MGMT 161: Chapter Three - Decision Making Process

Comprehensive vocabulary flashcards covering managerial functions, the 8-step decision-making process, models of decision-making, decision-making biases, group dynamics, ethics, and corporate social responsibility.

Planning

Deciding what needs to be done and how to achieve the organization's goals.

Organizing

Deciding who will do what and how resources, people, and tasks will be arranged.

Leading

Guiding, motivating, and communicating with employees so they can accomplish the goals.

Controlling

Checking progress to see whether goals are being met and making adjustments when needed.

The Decision-Making Process

An eight-step method consisting of: 1. Identification of a Problem, 2. Identification of Decision Criteria, 3. Allocation of Weights to Criteria, 4. Development of Alternatives, 5. Analysis of Alternatives, 6. Selection of an Alternative, 7. Implementation of the Alternative, and 8. Evaluation of Decision Effectiveness.

Decision Criteria

The factors and elements that matter when making a decision, used to evaluate available options.

Weighting

Giving each decision criterion a level of importance based on how much it should influence the final decision.

Rational Model

A decision-making approach where managers logically and systematically evaluate alternatives and select the best one based on maximizing, utilizing every step of the eight-step method.

Bounded Rationality

An approach acknowledging that managers make rational decisions but are limited by their reality and the impossibility of analyzing all information, leading them to satisfice.

Intuitive Decision Making

Making decisions on the basis of experience, feelings or emotions, prior knowledge, pattern recognition, and ethics, utilizing very little of the formal decision-making process.

Maximizing

Choosing the option that yields the best possible outcome by taking the time to compare alternatives and look for the highest value.

Satisficing

Choosing an option that is good enough rather than spending time finding the absolute best option, commonly practiced when time or information is limited.

Minimizing

Choosing the option that reduces an unwanted factor, such as cost or risk, in order to achieve the lowest negative impact.

Structured Problem

A problem that is straightforward, familiar, and easily defined, typically resolved using programmed decisions.

Unstructured Problem

A problem that is new and unusual, where information is often ambiguous or incomplete, requiring nonprogrammed decisions.

Programmed Decisions

Repetitive decisions that can be handled through routine approaches, specifically procedures, rules, and policies.

Nonprogrammed Decisions

Unique and nonrecurring decisions that require custom-made solutions.

Procedures

A series of sequential steps or instructions explaining how something should be done to handle routine situations consistently.

Rules

Specific, explicit statements that clearly tell employees what they must or must not do, leaving little room for interpretation.

Policies

General guidelines that establish parameters and provide flexibility for managers and employees making decisions.

Decision-Making Bias

A tendency to make decisions based on mental shortcuts, assumptions, emotions, or personal beliefs rather than objective evaluation of available information.

Overconfidence Bias

Believing you know more than you actually do or being excessively confident in your judgments and decisions.

The Dunning-Kruger Effect

A cognitive phenomenon illustrating that an early-stage learner often exhibits peak confidence despite limited knowledge, whereas an expert is typically less confident due to understanding complexity.

Immediate Gratification Bias

Choosing an option that provides a quick reward instead of choosing one with a better long-term outcome.

Anchoring Bias

Relying too heavily on the first piece of information received when making judgments or decisions.

Confirmation Bias

Seeking out and focusing on information that supports pre-existing beliefs while disregarding evidence that contradicts them.

Randomness Bias

Trying to identify patterns or create explanations for events that happen entirely by chance.

Sunk Cost Error

Persisting with a poor decision simply because time, money, or effort has already been invested into it.

Revision Bias

Assuming that a change is automatically an improvement solely because it is new.

Groupthink

A phenomenon occurring when group members prioritize agreement and harmony over critical thinking, leading them to overlook superior ideas or significant flaws.

Contingencies of Employee Involvement

Contingency variables that influence the outcomes of employee involvement: decision structure, source of decision knowledge, decision commitment, and risk of conflict.

Ethics

The principles and standards that define right and wrong behaviour.

Ethical Dilemma

A situation where no perfect solution exists because two or more fundamental values conflict.

Corporate Social Responsibility (CSR)

A business's intention, beyond its legal and economic obligations, to do the right things and act in ways that are beneficial to society.

Social Obligations

Activities that a business engages in solely to satisfy its economic and legal responsibilities.

Social Responsiveness

A characteristic of a business firm that actively engages in social actions in response to an identified popular social need.

Approaches to Corporate Social Responsibility

A four-stage continuum ranging from no social responsibility to high social responsibility, encompassing the obstructionist, defensive, accommodative, and proactive approaches.

Obstructionist Approach

A corporate social responsibility posture marked by disregard for social responsibility, representing no social responsibility.

Defensive Approach

A corporate social responsibility posture showing minimal commitment to social responsibility, focusing primarily on legal obligations.

Accommodative Approach

A corporate social responsibility posture demonstrating moderate commitment to social responsibility by agreeing to participate when requested.

Proactive Approach

A corporate social responsibility posture exhibiting strong commitment to social responsibility by actively taking the initiative to do good for society.