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Decision Making

decision

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69 views10 pages

Decision Making

decision

Uploaded by

adsfdgfhgjhk
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Decision- Making

Decision Making
Decision Making: Identifying and selecting a course of action to solve specific problems/ take advantage of opportunities.
Exploiting opportunities leads to progress and problem solving leads to normality. Elements of Decision making:
Time Human Relations

Process of Decision Making


Recognize the need for a decision

Generate alternatives
Assess alternatives Choose among the alternatives Implement the chosen alternative Learn from feedback

Nature of Managerial Decisions


Programmed & Non-Programmed Decisions
Programmed Decisions: made in accordance with policies/procedures and rules of the org, for recurring problems. Non-Programmed: Deal with unusual/exceptional probs.

Decisions
Certainty- objectives are known, Risk- cant predict the outcome of an alternative but give probability

Certainty, Risk and Uncertainty

Uncertainty- not enough info about the alternatives and their outcomes

The Rational/Classical Model


4 step model Used in making non-programmed decisions Weigh the alternatives, calculate optimal levels of risk and chose the one with the best chance to win. Assumption: There is an obvious solution already existing

Rational Model of Decision Making


1. Investigate the Situation
Define Problem Diagnose causes Identify decision objectives

2. Develop Alternatives
Is the alternative feasible? Is the alternative a satisfactory solution? What are the possible consequence for the

4. Implement and monitor


Plan Implementation Implement Plan Monitor implementation and make necessary adjustments

3. Evaluate alternatives and select the best alternative

Rational Model of Decision Making


Assumptions:
Problem clarity.
Known options. Clear and constant preferences. No constraint of cost and time. Maximum payoffs.

The Administrative/Bounded Rational Model


Bounded Rationality:
Managers make the most logical decisions they can within the constraints of limited info and ability.

Satisfice:
Accept the first satisfactory decision the manager uncovers. Effective manager learns to satisfice with a clear sense of goals for the org.

Cognitive Biases
Heuristic Principle (rules of thumb):
Managers proceed along the empirical lines/thumb rules to find solutions or answers.

Heuristics can lead to systematic errors and cognitive biases. Sources of biases:
Prior hypothesis: tendency to base decisions on strong prior beliefs Representativeness: tendency to generalize inaptly from small sample or single event occurrence Illusion of control : tendency to overestimate ones own ability to control activities and events. Escalating commitment: tendency to commit additional resources to a project

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