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CHAPTER 9 Managing Decision Making and Problem Solving Copyright  © by Houghton Mifflin Company. All rights reserved. Powe...
Learning Objectives <ul><li>After studying this chapter, you should be able to: </li></ul><ul><ul><li>Define decision maki...
Chapter Outline <ul><li>The Nature of Decision Making </li></ul><ul><ul><li>Decision Making Defined </li></ul></ul><ul><ul...
The Nature of Decision Making <ul><li>Decision Making </li></ul><ul><ul><li>The act of choosing one alternative from among...
Types of Decisions <ul><li>Programmed Decisions </li></ul><ul><ul><li>A decision that is a fairly structured decision or r...
Decision-Making Conditions <ul><li>Decision Making Under Certainty </li></ul><ul><ul><li>A condition in which the decision...
Decision-Making Conditions (cont’d) Figure  9.1 Level of ambiguity and chances of making a bad decision Lower Higher Moder...
Rational Perspectives on Decision Making <ul><li>The Classical Model of Decision Making </li></ul>Figure  9.2 When faced w...
Steps in the Rational  Decision-Making Process Table  9.1a
Steps in the Rational  Decision-Making Process (cont’d) Table  9.1b
Evaluating Alternatives in the Decision-Making Process Figure  9.3 Is the alternative feasible? Eliminate from considerati...
Behavioral Aspects of Decision Making <ul><li>The Administrative Model of Decision Making </li></ul>Figure  9.4 When faced...
Behavioral Aspects of Decision Making (cont’d) <ul><li>Bounded Rationality </li></ul><ul><ul><li>The concept that decision...
Behavioral Aspects of Decision Making (cont’d) <ul><li>Intuition </li></ul><ul><ul><li>An innate belief about something wi...
Behavioral Aspects of Decision Making (cont’d) <ul><li>Ethics and Decision Making </li></ul><ul><ul><li>Individual ethics ...
Group and Team Decision Making in Organizations <ul><li>Forms of Group Decision Making </li></ul><ul><ul><li>Interacting g...
Advantages and Disadvantages of Group and Team Decision Making Table  9.2
Managing Group and Team  Decision-Making Processes <ul><li>Managers Can Promote the Effectiveness of Group and Team Decisi...
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Griffin Chap09 Types Of Decision Making

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Transcript of "Griffin Chap09 Types Of Decision Making"

  1. 1. CHAPTER 9 Managing Decision Making and Problem Solving Copyright © by Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie Cook
  2. 2. Learning Objectives <ul><li>After studying this chapter, you should be able to: </li></ul><ul><ul><li>Define decision making and discuss types of decisions and decision-making conditions. </li></ul></ul><ul><ul><li>Discuss rational perspectives on decision making, including the steps in decision making. </li></ul></ul><ul><ul><li>Describe the behavioral nature of decision making. </li></ul></ul><ul><ul><li>Discuss group and team decision making, including its advantages and disadvantages, and how it can be managed more effectively. </li></ul></ul>
  3. 3. Chapter Outline <ul><li>The Nature of Decision Making </li></ul><ul><ul><li>Decision Making Defined </li></ul></ul><ul><ul><li>Types of Decisions </li></ul></ul><ul><ul><li>Decision-Making Conditions </li></ul></ul><ul><li>Rational Perspectives on Decision Making </li></ul><ul><ul><li>The Classical Model of Decision Making </li></ul></ul><ul><ul><li>Steps in Rational Decision Making </li></ul></ul><ul><li>Behavioral Aspects of Decision Making </li></ul><ul><ul><li>The Administrative Model </li></ul></ul><ul><ul><li>Political Forces in Decision Making </li></ul></ul><ul><li>Behavioral Aspects of Decision Making (cont’d) </li></ul><ul><ul><li>Intuition and Escalation of Commitment </li></ul></ul><ul><ul><li>Risk Propensity and Decision Making </li></ul></ul><ul><ul><li>Ethics and Decision Making </li></ul></ul><ul><li>Group and Team Decision Making in Organizations </li></ul><ul><ul><li>Forms of Group and Team Decision Making </li></ul></ul><ul><ul><li>Advantages of Group and Team Decision Making </li></ul></ul><ul><ul><li>Disadvantages of Group and Team Decision Making </li></ul></ul><ul><ul><li>Managing Group and Team Decision-Making Processes </li></ul></ul>
  4. 4. The Nature of Decision Making <ul><li>Decision Making </li></ul><ul><ul><li>The act of choosing one alternative from among a set of alternatives. </li></ul></ul><ul><li>Decision-Making Process </li></ul><ul><ul><li>The process of recognizing and defining the nature of a decision situation, identifying alternatives, choosing the “best” alternative, and putting it into practice. </li></ul></ul><ul><ul><li>An effective decision is one that optimizes some set of factors such as profits, sales, employee welfare, and market share. </li></ul></ul><ul><ul><li>Managers make decisions about both problems and opportunities. </li></ul></ul>
  5. 5. Types of Decisions <ul><li>Programmed Decisions </li></ul><ul><ul><li>A decision that is a fairly structured decision or recurs with some frequency or both. </li></ul></ul><ul><ul><ul><li>Example: Starting your car in the morning. </li></ul></ul></ul><ul><li>Nonprogrammed decisions </li></ul><ul><ul><li>A decision that is relatively unstructured and occurs much less often a programmed decision. </li></ul></ul><ul><ul><ul><li>Example: Choosing a vacation destination. </li></ul></ul></ul>
  6. 6. Decision-Making Conditions <ul><li>Decision Making Under Certainty </li></ul><ul><ul><li>A condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative. </li></ul></ul><ul><li>Decision Making Under Risk </li></ul><ul><ul><li>A condition in which the availability of each alternative and its potential payoffs and costs are all associated with risks. </li></ul></ul><ul><li>Decision Making Under Uncertainty </li></ul><ul><ul><li>A condition in which the decision maker does not know all the alternatives, the risks associated with each, or the consequences of each alternative. </li></ul></ul>
  7. 7. Decision-Making Conditions (cont’d) Figure 9.1 Level of ambiguity and chances of making a bad decision Lower Higher Moderate Certainty Uncertainty Risk The decision maker faces conditions of...
  8. 8. Rational Perspectives on Decision Making <ul><li>The Classical Model of Decision Making </li></ul>Figure 9.2 When faced with a decision situation, managers should . . . . . . and end up with a decision that best serves the interests of the organization. • obtain complete and perfect information • eliminate uncertainty • evaluate everything rationally and logically
  9. 9. Steps in the Rational Decision-Making Process Table 9.1a
  10. 10. Steps in the Rational Decision-Making Process (cont’d) Table 9.1b
  11. 11. Evaluating Alternatives in the Decision-Making Process Figure 9.3 Is the alternative feasible? Eliminate from consideration Is the alternative satisfactory? Are the alternative’s consequences affordable? Retain for further consideration Yes Yes Yes Eliminate from consideration Eliminate from consideration No No No
  12. 12. Behavioral Aspects of Decision Making <ul><li>The Administrative Model of Decision Making </li></ul>Figure 9.4 When faced with a decision situation managers actually… . . . and end up with a decision that may or may not serve the interests of the organization. • use incomplete and imperfect information • are constrained by bounded rationality • tend to satisfice
  13. 13. Behavioral Aspects of Decision Making (cont’d) <ul><li>Bounded Rationality </li></ul><ul><ul><li>The concept that decision makers are limited by their values and unconscious reflexes, skills, and habits. </li></ul></ul><ul><li>Satisficing </li></ul><ul><ul><li>The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency to resolve the problem. </li></ul></ul><ul><li>Coalition </li></ul><ul><ul><li>A political force in decision making which consists of an informal alliance of individuals or groups formed to achieve a goal. </li></ul></ul>
  14. 14. Behavioral Aspects of Decision Making (cont’d) <ul><li>Intuition </li></ul><ul><ul><li>An innate belief about something without conscious consideration. </li></ul></ul><ul><li>Escalation of Commitment </li></ul><ul><ul><li>A decision maker is staying with a decision even when it appears to be wrong. </li></ul></ul><ul><li>Risk Propensity </li></ul><ul><ul><li>The extent to which a decision maker is willing to gamble when making a decision. </li></ul></ul>
  15. 15. Behavioral Aspects of Decision Making (cont’d) <ul><li>Ethics and Decision Making </li></ul><ul><ul><li>Individual ethics (personal beliefs about right and wrong behavior) combine with the organization’s ethics to create managerial ethics. </li></ul></ul><ul><ul><li>Components of managerial ethics: </li></ul></ul><ul><ul><ul><li>Relationships of the firm to employees </li></ul></ul></ul><ul><ul><ul><li>Employees to the firm </li></ul></ul></ul><ul><ul><ul><li>The firm to other economic agents </li></ul></ul></ul>
  16. 16. Group and Team Decision Making in Organizations <ul><li>Forms of Group Decision Making </li></ul><ul><ul><li>Interacting groups or teams </li></ul></ul><ul><ul><ul><li>are the most common form of decision-making groups which consists of an existing group or newly formed team interacting and then making a decision. </li></ul></ul></ul><ul><ul><li>Delphi groups </li></ul></ul><ul><ul><ul><li>are sometimes used for developing a consensus of expert opinion from a panel of experts who individually contribute through a moderator. </li></ul></ul></ul><ul><ul><li>Nominal groups </li></ul></ul><ul><ul><ul><li>are a structured technique designed to generate creative and innovative ideas through the individual contributions of alternatives that are winnowed down through a series of rank-ordering of the alternatives to reach a decision. </li></ul></ul></ul>
  17. 17. Advantages and Disadvantages of Group and Team Decision Making Table 9.2
  18. 18. Managing Group and Team Decision-Making Processes <ul><li>Managers Can Promote the Effectiveness of Group and Team Decision Making </li></ul><ul><ul><li>Being aware of the pros and cons of having a group or team make a decision. </li></ul></ul><ul><ul><li>Setting deadlines for when decisions must be made. </li></ul></ul><ul><ul><li>Avoid problems with dominance by managing group membership. </li></ul></ul><ul><ul><li>Have each group member individually critically evaluate all alternatives. </li></ul></ul><ul><ul><li>As a manager, do not make your position known too early. </li></ul></ul><ul><ul><li>Appoint a group member to be a “devil’s advocate.” </li></ul></ul><ul><ul><li>Hold a follow-up meeting to recheck the decision. </li></ul></ul>
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