Chapter 7 – Information and decision-making ppt

7/22/2019 Chapter 7 Information and decision-making ppt

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Chapter 7Information and

decision-making


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Information and decision-

makingLearning objectives:

How is information technology changing the

workplace?

What are the current directions in informationsystems?

How is information used for decision-making?

How do managers make decisions? Why are knowledge management and

organisational learning important?


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Information technology and the

workplace

A knowledge worker is a worker who transforms

knowledge or information into a product or service.

Intellectual capital is the collective brain power or

shared knowledge of a workforce.


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new workplace

Information technology (IT)

The combination of computer hardware, software,

networks and databases supporting information use.

Instant messaging Instantaneous communication between people online

at the same time.

Peer-to-peer file sharingConnects PCs directly to one another over the internet.


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How information technology is

changing business Electronic commerce, or e-commerceis the

process of buying and selling goods and serviceselectronically through use of the internet andrelated information technologies.

In business-to-consumer e-commerce, or B2C,businesses like Amazon.com and Dell.com selldirectly to customers over the internet.

In business-to-business e-commerce, or B2B,businesses use the internet to collaborate andmake transactions with one another.


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workplace

The stages of development in e-commerce are:

1. Secure an online identity (web address and home

page)

2. Establish a web presence (online advertising andproduct information only)

3. Enable e-commerce (website allows products

orders)4. Provide e-commerce and customer relationship

management (online customer relationships)

5. Use a service application model.


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Information and information

systems

Data

Any quantifiable measured values, observations or

statistical counts that, when collated, become useful for

decision-making. Information systems use information technology to

collect, organise and distribute data for use in

decision-making.


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What is useful information?

Five essential characteristics of useful information:

1. Timelinessavailable when needed.

2. Qualityaccurate and reliable.

3. Completenesscomplete and sufficient, current

and up-to-date.

4. Relevancethe information is appropriate.

5. Understandabilityeasily understood by theuser; free from unnecessary detail; and is neither

too narrow nor too broad.


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Information needs of organisations


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Developments in information

systemsA DSS allows a computer to help organise and

analyse data for problem-solving.

Expertsystems allow computers to mimic the

thinking of human experts by applied problem-solving.

Intranetsand corporate portals use the web for

communication and data sharing within an

organisation. Extranetsuse the web for communication and data

sharing between the organisation and its

environment.

Electronic data interchange uses controlled


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Developments in information

systems

A management information system (MIS) is a

computer system that stores and distributes information

on how to successfully manage an organisation. It is

usually regarded as a subset of the internal controls ofa business.

Among the advantage of appropriate MIS use in the

managers job are:

Planning advantages Organising advantages

Leading advantages

Controlling advantages


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Information systems and

the managers job


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Information and decision-

making The work of managers involves planning,

organising, leading and controlling in the course ofdaily problem solving. Problem-solving is theprocess of identifying a discrepancy between anactual and desired state of affairs, and taking actionto resolve the deficiency or take advantage of theopportunity.

A decisionis a choice between alternative coursesof action.

Information systems help managers gather data,turn them into useful information, and use that

information to make problem-solving decisions.


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Types of managerial decisions

Programmed decisions

Apply solutions from past experience to a routine

problem.

Non-programmed decisionsApply specific solutions crafted for a unique problem.

A crisisis an unexpected problem that can lead to

disaster if not resolved quickly and appropriately. Managers in progressive organisations expect that

crises will occur and plan ahead on how to deal

with them.


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Decision conditions


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Decision conditions

People in organisations make decisions under each

of three decision conditions.

Certain environments offer complete information on

possible action alternatives and their consequences.A risk environment lacks complete information, but

offers probabilities of the likely outcomes for possible

action alternatives.

An uncertain environment lacks so much informationthat it is difficult to assign probabilities to the likely

outcomes of alternatives.


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How managers approach

decisions

People generally approach decision-making using

one of three approaches/styles:

Problem avoidersignore information, are inactive and

do not want to make decisions and deal with problems. Problem solversare willing to make decisions and

solve problems, but they are reactive.

Problem seekersactively process information and

constantly look for problems to solve or opportunities toexplore. True problem seekers are proactive.


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How managers approach

decisions Managers also differ in their approach to decision-

making depending on whether they use systematic orintuitive thinking.

Systematic thinking approaches problems in a rational

and analytical fashion. Intuitive thinking approaches problems in a flexible and

spontaneous fashion.

It is important not to be diverted from long-term goals

when making decisions. Strategic opportunismrefersto the ability to focus on long-term objectives whilebeing flexible in dealing with short-term problems.


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The decision-making process


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Steps in decision-making

Step 1.Find and define the problem.

This is a stage of information gathering, information

processing and deliberation.

Three common mistakes are:1. Defining the problem too broadly or narrowly

2. Focusing on the symptoms instead of causes

3. Choosing the wrong problem to deal with.


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Step 3. Choose a solution.

The classical decision modeldescribes decision-

making with complete information.

An optimising decision chooses the alternativegiving the absolute best solution to a problem.

The behavioural decision model describes

decision-making with limited information andbounded rationality.

Satisficing decisions choose the first satisfactory

alternative that comes to your attention.


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Classical, behavioural and judgemental

heuristics approaches


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Step 4. Implement the solution.

This is the stage at which directions are finally set

and problem-solving actions are initiated. At this

stage, managers need the ability and willingness toimplement their decisions.

Step 5.Evaluate results.

The decision-making process is not complete until

results are evaluated. If the desired results are not achieved, the process

must be renewed to allow for corrective actions.


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Behavioural influences on

decision-making People tend to use simplifying strategies for

decision-making. These strategies are calledheuristics.

Availability heuristic:Using information readilyavailable from memory as a basis for assessing acurrent event or situation.

Representativeness heuristic:Assessing thelikelihood of something occurring based on its similarity

to a stereotyped set of occurrences.Anchoring and adjustment heuristic:Making

decisions based on adjustments to a previouslyexisting value or starting point.


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Individual and group decision-

making

Advantages of group decisions:

Greater information, knowledge and expertise is

available

The number of action alternatives examined isexpanded, tunnel vision is avoided

Increased understanding and acceptance of outcomes,

increasing member commitment.

Disadvantages of group decisions:

Social pressure to confirm

Lack of timeliness.


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Individual and group decision-

making

Groupthink

When the group pressure for consensus and demand

for unanimity overwhelm the rational evaluation of

options. Characteristics of groupthink include:

Illusions of invulnerability

Negative stereotyping of others

Pressure on deviant members

Illusions of group morality

Self-censorship.


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Knowledge management

Knowledge management is the process through

which organisations use intellectual capital for

competitive advantage.

The intellectual assets include such things aspatents, intellectual property rights, trade secrets

and special processes and methods, as well as the

accumulated knowledge and understanding of the

entire workforce.

Explicit knowledge is codified and shared with

others through dialogue, demonstration or media.


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Organisational learning

A learning organisation continuously changes

and improves using the lessons of experience.

The core ingredients of learning organisations:

1. Mental models2. Personal mastery

3. Systems thinking

4. Share vision5. Team learning

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Chapter 7 – Information and decision-making ppt