Chapter 4 - Managerial Decision Making

Evaluating alternatives

Determining the value or adequacy of the alternatives generated. Predetermined decision criteria may be used in the evaluation process. Such as benefits, uncertainties and risks.

Identifying objectives

The quantity and quality of the desired results should be specified, for these aspects will ultimately guide the decision maker in selecting the appropriate course of action.

Be able to recognize the different

time frames and scopes of strategic decisions versus operational decisions.

Be equipped

with all the tools and techniques that can aid in making strategic decisions.

Be familiar

with the framework for operational decision making as well as the structural components for displaying operational decisions.

Decision Making Condition

Conditions: Certainty, Risk, Uncertainty, Ambiguity

Uncertainty

-Decision maker does not even know the probability of each alternatives - Individual has no information or intuitive judgement to use as a basis for assigning the probabilities

Certainty

-Decision maker knows exactly what will happen -Able to predict outcome precisely. Decision maker aware of: - Nature of the problem - Possible alternatives - Results of alternatives

Ambiguity

-Goals is unclear -Problems to be solved is unclear -Alternatives are difficult -Information about outcomes is not available

Risk

-Outcomes are not always known in advance Decision maker aware of: -Nature of problem -Possible alternatives - Probability of each alternative leading to desired results

7 Steps in the Decision-Making Process

>Identifying opportunities and diagnosing problems > Identifying objectives > Generating alternatives > Evaluating alternatives > Reaching decisions > Choosing implementation strategies > Monitoring and evaluating

Programmed Decisions

A decision made in response to a situation that is routine or recurring.

Non programmed decision

A decision made in response to a situation that is unique, unstructured, or poorly defined.

Implications of decision making to leaders

Be able to recognize quickly problems and opportunities that call for a decision. Be able to recognize the different time frames and scopes of strategic decisions versus operational decisions. Be equipped with all the tools and techniques that can aid in making strategic decisions. Be familiar with the framework for operational decision making as well as the structural components for displaying operational decisions Be able to recognize the different decision-making environments in which their operational decisions will be made. Have an awareness and understanding of the various quantitative tools that can aid in making operational decisions.

Reaching decisions

Decision making is commonly associated with making a final choice. Although choosing an alternative would seem to be a straightforward proposition, in reality the choice is rarely clear-cut.

Monitoring and evaluating

No decision-making process is complete until the impact of the decision has been evaluated. Managers must observe the impact of the decision as objectively as possible and take further corrective action if it becomes necessary.

Generating alternatives

Once an opportunity has been identified or a problem diagnosed correctly, a manager develops various ways to solve the problem and achieve objectives.

Nature of Decision

Programmed and Non-programmed decision

Choosing implementation strategies

The bridge between reaching a decision and evaluating the results. Keys to effective implementation are there should be sensitivity to those who will be affected by the decision and proper planning and consideration of the resources necessary to carry out the decision.

Identifying opportunities and diagnosing problems

The clear identification of opportunities or the diagnosis of problems that require a decision.

Decision making

The process through which managers and leaders identify and resolve problems and capitalize on opportunities

Have an awareness

and understanding of the various quantitative tools that can aid in making operational decisions.

Be able to recognize quickly

problems and opportunities that call for a decision.