MGT #2

Is decision-making a function of management?

No, it a part of all functions of management. Most closely associated with planning

Why do we make decisions as managers?

To accomplish our goals efficiently

What is the key to making good decisions under risk?

• Accurately determining the probabilities associated with each alternative, always a risk (can still have an unfavorable outcome)

How do programmed/non-programmed decisions and the different decision-making conditions relate?

• Certainty → Programmed • Uncertainty → Non-programmed • Risk → Both (Programmed & Non-programmed) • Most non-programmed decisions are made in craft jobs • Most programmed decisions are made in enlarged jobs; every programmed decision was at one point or another a non-programmed decision

What is decision-making under conditions of uncertainty?

• Don't know the alternatives, the potential outcomes, or the probabilities of the outcome occurrences • Hardest decision to make a good decision

What is decision-making under conditions of risk?

• Involves a risk of complete certainty regarding the outcomes of various alternatives, but an awareness of the probabilities • Alternatives are known but outcomes are in doubt • Most common condition • Key element in decision making under conditions of risk is accurately determining the probabilities associated with each alternative

What is decision-making under conditions of certainty?

• Managers know all available alternatives and outcomes associated with each. The outcomes of each alternative are known with absolute certainty (100% probability)

Do managers make more programmed or non-programmed decisions, in general?

• Managers make more programmed decisions • As you go up the management ladder, top-level makes more non-programmed decisions, these decisions become more common • More autonomy → more non-programed

Which decision-making condition is most common? Least common? Most difficult?

• Most common - Risk (probabilities 0-100%) • Least common/Easiest - Certainty (100% probabilities) • Most difficult - Uncertainty (no probabilities)

What's the difference between programmed and non-programmed decisions?

• Programmed → a set of decisions that has been developed for routine repetitive problems o Normally associated with a standing company policy o Rule or standard operating procedure used in making the decision • Non-Programmed → specific solution made for a problem that is novel (new), unique (different and hard to understand), complex (if you have to think about it), or unstructured o Top managers—more important as you go up the management pyramid, conceptual skills very important