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Management (管理学) Chapter9


Managerial Decision Making
Chapter 9

Managerial Decision Making
Decision making is not easy It must be done amid
– – –

ever-changing factors unclear information conflicting points of view

Manager’s Challenge: Tupperware

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2

Managerial Decision Making
Decision Characteristics Decision-making Models

Topics Chapter 9

Steps Executives Take Making Important Decisions Participative Decision Making Techniques for Improving Decision Making in Today’s Organizations
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Decisions and Decision Making

Decision = choice made from available
alternatives

Decision Making = process of identifying
problems and opportunities and resolving them
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Categories of Decisions
Programmed Decisions




Situations occurred often enough to enable decision rules to be developed and applied in the future Made in response to recurring organizational problems

Nonprogrammed Decisions – in response
to unique, poorly defined and largely unstructured, and have important consequences to the organization
Ethical Dilemma: The No-Show Consultant

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Decisions and Decision Making
Many decisions that managers deal with every day involve at least some degree of uncertainty and require nonprogrammed decision making
May be difficult to make Made amid changing factors Information may be unclear May have to deal with conflicting points of view
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Certainty, Risk, Uncertainty, Ambiguity
● ●

Certainty
● ● ● ●

all the information the decision maker needs is fully available decision has clear-cut goals good information is available future outcomes associated with each alternative are subject to chance managers know which goals they wish to achieve information about alternatives and future events is incomplete managers may have to come up with creative approaches to alternatives by far the most difficult decision situation goals to be achieved or the problem to be solved is unclear alternatives are difficult to define information about outcomes is unavailable

Risk



Uncertainty
● ● ●



Ambiguity
● ● ● ●

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Conditions that Affect the Possibility of Decision Failure
Organizational Problem Low Certainty Possibility of Failure Risk Uncertainty High Ambiguity

Programmed Decisions Problem Solution

Nonprogrammed Decisions

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Selecting a Decision Making Model
Depends on the manager’s personal preference Whether the decision is programmed or non-programmed Extent to which the decision is characterized by risk, uncertainty, or ambiguity
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Three Decision-Making Models

Classical Model Administrative Model Political Model

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Classical Model
Logical decision in the organization’s best economic interests

Assumptions
Decision maker operates to accomplish goals that are known and agreed upon Decision maker strives for condition of certainty – gathers complete information Criteria for evaluating alternatives are known Decision maker is rational and uses logic

Normative = describes how a manager should and
provides guidelines for reaching an ideal decision
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Administrative Model

Herbert A. Simon

How nonprogrammed decisions are made--uncertainty/ambiguity

Two concepts are instrumental in shaping the administrative model


Bounded rationality: people have limits or boundaries on how rational they can be Satisficing: means that decision makers choose the first solution alternative that satisfies minimal decision criteria



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Administrative Model
How nonprogrammed decisions are made--uncertainty/ambiguity


Managers actually make decisions in difficult situations characterized by non-programmed decisions, uncertainty, and ambiguity Decision goals often are vague, conflicting and lack consensus among managers; Rational procedures are not always used Managers’ searches for alternatives are limited Managers settle for a satisficing rather than a maximizing solution intuition, looks to past experience

● ● ● ● ●



Descriptive = how managers actually make decisions--not how
they should
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Political Model
Closely resembles the real environment


Closely resembles the real environment in which most managers and decision makers operate Useful in making non-programmed decisions Decisions are complex Disagreement and conflict over problems and solutions are normal

● ● ●



Coalition = informal alliance among manages who support a specific goal

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Characteristics of Classical, Political, and Administrative Decision Making Models
Classical Model
Clear-cut problem and goals Condition of certainty Full information about alternatives and their outcomes Rational choice by individual for maximizing outcomes

Administrative Model
Vague problem and goals Condition of uncertainty Limited information about Alternatives and their outcomes Satisficing choice for resolving problem using intuition

Political Model
Pluralistic; conflicting goals Condition of uncertainty/ambiguity Inconsistent viewpoints; ambiguous information Bargaining and discussion among coalition members

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Six Steps in the Managerial Decision-Making Process
Evaluation and Feedback Recognition of Decision Requirement

Implementation of Chosen Alternative

DecisionMaking Process

Diagnosis and Analysis of Causes

Selection of Desired Alternative

Development of Alternatives

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Diagnosis and Analysis of Causes
Diagnosis = analyze underlying causal
factors associated with the decision situation Managers make a mistake if they jump into generating alternatives without first exploring the cause of the problem more deeply

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Underlying Causes - Kepner /Tregoe
What is the state of disequilibrium affecting us? When did it occur? Where did it occur? How did it occur? To whom did it occur? What is the urgency of the problem? What is the interconnectedness of events? What result came from which activity?
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Selection of Desired Alternatives
Risk Propensity = willingness to undertake risk with the opportunity of gaining an increased payoff Implementation = using managerial, administrative, and persuasive abilities to translate the chosen alternative into action

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Decision Styles
Differences among people with respect to how they perceive problems and make decisions Not all managers make decisions the same
– – – –

Directive style Analytical style Conceptual style Behavioral style

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Personal Decision Framework

Situation: Programmed/nonprogrammed Classical, administrative, political Decision steps

Personal Decision Style: Directive Analytical Conceptual Behavioral

Decision Choice: Best Solution to Problem

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Directive Style
People who prefer simple, clear-cut solutions to problems Make decisions quickly May consider only one or two alternatives Efficient and rational Prefer rules or procedures

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Analytical Style
Complex solutions based on as much data as they can gather Carefully consider alternatives Base decision on objective, rational data from management control systems and other sources Search for best possible decision based on information available
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Conceptual Style
Consider a broad amount of information More socially oriented than analytical style Like to talk to others about the problem and possible solutions Consider many broad alternatives Relay on information from people and systems Solve problems creatively

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Behavioral Style
Have a deep concern for others as individuals Like to talk to people one-on-one Understand their feelings about the problem and the effect of a given decision upon them Concerned with the personal development of others May make decisions to help others achieve their goals
Experiential Exercise: What’s Your Personal Decision Style?

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Participation in Decision Making

Vroom-Jago Model

Helps gauge the appropriate amount of participation for subordinates in process


Leader Participation Styles
Five levels of subordinate participation in decision making ranging from highly autocratic to highly democratic

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Participation in Decision Making
Diagnostic

Vroom-Jago Model

Questions Decision participation depends on the responses to seven diagnostic questions about
● ● ●

the problem the required level of decision quality the importance of having subordinates commit to the decision

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Seven Leader Diagnostic Questions
How significant is the decision? How important is subordinate commitment? What is the level of the leader’s expertise? If the leader were to make the decision alone at what level would subordinates be committed to the decision? What level is the subordinate’s support for the team or organization’s objectives? What is the member’s level of knowledge or expertise relative to the problem? How skilled or committed are group members to working together?
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New Decision Approaches for Turbulent Times
New Decision Approaches for Turbulent Times

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