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Decision-Making - Coggle Diagram
Decision-Making
rationality
decision making assumed to be rational
choices that are consistent and value maximising
the problem is clear
single well defined goal
all alternatives and consequences are known
final choice will maximise pay off
Decision making conditions styles and errors
Conditions of decision making
Certainty
- managers know what decisions they need to make, as they have likely encountered this issue before. The alternatives are known.
Risk
- managers know there are risks associated with making a decision, and the manager can estimate the likelihood of certain outcomes
Uncertainty
- managers aren't certain, and are unable estimate the outcome of the problem they need to solve.
Managers need to be competent decision makers across conditions
Decision-Making Style
Non-Linear
Preference for using internal sources of information
Process information through internal insights, feelings and hunches
Accounting for variables that cannot be plotted on a straight line
More nuanced
Linear
Preference for using external data and facts
Process information through rational and logical thinking
Grounding approach to decision-making
bounded rationality
bounded by limitations and constraints, managers attempt to behave rationally
good enough decisions
captures the essential features of the problem
intuition
previous experience
'gut-level' feeling
accumulated judgement
Managerial Problems and Decisions
Type 1: Well structured and programmed decisions
Procedure
Rule
Policy
Type 2: unstructured and non-programmed decisions
Unique+ Non recurring=Tailored Solutions
Group Decision Making
Advantages
More complete picture of info and knowledge
More diverse alternatives
Increases acceptance of a solution
Increases legitimacy
Disadvantages
Time consuming to consider all perspectives
Minority domination
Pressure to conform
Ambiguous responsibility
Whether formal leaders are appointed or they naturally emerge