Transcript Management 8e. - Robbins and Coulter

Chapter 5
Decision Making
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
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Learning Outline
After you read this chapter you should know the following
learning objectives:
• #1:
What are the steps in the decisionmaking process?
• #2:
What factors affect how decisions
are made?
• #3:
How can managers make more
effective decisions?
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
5-2
Decision Making
• Decision
– Making a choice from two or more alternatives
• The Decision-Making Process
– Identifying a problem and decision criteria and
allocating weights to the criteria
– Developing, analyzing, and selecting an alternative that
can resolve the problem
– Implementing the selected alternative
– Evaluating the decision’s effectiveness
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
5-3
Exhibit 5.1
The
DecisionMaking
Process
Identify
a
Problem
“I need to decide the best
franchise to purchase.”
Identify
Decision
Criteria
• Financial qualifications
• Franchisor history
• Start-up costs
• Open geographical locations
• Franchisor support
Allocate
Weights
to Criteria
Start-up costs .......................................................10
Franchisor support ................................................7
Financial qualifications .........................................8
Open geographical locations ...............................6
Franchisor history ..................................................7
Develop
Alternatives
Curves for Women
Second Cup
Jani-King
Liberty Tax Service
Merle Norman
Petland
Chem-Dry Carpet Cleaning
McDonald’s
Analyze
Alternatives
Curves for Women
Second Cup
Jani-King
Liberty Tax Service
Merle Norman
Petland
Chem-Dry Carpet Cleaning
McDonald’s
Select
an
Alternative
Curves for Women
Second Cup
Jani-King
Liberty Tax Service
Merle Norman
Petland
Chem-Dry Carpet Cleaning
McDonald’s
Implement
the
Alternative
“Chem-Dry Carpet Cleaning!”
Evaluate
Decision Effectiveness
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
5-4
Step 1: Identification of a
Problem
• Problem
– A discrepancy between an existing and desired state of affairs
• Characteristics of Problems
– A problem becomes a problem when a manager becomes aware
of it
– There is pressure to solve the problem
– The manager must have the authority, information, or resources
needed to solve the problem
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
5-5
Step 2: Identification of Decision Criteria
• Decision criteria are factors that are important (relevant)
to resolving the problem:
– Costs that will be incurred (investments required)
– Risks likely to be encountered (chance of failure)
– Outcomes that are desired (growth of the firm)
Step 3: Allocation of Weights to Criteria
• Decision criteria are not of equal importance:
– Assigning a weight to each item places the items in the
correct priority order of their importance in the decisionmaking process
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
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Step 4: Development of Alternatives
• Identifying viable alternatives
– Alternatives are listed (without evaluation) that
can resolve the problem
Step 5: Analysis of Alternatives
• Appraising each alternative’s strengths and weaknesses
– An alternative’s appraisal is based on its ability to resolve
the issues identified in steps 2 and 3.
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
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Exhibit 5.3 Evaluation Using
Decision Criteria
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
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Exhibit 5.4 Evaluation Against
Weighted Criteria
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
5-9
Step 6: Selection of an Alternative
• Choosing the best alternative
– The alternative with the highest total weight is
chosen
Step 7: Implementation of the Alternative
• Putting the chosen alternative into action
– Conveying the decision to and gaining commitment from
those who will carry out the decision
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
5-10
Step 8: Evaluation of Decision
Effectiveness
• The soundness of the decision is judged by its
outcomes:
– How effectively was the problem resolved by outcomes
resulting from the chosen alternatives?
– If the problem was not resolved, what went wrong?
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada
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