Chapter 4 - Foundations of Decision Making (O)

Problem identification is ___

Problem identification is *subjective.*

Programmed decision making is relatively simple and tends to rely heavily on ___. The develop-the-alternatives stage is given little attention because ___ becomes ___

Programmed decision making is relatively simple and tends to rely heavily on *previous solutions.* The develop-the-alternatives stage is given little attention because *programmed decision making* becomes *decision making by precedent.*

*LEARNING OBJECTIVE* 3. Describe the types of decisions and decision-making conditions managers face. .

Programmed decisions are repetitive decisions that can be handled by a routine approach and are used when the problem being resolved is straightforward, familiar, and easily defined (structured). Non-programmed decisions are unique decisions that require a custom-made solution and are used when the problems are new or unusual (unstructured) and for which information is ambiguous or incomplete. Certainty is a situation when a manager can make accurate decisions because all outcomes are known. Risk is a situation when a manager can estimate the likelihood of certain outcomes. Uncertainty is a situation where a manager is not certain about the outcomes and can't even make reasonable probability estimates

*IV. HOW DO GROUPS MAKE DECISIONS?*

C) When Are Groups Most Effective?

*II. WHAT ARE THREE APPROACHES MANAGERS CAN USE TO MAKE DECISIONS?*

C. Intuition and Managerial Decision Making

*I. HOW DO MANAGERS MAKE DECISIONS?*

C. What Is Relevant in the Decision-Making Process?

(Step 5). Once identified, the decision maker must ___

(Step 5). Once identified, the decision maker must *critically analyze each alternative*

(Step 6). The critical act of ...

(Step 6). The critical act of *choosing the best alternative from among those enumerated and assessed*

(Step 7). The decision may still ...

(Step 7). The decision may still *fail if it is not implemented properly*

___, decision makers behave rationally within the limits of the simplified or bounded model. The result is a ___ decision; the solutions are "good enough."

*Bounded rationality*, decision makers behave rationally within the limits of the simplified or bounded model. The result is a *satisfying* decision; the solutions are "good enough."

What is brainstorming?

*Brainstorming* is a relatively simple technique for overcoming pressures for conformity. *Brainstorming is merely a process for generating ideas.*

___ is the essence of management. Managers—as they plan, organize, lead, and control—are called ___. (Exhibit 4-6).

*Decision making* is the essence of management. Managers—as they plan, organize, lead, and control—are called *decision makers*. (Exhibit 4-6).

Many managers do NOT deal specifically with ___ or ___ decisions but they still make decisions about ___ and design thinking can help them make better decisions.

*Design thinking is approaching management problems as designers approach design solutions* Many managers do NOT deal specifically with *product* or *process design* decisions but they still make decisions about *work issues* and design thinking can help them make better decisions.

____ is approaching management problems as designers approach design solutions,

*Design thinking* is approaching management problems as designers approach design solutions,

Design thinking

*Design thinking* means opening up your perspective and gaining insights by using observation and inquiry skills, and not relying simply on rational analysis.

What are (4) disadvantages of group decision making?

*Disadvantages of group decision-making:* 1) They are time-consuming. 2) There may also be a situation in which there is minority domination. 3) Finally, there is ambiguous responsibility - the responsibility of any single member is watered down. 4) Another problem focuses on the social pressures to conform in groups, an example being groupthink

____ is the foundation of all creative work

*Expertise* is the foundation of all creative work

*True or False* All managerial decisions are either fully programmed or fully nonprogrammed.

*FALSE* *Few* managerial decisions are either fully programmed or fully nonprogrammed.

___ tend to be more accurate. On the average, ___ make better decisions than ___—although ___ may occur.

*Group decisions* tend to be more accurate. On the average, *groups* make better decisions than *individuals*—although *groupthink* may occur.

___ is the desire to work on something because it's interesting, involving, exciting, satisfying, or personally challenging. ___ determines the extent to which individuals fully engage their expertise and creative skills.

*Intrinsic task motivation* is the desire to work on something because it's interesting, involving, exciting, satisfying, or personally challenging. *Intrinsic task motivation* determines the extent to which individuals fully engage their expertise and creative skills.

_____ proposed the notion of groupthing

*Irving Janis* proposed the notion of groupthing

___ is facilitated by the use of programmed decision making.

*Organizational efficiency* is facilitated by the use of programmed decision making.

*People differ in their inherent creativity* *1)* ___ is scarce. *2)* In study of lifetime creativity of 461 men and women, they found: *a)* Less than 1% was ___ *b)* 10 % percent were ___. *c)* About 60 percent were ___

*People differ in their inherent creativity.* *1) Exceptional* is scarce. *2)* In study of lifetime creativity of 461 men and women, they found: *a)* Less than 1% was *exceptionally creative* *b)* 10 % percent were *highly creative*. *c)* About 60 percent were *somewhat creative*

___ decision making is the most efficient way to handle well-structured problems. When problems are ill structured, managers must rely on ___ decision making.

*Programmed, or routine*, decision making is the most efficient way to handle well-structured problems. When problems are ill structured, managers must rely on *nonprogrammed* decision making.

When brainstorming (4)

*When brainstorming* 1) A half-dozen to a dozen people sit around a table. 2) The leader states the problem clearly, ensuring understanding by all participants. 3) Members then "free-wheel" as many alternatives as they can in a given time. 4) No criticism is allowed; all the alternatives are recorded.

What are the (5) organizational factors that can impede creaticvty?

*a) Expected evaluation*—focusing on how your work is going to be evaluated. *b) Surveillance*—being watched while you're working. *c) External motivators*—emphasizing external, tangible rewards. *d) Competition*—facing win-lose situations with your peers. *e) Constrained choices*—being given limits on how you can do your work.

*LEARNING OBJECTIVE* 1. Describe the decision-making process, including: a) The 8 steps, b) What managers use to simplify the decision process , and a) The 12 common decision-making errors.

*a)* The decision-making process consists of eight steps: (1) ID the problem, (2) ID the decision criteria, (3) weight the criteria, (4) develop alternatives, (5) analyze alternatives, (6) select alternative, (7) implement alternative, and (8) evaluate decision effectiveness. *(b)* To simplify the decision process managers may use heuristics, which can lead to errors and biases in their decision making. *(c)* The 12 common decision-making errors and biases include (1) overconfidence, (2) immediate gratification, (3) anchoring, (4) selective perception, (5) confirmation, (6) framing, (7) availability, (8) representation, (9) randomness, (10) sunk costs, (11) self-serving bias, and (12) hindsight.

How does groupthink occur? (4)

1) Group members rationalize any resistance to the assumptions they have made. 2) Members apply direct pressures on those who momentarily express doubts about any of the group's shared views or who question the arguments favored by the majority. 3) Those members who have doubts or hold differing points of view seek to avoid deviating from what appears to be group consensus. 4) There is an illusion of unanimity. Silence is assumed as being in full accord.

1) If decision effectiveness is defined in terms of speed, ___ are superior. 2) If creativity is important, ___ tend to be more effective. 3) If effectiveness means the degree of acceptance that the final solution achieves, then ___ are better.

1) If decision effectiveness is defined in terms of speed, *individuals* are superior. 2) If creativity is important, *groups* tend to be more effective than individuals. 3) If effectiveness means the degree of acceptance that the final solution achieves, then *groups* are better.

In electronic meetings (3)

1) Numerous people sit around a horseshoe-shaped table that is empty except for a series of computer terminals. 2) Issues are presented to participants, who type their responses onto their computer screens. 3) Individual comments, as well as aggregate votes, are displayed on a projection screen in the room.

Identify (12) common decision errors and biases that managers make.

1) Overconfidence bias 2) Immediate gratification bias 3) Anchoring effect 4) Selective perception bias 5) Confirmation bias= 6) Framing bias 7) Availability bias 8) Representation bias 9) Randomness bias 10) Sunk costs error 11) Self-serving bias 12) Hindsight bias

What are (3) acceptable standards for managers to compare their current states of affairs to in order to find discrepancies

1) Past performance. 2) Previously set goals. 3) Performance of some other unit within the organization or in other organizations.

1) Procedure is a series of ___ steps that a manager can use when responding to ___ 2) The only real difficulty is in __ 3) Once the problem is clear, so is the ___

1) Procedure is a series of *interrelated sequential steps* that a manager can use when *responding to a well-structured problem*. 2) The only real difficulty is in *identifying the problem*. 3) Once the problem is clear, so is the *procedure*.

*Decision making in Japan is much more group oriented than in the United States.* 1) The Japanese value ___ and ___. 2) Japanese CEOs collect ___ to build consensus called "___." 3) Managerial decisions take ___

1) The Japanese value *conformity* and *cooperation.* 2) Japanese CEOs collect *a large amount of information* to build consensus called *"ringisei."* 3) Managerial decisions take a *long-term perspective.*

Groupthink can be minimized if (3)

1) The group is cohesive. 2) It fosters open discussion. 3) Is led by an impartial leader who seeks input from all members.

How does the nominal group technique work? (4)

1) The technique restricts discussion during the decision-making process. 2) Group members must be present, but they are required to operate independently. 3) They secretly write a list of general problem areas or potential solutions.

What are the (2) decision variables?

1) The way decisions are made: who makes the decision? 2) The degree of risk a decision maker is willing to take.

What are the (3) drawback of electronic meetings?

1) Those who can type quickly can outshine those who may be verbally eloquent but are lousy typists. 2) Those with the best ideas don't get credit for them. 3) The process lacks the informational richness of face-to-face oral communication.

Groupthink hinders decision making, possibly jeopardizing the quality of the decision by (3)

1) Undermining critical thinking in the group. 2) Affecting a group's ability to objectively appraise alternatives. 3) Deterring individuals from critically appraising unusual, minority,

What are (3) ways of making group decision more creative?

1) brainstorming 2) the nominal group technique and 3) electronic meetings.

What are the (5) different aspects of intuition?

1. 2. 3. 4. 5.

What (3) decision-making conditions do managers face?

1. Certainty 2. Risk 3. Uncertainty

What are (5) advantages of group decision making?

1. Group decisions provide more complete information than do individual ones. 2. A group will bring a diversity of experiences and perspectives to the decision process. 3, Groups also generate more alternatives. 4. Group decision making increases acceptance of a solution. 5. This process increases legitimacy.

Such nonprogrammed decisions are ___ and ___, involving an ill-structured problem with no __

2. Such decisions are *unique* and *nonrecurring*, involving an ill-structured problem with *no cut-and-dried solution.*

*The effectiveness is also influenced by the sizeof the group.* A minimum of ___ to a maximum of about ___ is best. Because five and seven are odd numbers, ___ are avoided.

A minimum of *five* to a maximum of about *fifteen* is best. Because five and seven are odd numbers, *strict deadlocks* are avoided

*Members of a group are never perfectly equal.* A minority that dominates a group frequently has an ___ on the final decision.

A minority that dominates a group frequently has an *undue influence* on the final decision.

A policy provides guidelines to.. In contrast to a rule, a policy establishes ___ for the decision maker rather than..

A policy provides guidelines to *channel a manager's thinking in a specific direction.* In contrast to a rule, a policy establishes *parameters* for the decision maker rather than *specifically stating what should or should not be done.*

A rule is an ___ that tells a manager what he or she ___ Rules are frequently used with a ___ problem because they are simple to follow and ensure consistency.

A rule is an explicit statement that tells a manager what he or she ought or ought not to do. Rules are frequently used with a *well-structured problem* because they are simple to follow and ensure consistency.

A simple approach, give the ___ a weight of ten and then assign weights to the rest against that standard.

A simple approach, give the most important criterion a weight of ten and then assign weights to the rest against that standard.

A variation of the electronic meeting is the ___. This has enhanced ____ among members, saved ___, and ultimately saved companies ___

A variation of the electronic meeting is the *video conference*. This has *enhanced feedback* among the members, *saved countless hours of business travel*, and ultimately *saved companies hundreds of thousands of dollars.*

*III. WHAT TYPES OF DECISIONS AND DECISION-MAKING CONDITIONS DO MANAGERS FACE?* LO - Describe the types of decisions and decision-making conditions managers face.

A) How Do Problems Differ?

*I. HOW DO MANAGERS MAKE DECISIONS?* LO - Describe the decision-making process.

A) Intro MADE IT TO PP SLIDE 7

*IV. HOW DO GROUPS MAKE DECISIONS?* LO - Discuss group decision-making.

A) Introduction

*II. WHAT ARE THREE APPROACHES MANAGERS CAN USE TO MAKE DECISIONS?* LO - Explain the three approaches managers can use to make decisions.

A) Rational Model

*V. WHAT CONTEMPORARY DECISION-MAKING ISSUES DO MANAGERS FACE?* LO - Discuss contemporary issues in managerial decision-making.

A. How does national culture affect manager's decision-making?

*LEARNING OBJECTIVE* Discuss contemporary issues in managerial decision-making.

As managers deal with employees from diverse cultures, they need to recognize common and accepted behavior when asking them to make decisions. Some individuals may not be as comfortable as others with being closely involved in decision making, or they may not be willing to experiment with something radically different. Also, managers need to be creative in their decision making since creativity allows them to appraise and understand the problem more fully, including "seeing" problems that others can't see.

*III. WHAT TYPES OF DECISIONS AND DECISION-MAKING CONDITIONS DO MANAGERS FACE?*

B) How Does a Manager Make Programmed Decisions?

*IV. HOW DO GROUPS MAKE DECISIONS?*

B) What Are the Advantages and Disadvantages of Group Decision Making?

*I. HOW DO MANAGERS MAKE DECISIONS?*

B) What defines a decision problem?

*II. WHAT ARE THREE APPROACHES MANAGERS CAN USE TO MAKE DECISIONS?*

B. What Is Bounded Rationality?

*V. WHAT CONTEMPORARY DECISION-MAKING ISSUES DO MANAGERS FACE?*

B. Why Are Creativity and Design Thinking Important in Decision Making?

Because it is impossible for human beings to process and understand all the information necessary, they construct simplified models that...

Because it is impossible for human beings to process and understand all the information necessary, they construct simplified models *that extract the essential features from problems.*

What does big data have to do with decision making?

Big data is using (1) math modeling, (2) predictive algorithms, and (3) artificial intelligence software to *measure and monitor people and machines* like never before. But managers need to really examine and evaluate how big data might contribute to their decision making before jumping in with both feet.

Brainstorming utilizes a ___ process that specifically encourages ___

Brainstorming utilizes an *idea-generating process* that specifically encourages *any* and *all alternatives.*

*III. WHAT TYPES OF DECISIONS AND DECISION-MAKING CONDITIONS DO MANAGERS FACE?*

C) How Do Nonprogrammed Decisions Differ from Programmed Decisions?

Creative-thinking skills encompass (3) Individual traits associated with the development of creative ideas include (7)

Creative-thinking skills encompass (1) *personality characteristics associated with creativity*, (2) *the ability to use analogies*, as well as (3) *the talent to see the familiar in a different light.* Individual traits associated with the development of creative ideas include (1) *intelligence*, (2) *independence, (3) self-confidence, (4) risk-taking, (5) an internal locus of control, (6) tolerance for ambiguity, and (7) perseverance in the face of frustration.*

Creativity allows the decision maker to... Creativity's most obvious value is...

Creativity allows the decision maker to *appraise and understand the problem more fully, including "seeing" problems other can't see.* Creativity's most obvious value is *in helping the decision maker identify novel and useful ideas.*

*IV. HOW DO GROUPS MAKE DECISIONS?*

D) How Can You Improve Group Decision Making?

*III. WHAT TYPES OF DECISIONS AND DECISION-MAKING CONDITIONS DO MANAGERS FACE?*

D) How are Problems, Types of Decisions, and Organizational Level Integrated?

*I. HOW DO MANAGERS MAKE DECISIONS?*

D. How Does the Decision Maker Weight the Criteria and Analyze Alternatives?

Decision implementation includes conveying the decision to ___ and ___.

Decision implementation includes conveying the decision to *those affected* and *getting their commitment to it*.

Decision maker who was perfectly rational would be fully ___ and ___. How? (4)

Decision maker who was perfectly rational would be fully *objective and logical.* 1) He or she would carefully define the problem and have a clear and specific goal. 2) The steps in the decision-making process would consistently lead to selecting the alternative that maximizes that goal. 3) Decisions are made in the best interests of the organization. 4) Guide users through problems by asking them a set of sequential questions about the situation and drawing conclusions based on the answers given.

Decision making can be viewed as an eight-step process that involves (3) This process can be used for making both ___ and ___ decisions, and decisions that range from ___ to ___

Decision making can be viewed as an eight-step process that involves (1) identifying a problem, (2) selecting an alternative, and (3) evaluating the decision's effectiveness. This process can be used for making both *individual* and *group decisions*, and decisions that range from planning your spring break to complex planning for NASA.

Decision making in Japan is much more ___ than in the United States.

Decision making in Japan is much more *group oriented* than in the United States.

Decision-making is also likely influenced by the organization's ()

Decision-making is also likely influenced by the organization's (1) *culture*, (2) *internal politics*, (3) *power considerations*, and (4) by a phenomenon called *escalation of commitment*

Decision-making is typically described as ___

Decision-making is typically described as *"choosing among alternatives."*

Decisions are programmed to the extent that they are (2)

Decisions are programmed to the extent that (1) they are *repetitive and routine* and (2) to the extent that *a specific approach has been worked out for handling them.*

Design thinking says that managers should look at ___ and ___ with the goal of gaining a deep understanding of the situation.

Design thinking says that managers should look at *problem identification collaboratively* and *integrated* with the goal of gaining a deep understanding of the situation.

Managers who can accommodate ___ in decision-making philosophies and practices can expect a high payoff.

Managers who can accommodate *diversity* in decision-making philosophies and practices can expect a *high* payoff.

*III. WHAT TYPES OF DECISIONS AND DECISION-MAKING CONDITIONS DO MANAGERS FACE?*

E) What Decision-Making Conditions Do Managers Face?

*I. HOW DO MANAGERS MAKE DECISIONS?*

E. What Determines the Best Choice?

Each alternative is evaluated by ...

Each alternative is evaluated by *appraising it against the criteria and weights* established in Steps 2 and 3.

Effectiveness should not be considered without also assessing ___. Groups almost always are___ than the individual decision maker.

Effectiveness should not be considered without also assessing *efficiency.* Groups almost always are *less efficient* than the individual decision maker.

Every decision maker has ___—explicitly stated or not—that guide his/her decision. What is not identified is ___ as what is.

Every decision maker has *criteria*—explicitly stated or not—that guide his/her decision. What is not identified is *as important* as what is.

The creation of a new organizational strategy is an example of a non-programmed decision. *Example:* Amazon.com Jeff Bezos' strategy to "get big fast":

Example 1) Bezos' strategy to "get big fast" helped the company grow but at the cost of perennial financial losses. 2) To make a profit, Bezos made decisions affecting how the company operated, including allowing other sellers to sell their books at Amazon. For the first time, Amazon made a profit.

(4) Examples of nonprogrammed decisions:

Examples of nonprogrammed decisions: (1) deciding whether to acquire another organization (2) deciding which global markets offer the most potential (3) engineering work processes to improve efficiency, (4) the creation of a new organizational strategy etc.

*I. HOW DO MANAGERS MAKE DECISIONS?*

F. What Happens In Decision Implementation?

What is an example of how alternatives are reviewed until one that is "good enough" or sufficient are found.

For example, A finance major upon graduation is looking for a position as a personal financial planner with a minimum salary of $47,000. They accept a job offer as a business credit analyst at a bank 50 miles away from home at a starting salary of $42,000. Further searching would have revealed an opening for a personal financial planner (the job they were looking for) with firm 25 miles from home at a starting salary of $43,000. *They stopped searching when the first job was found because it was "good enough."*

*I. HOW DO MANAGERS MAKE DECISIONS?*

G. What is the Last Step in the Decision Process?

*LEARNING OBJECTIVE* 4. Discuss group decision making.

Groups offer certain advantages when making decisions—more complete information, more alternatives, increased acceptance of a solution, and greater legitimacy. On the other hand, groups are time-consuming, can be dominated by a minority, create pressures to conform, and cloud responsibility. Three ways of improving group decision making are brainstorming (utilizing an idea-generating process that specifically encourages any and all alternatives while withholding any criticism of those alternatives), the nominal group technique (a technique that restricts discussion during the decision-making process), and electronic meetings (the most recent approach to group decision making, which blends the nominal group technique with sophisticated computer technology).

*I. HOW DO MANAGERS MAKE DECISIONS?*

H. Common Errors Committed in the Decision-Making Process

Heuristics are "rules of thumb" that managers use to ___

Heuristics are "rules of thumb" that managers use to *simplify their decision making*

If a decision maker *does not identify a particular factor*, it is treated as irrelevant.

If a decision maker *does not identify a *particular factor*, it is treated as irrelevant.

In Egypt, where time pressures are low, managers make decisions at a ____ and ____ than managers in the United States. In Italy, were history and traditions are valued, managers tend to ____

In Egypt, where time pressures are low, managers make decisions at a *slower and more deliberate pace* than managers in the United States. In Italy, where history and traditions are valued, managers tend to *rely on tried and proven alternatives.*

In France ___ decision making is widely practiced and managers ___.

In France *autocratic decision making* is widely practiced and managers *avoid risks.*

1) In India power distance and uncertainty avoidance are ___ Only very senior-level managers make decisions, and they are likely to make ___ ones.

In India power distance and uncertainty avoidance are *high:* Only very senior-level managers make decisions, and they are likely to make *safe* ones.

In Sweden, power distance and uncertainty avoidance are ___. Swedish senior managers tend to make ___ decisions and also...

In Sweden, power distance and uncertainty avoidance are *low*. Swedish senior managers tend *not to be afraid to make risky decisions* and also *push decisions down in the ranks.*

Individual and group decisions have their own set of strengths—neither is ideal for ___

Individual and group decisions have their own set of strengths—neither is ideal for *all situations.*

Managers make consistent, ___ choices within ___.

Managers make consistent, *value-maximizing* choices within *specified constraints.*

Managers spend a significant portion of their time in ___

Managers spend a significant portion of their time in *meetings.*

Intuition and managerial decision making is making decisions on the basis of (3) Intuition and managerial decision making has been described as ___

Intuition and managerial decision making is making decisions on the basis of (1) *experience,* (2) *feelings,*and (3) *accumulated judgment.* Intuition and managerial decision making has been described as *"unconscious reasoning."*

It is necessary to __ in Step 2 in order to give them their __ in the decision (Step 3).

It is necessary to *allocate weights to the items listed* in Step 2 in order to give them their *relative priority* in the decision (Step 3).

Lower-level managers essentially confront ___ and ___ problems. *Ie* Lower-level managers essentially confront ___ problems, while the problems confronting managers up the organizational hierarchy are more likely to become ___.

Lower-level managers essentially confront *familiar* and *repetitive* problems. *Ie* Lower-level managers essentially confront *well-structured* problems, while the problems confronting managers higher up the organizational hierarchy are more likely to become *ill structured.*

Making decisions is making ___.

Making decisions is making ___.

Bounded rationality

Management theory is built on the premise that individuals *act rationally.*

Managerial decision-making is assumed to be ___

Managerial decision-making is assumed to be *rational*

Managerial styles in Germany reflect the German culture's concern for ___ and ___, ___ and ___, and managers accept that ___

Managerial styles in Germany reflect the German culture's concern for *structure and order, extensive rules and regulations*, and managers accept that decisions *must go through channels.*

How do managers become aware that they have a discrepancy?

Managers compare their current state of affairs against an acceptable standard.

Managers who deal with employees from diverse cultures need to recognize what ___ and ___ is regarding decision making.

Managers who deal with employees from diverse cultures need to recognize what *common* and *accepted behavior* is regarding decision making.

Many decisions in organizations, especially important decisions that have far-reaching effects on ___ and ___, are typically made in groups. In many cases, these groups represent people who ___

Many decisions in organizations, especially important decisions that have *far-reaching effects* on *organizational* activities and personnel, are typically made in groups. In many cases, these groups represent people who *will be most affected by the decisions.*

Many situations are ill-structured problems though and are ___, or ___. Information about such problems is ___ or ___. Examples of ill-structured problems include (2)

Many situations are ill-structured problems though and are *new*, or *unusual*. Information about such problems is *ambiguous or incomplete*. Examples of ill-structured problems include (1) the decision to enter a new market segment, (2) to hire an architect to design a new office park, etc.

Most people have creative potential. 1) They have to get.. 2) They have to learn..

Most people have creative potential. 1) They have to *get out of the psychological rut.* 2) They have to *learn how to think about a problem in divergent ways.*

Once a problem is identified, for (Step 2) the

Once a problem is identified, for (Step 2) the *decision criteria must be identified.*

Once a problem is identified, the search for ___ and ___ begins. This list of criteria is generally ___ and made up of the ___

Once a problem is identified, the search for *criteria* and *alternatives* begins. This list of criteria is generally *limited* and made up of the *more conspicuous choices.*

Once this limited set of alternatives is identified, decision makers begin ___ them. This ___ will not be ___.

Once this limited set of alternatives is identified, decision makers begin *reviewing* them. The *review* will not be *exhaustive*.

Programmed decisions minimize the need for managers to ___ This benefit is important because ___

Programmed decisions minimize the need for managers to *exercise discretion.* This benefit is important because *discretion costs money.*

Programmed, or routine, decision making is the most efficient way to handle ___ When problems are ___, managers must rely on nonprogrammed decision making.

Programmed, or routine, decision making is the most efficient way to *handle well-structured problems.* When problems are *ill structured*, managers must rely on nonprogrammed decision making.

Quantity and diversity of information are greatest when group members represent ___

Quantity and diversity of information are greatest when group members represent *different specialties*.

Research shows that, to some extent, ___ differ by country.

Research shows that, to some extent, *decision-making practices* differ by country.

Simon found that decision makers focus on ____—those that are ____ This means developing alternatives that ____ from past decisions about similar problems.

Simon found that decision makers focus on *easy-to-find choices*—those that are *highly visible*. This means developing alternatives that *vary only slightly* from past decisions about similar problems.

Some problems are ___. The ___ of the decision maker is clear, the ___ familiar, and ___ about the problem easily defined and complete. Examples of well-structured problems include (2)

Some problems are *straightforward*. The *goal* of the decision maker is clear, the *problem* familiar, and *information* about the problem easily defined and complete. Examples of well-structured problems include (1) a supplier's tardiness with an important delivery, (2) a customer's wanting to return an Internet purchase, etc.

4-4 "Because managers have so many powerful decision-making tools, they should be able to make more rational decisions." Do you agree or disagree with this statement? Why?

Technology helps decision making, it doesn't make decisions. The human factor—hidden agendas, power relationships, office politics, etc., will still be present. The electronic meeting blends the nominal group technique with computer technology. Numerous people sit around a horseshoe-shaped table that is empty except for a series of computer terminals. Issues are presented to participants, who type their responses onto their computer screens. Individual comments, as well as aggregate votes, are displayed on a projection screen in the room. The major advantages of electronic meetings are anonymity, honesty, and speed. Participants can anonymously type any message they want, and it will flash on the screen for all to see at the push of a board key. It is fast—chitchat is eliminated, discussions do not digress, and many participants can "talk" at once without interrupting the others. But there are drawbacks. Those who can type quickly can outshine those who may be verbally eloquent but are lousy typists. Those with the best ideas don't get credit for them. The process lacks the informational richness of face-to-face oral communication

The chief advantage to using the nominal group technique is that it ___

The chief advantage to using the nominal group technique is that it *permits a formal meeting but does not restrict independent thinking.*

The decision-making process begins with (Step) 1: _____

The decision-making process begins with (Step 1): the *identification of a problem* (Problem being a discrepancy between an existing and a desired state of affairs.)

4-2 Describe the eight steps in the decision making process.

The decision-making process consists of eight steps: (1) identify problem; (2) identify decision criteria; (3) weight the criteria; (4) develop alternatives; (5) analyze alternatives; (6) select alternative; (7) implement alternative; and (8) evaluate decision effectiveness.

The effectiveness is also influenced by the ___ of the group.

The effectiveness is also influenced by the *size* of the group.

The essence of managerial jobs revolves around the ___. However, few people actually behave rationally.

The essence of managerial jobs revolves around the *rational decision-making process*. However, few people actually behave rationally.

*LEARNING OBJECTIVE* 2. Explain the three approaches managers can use to make decisions.

The first approach is the *rational model.* The assumptions of rationality are as follows: (1) The problem is clear and unambiguous, (2) a single, well-defined goal is to be achieved, (3) all alternatives and consequences are known and (4) the final choice will maximize his or her economic payoff. The second approach,*bounded rationality*, says that managers make rational decisions but are bounded (limited) by their ability to process information. In this approach, managers satisfice. Finally, *intuitive decision making* is making decisions on the basis of experience, feelings, and accumulated judgment.

The last step (Step 8) ....

The last step (Step 8) *appraises the result of the decision to see whether it has corrected the problem.* Did the alternative chosen in Step 6 and implemented in Step 7 accomplish the desired result?

The major advantages of electronic meetings are (3)

The major advantages of electronic meetings are (1) *anonymity*, (2) *honesty*, and (3) *speed*. Experts claim that electronic meetings are *significantly faster* and *much cheaper* than traditional face-to-face meetings.

The manager who by mistake solves the wrong problem perfectly, is likely to perform just as poorly as the manager who ___

The manager who by mistake solves the wrong problem perfectly, is likely to perform just as poorly as the manager who *fails to identify the right problem and does nothing*

The people who must carry out a decision are most likely to enthusiastically endorse the outcome if ___.

The people who must carry out a decision are most likely to enthusiastically endorse the outcome if *they participate in the decision-making process.*

There are strong ___ incentives for top management to create (1) ___, (2) ___, and (3) ___.

There are strong *economic incentives* for top management to create *(1) policies, (2) standard operating procedures*, and *(3) rules to guide other managers*.

4-5 Is there a difference between wrong decisions and bad decisions? Why do good managers sometimes make wrong decisions? Bad decisions? How might managers improve their decision-making skills?

There could be a difference. Good managers can sometimes make the wrong choices due to inadequate information, biases, a lack of education or experience, etc. Bad decisions can be based in haste, emotion and a host of other reasons. They could improve through the use of research, experience, a reduction in bias, asking others for support, etc.

They review alternatives only until an ___ is found. The first alternative to meet the ___ ends the search.

They review alternatives only until an *alternative that is sufficient* is found. The first alternative to meet the *"good enough" criterion* ends the search.

the electronic meeting

This approach—called the *electronic meeting*—blends the nominal group technique with computer technology.

Well-structured problems are responded to with ___ decision making Ill-structured problems require ___ decision making.

Well-structured problems are responded to with *programmed decision making.* Ill-structured problems require *nonprogrammed decision making.*

What are the implications of bounded rationality on the manager's job? In situations in which the assumptions of perfect rationality do not apply (including many of the most important and far-reaching decisions that a manager makes), the details of the decision-making process are strongly influenced by the decision maker's (4)

What are the implications of bounded rationality on the manager's job? In situations in which the assumptions of perfect rationality do not apply (including many of the most important and far-reaching decisions that a manager makes), *the details of the decision-making process are strongly influenced by the decision maker's (1) self-interest, (2) the organization's culture, (3) internal politics, and (4) power considerations.*

Whenever possible, management decisions are likely to be ___. Why?

Whenever possible, management decisions are likely to be *programmed.* because organizational efficiency is facilitated by the use of programmed decision making