Management Decisions

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Management Decisions

• Introduction to Management (MGMT1101)
• PowerPoint by
• Claude Quinton, MBA, Lecturer
• College of Agriculture, Science Education

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What Is Rational Decision Making?
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Steps to Rational Decision Making
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Steps to Rational Decision Making
Define the problem
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• Problem exists when there is a gap between a
  desired state and an existing state
• To make decisions about problems, managers must
• be aware of the gap
• be motivated to reduce the gap
• have the knowledge, skills, abilities, and
  resources to fix the problem

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Steps to Rational Decision Making
Identify decision criteria
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• Standards used to guide judgments and decisions
• The more criteria a potential solution meets, the
  better that solution should be

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Steps to Rational Decision Making
Weight the criteria
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• Absolute comparisons
• each criterion is compared to a standard or
  ranked on its own merits
• Relative comparisons
• each criterion is compared directly to every
  other criterion

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Steps to Rational Decision Making
Absolute Weighting of Decision Criteria
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Steps to Rational Decision Making
Relative Weighting of Decision Criteria
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Steps to Rational Decision Making
Generate alternative courses of action
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• The idea is to generate as many alternatives as
  possible

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Steps to Rational Decision Making
Evaluate each alternative
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• This step can take much longer and be more
  expensive than other steps in the process

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Steps to Rational Decision Making
Compute the optimal decision
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• Multiply the rating for each criterion by the
  weight for that criterion
• Sum the scores for each alternative course of
  action

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Programmed vs. Non Programmed Decisions
Programmed A routine or repetitive decision
that can be handled by established business rules
or procedures. Programmed decisions do not
require much thought or discussion, and are
normally automated to ensure consistency and save
time for decision-makers
Non-programmed decisions are those which are made
in response to the unusual opportunities.
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Limits to Rational Decision Making
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Limits to Rational Decision Making
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Satisfice Bounded Rationality
Satisficing is a decision-making strategy or
cognitive heuristic that entails searching
through the available alternatives until an
acceptability threshold is met.
Bounded rationality is the idea that in
decision-making, rationality of individuals is
limited by the information they have, the
cognitive limitations of their minds, and the
finite amount of time they have to make a
decision.
Heuristic, ("find" or "discover") refers to
experience-based techniques for problem solving,
learning, and discovery that give a solution
which is not guaranteed to be optimal.
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Group Decision Making
Advantages

• View problems from multiple perspectives
• Find and access more information
• Generate more alternative solutions
• More committed to making chosen solutions work

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Group Decision Making
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Groupthink
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Electronic Brainstorming
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Electronic Brainstorming
Advantages of Electronic Brainstorming

• Overcomes production blocking
• technology allows everyone to record their ideas
  as they are created
• no ideas lost waiting your turn to speak
• Overcomes evaluation apprehension
• anonymity creates free expression

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Electronic Brainstorming
Disadvantages of Electronic Brainstorming

• Greater expense
• No automatic acceptance of ideas because of
  ones position
• Some find it difficult to express themselves in
  writing
• Lack of typing skills can frustrate participants

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Management Decisions