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Decisions

Decisions. 4 Conditions for a Decision. Gap between Reality and Ideal Noticeable Motivated to Reduce Can Be Reduced. Decisions: Are They???. Yours to make? Effective? Timely? Pertinent Did you decide not to decide?. Types of Decision Making.

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Decisions

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  1. Decisions

  2. 4 Conditions for a Decision • Gap between Reality and Ideal • Noticeable • Motivated to Reduce • Can Be Reduced

  3. Decisions: Are They??? • Yours to make? • Effective? • Timely? • Pertinent • Did you decide not to decide?

  4. Types of Decision Making Programmed Decisions:routine, almost automatic process. Non-programmed Decisions:unusual situations that have not been often addressed. Structured Decisions: Set way to solve Non- Structured Decisions

  5. The Classical Model List alternatives & consequences Assumes all information is available to manager Assumes manager can process information Assumes manager knows the best future course of the organization Figure 6.1 Rank each alternative from low to high Select best alternative

  6. The Administrative Model • Bounded rationality: There is a large number of alternatives and information is vast so that managers cannot consider it all. • Incomplete Information

  7. Incomplete Information Factors Incomplete information exists due to many issues: • Risk:managers know a given outcome can fail or succeed and probabilities can be assigned. • Uncertainty:probabilities cannot be given for outcomes and the future is unknown. • Ambiguous information:information whose meaning is not clear.

  8. Incomplete Information Factors • Time constraints and Information costs: Managers do not have the time or money to search for all alternatives. • Satisficing: Managers explore a limited number of options and choose an acceptable decision rather than the optimum decision. • Managers assume that the limited options they examine represent all options.

  9. Human Behavior • Regress toward Mean • Anchoring • Quantrophrenia Obsessed With Numbers • MIS vs OR • Political Considerations

  10. Decision Making Steps • Recognize the Need • Frame the Problem • Generate and Assess Alternatives • Choose Among Alternatives • Implement • Learn from Feedback

  11. Creating Senge’s Learning Organization Personal Master Mental Models: challenge employees to find new, better methods Team Learning Build a Shared Vision Systems Thinking: know that actions in one area of the firm impacts all others.

  12. Evaluating Alternatives • Is it legal? • Is it ethical? • Is it economically feasible? • Is it practical?

  13. Types of Cognitive Biases Prior Hypothesis Figure 6.6 Representativeness Cognitive Biases Illusion of Control Escalating Commitment

  14. Improved Group Decision Making • Devil’s Advocacy: one member of the group acts as the devil’s advocate and critiques the group • Dialectical inquiry: two different groups are assigned to the problem and each group evaluates the other group’s alternatives. • Promote diversity: by increasing the diversity in a group, a wider set of alternatives may be considered.

  15. Building Group Creativity • Brainstorming: managers meet face-to-face to generate and debate many alternatives. • Group members are not allowed to evaluate alternatives until all alternatives are listed. • Be creative and radical in stating alternatives. • When all are listed, then the pros and cons of each are discussed and a short list created. • Production blocking is a potential problem with brainstorming. • Members cannot absorb all information being presented during the session and can forget their own alternatives.

  16. Building Group Creativity • Nominal Group Technique: Provides a more structured way to generate alternatives in writing. • Avoids the production blocking problem. • Similar to brainstorming except that each member is given time to first write down all alternatives he or she would suggest. • Alternatives are then read aloud without discussion until all have been listed. • Then discussion occurs and alternatives are ranked.

  17. Building Group Creativity • Delphi Technique: provides for a written format without having all managers meet face-to-face. • Problem is distributed in written form to managers who then generate written alternatives. • Responses are received and summarized by top managers. • These results are sent back to participants for feedback, and ranking. • The process continues until consensus is reached. • Delphi allows distant managers to participate.

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