GMS 200 Chapter 2

Crisis decision making

A crisis involves an unexpected problem that can lead to disaster if not resolved quickly and appropriately.

Criteria for evaluating alternatives

Benefits, costs, timeliness, acceptability, ethical soundness

Decision Making Process step 1

Identify the Problem

Characteristics of Useful Information

Timely, high quality, complete, relevant, understandable

Basic information system concepts: Information Systems

Use of latest IT to collect, organize, and distribute data for decision making

Multidimensional thinkers

applies both systematic and intuitive thinking

Programmed decision

apply solutions that are readily available from past experiences to solve structured problems

Intuitive thinkers

are comfortable with abstraction and tend to be idealistic

Structured Problems

are ones that are familiar, straightforward, and clear with respect to information needs.

Recognize limits to human information processing capabilities

cognitive thinking, bounded rationally, results in a satisfying decision

Public information

disseminated to stakeholders and external environment

Decision Making Process step 4

implement decision solutions by: involves taking action to make sure the solution decided upon becomes a reality, managers need to have willingness and ability to implement the solution, lack-of-participation error should be avoided

Organizations need information

information exchanges with external environment, gather intelligence information, and provide public information

Ethical decision making

leads to better decisions and prevention of costly litigation

Certain Environment

offers complete information about possible action alternatives and their outcomes

anchoring and adjustment heuristic

people make decisions based on adjusted to a perviously existing value of starting point

Availability heuristic

people use information readily available from memory as a basis of assuring a current event or situation

intuitive feelers

prefer broad and global issues and are comfortable with intangibles

Group decision making: disadvantages

pressure to conform, decision making takes longer

Group decision making works best when

problem is unclear, time is sufficient

Effective multidimensional thinking

requires skill at strategic opportunism

Systematic vs. intuitive thinking

*Systematic thinkers* approach problems in a rational, step by step method. *intuitive thinkers* approach problems in a flexible and spontaneous fashion.

Issues in managerial decision making

Availability heuristic, representativeness heuristic, anchoring and adjustment heuristic

Decision environment

Certain environments, risk environment, uncertain enviornment

Creative decision making

Creativity is the generation of novel idea and concepts

What is useful information?

Data (raw facts and observations), Information (raw data useful for decision making), Information drives management functions

Decision Making Process step 5

Evaluate results: Involves comparing results and desired results, positive and negative consequences of chosen course of action should be examined, and if actual results fall short of desired results, managers returns to earlier steps in decision making process.

Information exchanges within an organizaiton

Facilitate decision making, and facilitate problem solving

Implications of IT within organizations

Facilitation of communication and information sharing, operating with few middle managers, flattening the organizational structure, faster decision making, increased coordination and control

Rules for crisis management

Figure out what is going on, remember that speed matters, remember the slow counts, respect the danger of the unfamiliar, value the skeptic, "fight the fire"

Group decision making:Advantages

Greater availability of information, commitment and understanding

uncertain environment

Information is so poor that possibilities cannot be assigned to likely outcomes of known action alternatives

Risk environment

Lack of complete information about action alternatives and their consequences, but offer some estimates of probabilities of outcomes for possible action alternatives

behavioral decision model

Managers act in terms of what they perceive about a given situation

Classical decision model

Managers act rationally in a certain world, managers face clearly defined problems have complete knowledge of all possible alternatives and their consequences, results in an optimizing decision

representativeness heuristic

People assess the likelihood of something happening based upon its similarity to a stereotyped set of occurrences

Information and Managerial Decisions

Performance deficiency, Performance opportunity, problem solving, a decision

Managerial advantages of IT utilization

Planning Advantages, Organization advantages, leading advantages, controlling advantages,

Problem solving approach styles

Problem avoiders, problem solvers, problem seekers,

Common mistakes

Selecting particular solutions too quickly, choosing a convenient alternative that may have been damaging side effects or may not be as good as other alternatives

Cognitive Styles

Sensational thinkers/feelers and intuitive thinkers/feelers

*Information and Knowledge (Basic linkages)* : Intellectual Capital

Shared knowledge of a workforce that can be used to create wealth

*Information and Knowledge (Basic linkages)* : Knowledge Workers

Someone who value to the organization rests with intellect, no physical capabilities

Management Information System (MIS)

Specifically designed to meet the information needs of managers in daily decision making

Approaches to evaluating alternatives

Stakeholder Analysis, and cost benefit analysis

Unstructured problems

are the ones that are full of ambiguities and information deficiencies; commonly faced by high level management

Decision Making Process step 3

decide on a preferred course of action

Common mistakes in identifying problems

defining the problem too broadly or too narrow, focus on symptoms instead of causes, choosing the wrong problem

Non-programmed decisions

develop novel solutions to meet the demands of unique situations that present unstructured problems

Sensational feelers

empathize analysis and human relations and tend to be realistic and prefer facts

Sensational thinkers

empathize the impersonal rather than the personal and take a realistic approach to problem solving

Internal information

flows up, down, around, and across organizations

Intelligence Information

gathered from stakeholders and the external environment

Decision Making Process step 2

generate and evaluate possible solutions (potential solutions are generated and more information is gathered, data are analyzed, the advantages and disadvantages of alternative solutions are identified