Upload
clepetpro
View
503
Download
11
Embed Size (px)
Citation preview
8/13/2019 Chapter 3 UiTM MGT
1/37
Is the process through which manageers andleaders identify and resolve prolems andcaptilize on opportunities.Good decision makingis the important at all levels in organization.
Some experts believe that decision making is themost basic and fundamental of all managerialactivities.Decision making is most closely linked with thePlanningfunction.However, it is also part of Organizing, Leadingand Controlling.
8/13/2019 Chapter 3 UiTM MGT
2/37
Decision makingis the act
of choosing onealternative from among a
set of alternatives.
We have to first decidethat a decision has to bemade and then secondly
identify a set of feasiblealternatives before weselect one.
8/13/2019 Chapter 3 UiTM MGT
3/37
Decision-Making Processincludes:
recognizing and defining the nature of a decision
situation
identifying alternatives
choosing the best[most effective] alternative and
putting it into practice.
8/13/2019 Chapter 3 UiTM MGT
4/37
Sometimes effective decisions must be
made to:
Optimize some set of factors such as profits, sales,
employee welfare and market share or
Minimizeloss, expenses or employee turnover or
Select best method for going out of business, laying off
employees, or terminating a strategic alliance.
8/13/2019 Chapter 3 UiTM MGT
5/37
Managers make decisions about both
problems (undesirable situations) and
opportunities(desirable situations).Cutting costs by 10%
Learning that the company has earned higher-than-
projected profits
It may take a long time before a manager
can know for sure if the right decision was
made.
8/13/2019 Chapter 3 UiTM MGT
6/37
Programmed decision is
one that is fairly
structured or recurs with
some frequency (or both). Nonprogrammed decision
is one that is unstructured
and occurs much less
often than a programmeddecision.
8/13/2019 Chapter 3 UiTM MGT
7/37
Many decisions regarding basic operating
systems and procedures and standard
organizational transactions fall into this
category.ex : McDonalds employees are trained to make the
Big Mac according to specific procedures.
ex : Starbucks, and many other organizations, use
programmed decisions to purchase new supplies
[coffee beans, cups and napkins].
8/13/2019 Chapter 3 UiTM MGT
8/37
Most of the decisions made by top managersinvolving strategy and organization design arenonprogrammed.
Decisions about mergers, acquisitions and takeovers, new
facilities, new products, labor contracts and legal issues arenonprogrammed decisions.
Managers faced with nonprogrammed decisionsmust treat each one as unique, investing greatamounts of time, energy and resources into
exploring the situation from all views.Intuition and experience are major factors inthese decisions.
8/13/2019 Chapter 3 UiTM MGT
9/37
Decision Making Under
Certainty
Decision Making Under
Risk
Decision Making Under
Uncertainty
8/13/2019 Chapter 3 UiTM MGT
10/37
A state of certaintyexists when a decision maker
knows, with reasonable certainty, what the
alternatives are and what conditions are
associated with each alternative.Very few organizational decisions, however, are
made under these conditions.
The complex and turbulent environment in which
businesses exist rarely allows for such decisions.
8/13/2019 Chapter 3 UiTM MGT
11/37
A state of risk exists when a decision maker makes
decisions under a condition in which the availability of
each alternative and its potential payoffs and costs are all
associated with probability estimate.
Decisions such as these are based on past experiences,
relevant information, the advice of others and onesown
judgment.
Decision is calculatedon the basis of which alternative
has the highest probability of working effectively. [unionnegotiations, PorschesSUV focus vs high-performance sports cars]
8/13/2019 Chapter 3 UiTM MGT
12/37
A state of uncertainty exists when a decision maker doesnot know all of the alternatives, the risks associated witheach, or the consequences each alternative is likely tohave.Most of the major decision making in todays
organizations is done under these conditions.To make effective decisions under these conditions,managers must secure as much relevant information aspossible and approach the situation from a logical andrational view.
Intuition, judgment and experience always play majorroles in the decision-making process under theseconditions.
See Figure 9.1, page 279.
8/13/2019 Chapter 3 UiTM MGT
13/37
Certainty Risk Uncertainty
Level of ambiguity and chances of making a bad decision
Lower Moderate Higher
The decision
maker faces
conditions of:
8/13/2019 Chapter 3 UiTM MGT
14/37
Keys to Decision Making
Classical
DecisionModel
Rational
DecisionMaking
8/13/2019 Chapter 3 UiTM MGT
15/37
An approach to decision making that tells
managers how they should make decisions.
Approach assumes that managers are logical
and rational.Approach assumes that managersdecisions will
be in the best interests of the organization.
Conditions suggested in this approach rarely, if
ever, exist.See Figure 9.2, page 281.
8/13/2019 Chapter 3 UiTM MGT
16/37
Obtain complete and
perfect information.
Eliminate uncertainty.
Evaluate everything
rationally and logically
When faced with adecision situation,
managers
should
and end up with a
decision that best
serves the interests
of the organization.
8/13/2019 Chapter 3 UiTM MGT
17/37
Consists of six (6) steps that keep thedecision maker focused on facts and logic
and help guard against inappropriate
assumptions and pitfalls.
Designed to help the manager approach a
decision rationally and logically.
8/13/2019 Chapter 3 UiTM MGT
18/37
1) Identifying opportunities and diagnosing
problems.a) Need to defineprecisely what the problem is.
b) Manager must develop a complete understandingof the problem.
c) Manager must carefully analyze and consider the
situation.
8/13/2019 Chapter 3 UiTM MGT
19/37
2) Identifying objectivesa) Managers must realize that their alternatives may
be limited by legal, moral and ethical norms,
authority constraints, available technology,economic considerations and unofficial social
norms.
8/13/2019 Chapter 3 UiTM MGT
20/37
3) Generating alternatives
a) Managers develop varioous ways to solve the
problem and achieve objectives. Managers may rely on
their training, personal experience, education, andknowledge of the situation to generate alternatives.
8/13/2019 Chapter 3 UiTM MGT
21/37
4) Evaluating alternatives
a) Each alternative must pass successfully through threestages before it may be worthy of consideration as asolution.
1. Feasibility Is it financially possible? Is it legallypossible? Are there limited human, material and/orinformational resources available?
2. Satisfactory Does the alternative satisfy the conditionsof the decision situation? [50% increase in sales]
3. Affordability How will this alternative affect other partsof the organization? What financial and non-financialcosts are associated?
b) The manager must put pricetagson the consequences ofeach alternative.c) Even an alternative that is both feasible and satisfactory
must be rejected if the consequences are too expensive forthe total system.
8/13/2019 Chapter 3 UiTM MGT
22/37
5) Reaching Decisionsa) Choosing the best alternative is the real test of
decision making.
b) Optimization is the goal because a decision is likelyto affect several individuals or departments.
c) Finding multiple acceptable alternatives may be
possible; selecting one and rejecting the others
may not be necessary.
8/13/2019 Chapter 3 UiTM MGT
23/37
6) Implementing the chosen alternativea) Managers must consider peoples resistance to
change when implementing decisions.
b) For some decisions, implementation is easy; forothers, very difficult or time consuming.
c) Operational plans are very useful in implementing
alternatives.
d) Managers must also recognize that even when all
of the alternatives and their consequences have
been evaluated as precisely as possible,
unanticipated consequences are still likely.
8/13/2019 Chapter 3 UiTM MGT
24/37
7) Following up and evaluating the resultsa) Managers must evaluate the effectiveness of their
decisions did the chosen alternative serve its original
purpose?
b) If the implemented alternative appears not to beworking, the manager has several choices:
1. Another previously identified alternative might be
adopted or
2. Recognize that the situation was not correctly
defined and start the process all over again or3. Decide that the alternative has not been given
enough time to work or should be implemented in a
different way.[See Figure 9.3 and Table 9.1 ]
8/13/2019 Chapter 3 UiTM MGT
25/37
8/13/2019 Chapter 3 UiTM MGT
26/37
Sometimes decision making must reflect
subjective considerations (tastes, etc.)
Other behavioral aspects include: political
forces, intuition, escalation of commitment,
risk propensity and ethics.
8/13/2019 Chapter 3 UiTM MGT
27/37
TheAdministrative Modelof Decision Making
Herbert A Simon, a Nobel Prize winner in Economics,
developed the model to describe how decisions are often
made rather than to prescribe how they should be made.
Argues that decision makers have incomplete and
imperfect information, are constrained by bounded
rationalityand tend to satisficewhen making decisions.
Bounded rationality suggests that decision makers are
limited by their values and unconscious reflexes, skillsand habits. [American vs foreign automakers]
8/13/2019 Chapter 3 UiTM MGT
28/37
Satisficing is the tendency to search foralternatives only until one is found that meetssome minimum standard of sufficiency.
Rather than conducting an exhaustivesearch forthe best possible alternative, decision makerstend to search only until they identify an
alternative that meets some minimum standard ofsufficiency.
8/13/2019 Chapter 3 UiTM MGT
29/37
...and end up with a
decision that may or
may not serve the
interests of the
organization.
Use incomplete and
imperfect Information.
Are constrained by
bounded rationality.
Tend to satisficeWhen faced with a
decision situation
managers
actually
8/13/2019 Chapter 3 UiTM MGT
30/37
perfect information
Attempt to accomplish
objectives
Rational and systematic
Work in the best !
8/13/2019 Chapter 3 UiTM MGT
31/37
8/13/2019 Chapter 3 UiTM MGT
32/37
A decisionmaking technique in which group member present
spontaneous suggestion for problem solution, regardless of their
likehood of implementation in order to promote their freer and creative
in the group :
RULES !
1. FREEWHEELING.
2. Not criticize ideas.
3. Quality4. Wilder
5. Piggyback
No ideas are evaluated after all alternatives are generated.
8/13/2019 Chapter 3 UiTM MGT
33/37
8/13/2019 Chapter 3 UiTM MGT
34/37
8/13/2019 Chapter 3 UiTM MGT
35/37
Uses experts to make predictions and forecast about future events buy
survey instruments or questionnaires without meeting face to face
8/13/2019 Chapter 3 UiTM MGT
36/37
8/13/2019 Chapter 3 UiTM MGT
37/37