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Chapter 3: Information and Decision-Making: Business Leadership: Management Fundamentals
Chapter 3: Information and Decision-Making: Business Leadership: Management Fundamentals
DECISION-MAKING
PLANNING
AHEAD
CHAPTER 3
LEARNING
GOALS
making process
in managerial decision-making
WHAT IS INFORMATION
TECHNOLOGY?
Information Technology
Helps to acquire, store, process and transmit
information
IMPLICATIONS OF IT WITHIN
ORGANIZATIONS
Facilitation of communication and information
sharing
Operating with fewer middle managers
Flattening of organizational structures
Faster decision making
Increased coordination and control
contracts
10
Teamwork and
Collaboration,
Harvard Business Publishing
Series
(external link)
11
INFORMATION NEEDS OF
ORGANIZATIONS
Information exchanges with the external
environment:
Gather intelligence information
Provide public information
Information exchanges within the organization:
Facilitate decision-making
Facilitate problem solving
12
Information system
Use of the latest IT to collect, organize, and
distribute data for use in decision-making
Management Information System (MIS)
Specifically designed to meet the information
needs of managers in daily decision-making
13
Management 2e - Chapter 13
14
MANAGERIAL ADVANTAGES
OF IT UTILIZATION
Planning advantages:
Better and more timely access to useful
information
Involving more people in planning
Organizing advantages:
More ongoing and informed communication
among all parts of the organization
Improved co-ordination and integration
15
MANAGERIAL ADVANTAGES
OF IT UTILIZATION (CONT.)
Leading advantages:
Improved communication with staff and
stakeholders
Keeping objectives clear
Controlling advantages:
More immediate measures of performance
results
Allows real-time solutions to performance
problems
16
Management 2e - Chapter 13
17
MANAGERS AS PROBLEM-SOLVERS
Problem solving:
The process of identifying a discrepancy between
actual and desired performance and taking
action to resolve it
A decision:
A choice among possible alternative course of
action
A performance deficiency:
Actual performance being less than desired
performance
A performance opportunity:
Actual performance being better than desired18
PROBLEM-SOLVING APPROACHES
OR STYLES
Problem avoiders: Inactive in information
gathering and solving problems
Problem solvers: Reactive in gathering
information and solving problems
Problem seekers: Proactive in anticipating
problems and opportunities and taking appropriate
action to gain an advantage
19
TYPES OF THINKING
Systematic Thinkers
Rational
step-by-step
analytical
breaks problems into
smaller components
Intuitive Thinkers
Rely on hunches and
feelings
Flexible and
spontaneous
See big picture
Multidimensional Thinkers
Multidimensional thinking applies both intuitive and
systematic thinking
Effective multidimensional thinking requires skill at
strategic opportunism
20
COGNITIVE STYLES
Sensation Thinkers emphasize the impersonal
rather than the personal and take a realistic
approach to problem solving.
Intuitive Thinkers are comfortable with
abstraction and tend to be idealistic. Have a
spontaneous fashion.
Intuitive Feelers prefer broad and global issues
and are comfortable with intangibles.
Sensation Feelers emphasize analysis and human
relations and tend to be realistic and prefer facts.
21
PROGRAMMED DECISIONS
Apply solutions that are readily available from past
experiences to solve structured problems
Structured problems are ones that are familiar,
straightforward, and clear with respect to
information needs
Best applied to routine problems that can be
anticipated
NONPROGRAMMED DECISIONS
Develop novel solutions to meet the demands of
unique situation that present unstructured problems
Unstructured problems are ones that are full of
ambiguities and information deficiencies
Commonly faced by higher-level management
24
CRISIS DECISION-MAKING
A crisis involves an unexpected problem that can
lead to disaster if not resolved quickly and
appropriately
Rules for crisis management:
Figure out what is going on
Remember that speed matters
Remember that slow counts, too
Respect the danger of the unfamiliar
Value the skeptic
Be ready to fight fire with fire
DECISION ENVIRONMENTS
Certain environments:
Offer complete information about possible action
alternatives and their outcomes
Risk environments:
Lack complete information about action
alternatives and their consequences, but offer
some estimates of probabilities of outcomes for
possible action alternatives
Uncertain environments:
Information is so poor that probabilities cannot
be assigned to likely outcomes of known action
alternatives
DECISION-MAKING PROCESS
Step 1: Identify and define the problem
Focuses on information gathering, information
processing, and deliberation
Decision objectives should be established
Common mistakes in defining problems:
Defining the problem too broadly or too narrowly
Focusing on symptoms instead of causes
Choosing the wrong problem
DECISION-MAKING PROCESS
Step 2: Generate and evaluate possible
solutions
Potential solutions are formulated and more
information is gathered, data are analyzed , the
advantages and disadvantages of alternative
solutions are identified
Approaches for evaluating alternatives:
Stakeholder analysis
Cost-benefit analysis
DECISION-MAKING PROCESS
Step 2: Generate and evaluate possible solutions
(cont.)
Criteria for evaluating alternatives:
Benefits
Costs
Timeliness
Acceptability
Ethical soundness
Common mistakes:
Selecting a particular solution too quickly
Choosing a convenient alternative that may have
damaging side effects or may not be as good as
other alternatives
DECISION-MAKING PROCESS
Step 3: Decide on a preferred course of action
Classical decision model
Managers act rationally in a certain world
Managers face clearly defined problems and
have complete knowledge of all possible
alternatives and their consequences
Results in an optimizing decision
DECISION-MAKING PROCESS
Step 3: Decide on a preferred course of action
(cont.)
Behavioural decision model
Managers act in terms of what they perceive
about a given situation
Recognizes limits to human informationprocessing capabilities
Cognitive limitations
Bounded rationality
Results in a satisficing decision
DECISION-MAKING PROCESS
Step 4: Implement the decision solution
Involves taking action to make sure the solution
decided upon becomes a reality
Managers need to have willingness and ability to
implement action plans
Lack-of-participation error should be avoided
DECISION-MAKING PROCESS
Step 5: Evaluate results
Involves comparing actual and desired
results
Positive and negative consequences of
chosen course of action should be examined
If actual results fall short of desired results,
the manager returns to earlier steps in the
decision-making process
CREATIVITY IN DECISION-MAKING
Creativity:
The generation of a novel idea or unique
approach that solves a problem to take
advantage of an opportunity
More likely:
Task expertise something one is good at
or knows about
Task motivated people work
exceptionally hard to resolve a problem or
exploit and opportunity
Organizations should create an environment
that supports and encourages creativity
(external link)
Left Brain
Imagination
Intuition
Spontaneity
Emotion
Logic
Order
Method
Analysis
CHARACTERISTICS OF CREATIVE
PEOPLE
Work with high energy
Identify problems, plan,
make decisions
Hold ground in face of
criticism
Accept responsibility for
what happens
Be resourceful, even in
difficult situations
Use both systematic and
intuitive in problemsolving
ALBERT EINSTEINS
NEEDLE IN THE HAYSTACK
Question: What is the difference between you and
the average person?
Response: If you asked the average person to find
a needle in the haystack, the person would stop
when he or she found a needle. I, on the other hand,
would tear through the entire haystack looking for all
the possible needles."
ACTIVITY
ACTIVITY (CONT.)
6.5
Six and one-half
Thir & teen = 4 (4 letters on each side)
13 = 1,3
XI II = 11, 2
XIII = 8, 8 (Halving horizontally gives us 8 on
the top
and 8 on the bottom)
CREATIVITY EXERCISE
ACTIVITY 1
The diagram represents twelve matchsticks positioned to
represent a square made up of four equal squares. Can you, by
moving only three of these sides, make three equal-sized
squares?
SOLUTION
ACTIVITY 2
Add one line to the following to make it into a 6.
IX
SOLUTION
SIX
GROUP DECISIONS
Advantages:
Greater amounts of
information, knowledge
and expertise are
available
Expand number of
alternatives
Avoids tunnel vision
Increase understanding
and acceptance of
outcomes
Increase commitments
of members to work
hard
Disadvantages:
Social pressures to
conform
Minority domination
may occur
Decision making takes
longer thus more costly
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