Chapter Nine - University of Mississippi
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Transcript Chapter Nine - University of Mississippi
Mgmt 371
Chapter Nine
Managing Decision Making and
Problem Solving
Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©
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Types of Decisions: Programmed
Decisions
Programmed Decisions - A decision
that is a fairly structured decision or
recurs with some frequency or both.
Matters of a routine nature that can be
predicted, hence virtually automatic
decisions can be made based on
established rules and guidelines.
Procedures
SOPs
Policies
Rules
Examples
Processing drop/add slips
destination.
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Types of Decisions: Nonprogrammed
Decisions
Nonprogrammed Decisions - A
decision that is relatively unstructured
and occurs much less often a
programmed decision.
Developing solution for complex,
unique, nonroutine problems
Procedures
Creative problem-solving techniques
Brainstorming, GDSS, focus groups
Examples:
New product development
Reengineering Processing drop/add
slips Example: Choosing a
vacation destination.
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Decision-Making Conditions
Decision Making Under Certainty
The decision maker knows with reasonable certainty
what the alternatives are and what conditions are
associated with each alternative.
Decision Making Under Risk
The availability of each alternative and its potential
payoffs and costs are all associated with risks.
Think probability.
Decision Making Under Uncertainty
The decision maker does not know all the alternatives,
the risks associated with each, or the consequences of
each alternative.
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The Classical Model of Decision
Making
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The Rational Decision-Making
Process
Recognize & Define Decision Situation
Identify Alternatives
Evaluate Alternatives
Select Best Alternative
Implement the Chosen Alternative
Evaluate Results
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Recognizing Defining the Decision
Situation
Problem Identification
Deviation from past performance.
Deviation from planned performance.
Outside criticism.
Avoid:
Defining problems to meet preconceived
solutions.
Identifying symptoms as problems.
Losing hands.
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Types of Problems
Opportunities
Crisis Problems
Routine Problems
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Identify Alternatives
Managers develop several feasible
alternative courses of action.
Too often managers get into a rut and fail to
develop creative alternatives.
New perspectives and inputs from others may
be beneficial.
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Evaluate Alternatives
Considerations
Legality of the alternatives.
Ethicality (ethicalness) of the alternatives.
Economic feasibility of the alternatives.
Practicality of the alternatives.
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Choosing Among Alternatives
The alternative which best fits the decision-
maker’s situation given consideration of the
risk or uncertainty is selected.
Assumes perfect and complete information is
available to the decision-maker.
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Evaluating the Results
All effective managers attempt to ensure
that actual results meet planned results.
Strive to learn from both your successes
and your mistakes.
Determine why expected outcomes failed to
materialize.
Develop guidelines for future decision
making.
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Evaluating the Results
Intended Outcome
Actual Outcome
Determine Cause
of Deviation
Corrective Action
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Evaluating Alternatives in the
Decision-making Process
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The Administrative Model of
Decision Making
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Behavioral Aspects of Decision
Making
Bounded Rationality
Decision makers are limited by their values
and unconscious reflexes, skills, and habits.
Limitations to our ability to interpret and process
information.
Incomplete and imperfect information.
Prevents optimal solutions.
Satisficing
The tendency to search for alternatives only
until one is found that meets some minimum
standard of sufficiency to resolve the problem.
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Behavioral Aspects of Decision
Making
Coalition
A positive or negative political force in decision
making which consists of an informal alliance
of individuals or groups formed to achieve
common goals.
Decisions are subject to internal
politics/candidates/agendas.
Decisions among members must be consistent
with the coalition’s goals.
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Illogical & Irrational Decision
Processes
Intuition – an innate belief about something
without conscious consideration.
Escalation of Commitment – staying with a
decision even when it appears to be wrong
usually because resources or reputations
have been so heavily invested in its outcome.
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Group and Team Decision Making
in Organizations
Forms of Group Decision Making
Interacting group or team
Consists of an existing group or newly formed team
interacting and then making a decision.
Nominal groups
Generating ideas through the individual contributions
of alternatives that are winnowed down to reach a
decision.
Delphi groups
Developing a consensus of expert opinion from a
panel of experts who individually contribute through a
moderator.
Panelists do not have direct contact.
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Advantages of Group Decision
Making
More information and knowledge are
available.
More alternatives are likely to be generated.
More acceptance of the final decision is likely.
Enhanced communication of the decision
may occur.
Better decisions are usually made.
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The Dark Side of Group Decision
Making
More time consuming than individual decsion
making (more costly).
Groups can be dominated and manipulated by
powerful individuals.
Groupthink may occur.
Compromises arising from indecision may
occur.
Committees may dilute accountability.
Groups may take greater risks than individuals.
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