decision making management chapter 6

Management

Chapter – 6 Decision MakingChapter – 6 Decision Making

Introduction

Aim To Acquaint The

Students With Steps Involved In Decision Making Process & Factors Influencing Decision Making

Group Members Fawad Hussain Rao Qaiser Rizwan Shaukat Naveed ur Rehman

Sequence Introduction Part – 1 Fundamentals of Decision Making : Fawad Hussain Part – 2 Managerial Decision Making: Rao

Qaiser Part – 3 Rational Decision Making : Rao

Qaiser Part – 3 Effective Decision Making : Naveed ur

Rehman Part – 4 Groups and Decision Making : Rizwan

Shaukat Conclusion Questions

Part – 1

What is Decision Making

It is the process of recognizing a problem, generating an weighing alternatives, coming to a decision, taking action , and assessing the results

Types of Problems

Crisis Problems Non Crisis Problems Opportunity Problems

Types of Decisions & Conditions of

Decision Making Types of Decisions

Programmed Decisions Nonprogrammed Decisions

Conditions of Decision Making Certainty Risk Uncertainty Ambiguity

Level & Scope of Organizational Decision Making

Part – 2

Three Managerial Decision Making Model

Part – 3

Steps In Rational Decision Making Process

(1) Identify The Problem

(2) Generate Alternatives

(3) Evaluate Alternatives

(4) Make The Decision

(5) Implement The Decision

(6) Evaluate The Results and Provide Feed Back

Part – 4

MORE EFFECTIVE DECISION MAKING

Barriers to effective decision making.

Behavioral tools for effective decision making.

Quantitative tools for effective decision making.

BARRIER TO EFFECTIVE DECISION MAKING

Barriers are the imperfect or incomplete information, inaccurate identification of problems or alternatives, biases and over commitment or under commitment

IMPERFECT OR INCOMPLETE INFORMATION.Imperfect or incomplete information is to withholding information or misinforming others.

INACCURATE IDENTIFICATION OF PROBLEM OR ALTERNATIVES.It means When we ask wrong question we can't get the right answer.

BIASES.

In decision making bias refers to situations in which decision- making short cuts are inappropriately applied.

OVER COMMITMENT OR UNDER COMMITMENT.

It means exhibiting no rational escalation of commitment.

BEHAVIORAL TOOLS FOR EFFECTIVE

DECISION MAKING

Behavioral tools are the ways in which a person behaves in a situation.these tools are:- Decision timing. Realistic decision constraints. Critical thinking. Experience and expertise. Intuition .

Decision Timing.It is the time when the decision is to be made by comparing the benefits and the risks.

Realistic Decision Constraints.By understanding constraints one can more realistically select an appropriate and acceptable solution.

Critical Thinking Skills.To improve decision making is to develop critical thinking which help us think clearly, logically and analytically about the problems we face.

BEHAVIORAL TOOLS

Experience and ExpertiseWith decision making experience comes the ability to make decisions faster managers also need to develop their expertise in decision making so that they can recognize the key elements in each problem

IntuitionIt is the ability to understand something immediately without the need for conscious reasoning. We should be intuitive in decision making.

BEHAVIORAL TOOLS

QUANTITATIVE TOOLS FOR EFFECTIVE DECISION MAKING

Quantitative tools are especially valuable when planning production, analyzing inventory levels and considering major budget expenditure.

These tools are :- Payoff matrix Decision tree Simulation model

PAYOF MATRIXA tool that compare probable outcome of two or more alternatives.

DECISION TREEAn analytical tool that graphically portrays the logical series of actions and decisions in a problem situation.

SIMULATION MODEL A mathematical representation of problems that reflect the relationship between the elements and it is used to project that result of certain actions under various circumstances.

QUANTITATIVE TOOLS

Part – 5

GROUPS AND DECISION MAKING

Decision making is often an individual activity but there are many times when groups become involved in the process.

Employee Participation in Decision Making Manager have a great deal of latitude when deciding to handle decision making alone or

to involve others in the process.

Group Decision – Making Formats

Interacting Group.

Nominal Groups.

Delphi Groups.

Impact of group Decision Making Group decision making has both benefits and limitation as compared with individual

decision making.

Benefits of Groups Decision When attacking a problem, group members are able to contribute more knowledge and

information than individuals.

Advantages and Disadvantages of Group Decision Making

Advantages

Groups can accumulate more knowledge and facts.

Groups may have a broader perspective and consider more approaches and alternatives.

Individuals who participate in group decision making are more likely to be satisfied with the decision and to support its implementation.

The group decision making process serves as an important communication devices.

Disadvantages

Groups tend to work more slowly and take more time to reach any decision.

To much dependence on group decision making may limit a manager’s ability to act quickly and decisively when necessary.

Groups may be dominated by one individual or a small sub group.

Group effort frequently result in compromises that may not be optimal for organizational effectiveness or performance.

Tools for Effective Group Decision Making

Brain Storming

An informal interactive group technique in which members generate many alternatives with out passing judgment on their value.

Devil’s Advocate

A technique in which one or more group members deliberately challenge the group’s view to the problem, the alternatives, and their evaluation.

Dialectic process

A technique in which individuals or groups present and defend opposing solution to a particular problem to drive an improved solution.