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Decision Making Processes

Business 5301. Today's Business Environment. New strategiesReengineeringRestructuringMergers/AcquisitionsDownsizingNew product/market development. . . Etc.. Business 5301. Decisions Made Inside the Organization. Complex, emotionally charged issuesMore rapid decisionsLess certain environm

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Decision Making Processes

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    1. Decision Making Processes Definition Individual Decision Making Organisation Decision Making The Learning Organisation Contingency Decision-Making Framework Special decision circumstance

    2. Business 5301 Today’s Business Environment New strategies Reengineering Restructuring Mergers/Acquisitions Downsizing New product/market development . . . Etc.

    3. Business 5301 Decisions Made Inside the Organization Complex, emotionally charged issues More rapid decisions Less certain environment Less clarity about means/outcomes Requires more cooperation

    4. Business 5301 A New Decision-Making Process Required because no one person has enough info to make all major decisions No one person has enough time and credibility to convince many Relies less on hard data Guided by powerful coalition Permits trial and error approach

    5. Business 5301 Definition Organisational Decision Making – process of identifying and solving problems Two major stages: Problem identification Problem solution (also includes alternative forms of action) Two types of decision Programmed Non-programmed

    6. Business 5301 Definition Non-programmed decisions usually involve strategic planning Today’s managers and organisations are dealing with a higher percentage of non-programmed decisions because of rapidly changing business environment See Exhibit 12.1

    7. Business 5301 Steps in the Rational Approach to Decision-Making

    8. Business 5301 Individual Decision Making Two ways of describing: Rational – which suggests how managers should try to make decisions Bounded rationality perspective – which describes how decisions actually have to be made under severe time and resource constraints Rational decision making approach is an ideal that is very difficult to reach

    9. Business 5301 Rational Approach Need for systematic analysis of a problem followed by choice and implementation in a logical, step-by-step sequence Not ideal or fully achievable – but the rational model helps managers think about decisions more clearly and rationally Steps are Monitor the decision environment Define the decision problem Specify decision objectives Diagnose the problem

    10. Business 5301 Rational Approach 5. Develop alternative solutions 6. Evaluate alternatives 7. Choose the best alternative 8. Implement the chosen alternative

    11. Business 5301 Bounded rationality perspectives Try and use systematic procedures to arrive at good decisions Very difficult to evaluate all the factors There is a limit to how rational managers can be Many other constraints impinge on the decision maker (see Exhibit 12.3) Corporate culture and ethical values also influence decision making – personal constraints also involved Need for intuitive decision making Previous experience and judgement

    12. Business 5301 Constraints and Trade-offs During Non-programmed Decision-Making

    13. Business 5301 Choice Processes in the Carnegie Model

    14. Business 5301 The Incremental Decision Process Model Identification Phase Recognition Diagnosis Development Phase Search Screen Design Selection Phase Judgment (evaluation – choice) Analysis (evaluation) Bargaining (evaluation – choice) Authorization Dynamic Factors

    15. Business 5301 Learning Organization Decision Process When Problem Identification and Problem Solution Are Uncertain

    16. Business 5301 Illustration of Independent Streams of Events in the Garbage Can Model of Decision-Making

    17. Business 5301 Contingency Framework for Using Decision Models

    18. Business 5301 Special Decision Circumstances High-Velocity Environments Decision Mistakes and Learning Escalating Commitment

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