Lecture 4 decision making
Sponsored Links
This presentation is the property of its rightful owner.
1 / 70

Lecture 4 Decision Making PowerPoint PPT Presentation


  • 168 Views
  • Uploaded on
  • Presentation posted in: General

Lecture 4 Decision Making. The Essence of the Manager ’ s Job. Outline of the Lecture. The Decision-Making Process The Manager as Decision Maker. Learning Outcomes. The decision-making process ▲ Define decision and decision-making process.

Download Presentation

Lecture 4 Decision Making

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Lecture 4 Decision Making

The Essence of the Manager’s Job


Outline of the Lecture

  • The Decision-Making Process

  • The Manager as Decision Maker


Learning Outcomes

  • The decision-making process

    ▲Define decision and decision-making process.

    ▲ Describe the eight steps in the decision-making process.

  • The manager as decision maker

    ▲Discuss the assumptions of rational decision making

    ▲ Describe the concepts of bounded rationality, satisficing, and escalation of commitment


Learning outcomes

▲ Explain intuitive decision making

▲ Contrast programmed and nonprogrammed decisions

▲ Contrast the 3 decision-making conditions

▲ Explain maximax, maximin, and minimax decision choice approaches

▲ Discuss the 4 decision-making styles

▲ Explain the managerial decision-making model.


Which one do you choose?


The Decision-Making Process

  • Decision

    A choice from 2 or more alternatives

    Decision-making process

    A set of 8 steps that include identifying a problem, selecting alternative, and evaluating the decision’s effectiveness.


Significance of decision-making

*Each use it frequently ,even some are unconsciously

*Outcomes are different based on the different choices.

*Different level managers and operatives have their own decisions. Can you give an example?

★Decision-making is a process, not just a choice among Alternatives---《老子》第六十四章:“慎终如始,则无败事。”


瓦匠的故事

  • 三个泥瓦匠都在砌墙。有人问第一个泥瓦匠:你在做什么呀?第一个泥瓦匠一脸沮丧地回答:我在砌墙,枯燥的很!第二个泥瓦匠则喜滋滋地回答:我在造房子,这座房子造好了一定很漂亮!第三个泥瓦匠则信心十足地回答:我在搞城市建设,将来我们的这座城市不但漂亮,而且生活在这里的人也一定很幸福。

  • 二十年后,第一个瓦匠仍然在垒砖;第二个瓦匠成为当地第一建筑公司董事长,第三个瓦匠成为这个城市的市长。

  • 这个故事说明了一个什么问题呢?


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step1 Identifying a problem(界定问题)

  • What is problem?

  • A discrepancy between an existing state and a desired state of affairs.


Some Cautions about problem identification

  • A problem or a symptom of problem?

  • Did all discrepancies be considered ?

  • Is there any pressure on correcting it?

  • Are there any resources be assigned to solve the problem?

  • Is the problem subjective?


鸡贵有自知之明

我不叫太阳

就不会出来

鸡贵有自知之明


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step2 Identifying Decision Criteria

•decision criteria - what’s relevant in making a decision

★Costs that will be incurred (investments required)

★Risks likely to be encountered (chance of failure)

★Outcomes that are desired (growth of the firm): market share/time saving/customer satisfaction



全球幸福指数 GNH(Gross National Happiness国民幸福总值)

  • 是全球第一个将生态环境因素考虑进幸福程度的指数。

  • 该指数不衡量一国或地区有多少资源和财富,或享有多么高的社会福利或人均收入,而是看各国在生态资源利用上是否合理、有效,是否以较少的消耗实现了较大的价值。

  • “全球幸福指数”囊括三个方面的信息,包括“生态足迹”度量指标、生活满意程度和人均寿命。其中“生态足迹”度量指数是指在现有消费水平、技术发展和自然资源背景下,一定数目的人口需多少土地才能养活。用生活满意度乘以人均寿命,再除以“生态足迹”度量指标,就得出了“幸福指数”。

  • “全球幸福指数”旨在衡量一个国家或地区在尊重有限的自然资源的同时,为人民赢得了多少幸福。


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step 3 -Allocating Weights to the Criteria

Assigning a weight to each item, making them in the correct priority order in the decision making process.

Question: How do decision makers know what weight to assign to the decision criteria?


GDP、GNP 与GNH作为标准其权重如何确定?

  • GDP指标与“幸福指数”的辩证关系:“GDP是唯效率主义或独尊经济指数的发展取向;“幸福指数”关怀则体现了“以人为中心”发展理念的高级层面,标志着人本取向发展观的出现。

  • 经济增长只是手段,人的幸福才是目的。

  • 当经济发展到一定水平之后,健康的身体、稳定的工作、美满的婚姻、和谐的人际关系等,对于人的幸福程度的影响力不亚于收入的高低、财产的多少等经济因素。


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step 4 - Developing Alternatives

  • list the viable alternatives that could resolve the problem without evaluating them

  • As much as possible


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step 5 - Analyzing Alternatives

  • each alternative is evaluated against the criteria2 and 3.

  • Comparing the weaknesses and strengths of each alternatives


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step 6 - Selecting an Alternative

  • Comparing with the results and select the best one from those considered


抓周的宝宝—The first choice


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step 7 - Implementing the Alternative

  • implementation – try to get operatives’ commitment

    *operatives’participation in decision-making process

    ★Reassess the environment for any changes


8 Steps of Decision-Making Process

  • Identifying a problem(界定问题)

  • Identification of Decision Criteria(确定决策标准)

  • Allocation of Weights to Criteria(确定标准的权重)

  • Development of Alternatives(罗列待选项)

  • Analysis of Alternatives(分析选项)

  • Selection of an Alternative(选择)

  • Implementation of the Alternative(实施所选)

  • Evaluation of Decision Effectiveness(决策效果评估)


Step 8 - Evaluating Decision Effectiveness

  • The soundness of the decision is judged by its outcomes.

    • How effectively was the problem resolved by outcomes resulting from the chosen alternatives?

    • If the problem was not resolved, what went wrong?

  • After evaluation, the whole decision process will start over.

    Question:What if the problem isn’t solved by my decision? Did I make a bad decision?


Practice

三个和尚没水吃

请分别从小和尚、高和尚、和胖和尚的角度进行“不去挑水”的决策过程分析。


Exhibit 6–5Decisions in the Management Functions


The Manager as Decision Maker

How decisions are made: rationality, bounded rationality, and intuition

  • The types of problems and decisions managers face

  • Decision-making conditions

  • Decision-making styles


Assumption of Rationality

  • Rationality

    • Managers make consistent, value-maximizing choices with specified constraints.

    • Assumptions are that decision makers:

      • Are perfectly rational, fully objective, and logical.

      • Have carefully defined the problem and identified all viable alternatives.

      • Have a clear and specific goal

      • Will select the alternative that maximizes outcomes in the organization’s interests rather than in their personal interests.


Exhibit 6–6Assumptions of Rationality


Making Decisions (cont’d)

  • Bounded Rationality

    • Managers make decisions rationally, but are limited (bounded) by their ability to process information.

    • Assumptions are that decision makers:

      • Will not seek out or have knowledge of all alternatives

      • Will satisfice—choose the first alternative encountered that satisfactorily solves the problem—rather than maximize the outcome of their decision by considering all alternatives and choosing the best.


Influence on decision making

  • In accordance with reality in decision-making.

  • Escalation of commitment(承诺升级):an increased commitment to a previous decision despite evidence that it may have been wrong.


完全理性决策与有限理性决策


Question

  • Satisficing seems like settling for second best(退而求其次). Is that true?

  • How to avoid the escalation of commitment?


Role of Intuition

- making decisions on the basis of experience and accumulated judgment

  • does not rely on a systematic or thorough analysis of the problem

  • generally complements a rational analysis


Exhibit 6–7What is Intuition?


Credit Card and Rush Shopping


Types of Problems and Decisions(自学)

  • -Structured Problems

    Straight forward, familiar, and easily defined problems

  • -the goal of the decision maker is clear

  • -the problem is familiar

  • -and information about the problem is easily defined and complete


Programmed Decisions

  • –A repetitive decision that can be handled by a routine approach.

  • -used to address structured problems

  • -a repetitive decision

    Question: give us an example.


Three Possible Programmed Decisions

•procedure(程序) – a series of interrelated sequential steps used to respond to a structured problem

•rule (规定)- An explicit statement of what to do or not to do

•policy(政策) -A guidelines or parameters(范围) for decision making

-A guide that establishes parameters for making decisions

Question: Policies seem kind of wishy-washy(特征模糊). What purpose do they serve?


Unstructured problems and nonprogrammed decisions

-UnStructured Problems (非结构性问题)- new, unusual problems for which information is ambiguous or incomplete

–Nonprogrammed Decisions (非程序性决策)–a unique decision that requires a custom-made response

-used to address unstructured problems

•produce a custom-made response

•more frequent among higher-level managers


Programmed versus Nonprogrammed Decisions


Exhibit 6–8Programmed versus Nonprogrammed Decisions


Integration (自学)

  • at the higher levels of the organization, managers are dealing with poorly structured problems and using non-programmed decisions

  • at lower levels, managers are dealing with well-structured problems by using programmed decisions

  • Keep in mind - few decisions in the real world are either fully programmed or non-programmed


Decision-Making Conditions

–Certainty: A situation in which a manager can make accurate decisions because all outcomes are known.

•idealistic rather than realistic

–Risk :A situation in which the decision maker is able to estimate the likelihood of certain outcomes

•expected value - the conditional return from each possible outcome

–multiply expected revenue from each outcome by the probability of each outcome

expected value = expected revenues × probability

Ei = ΣERij ㄨ Pij


Uncertainty

–Uncertainty - a situation in which the decision maker has neither certainty nor reasonable probability estimates available

•the limited amount of information available to the decision maker

•psychological orientation of decision maker

  • –maximax choice(大中取大) - optimistic

  • –maximin choice (小中取大)- pessimistic

  • –minimax (最小最大后悔值)- minimize the maximum “regret”


Exhibit 6–10Payoff Matrix


Exhibit 6–11Regret Matrix


Steps of Uncertainty Decision Making - minimax

  • 1. To select the maximum payoffs from different conditions.

  • 2. To get the regret

  • 3.In contrast to the regret and get the maximum ones.

  • 4. Compare them and choose the minimum one as the result.


3.Lateral Compare to select the maximum regret figure

  • S1:17

  • S2:15

  • S3:13

  • S4:7

    4.Then choose the minimum one as the result---S4=7


Decision Making Styles(自学)

–two dimensions define the approach to decision making

•way of thinking - differs from rational to intuitive

Rational: Look at information in order and make sure it is logical

Intuitive: Need not to process information in a certain order but look at it as a whole.

•tolerance for ambiguity - differs from low to high

Low tolerance: Try to get structured information to minimize the ambiguity

High tolerance: Tolerate for ambiguity and process many thoughts

–define four decision-making styles


Exhibit 6–12Decision-Making Matrix


Decision-making Styles

•Directive – characterized by low tolerance for

ambiguity and a rational way of thinking

-fast, efficient, logical, focus on short run.

-making decisions with minimal information and assessing few alternatives.

•Analytic – characterized by a high tolerance for

ambiguity and a rational way of thinking

-careful and able to adapt or cope with new situations

-want more information and consider more alternatives


Decision-Making Styles

•Conceptual –characterized by a high tolerance for ambiguity and an intuitive way of thinking

-broad outlook, look at many alternatives

-focus on long run and good at finding creative decisions.

•Behavioral – characterized by a low tolerance for ambiguity and an intuitive way of thinking

-seek acceptance of decisions from others

-most managers realistically probably have a

Dominant(统治的) style and alternate(交替变化的) styles


Question

  • Did you ask others for their opinions on important decisions (such as deciding a major or make a big purchase )? Did you seek out advice from a variety of people?

  • “三个臭皮匠,赛过一个诸葛亮”对否?为何?


Exhibit 6–13 Common Decision-Making Errors and Biases


Decision-Making Biases(偏见) and Errors

  • Heuristics (启发方法)

    • Using “rules of thumb”(经验法则)to simplify decision making.

  • Overconfidence Bias(自负)

    • Holding unrealistically positive views of one’s self and one’s performance.

  • Immediate Gratification (sth that gives pleasure)Bias(即刻回报)

    • Choosing alternatives that offer immediate rewards and that to avoid immediate costs.


Decision-Making Biases and Errors (cont’d)

  • Anchoring (锚定)Effect(第一印象)

    • Fixating on initial information and ignoring subsequent information.

  • Selective Perception Bias(选择性感知)

    • Selecting organizing and interpreting events based on the decision maker’s biased perceptions.

  • Confirmation Bias(寻求认同)

    • Seeking out information that reaffirms past choices and discounting(低估) contradictory(矛盾的) information.


Decision-Making Biases and Errors (cont’d)

  • Framing Bias(框架效应)

    • Selecting and highlighting(emphasize) certain aspects of a situation while ignoring other aspects.

  • Availability Bias(可获性)

    • Losing decision-making objectivity by focusing on the most recent events.

  • Representation Bias(典型性)

    • Drawing analogies and seeing identical situations when none exist.

  • Randomness Bias(随机性)

    • Creating unfounded (not based on reason or fact,无端的,无来由的)meaning out of random events.


Decision-Making Biases and Errors (cont’d)

  • Sunk Costs Errors(沉没成本)

    • Forgetting that current actions cannot influence past events and relate only to future consequences.

  • Self-Serving Bias(自利性)

    • Taking quick credit for successes and blaming outside factors for failures.(成事在己,败事在人)

  • Hindsight Bias(事后诸葛亮)

    • Mistakenly believing that an event could have been predicted once the actual outcome is known (after-the-fact).


Exhibit 6–14 Overview of Managerial Decision Making


Team Work

  • Did you make a wrong decision? If so, did you learn something from it? Would you like share some with us?

  • Read the materials and comment on increasing luxury expenditure in our society.


  • Login