DECISION MAKING MODELS.pptx
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This document discusses several models of organizational decision making. It describes programmed and non-programmed decisions, with programmed decisions following established rules and non-programmed decisions made in response to new opportunities and threats. It also discusses rational, bounded rationality, and garbage can models of decision making, highlighting limitations of fully rational models and how intuition and constraints impact real-world decisions. Different models make tradeoffs between optimization and practical constraints.
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DECISION MAKING MODELS.pptx
- 2. Organizational decision making: the processof respondingto aproblemby searchingforandselectingasolutionor courseof actionthat will createvaluefor organizational stakeholders Types: Programmed Decision Non-Programmed Decision
- 3. Decision Making - Types Programmed Decision – Routine, virtually automaticdecisionmakingthat follows establishedrulesor guidelines. Non-Programmed Decision – Nonroutine decisionmadein responseto unusualor novelopportunitiesand threats. – Thearenorulesto follow sincethe decisionis new.
- 4. Individual Decision Making Rational approach – ideal method for how managers should make decisions Bounded rationality perspective – how decisions are made under severe time and resource constraints
- 5. Steps in the Rational Approach
- 6. Limitations for the Rational Decision Making Model requires a great deal of time requires great deal of information assumes rational, measurable criteria are available and agreed upon assumes accurate, stable and complete knowledge of all the alternatives, preferences, goals and consequences assumes a rational, reasonable, non – political world
- 7. Bounded Rationality Perspective There is a limit to how rational managers can be—time and resource constraints – Nonprogrammed decisions Constraints and Tradeoffs – Constraints impinge the decision maker The Role of Intuition – Experience and judgment rather than logic
- 8. Constraints and Tradeoffs During Nonprogrammed Decision Making
- 9. Organizational Decision Making ManagementScienceApproach CarnegieModel IncrementalDecision Model GarbageCan Model Unstructuredmodel
- 10. Management Science Approach Similar to rational individual approach – Structured Based on technology
- 11. Management Science Approach Use of statistics to identify relevant variables Remove human element Very successful for military problems Good tool for decisions where variables can be indentified and measured A drawback of management science is that quantitative data are not rich and lack tacit knowledge
- 12. The Carnegie Model Introduces a set of more realistic assumptions about the decision-making process – Satisficing: limited information searches to identify problems and alternative solutions – Bounded rationality: a limited capacity to process information – Organizational coalitions: solution chosen is a result of compromise, bargaining, and accommodation between coalitions
- 13. Carnegie Model
- 14. Differences Between the Rational and Carnegie Models Rational model Carnegie model Information is available Limited informationis available Decisionmakingis costless Decisionmakingis costly Possiblealternativesare generated Limited rangeof alternativesare generated Solutionischosenbyunanimous agreement Solutionischosenbybargaining and compromise Solnchosenisbestforthe orgn Solnchosenissatisficingforthe orgn
- 15. Incremental Decision Process Model Focuses on sequence of events from problem discovery to solution
- 17. Garbage Can Model - a theory that contends that decisions in organizations are random and unsystematic Solutions Choice opportunities Problems Participants Garbage Can Model
- 18. Garbage Can Model Pattern or flow of multiple decisions Think of the whole organization Explain decision making in high uncertainty - organized anarchy: – Problematic preferences – Unclear, poorly understood technology – Turnover Streams of events instead of defined problems and solutions
- 19. Consequences of the Garbage Can Model 1. Solutions may be proposed even when problems do not exist 2. Choices are made without solving problems 3. Problems may persist without being solved 4. A few problems are solved
- 21. Unstructured Decision Making Model Takes place when uncertainty is high Unprogrammed decisions Not a sequential process Involves unpredictable decisions
- 22. Contingency Decision-Making Two dimensions – Problem consensus – Technical knowledge about solutions
- 24. Design Essentials Most decisions are not made in a logical manner Individuals make decisions, but organizational decisions are not made by a single individual Conflict exists when problems are not agreed on The garbage can model has become a description of decision-making Organizations operate in high-velocity environments Allowing biases to cloud decision making can have negative consequences