain outcome based on personal experience or secondary information
Ambiguity
- The goals to be achieved or problem to be solved is unclear, alternatives are difficult to define & information about outcomes is not available
TYPES OF DECISION MAKING
Program
It is structured
A repetitive decision that can be handled by a routine approach
e.g.: Rules & regulations
Non-program
Unstructured & requires high level management usually deals with unique, unusual or exceptional problem
Non-routine decision making that occurs in response to unusual, predictable opportunities & threat
e.g.: Goverment's decision to prevent H1N1
THE RATIONAL OF DECISION MAKING
Investigate the situation
Define problem
Diagnose causes
Identify decision objectives
Develop alternatives
Seek creative alternative
Do not evaluate yet
Evaluate alternatives and select the best one
Evaluate alternative. Time required, cost involved, risk involved, benefit or advantage & limitation
Select the best alternative
Implement and monitor
Plan implementation review the plan periodically
Monitor implementation & make necessary adjustment
ADVANTAGES GROUP DECISION MAKING
More information and knowledge are available
More alternatives are likely to be generated
More acceptance of the final decision is likely
Enhanced communication of the decision may result
Better decisions generally emerge
DECISION MAKING PROCESS 7 STEPS
Identifying opportunities/problem
Identify objectives
Generating alternatives
Evaluating alternatives
Reaching decisions
Choosing implementation strategies
Monitoring & evaluating
3 MAJOR TYPES OF GROUP DECISION MAKING
Brainstorming
A technique used to enhance creativity that encourages group members to generate as many novel ideas as possible on a given topic without evaluating them
Nominal Group Technique (NGT)
Individual members list their ideas on the specific problem & present the ideas at one time, without discussion
Members' ideas are recorded so that everyone can see them
After all members' ideas are presented, the group discusses the ideas to clarify and evaluate them
Delphi Technique
An approach that uses the experts to make predictions and forecasts about future events without meeting face-to-face