DECISION MAKING0

8/7/2019 DECISION MAKING0

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Group Members

Hafiz Syed maaz Agha

Hafiz Syed Raheel Agha

Mohammad Nabeel Khan

Mohammad Umer Khan

Mohsin Aslam Khan

DECISION MAKING

The Essence Of Manager's Job


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Decision Making ProcessDecision Making Process

A set of eight steps that include identifying a

problem, selecting an alternative, and

evaluating the decisions effectiveness


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The Decision Making ProcessThe Decision Making Process


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STEP 1:STEP 1: Identifying A Problem

The decision making process begins with the existence of aPROBLEM or , more specifically, a discrepancy between an

existing and a desired state of affairs.

STEP 2:STEP 2: Identifying Decision Criteria

Once a manager has identified a problem that needs attention, the

decision criteria important to resolving the problem must beidentified.


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STEP 3:STEP 3: ALLOCATING WEIGHTS TO THE CRITERIA

The criteria identified in Step 2 arent equally important so the

decision maker must weight the items in order to give them the

correct priority in the decision.

STEP 4:STEP 4: DEVELOPING ALTERNATIVES:

The fourth step requires the decision maker to list the variable

alternatives that could solve the problem. No attempt is made in

this step to evaluate the alternatives, only to list them.


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STEP 5:STEP 5: ANALYZING ALTERNANTIVES:

Once the alternatives have been identified, the decision maker

must critically analyze each one. After analyzing each criteriaor from this comparison of alternatives the strength &

weaknesses of each alternative becomes evident.

STEP 6:STEP 6: SELECTING AN ALTERNATIVE:SELECTING AN ALTERNATIVE:

The sixth step is the important act of choosing the bestalternative from among those considered.


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STEP 7:STEP 7: IMPLEMENTING THE ALTERNATIVE

Although the choice process is completed in the previous step

STEP 8:STEP 8: EVALUATING DECISION EFFECTIVENESSEVALUATING DECISION EFFECTIVENESS

Appraising the outcome of the decision to see if the problem

has been resolved . Did the alternative chosen andimplement accomplish the desired result.


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Rational Decision Making:

Decision-making behavior where choices are

consistent and value-maximizing within specified

constraint.Bounded Rationality:

Decision-making behavior thats rational , but

limited(bounded)by Individual ability to process

information.

Intuitive Decision Making:

Making Decision on the basis of experience,

feelings, and accumulated judgment.

Making Decisions : Rationality ,Making Decisions : Rationality ,

Bounded Rationality, and intuitionBounded Rationality, and intuition


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Types Of Problems and DecisionsTypes Of Problems and Decisions

Structured Problems and Programmed Decisions:

Some problems are straight forward. The goals of decisions

makers are clear, the problems is familiar and information about

the problems is easily defined and complete.

Unstructured problems and nonprogrammed Decisions:

In this situation the problems are new or unusual for which the

information is ambiguous or in complete.

Integration: The difference between programmed and non programmed

decisions backed by organization characteristics and hierarchy.


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DecisionDecision--Making ConditionsMaking Conditions

Managers within organizations make decisions and permeateseverything an organization does.

Decisions are the means by which organizations turn ideas into

action and can have a positive or a negative impact.


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Decision-Making Conditions

CertaintyA situation in which a

manager can make an

accurate decision because the

outcome of every alternativechoice is known.

RiskA situation in which the

manager is able to estimate

the likelihood (probability) of

outcomes that result from the

choice of particular

alternatives.


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UncertaintyUncertainty

Limited information prevents estimation ofoutcome probabilities for alternatives

associated with the problem and may force

managers to rely on intuition, hunches, and

gut feelings.


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DecisionDecision--Making StylesMaking Styles

y Dimensions ofDecision-Making Styles

y Ways of thinking

y Rational, orderly, and consistent

y Intuitive, creative, and unique

y Tolerance for ambiguity

y Low tolerance: require consistency and order

y High tolerance: multiple thoughts simultaneously


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Decision-Making Biases and Errors


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Overconfidence Bias

When decision makers tend to think they know more than they

do or hold unrealistically positive views of themselves and

ones performance.

Immediate Gratification Bias

Decision makers who tend to want immediate rewards and that

to avoid immediate costs. For these individuals decision

choices that provide quick payoffs are more appealing thanthose in the future.


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Anchoring Effect

Fixating on initial information as a starting point and the once

set fail to adequately adjust for subsequent information.

Selective Perception Bias

When decision makers Selectively organize and interpret

events based on their biased perceptions they are using

Selective Perception Bias

Confirmation Bias

Seeking out information that reaffirms past choices and

discount information that contradicts past judgments exhibit theconfirmation bias.


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Framing Bias

When decision makers Select and highlight certain aspects

of a situation while excluding others. By drawing

attention to specific aspects of a situation and highlighting

them while at the same time omitting other aspects

Availability Bias

When decision makers tend to remember events that are the

most recent and vivid in their memory.

It distorts their ability to recall events in an objective mannerand results in distorted judgments.


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Representation Bias

When decision makers assess the likelihood of an event basedon how closely it resembles other events or set of events.

Managers exhibiting this bias draw analogies and see

identical situations where dont exist

Randomness Bias

They do this because most decision makers have difficulty

dealing with chance even though random events happen to

everyone & there is nothing that can be done to predict them


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Sunk Costs Errors

Forgetting that current actions cannot influence past events andrelate only to future consequences.

Self-Serving Bias

Taking quick credit for successes and blaming outside factors forfailures.

Hindsight Bias

Is the tendency for decision makers to falsely believe that theywould have accurately predicted the outcome of an event once

that outcome is actually known


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Thank You!

Documents

DECISION MAKING0