Topic 6: Managing, Informing and Decision-Making - Coggle Diagram
Topic 6: Managing, Informing and Decision-Making
Objective 1: POLC, Informing and Decision-Making
Managing and Decision-Making:
Decision-making influenced by sources, quality and reliability of information
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
Learning Objective2: How do managers arrive at decisions?
There are three methods of managerial decision-making: Rationality, Bounded Rationality and Intuition
RATIONALITY: Managerial decision making is assumed to be rational, rational decisions describe choices that are consistent and value-maximising and 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.
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 - "Satisfying".
Constraints: limited time and budget to make important decisions. (e.g. quick decisions and solutions put in place by the government during the pandemic)
INTUITION: Steve Jobs and the evolutions of his intuition. (look at quote about SJ).
Intuition is a product of: Previous experience,"Gut-level" feeling, accumulated judgement
Making a decision on intuition doesn’t necessarily happen independently of rational thinking, rather the two compliment each other.
Learning Objective 3: Managerial Problems and Decisions
Types of problems and decisions:
Well structures problems and programmed decisions. Procedure -> Rule -> Policy
Un-structures problems and non-programmed decisions
Unique + non-recurring = tailored solution
Learning Objective 4: Group Decision-Making
ADVANTAGES: more complete information and knowledge, more diverse alternatives, increases acceptance of a solution, increase legitimacy
DISADVANTAGES: time consuming, minority domination, pressure to conform, ambiguous responsibility
Learning Objective 5: Decision-making conditions, styles and errors
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 liklihood of certain outcomes
Uncertainty: a manager has neither certainty nor reasonable probably estimates
Decision making styles:
Linear: preference for using external data and facts, process information through rational, logical thinking
Non-linear: preference for internal sources of information, process information throughinteral insights, feelings and hunches
Overconfidence, immediate gratification, anchoring effect, selective perception, confirmation, framing, availability, representation, randomness, sunk costs, self-serving and hindsight