MGT Lec 4 - Managers As Decision Makers

Managers as
Decision Makers
Copyright
Copyright © 2014 Pearson©Education,
2012 Pearson Education,
Inc. publishing as Prentice Hall 6-1
Inc. Publishing as Prentice Hall
Describe the eight steps in the decision-making
process.
Explain the four ways managers make
decisions.
Classify decisions and decision-making
conditions.
Describe different decision-making styles and
discuss how biases affect decision making.
Identify effective decision-making techniques.
Copyright
Copyright © 2014 © Education,
Pearson 2012 PearsonInc.Education,
publishingInc.
as Prentice Hall 6-2
Publishing as Prentice Hall
The Decision-Making Process
• Decision -
making a
choice from two
or more
alternatives
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The Decision-Making Process
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Exhibit 6-1
Decision-Making Process
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1. Identifying the Problem (contd.)
2. Identify Decision Criteria
3. Allocate Weights to the Criteria
4. Develop Alternatives
5. Analyzing Alternatives
6. Select an Alternative
7. Implement the Alternative
8. Evaluate Decision Effectiveness
Copyright
Copyright © 2014 © Education,
Pearson 2012 PearsonInc.Education,
publishingInc.
as Prentice Hall 6-6
Publishing as Prentice Hall
The Decision-Making Process (cont.)
• Step 1: Identify a Problem

– Problem - an obstacle that makes it difficult to
achieve a desired goal or purpose.
– A discrepancy between an existing and desired
state of affairs.
– Every decision starts with a problem, a
discrepancy between an existing and a desired
condition
– Example - Amanda is a sales manager whose
reps need new laptops
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Step 1: Identifying the Problem (contd.)
–Managers have to be careful not to confuse problems
with symptoms of the problem.
–A manager who mistakenly resolves the wrong problem
is likely to perform just a s poorly as the manager who
doesn’t identify the right problem and does nothing.
–Characteristics of Problems (how managers identify a
problem)
• A problem becomes a problem when a manager becomes aware
of it.
• There is pressure to solve the problem.
• The manager must have the authority, information, or
resources needed to solve the problem.
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• Step 2: Identify Decision Criteria

– Decision criteria are factors that are important
(relevant) to resolving the problem
• Costs that will be incurred (investments required)
• Risks likely to be encountered (chance of failure)
• Outcomes that are desired (growth of the firm)
– Example - Amanda decides that memory and
storage capabilities, display quality, battery life,
warranty, and carrying weight are the relevant
criteria in her decision.
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Exhibit 6-2
Important Decision Criteria
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• Step 4: Develop Alternatives

– List viable alternatives that could resolve the
problem
– Alternatives are listed (without evaluation) that
can resolve the problem.
– Example - Amanda, identifies eight laptops as
possible choices. (See Exhibit 6-3.)
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Exhibit 6-3
Possible Alternatives
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Exhibit 6-4
Evaluation of Alternatives
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• Step 6: Select an Alternative

• Choosing the best alternative
– The alternative with the highest total weight is
chosen.
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• Step 7: Implement the Alternative

• Putting the chosen alternative into action
− Conveying the decision to and gaining
commitment from those who will carry out the
alternative যারা সিদ্ধান্তটি গ্রহণ করবেন তাদের কাছ
থেকে সিদ্ধান্তটি পৌঁছে দেওয়া এবং প্রতিশ্রুতি অর্জ ন করা
− participation in decision-making process
inclines people to support the decision
− decision may fail if it is not implemented
properly
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The Manager as Decision-Maker
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• Managerial decision making will be rational if these conditions are met
Single, well-
defined goal
is to be achieved
Problem is
All alternatives clear and
and consequences unambiguous
are known
Rational
Decision
Making Final choice
Preferences will maximize
are clear payoff
Preferences
are constant No time or cost
and stable constraints exist
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The Manager as Decision Maker
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Making Decisions: The Role of Intuition
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What is Intuition?
Decisions based
on experience
Decisions based
on ethical values Experienced- Decisions based
or culture on feelings and
based decisions
emotions
Values or Affect-
ethics-based initiated
decisions Intuition decisions
Subconscious Cognitive-
mental based
processing decisions
Decisions based Decisions based
on subconscious on skills,
data knowledge,
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Inc. Publishing as Prentice Hall or training
Types of problems and decisions:

−Structured Problems & Programmed
decisions
−Unstructured Problems & Non-
programmed decisions
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Structured Problems and Programmed
Decisions
• Structured Problems
– Involve goals that clear.
– Are familiar (have occurred before).
– Are easily and completely defined—information about
the problem is available and complete.
• Programmed Decision
– A repetitive decision that can be handled by a routine
approach. একটি পুনরাবৃত্তিমূলক সিদ্ধান্ত যা একটি রুটিন পদ্ধতির
মাধ্যমে পরিচালনা করা যায়।
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Structured Problems and Programmed
Decisions
• Types of Programmed Decisions
A Procedure
– A series of interrelated sequential steps that a manager
can use to respond (applying a policy) to a well structured
problem.
A Rule
– An explicit statement that limits what a manager or
employee can or cannot do in carrying out the steps
involved in a procedure.
A Policy
– A general guideline for making a decision about a
structured problem.
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Unstructured Problems and
Nonprogrammed Decisions
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Types Of Problems, Types Of Decisions, And Level In The Organization
Ill-structured Top
Nonprogrammed
Type of Decisions Level in
Problem Organization
Programmed
Decisions
Well-structured Lower
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Exhibit 6-7
Programmed Versus
Nonprogrammed Decisions
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Decision-Making Styles
• Recent research on how new managers make decision
was done with four distinct groups of people shows that
the way a person approaches decision making is likely
affected by his or her thinking style.
• Peoples thinking style reflects two things:
1. the source of information used (external data and facts
OR internal sources such as feelings and intuition), and
2. whether that information is processed in a linear way
(rational, logical, analytical) OR a nonlinear way
(intuitive, creative, insightful). These four dimensions are
collapsed into two styles.
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• Managers need to recognize that their employees

may use different decision-making styles. Some
employees may take their time weighing alternatives
and relying on how they feel about it while others
rely on external data before logically making a
decision. These differences don’t make one
person’s approach better than the other. It just
means that their decision making styles are
different.
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Managers as

• Step 1: Identify a Problem

• Step 2: Identify Decision Criteria

• Step 4: Develop Alternatives

• Step 6: Select an Alternative

• Step 7: Implement the Alternative

Types of problems and decisions:

• Managers need to recognize that their employees

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