Management Chapter 5

Administrative Model

-An approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions. -Three important concepts: --bounded rationality --incomplete information --satisfying.

Bounded rationality

-Cognitive limitations that constrain one's ability to interpret, process, and act on information.

Ambiguous Information

-Information that can be interpreted in multiple and often conflicting ways.

Risk and Uncertainty

-Risk: is present when managers know the possible outcome of a particular course of action and can assign probabilities to them. -unpredictability

Time Constraints and Information costs

-The third reason why information is incomplete is that managers have neither the time nor the money to search for all possible alternative solutions and evaluate all the potential consequences of this alternatives.

Entrepreneurs

-an individual who notice opportunities and decide how to mobilize the resources necessary to produce new and improved goods and services

Social Entrepreneur

-an individual who pursues initiatives and opportunities and mobilizes resources to address social problems and needs in order to improve society and well-being through creative solutions

Learning organization

-an organization in which managers try to maximize the ability of individuals and groups to think and behave creatively and thus maximize the potential for organizational learning to take place

Recognize the Need for a Decision

-an organization possesses a set of skills, competencies, and resources in its employees and in departments such as marketing, manufacturing and research and development. Manger thus can be proactive and reactive with recognizing the need to make decision with the data they receive from these areas.

intrapreneurs

-employees of existing organizations who notice opportunities to develop new or improved products and better ways to make them

Intuition

-feelings, beliefs, and hunches that come readily to mind, require little effort and information gathering, and result in on-the-spot decisions.

Management Snapshot

-illustrates how decision making and learning are ongoing challenge for managers that can profoundly influence organizational effectiveness.

Incomplete Information

-information is incomplete because the full range of decision-making alternatives is unknowable in most situations, and the consequences associated with known alternatives are uncertain. --Uncertainty and risk --Ambiguous Information --Time constraints and information costs

Programmed Decision Making

-is a routine, virtually automatic process. -these type of decisions have been made so many times in the past that managers have developed rules or guidelines to be applied when certain situations inevitably occur. -Ex. when office manager orders basic office supplies, such as paper and pens, whenever the inventory of supplies drops to a certain level.

Classical Model

-is perspective, which means it specifies how decisions should be made. Managers use this model to make a series of simplifying assumptions about the nature of the decision-making process.

Non-programmed Decision Making

-is required for these non-routine decisions. -are made in response to unusual or novel opportunities and threats. -decision making occurs when there are no ready-made decision rules that mangers can apply in a situation.

Decision Making

-is the process by which managers respond to opportunities and threats by analyzing the options and making determinations, or decisions, about specific organizational goals and courses of action. -occurs when managers search for ways to improve organizational performance to benefit customer, employees, and other stakeholder groups.

Organizational Learning

-is the process through which managers seek to improve employees desire and ability to understand and manage the organization and its task environment so employees can make decisions that continuously raise organizational effectiveness

satisficing

-searching for and choosing an acceptable, or satisfactory, response to problems and opportunities, rather than trying to make the best decision.

Optimum decision

-which is the most appropriate decision possible in light of what they believe to be the most desirable consequences for the organization.

Senge's Principles for Creating a Learning Organization

1. Develop personal mastery 2. Build complex, challenging mental models 3. Promote team learning 4. Build shared vision 5. Encourage systems thinking

Six steps

1.) Recognize the need for a decision 2.) Generate alternatives 3.) Asses alternatives 4.) Choose among alternatives 5.) Implement the chosen alternative 6.) Learn from feedback

Which of the following steps of the decision-making process requires the managers to specify the opportunity or threat properly and then define the criteria influencing the selection of alternatives to respond to the problem or threat?

Assess alternatives

In the context of the decision-making process, which of the following is the fourth step that involves ranking the alternatives before making a final decision?

Choose among alternatives

Which of the following refers to the pattern of faulty and biased decision making in which team members strive for agreement among themselves at the expense of accurately assessing information relevant to a decision?

Groupthink

Which of the following statements is true of the classical model of decision making?

It assumes that decision makers have access to all the information they need to make the optimum decision.

True for a manager intending to create a learning organization?

Managers must emphasize the use of a common mental model to frame problems.

The Delphi technique is a decision-making technique in which

members respond in writing to questions posed by the leader

Managers should consciously follow six steps to make a good decision. The first step is to

recognize the need for a decision

The process of searching for and choosing an acceptable response to problems and opportunities, rather than trying to make the best decision is known as ________.

satisficing

Groups of intrapreneurs who are deliberately separated from the normal operation of an organization to encourage them to devote all their attention to developing new products are known as the ________.

skunkworks

The administrative model was developed to explain

why decision making is always an inherently uncertain and risky process