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Organizational Organizational Decision making Decision making
ModelsModels
U.KALPANADEVI MBA
Organizational decision making: the process of responding to a problem by searching for and selecting a solution or course of action that will create value for organizational stakeholders
Types: Programmed Decision Non-Programmed Decision
Decision Making - Types
Programmed Decision– Routine, virtually automatic decision making that
follows established rules or guidelines.
Non-Programmed Decision– Nonroutine decision made in response to unusual or
novel opportunities and threats.– The are no rules to follow since the decision is new.
Individual Decision Making
Rational approach – ideal method for how managers should make decisions
Bounded rationality perspective – how decisions are made under severe time and resource constraints
Steps in the Rational Approach
Limitations for the Rational Decision Making Model requires a great deal of time requires great deal of information assumes rational, measurable criteria are available and
agreed upon assumes accurate, stable and complete knowledge of all
the alternatives, preferences, goals and consequences assumes a rational, reasonable, non – political world
Bounded Rationality Perspective
There is a limit to how rational managers can be—time and resource constraints– Nonprogrammed decisions
Constraints and Tradeoffs– Constraints impinge the decision maker
The Role of Intuition– Experience and judgment rather than logic
Constraints and Tradeoffs During Nonprogrammed Decision Making
Organizational Decision Making
Management Science Approach
Carnegie Model
Incremental Decision Model
Garbage Can Model
Unstructured model
Management Science Approach
Similar to rational individual approach– Structured
Based on technology
Management Science Approach
Use of statistics to identify relevant variables
Remove human element
Very successful for military problems
Good tool for decisions where variables can be indentified and measured
A drawback of management science is that quantitative data are not rich and lack tacit knowledge
The Carnegie Model Introduces a set of more realistic assumptions
about the decision-making process– Satisficing: limited information searches to identify
problems and alternative solutions
– Bounded rationality: a limited capacity to process information
– Organizational coalitions: solution chosen is a result of compromise, bargaining, and accommodation between coalitions
Carnegie Model
Differences Between the Rational and Carnegie Models
Rational model Carnegie model
Information is available Limited information is available
Decision making is costless Decision making is costly
Possible alternatives are generated
Limited range of alternatives are generated
Solution is chosen by unanimous agreement
Solution is chosen by bargaining and compromise
Soln chosen is best for the orgn Soln chosen is satisficing for the orgn
Incremental Decision Process Model
Focuses on sequence of events from problem discovery to solution
Garbage Can Model -
a theory that contends
that decisions in organizations are random and
unsystematic
Problems
Solutions
Choiceopportunities
Participants
Garbage Can Model
Garbage Can Model
Pattern or flow of multiple decisions Think of the whole organization Explain decision making in high
uncertainty - organized anarchy:– Problematic preferences– Unclear, poorly understood technology– Turnover
Streams of events instead of defined problems and solutions
Consequences of the Garbage Can Model
1. Solutions may be proposed even when problems do not exist
2. Choices are made without solving problems
3. Problems may persist without being solved
4. A few problems are solved
Garbage Can Model
Unstructured Decision Making Model
Takes place when uncertainty is high Unprogrammed decisions Not a sequential process Involves unpredictable decisions
Contingency Decision-Making
Two dimensions– Problem consensus– Technical knowledge about solutions
Design Essentials
Most decisions are not made in a logical manner
Individuals make decisions, but organizational decisions are not made by a single individual
Conflict exists when problems are not agreed on
The garbage can model has become a description of decision-making
Organizations operate in high-velocity environments
Allowing biases to cloud decision making can have negative consequences
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