Chapter 8 Flashcards
The Decision-Making Process:
Decision: Making a choice from two or more alternatives.
If you only have 1 choice than the decision is made for you
The Steps of The Decision-Making Process: 1 - 3
Step 1: Identification of a Problem
Problem: A discrepancy between an existing and desired state of affairs.
Characteristics of Problems:
A problem is recognized by awareness
There is pressure to solve the problem
The manager must have the authority, information, or resources needed to solve the problem
Step 2: Identification of Decision Criteria
Criteria that define what is relevant in making a decision:
Costs that will be incurred (investments required)
Risks likely to be encountered (chance of failure)
Outcomes that are desired (growth of the firm)
Etc.
Step 3: Allocation of Weights to Criteria
Decision criteria are not of equal importance:
Assigning a weight to each item places the items in the correct priority order of their importance in the decision making process
The Steps of The Decision-Making Process: 4 - 6
Step 4: Development of Alternatives
Identifying viable alternatives:
Alternatives are listed (without evaluation) that can solve the problem.
Step 5: Analyze Alternatives
Appraising each alternative’s strengths and weaknesses:
An alternative’s appraisal is based on its ability to resolve the issues identified in steps 2 and 3.
Step 6: Select an Alternative
Choosing the best alternative:
Typically the alternative with the highest total weight is chosen.
What if the “best alternative” does not seem like the right one?
The Steps of The Decision-Making Process: 7 - 8
Step 7: Implement the Alternative
Putting the chosen alternative into action:
Conveying the decision to those affected by it and gaining their commitment to it.
Step 8: Evaluation of Decision
Effectiveness - The soundness of the decision 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?
There is always room for human error, other than that you may have analyzed different criterion and weighed them a little to skewed to a particular criteria
These 8 steps are not an exact science as there is a lot of subjectivity within the process, it is just a good guideline to follow to cover your basis
Thing called organizational learning where an organization will learn from previous experiences
What is the DICE Framework?
Decision, Integrity, Commitment, Effort
What is the RACI Framework?
Responsibility (who is responsible for what)
Accountability (who is accountable for successes and failures)
Consulted (who is consulted on what and for what reason)
Informed (who is informed on what and why)
What is Rational Decision Making?
Making decisions that are consistent and value-maximizing within specified constraints.
The problem is clear and unambiguous
A single, well-defined goal is to be achieved
No time or cost constraints exist
The manager as Decision Maker:
Bounded Rationality:
Assumes decision makers:
Will not seek out or have knowledge of all alternatives
Will satisfice (accept solutions that are “good enough)
Can be influenced by escalation of commitment (increased commitment to a previous decision despite evidence that it might have been wrong)
What is the Role of Intuition?
Intuitive Decision Making
Making decisions on the basis of experience, feelings, and accumulated judgment.
One-third of managers and other employees said they emphasized “gut feeling” over cognitive problem solving.
Types of Decisions and Decision-Making Conditions:
Structured Problems:
Problems that are straightforward, familiar, and easily defined
Programmed Decision:
A repetitive decision that can be handled by a routine approach.
Unstructured Problems:
Problems are new or unusual; information is ambiguous or incomplete.
Non-programmed Decisions:
Decisions are unique and nonrecurring; they require custom-made solutions.
Decision-Making Conditions:
Certainty:
Decision maker can make accurate decisions because the outcome of every alternative is
known.
Risk:
Decision maker is able to estimate the likelihood of certain outcomes.
Design thinking and decision making: 5 Steps
A human centered, iterative process, and a solution-based approach for solving problem.
5 Steps:
Empathize; Put yourself in the clients shoes to see what they are going for
Define the problem; Come up with a clear vision of the problem
Ideate; Come up with some ideas to approach this problem
Prototype; Create a physical or digital prototype to apply a real
approach to all the ideas you have come up
Test. Iterate and work out all the bugs and problems with this product
