管理学原理英文版课件Chapter 4Foundations of Decision Making

1、Chapter 4Foundations of Decision MakingWhats in a decision?Choosing among alternativesToo simpleDecision-making process:Set of 8 steps that help you to make a decision.Can be used to describe individual and group decisions.Whats the problem?Step 1 is to identify the problemA problem occurs when ther

2、e is a difference between how things are and how you want things to beWhat do we care about?Step 2 is to determine the decision criteria.Decision criteria are the factors that are relevant in a decisionWhat is going to influence your choicesHow important is it?Step 3 is to assign weights to each fac

3、tor based on importance.We want to know the relative priority of each item.Not all criteria are equally importantWhat are our choices?Step 4 is to list all the alternatives that could succeed in resolving the problem.What options do we have?So many choicesStep 5 is to analyze each option listed in s

4、tep 4.We use the criteria in step 2 to evaluate the strengths and weaknesses of each alternativeWhich one is the best?Step 6 is where we choose the best optionOkay, lets do it!Step 7 is where we put the decision into action.Decision implementation we must tell those who will be affected and get them

5、 to commit to the new plan.Whats left?The 8th and final step is to appraise the result of our decision.Did it correct the problem?Did you get the result you wanted?What decisions have you made Lately?Do you always follow this process?Why or why not?Assumptions: RATIONALITYManagerial decision making

6、is assumed to be rational. Managers are making consistent choices from value-maximized choices withing specified constraintsPerfectly rationalA decision maker who is perfectly rational is fully objective and logical.They defines the problem carefullyHave a clear and specific goalSteps in the process

7、 consistently lead one to select the choice that maximizes the goal.Thats a big taskNote: the assumption of rationality does NOT usually hold true!Certainty implies that a manager is able to make an accurate decision because they already know the outcome of every option.In the real world, this doesn

8、t often happenRisky BusinessSince we dont always know the outcome of each of our choices, we must assign a probability to the potential outcomes that may occur that is, we must deal with risk.But, Im not sure!When decisions makers do not have full knowledge of the problem and cant guess probabilitie

9、s for the alternative outcomes, they must make the decision under uncertainty.Time to get creativeWhen we a faced with a problem, we often have to be creative.We need the ability to produce new and useful ideasIm not very creativeThere are 5 things that can get in the way of your creative skills:Exp

10、ected evaluation focusing on how your work is going to be evaluatedSurveillance being watched while you workExternal motivators external rewardsCompetition facing a win/lose situation with your peersConstrained choices limits on how you can do your workTheres not enough informationMost of us make de

11、cisions without complete informationWhen we face a complex problem, most of us reduce the problem to something we can readily understand This is good enough for me!Most people cant process a ton of information to reach an optimal solution, so they satisfice.They seek solutions that satisfactory and

12、sufficient (just good enough).Making things easierIt is impossible for humans to process and understand all of the information necessary to meet the test of rationalitySo, they simplify the model including only the essential features of the problem this process is know as bounded rationality.Within

13、the limitsDecision makers often focus on the easy-to-find choicesAnd the review is not exhaustive only continue until they find an alternative that is sufficient (good enough) to solve the problemTaking shortcutsIn order to avoid information overload, we rely on judgmental shortcuts or heuristics.Ty

14、pes:Availability RepresentativeEscalation of commitmentBiased decisionsAvailability heuristic tendency to base judgments on information that is readily availableRepresentative heuristic tendency to match the likelihood of an outcome with something that they are familiar with Escalation of commitment

15、 an increased commitment to a previous decision despite negative informationLots of problemsSome problems are straightforward, familiar, and easily defined (well-structured problems) But many problems are new or unusual and have to be made with incomplete information (ill-structured problems)Types o

16、f decisionsProgrammed decisions a repetitive decision that can be handled by a routine approachUsed when the problem is well-structured problemManager can follow a procedure when responding to the problemManagers follow rules and policiesProgrammed DecisionsProcedure a series of interrelated sequent

17、ial steps that can be used to respond to a well-structured problemRule an explicit statement that tells managers what they ought or ought not to doPolicy a general rule that establishes parameters for making decisionsTypes of decisionsNonprogrammed decisions decisions that must be custom-made to sol

18、ve unique and nonrecurring problemsManager uses this type of decision for nonrecurring problemsExample: where to build a new location?Decision-Making StylesDifferences in the way people think (rational and intuitive) and their tolerance of ambiguity, that is they want things to be ordered and consis

19、tent (low to high)Tolerance of AmbiguityWay of ThinkingLowHighRationalDirectiveAnalyticIntuitiveBehavorialConceptualDecision-Making StylesDirective: low ambiguity, rational thinkingLogical and efficient; make quick decisions that focus on the short termAnalytic: high ambiguity, rational thinkingPref

20、er to have complete information before making decisions and will consider many optionsBehavioral: low ambiguity, intuitive thinkingWork well with others, are open to suggestions, care for workersConceptual: high ambiguity, intuitive thinkingFocus on the long run, look for creative solutionsMaking De

21、cisions in GroupsGroups often represent the people who will be most affected by the decisions being madeBecause of their expertise, these people are often the most qualified to make decisions that will affect them.Advantages of Group Decisions “Two heads are better than one”More complete informationDiversity of experiences and perspectivesGenerate more alternativesIncreased acceptance of decisionDisadvantages of Group DecisionsTime-consumingMinority domination Members are not equalAmbiguous responsibilityWhos actually respo