Transcript Document 7118518

Chapter 7
Decision Making,
Learning, Creativity,
and Entrepreneurship
Decision Making

Programmed Decision
– Routine, virtually automatic decision making that
follows established rules or guidelines.

Non-Programmed Decisions
– Non-routine decision made in response to unusual
or novel situations

Intuition
– Feelings, beliefs, and hunches that come readily
to mind and result in on-the-spot decisions
MGMT 321 – Chapter 7
The Classical Model
MGMT 321 – Chapter 7
The Administrative Model

Bounded rationality
– Managers cannot consider all alternatives
and available information
– Decisions are by cognitive limitations

Incomplete information
– Due risk and uncertainty, ambiguity, and
time constraints

Satisficing
– Choosing the first acceptable decision
MGMT 321 – Chapter 7
Why Information Is Incomplete
Figure 7.2
MGMT 321 – Chapter 7
Steps in Decision Making
MGMT 321 – Chapter 7
Cognitive Biases

Heuristics
– Rules of thumb that simplify decision
making
– Used to deal with bounded rationality

Types
– Prior Hypothesis Bias
– Representativeness
– Illusion of Control
– Escalating Commitment
MGMT 321 – Chapter 7
Group Decision Making
Usually superior to individual making
 Choices less likely to fall victim to bias
 Able to draw on combined skills of
group members
 Improve ability to generate feasible
alternatives
 Allows managers to process more
information

MGMT 321 – Chapter 7
Group Decision Making

Potential Disadvantages
– Usually takes much longer than individual
decision making
– Can be difficult to
reach agreement
– Can be
undermined by
biases
– Groupthink
MGMT 321 – Chapter 7
Improving Decision Making
MGMT 321 – Chapter 7
Organizational Learning and
Creativity

Organizational Learning
– Improving employees’ desire and ability to
understand and manage the organization and its
task environment

The Learning Organization
– Maximizing employees’ ability to behave creatively
to maximize organizational learning

Creativity
– The ability to discover novel ideas leading to a
feasible course of action
MGMT 321 – Chapter 7
Senge’s Principles
MGMT 321 – Chapter 7
Creating a Learning Organization

Personal mastery

Mental models

Team learning

Build a shared vision

Systems thinking
MGMT 321 – Chapter 7
Building Group Creativity

Brainstorming

Production blocking

Nominal group technique

Delphi technique
MGMT 321 – Chapter 7
Entrepreneurship
Entrepreneurs
 Intrapreneurs
 Characteristics

– Open to experience
– Internal locus of control
– High self-esteem
– High need for achievement
MGMT 321 – Chapter 7
Entrepreneurship and
Management

People can become involved in
entrepreneurial ventures by starting a
business from scratch
 Frequently need to hire other people to
help them run the business
 Frequently, founding entrepreneur lacks
the skills, patience, and experience to
manage the people and processes
MGMT 321 – Chapter 7