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Managing information and decision making - Coggle Diagram
Managing information and decision making
How managers make decisions
Rationality
Best economic interest of organisation
Assumes
Problem is clear and unambiguous
A single, well-defined goal is to be achieved
Preferences are clear
Preferences are constant and stable.
No time or cost constraints exist
Final choice will maximise payoff
All conditions are not usually met; Not realistic
Bounded Rationality
Satisficing = good decisions
Decisions made within the limits
Ability to process information
limitations and constraints allow managers to behave rationally
Intuition
example of Steve jobs: relied more on others, listening, concise and trust of members of his team
Previous experience, gut feeling, accumulated judgment
Critical thinking, analysis and reflection
execution of managerial functions of POLC results in decision making
Big Data - how contemporary debates and arguments around decision making
Managerial problems and decision-making
Well structed problems and programmed decisions
well-structed problems: straight forward, familiar, easily defined problems
Programmed decision: a repetitive decision that can be handle by a routine approach
procedure => rule => policy
Unstructed problems and non-programmed decisions
Un-structed problems: new or unusual & for which information is ambiguous or incomplete
Non-programmed decision: Unique decisions that require custom-made solutions
Unique + non recurring = tailored solutions
Decision-Making Conditions, Styles and Errors
Conditions
Risk
A manager can estimate the likelihood of certain probabilities
Uncertainty
A manager has neither certainty nor reasonable probability estimates
Certainty
A manager can make accurate decisions as every outcome is known
Styles
Linear
Preference for using external data and facts
Process information through rational, logical thinking
Non-linear
Preference for using internal data and facts
Process information through internal insights, feelings, and hunches
Errors
Examples of Errors and Biases
Representation
Randomness
Availability
Sunken Costs
Framing
Self-serving
Confirmation
Hindsight
Selective perception
Anchoring effect
Immediate gratifaction
Overconfidence
Group Decision-Making
Advantages
More diverse alternatives
Increase acceptance of a solution
More complete information and knowledge
Increase legitimacy
Disadvantages
Minority Domination
Pressure to conform
Time consuming
Ambiguous responsibility