This document discusses decision making and different models of decision making. It describes programmed versus nonprogrammed decisions, certainty versus uncertainty, and three common models of decision making: the classical, administrative, and political models. The classical model assumes rationality and complete information, while the administrative and political models are more descriptive of real-world constraints. Managers may also have different personal decision-making styles such as directive, analytical, conceptual, or behavioral.

1. Decision Making
Chapter 6

2. Why Decision Taking?
Actual
Situation
Desired
State
( - )
Problem
( + )
Opportunity
Decision
A choice made from alternatives to solve a problem
or to seize an opportunity.

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Types of Decisions and Problems
Decision making is
the process of
identifying a
discrepancy and
taking action
A decision is a
choice made
from available
alternatives.

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Programmed and Nonprogrammed
Decisions
Programmed Decisions
– Recurring problems
– Apply rule
Nonprogrammed Decisions
– Unique situations
– Poorly defined
– Unstructured
– Important consequences

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Facing Certainty and Uncertainty
• Uncertainty occurs when information about
alternatives and future events is incomplete
• Certainty – situation in which all information
is fully available
• Risk – the future outcomes associated with
an alternative are subject to chance
• Ambiguity involves unclear alternatives and
managers have conflict about alternatives
Difference between programmed and nonprogrammed decisions

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Conditions that Affect the Possibility
of Decision Failure

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Three Decision-Making Models
 Classical Model
 Administrative Model
 Political Model

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Classical Model
Assumptions:
 Operates to accomplish goals that are known
and agreed upon
 Strives for condition of certainty – gathers
complete information
 Criteria for alternatives are known
 Decision maker is rational and uses logic
Normative - describes how a manager should and provides
guidelines for reaching an ideal decision
Rational economic assumptions drive decision

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(How Managers Actually Make Decisions)
• Descriptive approach, defined as more realistic
– How managers really make decisions
– Recognize human and environmental limitations
• Bounded rationality – people have limits or
boundaries
• Satisficing – decision makers choose the first
solution that satisfies minimal decision criteria
Administrative Model

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Administrative Model (contd.)
 Decision goals often are vague, conflicting and lack
consensus among managers
 Rational procedures are not always used
 Managers’ searches for alternatives are limited
 Managers settle for a satisficing rather than a
maximizing solution
Descriptive is how managers actually make decisions--not how they
should.
Intuition is when managers lean on past experiences.

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The Political Model
• Nonprogrammed decisions involving
managers with diverse interests
• Managers must engage in coalition building
– Informal alliance to support specific goal
• Without a coalition, powerful groups can
derail the decision-making process
• Political model resembles the real
environment

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Assumptions of Political Model
• Organizations are made of groups with diverse
interests, goals, and values
• Information is ambiguous and incomplete
• Managers do not have the time, resources, or
mental capacity to identify all dimensions of a
problem
• Managers debate goals and alternatives

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Characteristics of the Classical, Administrative,
and Political Decision-Making Models

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Six-Steps in the Managerial
Decision-Making Process

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Decision-Making Steps
• Recognition of Decision Requirement – identify
problem or opportunity
• Diagnosis – analyze underlying causal factors
• Develop Alternatives – define feasible alternatives
• Selection of Desired Alternative – alternative with
most desirable outcome
• Implementation of Chosen Alternative – use of
managerial and persuasive abilities to execute
• Evaluation and Feedback – gather information
about effectiveness

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Personal Decision Framework
Not all managers make decisions the
same.
 Directive style
 Analytical style
 Conceptual style
 Behavioral style

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Personal Decision Framework

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Directive Style
 People who prefer simple, clear-cut
solutions to problems
 Make decisions quickly
 May consider only one or two
alternatives
 Efficient and rational
 Prefer rules or procedures

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Analytical Style
 Complex solutions based on as much
data as they can gather
 Carefully consider alternatives
 Base decision on objective, rational
data
 Search for best possible decision
based on information available

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Conceptual Style
 More socially oriented
 Consider others about the problem
and possible solutions
 Consider many broad alternatives
and information
 Rely on information from people
and systems
 Solve problems creatively

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Behavioral Style
 Deep concern for others
 Talk to people one-on-one
 Understand individual feelings about the problem
and possible effects
 Concerned with the personal development of
others
 Decisions to help others achieve their goals