1、8th editionSteven P.RobbinsMary CoulterCopyright 2005 Prentice Hall,Inc.All rights reserved.62L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapter.The Decision-Making Process Define decision and decision-making process.Describe the eight steps in the decision
2、-making process.Explain the challenges managers face in identifying problems.Discuss why decision criteria are important in the decision-making process.Describe how managers develop,analyze,and select alternatives.Explain what happens during implementation and evaluation.Copyright 2005 Prentice Hall
3、,Inc.All rights reserved.63L E A R N I N G O U T L I N E (contd)Follow this Learning Outline as you read and study this chapter.The Managers as Decision Maker Explain why decision making is synonymous with managing.Discuss the assumptions of rational decision making.Describe the concepts of bounded
4、rationality,satisficing,and escalation of commitment.Explain what intuition is and how it affects decision making.Contrast programmed and nonprogrammed decisions.Define the three forms of programmed decision making.Contrast the three decision-making conditions.Copyright 2005 Prentice Hall,Inc.All ri
5、ghts reserved.64L E A R N I N G O U T L I N E (contd)Follow this Learning Outline as you read and study this chapter.The Managers as Decision Maker(contd)Explain maximax,maximin,and minimax decision choice approaches.Describe the four decision making styles.Discuss the twelve decision-making biases
6、managers may exhibit.Describe how manager can deal with the negative effects of decision errors and biases.Explain the managerial decision-making model.Decision Making for Todays World Describe todays decision-making environment.Copyright 2005 Prentice Hall,Inc.All rights reserved.65L E A R N I N G
7、O U T L I N E (contd)Follow this Learning Outline as you read and study this chapter.Decision Making for Todays World(contd)Explain how managers can make effective decisions in todays world.List six characteristics of an effective decision-making process.Tell what a highly reliable organization is.D
8、escribe the five habits of highly reliable organizations.Copyright 2005 Prentice Hall,Inc.All rights reserved.66L E A R N I N G O U T L I N E (contd)Follow this Learning Outline as you read and study this chapter.What Is An Organization?Describe the characteristics of an organization.Explain how the
9、 concept of an organization is changing.Why Study Management?Explain the universality of management concept.Discuss why an understanding of management is important even if you dont plan to be a manager.Describe the rewards and challenges of being a manager.Copyright 2005 Prentice Hall,Inc.All rights
10、 reserved.67Decision Making DecisionMaking a choice from two or more alternatives.The Decision-Making ProcessIdentifying a problem and decision criteria and allocating weights to the criteria.Developing,analyzing,and selecting an alternative that can resolve the problem.Implementing the selected alt
11、ernative.Evaluating the decisions effectiveness.Copyright 2005 Prentice Hall,Inc.All rights reserved.68Step 1:Identifying the Problem ProblemA discrepancy between an existing and desired state of affairs.Characteristics of ProblemsA problem becomes a problem when a manager becomes aware of it.There
12、is pressure to solve the problem.The manager must have the authority,information,or resources needed to solve the problem.Copyright 2005 Prentice Hall,Inc.All rights reserved.69Step 2:Identifying Decision Criteria Decision criteria are factors that are important(relevant)to resolving the problem.Cos
13、ts that will be incurred(investments required)Risks likely to be encountered(chance of failure)Outcomes that are desired(growth of the firm)Step 3:Allocating Weights to the Criteria Decision criteria are not of equal importance:Assigning a weight to each item places the items in the correct priority
14、 order of their importance in the decision making process.Copyright 2005 Prentice Hall,Inc.All rights reserved.610Step 4:Developing Alternatives Identifying viable alternativesAlternatives are listed(without evaluation)that can resolve the problem.Step 5:Analyzing Alternatives Appraising each altern
15、atives strengths and weaknessesAn alternatives appraisal is based on its ability to resolve the issues identified in steps 2 and 3.Copyright 2005 Prentice Hall,Inc.All rights reserved.611Step 6:Selecting an Alternative Choosing the best alternativeThe alternative with the highest total weight is cho
16、sen.Step 7:Implementing the Decision Putting the chosen alternative into action.Conveying the decision to and gaining commitment from those who will carry out the decision.Copyright 2005 Prentice Hall,Inc.All rights reserved.612Step 8:Evaluating the Decisions Effectiveness The soundness of the decis
17、ion is judged by its outcomes.How effectively was the problem resolved by outcomes resulting from the chosen alternatives?If the problem was not resolved,what went wrong?Copyright 2005 Prentice Hall,Inc.All rights reserved.613Making Decisions RationalityManagers make consistent,value-maximizing choi
18、ces with specified constraints.Assumptions are that decision makers:vAre perfectly rational,fully objective,and logical.vHave carefully defined the problem and identified all viable alternatives.vHave a clear and specific goalvWill select the alternative that maximizes outcomes in the organizations
19、interests rather than in their personal interests.Copyright 2005 Prentice Hall,Inc.All rights reserved.614Making Decisions(contd)Bounded RationalityManagers make decisions rationally,but are limited(bounded)by their ability to process information.Assumptions are that decision makers:vWill not seek o
20、ut or have knowledge of all alternativesvWill satisficechoose the first alternative encountered that satisfactorily solves the problemrather than maximize the outcome of their decision by considering all alternatives and choosing the best.Copyright 2005 Prentice Hall,Inc.All rights reserved.615Influ
21、ences on Decision Making Escalation of CommitmentIncreasing or continuing a commitment to previous decision despite mounting evidence that the decision may have been wrong.The Role of IntuitionIntuitive decision makingvMaking decisions on the basis of experience,feelings,and accumulated judgment.Cop
22、yright 2005 Prentice Hall,Inc.All rights reserved.616Problems and Decisions Structured ProblemsInvolve goals that clear,Are familiar(have occurred before),Are easily and completely definedinformation about the problem is available and complete,Programmed DecisionA repetitive decision that can be han
23、dled by a routine approach.Copyright 2005 Prentice Hall,Inc.All rights reserved.617Types of Programmed Decisions A PolicyA general guideline for making a decision about a structured problem.A ProcedureA series of interrelated steps that a manager can use to respond(applying a policy)to a structured
24、problem.A RuleAn explicit statement that limits what a manager or employee can or cannot do in carrying out the steps involved in a procedure.Copyright 2005 Prentice Hall,Inc.All rights reserved.618Policy,Procedure,and Rule Example PolicyAccept all customer-returned merchandise.ProcedureFollow all s
25、teps for completing merchandise return documentation.RulesManagers must approve all refunds over$50.00.No credit purchases are refunded for cash.Copyright 2005 Prentice Hall,Inc.All rights reserved.619Problems and Decisions(contd)Unstructured ProblemsProblems that are new or unusual and for which in
26、formation is ambiguous or incomplete.Problems that will require custom-made solutions.Nonprogrammed DecisionsDecisions that are unique and nonrecurring.Decisions that generate unique responses.Copyright 2005 Prentice Hall,Inc.All rights reserved.620Decision-Making Conditions CertaintyA ideal situati
27、on in which a manager can make an accurate decision because the outcome of every alternative choice 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.Copyright 2005 Prentice Hall,Inc.All rig
28、hts reserved.621Decision-Making Conditions UncertaintyLimited or information prevents estimation of outcome probabilities for alternatives associated with the problem and may force managers to rely on intuition,hunches,and“gut feelings”.vMaximax:the optimistic managers choice to maximize the maximum
29、 payoffvMaximin:the pessimistic managers choice to maximize the minimum payoffvMinimax:the managers choice to minimize his maximum regret.Copyright 2005 Prentice Hall,Inc.All rights reserved.622Decision-Making Styles Dimensions of Decision-Making StylesWays of thinkingvRational,orderly,and consisten
30、tvIntuitive,creative,and uniqueTolerance for ambiguityvLow tolerance:require consistency and ordervHigh tolerance:multiple thoughts simultaneouslyCopyright 2005 Prentice Hall,Inc.All rights reserved.623Decision-Making Styles(contd)Types of Decision MakersDirectivevUse minimal information and conside
31、r few alternatives.AnalyticvMake careful decisions in unique situations.ConceptualvMaintain a broad outlook and consider many alternatives in making long-term decisions.BehavioralvAvoid conflict by working well with others and being receptive to suggestions.Copyright 2005 Prentice Hall,Inc.All right
32、s reserved.624Decision-Making Biases and Errors HeuristicsUsing“rules of thumb”to simplify decision making.Overconfidence BiasHolding unrealistically positive views of ones self and ones performance.Immediate Gratification BiasChoosing alternatives that offer immediate rewards and that to avoid imme
33、diate costs.Copyright 2005 Prentice Hall,Inc.All rights reserved.625Decision-Making Biases and Errors(contd)Anchoring EffectFixating on initial information and ignoring subsequent information.Selective PerceptionSelecting organizing and interpreting events based on the decision makers biased percept
34、ions.Confirmation BiasSeeking out information that reaffirms past choices and discounting contradictory information.Copyright 2005 Prentice Hall,Inc.All rights reserved.626Decision-Making Biases and Errors(contd)Framing Bias Selecting and highlighting certain aspects of a situation while ignoring ot
35、her aspects.Availability Bias Losing decision-making objectivity by focusing on the most recent events.Representation Bias Drawing analogies and seeing identical situations when none exist.Randomness Bias Creating unfounded meaning out of random events.Copyright 2005 Prentice Hall,Inc.All rights res
36、erved.627Decision-Making Biases and Errors(contd)Sunk Costs Errors Forgetting that current actions cannot influence past events and relate only to future consequences.Self-Serving Bias Taking quick credit for successes and blaming outside factors for failures.Hindsight Bias Mistakenly believing that
37、 an event could have been predicted once the actual outcome is known(after-the-fact).Copyright 2005 Prentice Hall,Inc.All rights reserved.628Decision Making for Todays World Guidelines for making effective decisions:Know when its time to call it quits.Practice the five“whys”.Be an effective decision
38、 maker.Habits of highly reliable organizations(HROs)Are not tricked by their success.Defer to the experts on the front line.Let unexpected circumstances provide the solution.Embrace complexityAnticipate,but also anticipate their limitsCopyright 2005 Prentice Hall,Inc.All rights reserved.629Character
39、istics of an Effective Decision-Making Process It focuses on what is important.It is logical and consistent.It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking It requires only as much information and analysis as is necessary to resolve a particular dilemma.It encourages and guides the gathering of relevant information and informed opinion.It is straightforward,reliable,easy to use,and flexible.
