5-1 the nature of managerial decision making decision making the process by which managers respond...
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5-1
The Nature of Managerial Decision Making
Decision MakingThe process by which managers respond to opportunities and threats by analyzing options, and making determinations about specific organizational goals and courses of action.
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Decision Making
Programmed DecisionRoutine, virtually automatic decision making that follows established rules or guidelines.Managers have made the same decision
many times beforeThere are rules or guidelines to follow
based on experience with past decisionsLittle ambiguity involved
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Decision Making
Non-Programmed DecisionsNonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats.
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Decision Making
Intuition – feelings, beliefs, and hunches that come readily to mind, require little effort and information gathering and result in on-the-spot decisions
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Decision Making
Reasoned judgment – decisions that take time and effort to make and result from careful information gathering, generation of alternatives, and evaluation of alternatives
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The Administrative Model
Administrative Model of Decision MakingAn approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions.
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The Administrative Model
Administrative Model of Decision Making Bounded rationality
There is a large number of alternatives and available information can be so extensive that managers cannot consider it all.
Decisions are limited by people’s cognitive abilities.
Incomplete informationMost managers do not see all alternatives
and decide based on incomplete information.
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Satisficing
Searching for and choosing an acceptable, or satisfactory response to problems and opportunities, rather than trying to make the best decision.
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.
This is the typical response of managers when dealing with incomplete information.
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Group Decision Making
Superior to individual makingChoices less likely to fall victim to bias
Able to draw on combined skills of group members
Improve ability to generate feasible alternatives
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Group Decision Making
Allows managers to process more information
Managers affected by decisions agree to cooperate
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Group Decision Making
GroupthinkA pattern of faulty and biased decision
making that occurs in groups whose members strive for agreement among themselves at the expense of accurately assessing information relevant to a decision
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Improved Group Decision Making
Devil’s AdvocacyCritical analysis of a preferred alternative to ascertain its strengths and weaknesses before it is implemented
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Organizational Learning and Creativity
Organizational LearningManagers seek to improve a
employee’s desire and ability to understand and manage the organization and its task environment so as to raise effectiveness.
The Learning OrganizationManagers try to maximize the people’s
ability to behave creatively to maximize organizational learning.
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