Chapter 2- Making Decisions
Structured Problems
straightforward, familiar, and easily defined problems.
Programmed decision
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).
satisficing, escalation of commitment, intuitive decision making, evidence
4 ways managers make decisions
Decision
criteria are factors that are important (relevant) to resolving the problem.
Bounded Rationality
decision-making that's rational, but limited (bounded) by an individual's ability to process information.
Rational Decision Making-
describes choices that are logical and consistent while maximizing value.
Decision
making a choice from two or more alternatives.
Unstructured Problems
problems that are new or unusual and for which information is ambiguous or incomplete.
Intuitive decision making
Making decisions on the basis of experience, feelings, and accumulated judgment.
Identify the problem (opportunity) Identify the decision criteria Allocating weights to the criteria Developing the alternatives Analyzing the alternatives Selecting the alternative Implementing the alternative Evaluating the decision effectiveness
8 steps in decision making process
the decision maker's expertise and judgment, external evidence that's been evaluated by the decision maker, opinions, preferences, and values of those who have a stake in the decision, relevant organizational (internal) factors
The 4 essential elements of EBMgt
Assumptions of rationality
The problem is clear and unambiguous, A single well-defined goal is to be achieved, All alternatives and consequences are known, The final choice will maximize the payoff
Policy
a guideline for making decisions.
Nonlinear Thinking Style
a person's preference for internal sources of information; a method of processing this information with internal insights, feelings, and hunches.
Linear Thinking Style
a person's tendency to use external data/facts; the habit of processing information through rational, logical thinking.
Procedure
a series of sequential steps used to respond to a well-structured problem.
Certainty
a situation in which a manager can make accurate decisions because all outcomes are known.
Uncertainty
a situation in which a manager is not certain about the outcomes and can't even make reasonable probability estimates.
Risk
a situation in which the decision maker is able to estimate the likelihood of certain outcomes.
Satisfice
accepting solutions that are "good enough."
Rule
an explicit statement that tells managers what can or cannot be done.
Escalation of commitment
an increased commitment to a previous decision despite evidence it may have been wrong.
Problem
an obstacle that makes it difficult to achieve a desired goal or purpose. Every decision starts with one.
Design thinking
approaching management problems as designers approach design problems.
Nonprogrammed 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.
Evidence based management(EBMgt)
the systematic use of the best available evidence to improve management practice.
