CH9 Managerial Decision Making

The decision is a choice made from the available alternatives. Decision-making is the process of
identifying problems and opportunities and then solved. Decision-making involves exerting effort before
and after actual selection.

Programmed and Nonprogrammed Decisions:

Programmed decisions: Involving situations that have often occurred sufficiently to enable decision
rules to be developed and applied in the future. when managers have established decision-making rules,
subordinates and others can make decisions to rid managers of other tasks.

Nonprogrammed Decisions: Unprogrammed decisions are made in response to unique, undefined,

highly unregulated and potentially significant consequences for the Organization it involves strategic
planning because of great uncertainty and complex decisions.

Facing Certainty and Uncertainty

the degree of certainty or uncertainty is difference between programmed and unprogrammed

decision.

The uncertainty depends on the amount of available information.

Certainty - a situation where all information is fully available

Risk - Future results associated with alternative are prone to chance

Ambiguity vs Conflict

Ambiguity means that the goal to be achieved or the problem to be resolved is unclear, it is difficult to
identify alternatives, and information about results is not available.
Wicked Decisions is a highly ambiguous situation involving a conflict over objectives, there is no
clear answer.

Decision-Making Models:

1- The Ideal, Rational Model: Is based on assumptions that managers should make logical
decisions that are in the best economic interests of the Organization. There are four
assumptions:
a- Working to achieve the goals known and agreed upon.
b- The decision-maker strives to ensure certainty, which gathers complete information.
c- Criteria for assessing alternatives are known.
d- Decision maker is a rationale and uses logic.
2- The administrative model is descriptive, in the sense that it describes how managers
actually make decisions rather than how they are taken. two basic concepts in the
formation of the administrative model: bounded rationality and satisficing.
Steps in the Administrative Model:

 Decision goals often are often ambiguous, contradictory and lacking unanimity.

 Rational procedures are not always used, and when they are, they are limited to a simplified
vision of the problem that does not reflect the main problem.

 Managers' search for alternatives is limited by human resource, information and resources
constraints.

 Most managers settle for a solution instead of maximizing it.

3- Political Model:

 Decisions include managers with diverse interests

 Managers must engage in coalition building
 An informal alliance to support a specific goal
 Without an alliance, powerful groups can hinder decision-making
 The political model resembles the real environment
Decision-Making Steps

 Recognition of Decision Requirement - identify the problem or opportunity

 Diagnosis and Analysis - Analysis of underlying causative factors
 Development of alternatives - identification of possible alternatives
 Selection of Desired Alternative - an alternative with the desired result
 Implementation of Chosen Alternative - Use compelling management capabilities
to implement
 Evaluation and feedback - Collect information on effectiveness

Personal Decision Framework

Many managers rely on their own decision-making style to make decisions. The style of personal
decision refers to the differences between people regarding how to perceive problems and make
decisions.

four major decision styles

 directive style is used by people who prefer simple, straightforward solutions to problems.
 analytical style, managers like to think of complex solutions that rely on as much data as they
have.
 conceptual style, People who tend to conceptual style also like to think of a large amount of
information.
 Behavioral style is characterized by a deep concern for others as individuals.
Innovative Group Decision Making

 brainstorming - unplanned suggestions in a group.

 Engage in a rigorous debate - Use divergent views to focus on the problems.
 Avoid group thinking - Confession will recognized as a value rather than a blind agreement.
 Act with speed - decisions must be taken very quickly.
 Do not ignore the crisis - managers should expect and plan crises (quickly).
 Know when to bail - Good managers must know when to pull the plug.

Effective Brainstorming

 Less than 10 people

 Less than 30 min.
 Focus on one topic (subject)
 Encourage everyone to participate
 Prohibit criticism.
 Leader writes the ideas on the board