© 2016 Cengage Learning. All Rights Reserved.

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Decision
making is the Decision is a
process of choice made
identifying from
opportunities available
alternatives

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 Programmed Decisions
Recurring problems
Apply rule
 Nonprogrammed Decisions
Unique situations
Poorly defined
Unstructured
Important consequences

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Difference between programmed and
unprogrammed decisions
 Certainty – Situation in which all information
is fully available
 Risk – Future outcomes associated with an
alternative are subject to chance
 Uncertainty - Depends on the amount and
value of information available

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Ambiguity - Making decisions in difficult
situations
The goals and the problem are unclear
 Wicked decisions involve conflict over goals
and have changing circumstances, fuzzy
information, and unclear links
There is often no “right” answer

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Rational economic assumptions drive
decisions
 Operates to accomplish established goals,
problem is defined
 Decision maker strives for information and
certainty, alternatives evaluated
 Criteria for evaluating alternatives is known;
select alternative with maximum benefit
 Decision maker is rationale and uses logic
 Normative─ how a decision maker
should make a decision
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Administrative/descriptive approach
How managers really make decisions
Recognize human and environmental
limitations
 Bounded rationality – People have limits or
boundaries on how rational they can be
 Satisficing – Decision makers choose the first
solution that satisfies minimal decision
criteria

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Goals are often vague
 Rational procedures are not always used
 Managers’ searches for alternatives are
limited
 Most managers settle for satisficing
 Intuition – Quick apprehension of situation
based on practice and experience

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Decisions involve managers with diverse
interests
 Managers must engage in coalition
building
Informal alliance to support specific goal
 Without a coalition, powerful groups can
derail the decision-making process
 Political model resembles the real
environment

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Assumptions of the political model
Organizations are made up of groups with
diverse interests, goals, and values
Information is ambiguous and incomplete
Lack of time, resources, or mental capacity
to process all information regarding a
problem
Decisions are the result of bargaining and
discussion among coalition members

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Recognition of Decision Requirement – Identify
problem or opportunity
 Diagnosis and Analysis – Analyze underlying causal
factors
 Develop Alternatives – Define feasible alternatives
 Selection of Desired Alternative – Alternative with
most desirable outcome
 Implementation of Chosen Alternative – Use of
managerial, administrative, and persuasive abilities
to execute chosen alternative
 Evaluation and Feedback – Gather information
about effectiveness
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 Directive style – People who prefer simple,
clear-cut solutions to problems
 Analytic style – Managers prefer complex
solutions based on a lot of data
 Conceptual style – Managers like a broad
amount of information
 Behavioral style – Managers with a deep
concern for others

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 Being influenced by initial impressions
 Justifying past decisions
 Seeing what you want to see
 Perpetuating the status quo
 Being influenced by problem framing
 Overconfidence

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 Mechanisms to help reduce bias-related
decision errors:
 Start with brainstorming
 Use hard evidence
 Engage in rigorous debate
 Avoid groupthink
 Know when to bail
 Do a postmortem

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