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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Decision
making is the Decision is a
process of choice made
identifying from
opportunities available
alternatives

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 Programmed Decisions
Recurring problems/routine
Structured, planned
Apply rule
 Nonprogrammed Decisions
Unique situations/non-routine
Poorly defined
Unstructured
Important consequences
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Difference between programmed and
unprogrammed decisions
 Certainty – Situation in which all information
is fully available
 Risk – Future outcomes associated with an
alternative are subject to chance
 Uncertainty - Depends on the amount and
value of information available

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 Ambiguity - Making decisions in difficult
situations
The goals and the problem are unclear
 Wicked decisions involve conflict over goals
and have changing circumstances, fuzzy
information, and unclear links
There is often no “right” answer

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 Decision Makers
Individuals or Groups who actually make the
choice among the alternatives
Orientations
Receptive
Exploitative
Hoarding
Marketing-Oriented

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 Goals to be Served
 Should be organization’s objectives
 Relevant Alternatives
 Feasible for solving existing problem &
implementation
 Ordering of Alternatives
 Ranking most desirable to least desirable
 Choice of Alternatives
 Actual choice among available alternatives

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Rational economic assumptions drive
decisions
 Operates to accomplish established goals,
problem is defined
 Decision maker strives for information and
certainty, alternatives evaluated
 Criteria for evaluating alternatives is known;
select alternative with maximum benefit
 Decision maker is rationale and uses logic
 Normative─ how a decision maker
should make a decision
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Administrative/descriptive approach
How managers really make decisions
Recognize human and environmental
limitations
 Bounded rationality – People have limits or
boundaries on how rational they can be
 Satisficing – Decision makers choose the first
solution that satisfies minimal decision
criteria

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13
 Goals are often vague
 Rational procedures are not always used
 Managers’ searches for alternatives are
limited
 Most managers settle for satisficing
 Intuition – Quick apprehension of situation
based on practice and experience
 Quasirationality - a new trend in decision
making, means combining intuitive and
analytical thought
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 Decisions involve managers with diverse
interests
 Managers must engage in coalition
building
Informal alliance to support specific goal
 Without a coalition, powerful groups can
derail the decision-making process
 Political model resembles the real
environment

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 Assumptions of the political model
Organizations are made up of groups with
diverse interests, goals, and values
Information is ambiguous and incomplete
Lack of time, resources, or mental capacity
to process all information regarding a
problem
Decisions are the result of bargaining and
discussion among coalition members

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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Recognition of Decision Requirement – Identify
problem or opportunity
 Diagnosis and Analysis – Analyze underlying
causal factors
 Develop Alternatives – Define feasible
alternatives
 Selection of Desired Alternative – Alternative
with most desirable outcome
 Implementation of Chosen Alternative – Use of
managerial, administrative, and persuasive
abilities to execute chosen alternative
 Evaluation and Feedback – Gather information
about effectiveness
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Directive style – People who prefer simple,
clear-cut solutions to problems
 Analytic style – Managers prefer complex
solutions based on a lot of data
 Conceptual style – Managers like a broad
amount of information
 Behavioral style – Managers with a deep
concern for others

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 Being influenced by initial impressions
 Justifying past decisions
 Seeing what you want to see
 Perpetuating the status quo
 Being influenced by problem framing
 Overconfidence

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 Mechanisms to help reduce bias-related
decision errors:
Start with brainstorming
Use hard evidence
Engage in rigorous debate – devil’s
advocate
Avoid groupthink
Know when to bail
Do a postmortem

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 Advantages:
More and better alternatives
Draw on collective experiences and
knowledge
Individuals tend to buy in to decisions when
they have had input to the decision
Group members tend to identify decisions as
their own and have a feeling of ownership

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 Disadvantages:
Takes longer for groups to make decisions
Costs increase because of the additional
time of people involved in the group
Lower-quality decisions if group members’
focus is on relationships and friendships
among themselves
Groupthink – negative impact of group
decision making

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Brainstorming:

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 Nominal Group Technique:
Each group member writes down ideas on
decision or problem being discussed
Each member presents his/her ideas orally
Entire group discusses ideas simultaneously
Secret ballot vote is taken
Idea with most votes is adopted and
implemented

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 Delphi Technique:
Problem is identified
Group members offer solutions through
anonymous questionnaire responses
Responses are compiled and sent out to all
group members
Individual group members select solution
Process repeats until consensus solution is
reached

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 Advantages:
Brainstorming
Many useful ideas are possible
Nominal Group Technique
Input can be offered without fear of retribution
Delphi Technique
Ideas gathered from individuals
geographically separated from one another

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Disadvantages:
Brainstorming
Time wasted on impractical ideas
Nominal Group Technique
Cannot discern why individuals voted the way
they did
Delphi Technique
Unable to ask questions of one another

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.