The process through which managers identify and resolve problems and capitalize on opportunities.

PROGRAMMED DECISION

Decisions made in response to routine situations that have occurred in the past. Identifying alternative courses of action in such situations is usually routine. Eg: Functions of customer assistance operator.

NONPROGRAMMED DECISION

Decisions made in response to situations that are unique and unstructured. Required creativity and innovative to obtain a list of reasonable alternatives courses of action. Eg: New management tried to restructured company.

WHAT IS IT?
Where the decision maker can make a decision accurately.

WHY? Because the decision maker knows certainly on the outcome of every alternatives.

DECISION MAKING UNDER CERTAINTY HOW? The probabilities associated with the various alternatives are guaranteed and managers gave a complete knowledge on the decision. EXAMPLE? We know the exact interest rate being offered by the bank for fixed deposit account.

WHAT IS IT? Condition in which a decision maker is able to estimate the likelihood of certain outcomes.

WHY?
Decision makers have only enough information of each alternative to estimate how probable the outcome will be if the alternative is implemented.

DECISION MAKING UNDER RISK

HOW? The probabilities are used to obtain expected values of outcomes for each decision alternative. Most decisions made in organizations have some amount of risk associated with them.

EXAMPLE?
Share trading in Bursa Malaysia

WHAT IS IT? A situation in which a decision maker has neither certainty nor reasonable probability estimates available.

WHY? Limited amount of information and the consequences that will take place when an alternative is implemented later.

DECISION MAKING UNDER UNCERTAINTY HOW CAN IT BE? Decision makers have absolutely no idea what the results of an implementation alternative will be, there were no historical data and it is difficult to predict what will happen in the future.

EXAMPLE?
Hybrid cars and green cars, can it survive in Malaysian market?

Identifying opportunities and diagnosing problems

Identifying objectives Generating alternatives Evaluating alternatives Reaching decisions Choosing implementation strategies Monitoring and evaluating

A prescriptive framework of how a decision should be made that assumes managers have completely accurate information.
Concentrates on how decisions should be made, not on how they actually are made

Managers have perfect information. Managers attempt to accomplish objectives that are known and agreed upon and have an extensive list of alternatives to choose from. Managers are rational, systematic, and logical in assessing alternatives and their associated probabilities. Managers work in the best interests of their organizations.

In practice, the model may not always be a realistic description of decision environments and managerial behavior. Because:
Leaders rarely have access to perfect

information. Even if perfect information was available, decision makers are limited in their ability to figure out and process vast amounts of information.

 Decision makers seldom have enough

knowledge about future consequences of alternatives.

attitudes, motives of behaviors intervene to prevent a decision maker from always acting in a completely rational manner. influence the decision process.

Personal factors such as exhaustion, emotions,

Individual culture and ethical values will

Two or more persons interacting for some purpose and who influence one another in the process.

Brainstorming
Nominal Group Technique Delphi Technique Devils Advocacy Approach Dialectical Inquiry

A technique used to enhance creativity that encourages group members to generate as many original ideas as possible on a given topic without evaluating them.

Freewheeling is encouraged. Group members will not criticize ideas as they are being generated. Quality is encouraged. The wilder the ideas the better.

Piggyback on previously stated ideas.

NO IDEAS ARE EVALUATED UNTIL AFTER ALL ALTERNATIVES ARE GENERATED.

A structured process designed to stimulate creative group decision making where agreement is lacking or the members have incomplete knowledge concerning the nature of the problem. They present ideas in a round-robin manner and after all ideas are presented the group will discuss the ideas to clarify and evaluate them.

Uses experts to make predictions and forecasts about future events by survey instruments or questionnaires without meeting face-to-face.

Devils Advocacy

An individual or subgroup appointed to

critique a proposed course of action and identify problems to consider before the decision is final. Eg: Viva Voce

Dialectical Inquiry

Approaches a decision from two opposite

points and structures a debate between conflicting views. Eg: The Apprentice

Experience and expertise of several individuals available. More information, data, and facts accumulated. Problems viewed from several perspectives. Higher member satisfaction. Greater acceptance and commitment to decisions.

Greater time requirement Minority domination Compromise Concern for individual rather than group goals Social pressure which is the desire to maintain friendships and avoid disagreements.

Groupthink