Understanding
Management
First Canadian Edition
Slides prepared by
Janice Edwards
College of the Rockies
Copyright © 2009 Nelson Education Ltd.
Chapter 6
Managerial Decision
Making and Information
Technology
6-2
Learning Objectives
1.
2.
3.
4.
Explain the difference between programmed and non
programmed decisions and the decision characteristics of
risk, uncertainty, and ambiguity.
Describe the classical, administrative, and political
models of decision making and their applications.
Explain why decision making is an important component
of good management.
Identify the six steps used in managerial decision
making.
Copyright © 2009 Nelson Education Ltd.
6-3
Learning Objectives (contd.)
5.
6.
7.
8.
9.
Explain four personal decision styles used by
managers.
Discuss the advantages and disadvantages of
participative decision making.
Identify techniques for improving decision making in
today’s turbulent environment.
Describe the importance of information technology
(IT) for organizations and the attributes of quality
information.
Discuss IT trends that affect the workplace.
Copyright © 2009 Nelson Education Ltd.
6-4
Decisions and Decision Making
•
A decision is a choice made from available
alternatives.
•
Decision making is the process of
identifying problems and opportunities and
then resolving them.
Copyright © 2009 Nelson Education Ltd.
6-5
Types of Decisions
Programmed decisions
•
situations that occur often enough to enable
decision rules to be developed.
Nonprogrammed decisions
•
are made in response to situations that are
unique, are poorly defined and largely
unstructured.
Copyright © 2009 Nelson Education Ltd.
6-6
Decision Making Conditions
Certainty
•
All of the information the decision maker needs
is fully available
Risk
•
A decision has clear goals and good information
is available, but the future outcomes associated
with each alternative are subject to chance.
Copyright © 2009 Nelson Education Ltd.
6-7
Decision Making Conditions (Cont’d)
Uncertainty
•
Managers know which goals they wish to achieve.
•
Information about alternatives and future events is
incomplete.
•
Managers may have to come up with creative
approaches to alternatives.
Copyright © 2009 Nelson Education Ltd.
6-8
Decision Making Conditions (Cont’d)
Ambiguity
•
The goals to be achieved or the problem to be
solved is unclear
•
Alternatives are difficult to define
•
Information about outcomes is unavailable.
Copyright © 2009 Nelson Education Ltd.
6-9
Ex. 6.1
Conditions That Affect the Possibility
of Decision Failure
Organizational
Problem
Low
Possibility of Failure
Certainty
Risk
Uncertainty
Programmed
Decisions
High
Ambiguity
Nonprogrammed
Decisions
Problem
Solution
Copyright © 2009 Nelson Education Ltd.
6-10
Three Decision Making Models
Classical Model
Administrative Model
Political Model
Copyright © 2009 Nelson Education Ltd.
6-11
Selecting a Decision Making Model
Depends on:
•
The manager’s personal preference.
•
Whether the decision is programmed or nonprogrammed.
•
The extent to which the decision is characterized by risk,
uncertainty, or ambiguity.
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6-12
Classical Model
•
•
Based on economic assumptions
Is considered to be normative
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6-13
Assumptions of the Classical Model
•
•
•
•
Accomplishes goals that are known and agreed upon.
Strives for certainty by gathering complete information.
Criteria for evaluating alternatives are known.
Decision maker is rational and uses logic.
Copyright © 2009 Nelson Education Ltd.
6-14
Administrative Model
•
•
How managers actually make decisions in situations
characterized by non-programmed decisions,
uncertainty, and ambiguity.
Two concepts are instrumental in shaping the
administrative model:
•
Bounded Rationality: people have limits or
boundaries on how rational they can be.
•
Satisficing: decision makers choose the first
solution alternative that satisfies minimal decision
criteria.
Copyright © 2009 Nelson Education Ltd.
6-15
Political Model
•
•
•
•
•
Closely resembles the real environment in which
most managers and decision makers operate.
Decisions are complex.
Information is often ambiguous.
Disagreement and conflict over problems and
solutions are normal.
Coalition building is important.
Copyright © 2009 Nelson Education Ltd.
6-16
Ex. 6.2
Characteristics of Classical, Administrative,
and Political Decision-Making Models
Classical Model
Administrative Model
Political Model
Clear-cut problem and goals.
Vague problem and goals.
Pluralistic; conflicting goals.
Condition of certainty.
Condition of uncertainty.
Condition of uncertainty/ambiguity.
Full information about
alternatives and their outcomes.
Limited information about
alternatives and their outcomes.
Inconsistent viewpoints; ambiguous
information.
Rational choice by individual
for maximizing outcomes.
Satisficing choice for resolving
problem using intuition.
Bargaining and discussion among
coalition members.
Copyright © 2009 Nelson Education Ltd.
6-17
Ex. 6.3
Six Steps in the Managerial
Decision Making Process
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6-18
Ex. 6.5
Personal Decision Framework
Situation:
· Programmed/non-programmed
· Classical, administrative,
political
· Decision steps
Copyright © 2009 Nelson Education Ltd.
Personal Decision Style:
·Directive
·Analytical
·Conceptual
·Behavioural
Decision Choice:
·Best Solution to Problem
6-19
The Vroom-Jago Model
The Vroom-Jago Model helps gauge the appropriate amount
of participation for subordinates, based on:
•
•
•
leader participation styles
a set of diagnostic questions with which to analyze a
decision situation
a series of decision rules.
Copyright © 2009 Nelson Education Ltd.
6-20
Vroom-Jago Model: Diagnostic Questions
1.
2.
3.
4.
5.
6.
7.
Decision significance
Importance of commitment
Leader expertise
Likelihood of commitment
Group support for goals
Group expertise
Team competence
Copyright © 2009 Nelson Education Ltd.
6-21
New Decision Approaches for Turbulent Times
1.
2.
3.
4.
5.
Start with brainstorming.
Learn; do not punish.
Know when to bail.
Practise the 5 Whys.
Engage in rigorous debate.
Copyright © 2009 Nelson Education Ltd.
6-22
Management Implications of
Information Technology
•
Improved employee effectiveness.
•
Increased efficiency.
•
Empowered employees.
•
Information overload.
•
Enhanced collaboration.
Copyright © 2009 Nelson Education Ltd.
6-23