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8/6/2019 BA Decision Making
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INTRODUCTION.
All managers make numerous
decisions. The overall quality of
these decisions strongly affect theorganization's success or failure.
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THE DECISION-MAKING
PROCESS.Decision making is a process that
involves more than the simple act of
choosing among alternatives. The
decision-making process is defined as a
set of eight steps that include
identifying a problem, selecting an
alternative, and evaluating the
decision's effectiveness. 3
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A problem is defined as a discrepancy
between an existing and a desired stateof affairs.
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The decision criteria include any
criteria th
at define wh
at is relevant in adecision.
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The criteria identified in step 2 of the
decision-making process must beweighted in order to give them correctpriority in the decision.
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The decision maker now needs toidentify viable alternatives for resolving
the problem.
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Each of the alternatives must now be
critically analyzed.E
ach
alternative isevaluated by appraising it against thecriteria.
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The act of selecting the best alternativefrom among those identified and
assessed is critical.
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The chosen alternative must beimplemented. Implementation is
defined as conveying a decision to thoseaffected and getting their commitment
to it.10
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The last step in the decision-makingprocess assesses the result of the
decision to see whether or not theproblem has been corrected.
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THE RATIONAL DECISIONMAKER.
Rational decision makingdescribes choices that are
consistent and value-maximizingwithin specific constraints.
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There are seven assumptions about rationality.
1. The problem is clear and unambiguous.
2. A single, well-defined goal is to be achieved.
3. All alternatives and consequences are known.
4. Preferences are clear.
5. Preferences are constant and stable.
6. No time or cost constraints exist.
7. Final ch
oice will maximize economic payoff. 13
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Unfortunately, most decisions thatmanagers face don't meet all the tests of
rationality.
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Defined as behavior that is rational withinthe parameters of a simplified model that
captures the essential features of a problem.
The result of bounded rationality issatisficing, which is defined as acceptance of
solutions that are "good enough."
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There are two types of decisionsthat managers might face.
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are repetitive decisions that can behandled by a routine approach. Indealing with this type of decision,
managers may utilize procedures, rules,or policies.
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are unique decisions that require acustom-made solution.
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DECISION-MAKING STYLES.
Managers have different styles
when it comes to making a decision
and solving problems.
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A. One view proposes that there are
three different ways managersapproach problems in the workplace.
1. A problem avoider ignores information
that points to a problem. These individuals don't
want to confront problems.
2. Problem solvers try to solve problemswhen they come up. They can be characterized as
being reactive only dealing with problems when
they occur. 20
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3. A problem seeker actively seeks out
problems to solve or new opportunities
to pursue. They take a proactiveapproach to anticipating problems
before they occur.
4. Managers can and do use each
approach.
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B. The other approach suggests thatindividuals differ along two dimensions in
the way they approach decision making.
One dimension is an individual's way ofthinking (rational or intuitive) and the other
is an individual's tolerance for ambiguity
(low or high). These two dimensions can becombined into four different decision-
making styles.
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1. The directive style is characterized
by a low tolerance for ambiguity and a
rational way of thinking.
2. The analytic style is characterized by
a high tolerance for ambiguity and arational way of thinking.
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3. The conceptual style is characterized by a high
tolerance for ambiguity and an intuitive way of thinking.
4. The behavioral style is characterized by a lowtolerance for ambiguity and an intuitive way of thinking.
5. Although these four styles are distinct, most
managers have characteristics of more than one style. It'sprobably more realistic to think of a managers dominant
style and his or her alternate styles.
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Short Quiz
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1. The set of eight steps that begins with
identifying a problem and decision criteria
and allocating weights to those criteria is
called the _____.
A. programmed decision
B. decision-making process
C. structured problem
D. directive style
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2. In the decision-making process, once
alternatives have been identified, a
decision maker must analyze each one byevaluating it against _____.
A. heuristics
B. risks
C. nonprogrammed decisions
D. decision criteria
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3. The last step of the decision-
making process involves _____.
A. selecting an alternative
B. identifying decision criteria
C. evaluating decision effectivenessD. identifying a problem
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4. Because of limitations on coming up with
the "best" alternative, managers frequently
pursue alternatives that they consider to be
"good enough." This is known as _____.
A. satisficing
B. bounded rationality
C. rationality
D. certainty
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5. A waitress spills a drink on a customer
and the manager immediately offers to pay
to dry-clean the customer's jacket. This
problem and solution are fairly routine and
straightforward. This is an example of a
_____.
A. nonprogrammed decision
B. unstructured problemC. programmed decision
D. bounded rationality30
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6. In the case of _____, the goal of the
decision maker is clear, the problem is
familiar, and information about the
problem is easily defined and complete.
A. structured problems
B. intuitive decision making
C. unstructured problems
D. bounded rationality
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7. Which of the following is an example of a
policy?
A. Employees must clock out before taking lunchbreaks.
B. Employees may not smoke inside the building.
C. Employee wages will be competitive withincommunity standards.
D. Employees requesting vacation time must
submit the appropriate form at least three weeks
prior to the beginning of the requested vacation
period.
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8. Under conditions of _____, the choice of
alternative is influenced by the limited
amount of information available to the
decision maker and by the psychological
orientation of the decision maker.
A. certainty
B. uncertaintyC. risk
D. intuition33
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9. Individuals with a(n) _____ managementstyle tend to be very broad in their outlook
and look at many alternatives. They focus
on the long run and are very good atfinding creative solutions to problems.
A. directive
B
. analyticC. conceptual
D. behavioral
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10. Which of the following is NOT one of
the habits of highly reliable organizations,
as described by Karl Weick?A. They defer to experts on the front line.
B. They let unexpected circumstances
provide the solution.C. They reject uncertainty.
D. They are not tricked by their successes.
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11. The overall quality of
managerial decisions has no
appreciable influence on whether
an organization succeeds or fails.
TrueFalse
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12. All organizational members
make decisions that affect their
jobs and the organization theywork for.
TrueFalse
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13. Problem identification is
objective.
TrueFalse
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14. Rational managerial decision
making assumes that decisions are
made in the best interests of the
organization.
TrueFalse
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15. Most decisions that managers
make fit the assumptions ofperfect rationality.
True
False
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16. Procedures, rules, and policies
are examples of nonprogrammeddecisions.
TrueFalse
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17. Problems confronting
managers usually become more
unstructured as they move up theorganizational hierarchy.
True
False
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18. The ideal situation for making
decisions is one of uncertainty.
True
False
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19. Most managers have
characteristics of more than onedecision-making style.
True
False
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20. Heuristics can be useful to
decision makers because they
increase the complexity of aproblem.
True
False
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