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Managing Information and decision Making - Coggle Diagram
Managing Information and decision Making
Managing and Decision Making
How managers arrive at decisions
intuition
product of
gut feeling
accumulated judgement
experience
rationality
manager decisions assumed to be rational
bounded rationality
made in parameters of simplified model
capture essential problem features
Preferences are clear, constant and stable
no time/cost constraints
max payoff
assumes
no time and cost constraint
clear and constant preferences
well defined goal
final choice maximises payoff
clear problem
Types of problems and decisions
structured problems and decisions
clearly defined
Un-structured problems and programmed decisions
New and unusual
not yet seen before
existing standards not appropriate
Group decision making
Increased reliance on teams and collaboration
if you want to hire great people have to have them make a lot of decisions
Advantages of group decision making
more complete pic of info and knowledge
diverse alternatives
increased acceptance of solution
Increased legitimacy of decision making
Disadvantages
Decision making process
8 Steps
Form alternatives
Get creative, not evaluating yet
Analysis of alternatives
Strength and weakness of said alternatives
Allocate weights to criteria
Priority to the criteria
E.g Product quality 10, costs 8
Selection of alternatives
Choose highest scoring alternative
Identify decision criteria
Determine the relevance in making decision
E.g product quality, costs etc
Implementing of selected alternative
Put into action whilst always being on look out for any changes in business environment, otherwise, re-evaluate
Identify problem
Could be obvious or underlying problems
E.g unsatisfactory products leading to lower sales
Evaluating the effectiveness
Did it fix problem
Yes, leave it at that
No, problem still exists?
Re-assess problem, go back to previous steps if wrong identification of problem
Decision making conditions, style and errors
Decision-making styles
Linear
prefer external data and facts
processing through rational and logical thinking
Non-linear
prefer internal sources of information
processing through internal insights, feelings and hunches
Decision-making errors examples
Hindsight
Sunk cost
Overconfidence
......
conditions of decision-making
Risk
can estimate the likelihood of certain outcomes
Uncertainty
has neither certainty nor reasonable probability estimates
Certainty
can make accurate decisions because the outcome of every alternative is known