BA Decision Making

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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BA Decision Making