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Decision Making Notes

The document discusses the managerial decision-making process and the role of information. It begins by outlining the information, technology, and analytical competencies required of managers. It then defines useful information and describes how analytics and information systems help extract and report data for decision-makers. The decision-making process involves 5 steps - defining the problem, generating alternatives, deciding on a course of action, implementing it, and evaluating results. Effective problem-solving requires both systematic and intuitive thinking styles. The document examines different types of problems, crisis decision-making, and issues like decision errors. It also discusses creative decision-making and the personal and situational drivers of creativity.

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Violet Evergarden
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18 views8 pages

Decision Making Notes

The document discusses the managerial decision-making process and the role of information. It begins by outlining the information, technology, and analytical competencies required of managers. It then defines useful information and describes how analytics and information systems help extract and report data for decision-makers. The decision-making process involves 5 steps - defining the problem, generating alternatives, deciding on a course of action, implementing it, and evaluating results. Effective problem-solving requires both systematic and intuitive thinking styles. The document examines different types of problems, crisis decision-making, and issues like decision errors. It also discusses creative decision-making and the personal and situational drivers of creativity.

Uploaded by

Violet Evergarden
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DECISION-MAKING PROCESS

 INFORMATION, TECHNOLOGY, & MANAGEMENT


 Managers must have
• Technological competency
o Ability to understand new technologies and to use them to their best advantage
• Information competency
o Ability to locate, gather, organize, and display information for decision making and problem solving
• Analytical competency
o Ability to evaluate and analyze information to make actual decisions and solve real problems

What is useful information?


• Data
o Raw facts and observations
• Information
o Data made useful and meaningful for decision making
• Information drives management functions

Characteristics of useful information:


• Timely
• High quality
• Complete
• Relevant
• Understandable

 Analytics: systematic gathering and processing of data to make it useful as information

 Information systems and business intelligence


• Management information systems
o Use IT to collect, organize, and distribute data for use in decision making
• Business intelligence
o Taps information systems to extract and report data in organized ways that are helpful to decision makers

EXECUTIVE DASHBOARDS
 Visually update and display key performance indicators and information on a real-time basis
INFORMATION NEEDS IN ORGANIZATIONS
 Information exchanges with the external environment:
• Gather intelligence information
• Provide public information
 Information exchanges within the organization:
• Facilitate decision making
• Facilitate problem solving

Figure 7.1 Internal and external information needs in organizations


Takeaway 1: Information, Technology, & Management

Figure 7.2
Implications of IT for relationships
Implications of IT within organizations:
with external environment:

 Helps with customer relationship  Facilitation of communication and


management information sharing
 Helps organizations with supply  Operating with fewer middle managers
chain management  Flattening of organizational structures
 Helps in monitoring outsourcing  Faster decision making
and other business contracts  Increased coordination and control

Information technology is breaking barriers and changing organizations


Figure 7.5 Steps in managerial decision making and problem solving

 THE DECISION MAKING PROCESS


Step 1 — Identify and define the problem
 Focuses on information gathering, information processing, and deliberation
 Decision objectives should be established
 Common mistakes in defining problems:
• Defining the problem too broadly or too narrowly
• Focusing on symptoms instead of causes
• Choosing the wrong problem

Step 2 — Generate and Evaluate Alternative Courses of Action


 Potential solutions are formulated and more information is gathered, data are analyzed, the advantages and
disadvantages of alternative solutions are identified
 Approaches for evaluating alternatives:
• Stakeholder analysis
• Cost-benefit analysis
 Criteria for evaluating alternatives:
• Benefits
• Costs
• Timeliness
• Acceptability
• Ethical soundness
 Common mistakes:
• Abandoning the search for alternatives too quickly

Step 3 — Decide on a Preferred Course of Action


 Two different approaches
• Behavioral model leads to satisficing decisions
• Classical model leads to optimizing decisions
Figure 7.6 Differences in the classical and behavioral decision-making models

Step 4 — Implement the Decision


 Involves taking action to make sure the solution decided upon becomes a reality
 Managers need to have willingness and ability to implement action plans
 Lack-of-participation error should be avoided

Step 5 — Evaluate Results


 Involves comparing actual and desired results
 Positive and negative consequences of chosen course of action should be examined
 If actual results fall short of desired results, the manager returns to earlier steps in the decision-making
process

At all steps, check ethical reasoning!


 Ask these spotlight questions

Information and Managerial Decisions


 Managers as Information Processors
• Continually gather, give, and receive information
• Now as much electronic as it is face to face
• Always on, always connected
Figure 7.3 The manager as an information-processing nerve center

Problem solving
 The process of identifying a discrepancy between actual and desired performance and taking action to resolve
it

Problem-solving approaches or styles:

Systematic versus intuitive thinking


Systematic thinking Intuitive thinking
• approaches problems in a rational,
• approaches problems in a flexible
step-bystep, and analytical
and spontaneous fashion
fashion
 Multidimensional thinking applies both intuitive and systematic thinking
• Effective multidimensional thinking requires skill at strategic opportunism  

 Managers use different cognitive styles

Types of problems
 Structured problems are ones that are familiar, straightforward, and clear with respect to information needs
 Programmed decisions apply solutions that are readily available from past experiences to solve structured
problems
 Unstructured problems are ones that are full of ambiguities and information deficiencies
 Nonprogrammed decisions apply a specific solution to meet the demands of a unique problem
 Commonly faced by higher-level management

Crisis decision making


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

 Managers make decisions with various amounts of information


Figure 7.4 Three environments for managerial decision making and problem solving

Issues in decision making


 How do decision errors happen?
 Heuristics are strategies for simplifying decision making 

Creative Decision making:


 Creativity is the generation of a novel idea or unique approach that solves a problem or crafts an opportunity
• Big-C creativity occurs when extraordinary things are done by exceptional people
• Little-C creativity occurs when average people come up with unique ways to deal with daily events
and situations

Personal creativity drivers

Situational creativity drivers

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