Chapter 3 (MGT)

8 Steps of decision making

Identify a problem, identify decision criteria, allocate weights to criteria, develop alternatives, Analyze alternatives, Select an alternative, Implement the alternative, Evaluate decision effectiveness

Decision making is the…

Essence of management

Rational Model

Managers make decisions that are consistent and value maximizing with specified constraints

Bounded Rationality

Managers make rational decisions but are limited (bound) by their ability to process information, Since its impossible to analyze all information on alernative, managers satisfice

Bounded Awareness

People overlook important information during the decision making process

Bounded Ethicality

Personal ethical preferences may not be in sync with out actual behaviour

Bounded rationality

We employ shortcuts to help make sense of things

Bounded will power

We give too much focus to the present and not the future

Bounded self interest

We attach priority to then outcomes of others rather than simply try to maximize our own payoffs

Intuitive decision making

Managers make decisions on the basis of experience, feelings and accumulated judgement

Structured problems

Straightforward, familiar, and
easily defined. They are resolved using programmed
decisions

Programmed decisions

Repetitive decisions that can be handled by routine approach

Unstructured problems are new and unusual

Info is often ambiguous / incomplete and resolved using nonprogrammed decisions

Nonprogrammed decisions (unstructured problems)

Unique and non recurring ; and require custom-made solutions

Group think is…

A form of conformity where deviant, minority or unpopular views are withheld in order to give the appearance of agreement

How does national culture change the way managers think

The way decisions are made (group vs individual), the degree of risk a decision maker is willing to take

How does design thinking change the way managers think

Considers emotional as well as rational aspects, Uses observation and inquiry not only rational analysis

How does big data change the way managers think

Performances can be measured and monitored unlike before, goals are needed when collecting and using this type of info

Ethics refers to..

Rules and principles that define right and wrong behaviour

utilitarian view…

decisions are made solely on the basis of their outcomes and consequences

Rights view…

Decisions are made while respecting and protecting individual liberties and privileges

Theory of justice view…

Rules are imposed and enforced fairly and impartially by following all legal rules and regulations

Integrative social contracts theory…

Decisions are based on existing ethical norms in industries and communities

Corporate social responsibility. (C S R) is…

A business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society