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Flashcards in Chapter 5 last exam Deck (70):

Decision making

process by which managers respond to opportunities and threats by analyzing the options and making decisions about specific organizational goals and actions


What are managers 4 principal tasks?

planning, organizing, leading, and controlling


Programmed decisions?

routine decisions that almost have an automatic response. established guidelines and rules


Non programmed decision making?

used for non routine decisions that are made to unusual opportunities or threat


what are non programmed decisions based on?

intuition and reasoned judgement


what is intuition?

feelings, beliefs and hunches about situation


what is reasoned judgement

decisions take time and result from careful information gathering, figuring out alternatives


what is the problem with most managers?

they are overconfident


what are the two models of decision making?

classical model and administrative model


what is the classical decision making model? what does prescriptive mean?

prescriptive means the model specifies how should be made.
- essentially its a model that believes decision makers can identify all the possible solutions and evaluate the possible result of that decision and then reasonabbly choose the best decision


what does the classical model base itself on?

the assumption managers have access to all information and that its all accurate and can make the OPTIMUM DECISION


what is the optimum decision?

best decision possible in light of what they believe to be the most desirable result


who made the administrative model?

james march and herbet simon


what is the administrative model?

approach to decision making that explains why decision making is risky and uncertain and usually make decisions that are done to satisfy and not come at the best decision


The administrative model is based on what 3 concepts?

1. bounded rationality
2. incomplete information
3. satisficing


what is bounded rationality concept in the administrative model?

- believes that decision makers cant make the optimum decision because their cognitive abilities are limited that cause them to not process and act on the decision in the correct way


what is incomplete information concept in the administrative model?

- managers cant make the best decision because the information isnt complete due to the inability to know all the alternatives and results of those decisions. information is incomplete because of 1. risk and uncertainity, 2. ambiguity, and 3. timeconstraitns


what is the risk in the incomplete information section of the administrative model?

degree of probablity that the possible results of a particular deision of action could occur


what is the uncertainty of incomplete information section of the administrative model?

- the unpredictablity of outcomes of decisions


what is the ambiguity of information in the incomplete information of the administrative model?

- information can be interpreted in many ways that conflict each other


what are time constraints and information costs in the incplete information section of the administrative model?

- managers dont have the time or money to look at and research all possible alternatives and decisions


what is the satisficing concept of the administrative model

- searching for and choosing an aceptable or satisfactory decision instead of choosing the best decision
- only ask a limited # of people to find information


what are the 6 steps in the decision making process

1. recognize the need for a decision
2. generative alternative
3. assess alternatives
4. choose among alternatives
5. implement the choosen alternative
6.. learn from feedback


what is the recognize need for a decision step in the decision making process?

- recognize their is an issue they need to address or an opportunity they can take advantage of


what is the generation of alternatives for a decision step in the decision making process?

- create as many possible reasonable solutions to the opprotunity or threat
- tough to find creative solution


what is the assess alternatives for a decision step in the decision making process? this is based on 4 criteria to evaluate pros and cons, what are they?

- compare and contrast possible solutiions that lead to the best decision that satisfy the four criteria
1. legality: is the deciison legal
2. ethicalness: is deciison ethicial
3. economic feasibility: can we afford this deciison and is it cost effect, does it benefit us
4. PRacticality: do we have the capabilities and resources to do this decision


what is the choose among alternatives for a decision step in the decision making process?

- rank the possible alternative solutions from best to worst and make decision


what is needed for managers to make a decision?

as much information as they can possibly get


what is the implement chosen alternative for a decision step in the decision making process?

- actually put the decision into play and make necessary changes or follow-up decisions to adapt to and implement the decision


what is the learn from feedback for a decision step in the decision making process? 3 steps to getting and assessing feedback in order to learn from feedback, what are they?

- see the effects from decision and learn from them
3 steps to doing so:
1. ocmpare and contrast what ctually happened vs what you expected to happen as a result of the decision
2. explore why any expectations for the decision were not met
3. derive guidliines that will help in future decision making


who said that decision makers use heuristics when making decision? what are heuristics?

- daniel kahneman and Amos Tversky
- heuristic are rules of thumb that simplify deciion making


What are examples of heuristics?

decision making process etc...


what can heuristics sometimes cause? and what is that definition?

- can sometimes cause systematic errors
systematic errors: errors people make continuously that result in poor decision making because of cognitive biases


what are 4 sources of cognitive bias that adversely affect the way managers make decisions?

1. prior hypothesis bias
2. representative bias
3. illusion of control
4. escalating commitment


what is the prior hypothesis cognitive bias say about decisions? and decision makers?

- decision makers make decisions sometimes on the basis of their prior beliefs between two variables even when given evidence that shows they are wrong


what is the representative cognitive bias say about decisions? and decision makers?

- decision makers sometimes make decision based on a small sample or because of a single event
ex. went to one bad fast food spot and thinks all fast food spots are bad and make decisions off that


what is the illusion of control cognitive bias say about decisions? and decision makers?

- tendency of decision makers to overestimate their ability to control activities and events
ex. are overconfident in their ability to succeed


what is the escalating commitment cognitive bias bias say about decision? and decision makers?

- says decision are made because they already ar ein the hole and feel a personal responsibility to change situation
ex. u invested a lot of money into something that even when it starts to go bad you invest more money because you feel connected to it and feel the need to see it through and think that investinng more will fix situation


what are some ways to be aware of your cognitive biases and improve decision making?

1. look at tow recent decisions, one that was good, and one that was bad, and learn frm it
2. critically evaluate themselves by listing criteria they typically use to assess and evaluate alternatives, heuristics they use, perosnal biases, and see how appropriate they are


One good result of group decision making?

- decisons are less likely to fall victim to the biases and errors discussed previously
- combine skills and backgrounds, and experiences that allow for best decisions
- chance thing gets implemented increases


what is a negative of groupwork?



what is groupthink?

- tendency for gorup members to come to a decision that creates the most hamrony amongst group members instead of arrive at they best decision that would be reached through some conflict and discussion of opposing views


what are two ways to prevent gorupthink?

devils advocacy and dialectical inquiry


what id devil advocacy?

- when a person or people are critical of a solution and present all possible reasons that it would not work in order for the group to come up wiht best decision


what is dialectical inquiry?

- analysis of a solution critically by presenting two alternatives that were created by two separate groups and then comparing those two best decisions against each other


what is good to have in gorups and why?

diversity and because it results in many different life experiences to be shared and caus epeople to come frm different angles that allows them to come up with the best solution


quality of managerial decision making depends on what?

innovative responses to opportunities and threats


what is organizational learning?

process through which managers try to improve the desire and ability of employees to understand and manage the organization and its task environment


what is a learning organization?

an organization is one in which managers doe everything possible to maxmize the ability of individuals and groups to think and behave creatively and therefore maximize possibility for organizational learning to take place


what is at the heart of organizational learning and what is it?

creativty and it is a decision makers abaility to discover original and unique ideas that lead to reaslistic and possible courses of action


what were the fiv eprinciples for creating a learging organization and who created them?

- Peter senge
1. personal mastery
2. complex mental models
3. team learning
4. building a shared vision
5. systems thinking


what is the personal mastery principle for creating a learning organization by peter senge?

- managers must empower employees and allow them to experiement, create, and explore what they want


what is the complex mental models principle for creating a learning organization by peter senge?

- managers must encourage workers to use sophistacted ways of thinking to come up with creative solutions


what is the team learning principle for creating a learning organization by peter senge?

- learning in a team setting


what is the building a shared vision principle for creating a learning organization by peter senge?

- common mental model that all members use to frame problems or opportunities


what is the systems thinking principle for creating a learning organization by peter senge?

- managers must give employees freedom to develop a sense of mastery associated with connecting one level of information and its relationship to another


creating a learning organization is a?

long term solution


Managers must to what to promote individual creativity?

- give employees freedom and oppotunity to generate new ideas
- givem the constructive feedback
- reward them


what are the 3 group problem solving techniques? and what do they do?

1. brainstorming
2. nominal group technique
3. delphi technique
- allow grups to come up with creatve ideas and innovative solutions


what is the brainstorming group problem solving technique?

1. managers present a problem or opportunity to the group
2. group generates as many ideas as possible that are as creative and as wild as they can be
3. come together and asses all options and eleminate ones they dont think can work
4. build on the idea
5. come up wiht solution


what is a cause of lack of ideas when brainstorming? and what is it?

production blocking and its the loss of productivity in brain storming session because group members don make sense of all options being generated


to avoid production blocking in brainstorming what is done?

nominal grup thinking which is a more structured way to come up wiht ideas that gives eahc member time to think on their own and then brings them together to explain their possible solution they came up with which allows for more structured thinking


what do the nominal group technique require? what is a way to fix this? and what is that ways definition?

requires them to be face to face with all mebers
- if you cant be they use delphi tehniuqu which is when grup members respond in writing by mail to a problem the grup leader presents and then they get feedback
- basically do it all over mail


what are entrepreneurs?

individuals who notive opportunities and decide how to use and mobilize resources to produce new and improved goods or services


social entrepeneurs?

individuals wh pursue alternatives and opportunies to address coial problems and needs in society



someone who works for an organization and notices opportunities to develop or improve products or come up with new ways to make exisiting ones


entreprenuers have what traits?

1. internal locus of contral
2. high self-esteem
3. need for achievement


differnece between entreprenuership and amangement?

enttreprenuership notices opprtunities to satisfy a customers and decides how to find and use resources to satisfy that need
- managers encompass all decision involved in planning, organizing, leading, and controlling


how could you encourage intraprenuership and what is that way?

product champion: assume this role which is when a manager takes ownship of a project and provides leadership and vision to reach it
ex. workers at 3m come up with idea and present it to managementand if they like it they put it into effect which they then work on and it allwos them to feel connected to their work


What is skunkworks?

group of intraprenuers who are deliberately separated frm organization to encourage them to devote all their attention to developing new products
ex. what product champions do and then go off by themselves to work on product.