National University of Modern

Languages.

Assignment No 2
Subject: Contemporary Management

Submitted To: Dr Sehar Zulfiqar

Submitted By: Waqar Faisal

M.com 1st Section (A) Morning

Summary and Review Chapter No 7

The Nature of managerial decision making:-

Decision making is the process by which managers
respond to opportunities and threats by analyzing the
options and making determinations, or decisions, about
specific organizational goals and courses of action. Good
decisions result in the selection of appropriate goals and
courses of action that increase organizational
performance; bad decisions lower performance.
Programmed decisions are routine decisions made so
often that managers have developed decision rules to be
followed automatically. Nonprogrammed decisions are
made in response to situations that are unusual or novel;
they are no routine decisions. The classical model of
decision making assumes that decision makers have
complete information; are able to process that information
in an objective, rational manner; and make optimum
decisions. March and Simon argued that managers exhibit
bounded rationality, rarely have access to all the
information they need to make optimum decisions, and
consequently satisfice and rely on their intuition and
judgment when making Decisions.
STEPS IN THE DECISION-MAKING PROCESS:
When making decisions, managers should take these six
steps: recognize the need for a decision, generate
alternatives, assess alternatives, choose among
alternatives, implement the chosen alternative, and learn
from
Feedback.
COGNITIVE BIASES AND DECISION MAKING:

Most of the time, managers are fairly good decision

makers. On occasion, however, problems can result
because human judgment can be adversely affected by the
operation of cognitive biases that result in poor decisions.
Cognitive biases are caused by systematic errors in the
way decision makers’ process information and make
decisions. Sources of these errors include prior
hypotheses, representativeness, the illusion of control, and
escalating commitment. Managers should undertake a
personal decision audit to become aware of their biases
and thus improve their decision making.
GROUP DECISION MAKING:

Many advantages are associated with group decision

making, but there are also several disadvantages. One
major source of poor decision making is groupthink.
Afflicted decision makers collectively embark on a
dubious course of action without questioning the
assumptions that underlie their decision. Managers can
improve the quality of group decision making by using
techniques such as devil’s advocacy and dialectical
inquiry and by increasing diversity in the decision-making
group.

ORGANIZATIONAL LEARNING AND

CREATIVITY:

Organizational learning is the process through which

managers seek to improve employees’ desire and ability
to understand and manage the organization and its task
environment so employees can make decisions that
continuously raise organizational effectiveness. Managers
must take steps to promote organizational learning and
creativity at the individual and group levels to improve
the quality of decision making.
ENTREPRENEURSHIP AND CREATIVITY:
Entrepreneurship is the mobilization of resources to take
advantage of an opportunity to provide customers with
new or improved goods and services. Entrepreneurs start
new ventures of their own. Entrepreneurs work inside
organizations and manage the product development
process. Organizations need to encourage
entrepreneurship because it leads to organizational
learning and innovation.

The End