Chapter 2: Making decisions

2.1. Describe the 8 steps process of decision making:

Step 1: Identify the problem

Every decision starts with a problem, a difference between desired and existing conditions

Step 2: Identify the decision criteria

Decision criteria refers to the criteria which is crucial for solving the problem

Step 3: allocate weights in the criteria

Weight the most important criteria and arrange it in order according to the weights, for instance,
10, 9, 8, 7…

Step 4: Develop alternative

In the decision-making process, it is required to develop alternatives to solve the problems.

Step 5: Analyze alternative

Since the alternatives has been associated, the decision maker has to size up each one.

Step 6: Select an alternative

in decision-making process, the decision maker has to choose the best alternative that gives the
largest totals.

Step 7: Implement the alternative

Implementing the actions will have some effects on people, but it will steer up their commitment

Research has shown that implementing actions instead of telling them what to do, they tend to be
more likely supportive

Step 8: Evaluate the decision effectiveness

Sizing up the results or outcomes to see if the problems have solved.

2.2 Explain the 5 approaches that managers can use when making decisions
Planning:

. An organization long-term goals are the targets that they aim to achieve in the long run process

. Organization has to conduct strategic analysis to both internal and external environment to
succeed their long-term goals

. Short term goals are the ones they will be achieving in a year or less

. Demonstrating the difficulties for each employee goal, in order to inspire them and drive their
performances

Organizing:

Organizing is referring to allocating resources to carry out the organization plans.

Leading:

. dealing with unmotivated employees: identify the reasons behind the lack of motivation for
work through open communication, a positive work area, and so on.

. Acquire the leadership styles for different situations and using a wide range of approaches.

. Affecting the change of workers productivity: making changes can interrupt productivity, but it
can resolve with open communication, training, and so on.

. restoring conflicts in a controllable way and constructive manner can lead to productive
outcomes.

Controlling:

Controlling includes contrasting the current performances and the expected performances by
taking corrective actions when needed.

Rationality:

Rational decision-making refers to the process of making decisions under logical reasoning and
objective analysis.

Bounded-Rationality:

Bounded-rationality refers to making decisions with limited information.

Intuition:
Intuition decision-making refers to the process of making decisions under gut feelings, instincts,
and so on, instead of using logic.

Evidence-based management:

Evidence-based management refers to the management approach of using various information,

data, and sciences for attaining knowledge.

The 4 effects of Evidence-based management:

. scientific evidence
. organization evidence
. stakeholders
. practitioners

Crowdsourcing:

Crowdsourcing refers to process of getting new ideas, solutions, and more by using online
platforms or a large group of individuals.

Advantage of crowdsourcing:

. Cost-effect
. Rapid outcomes
. Knowledge sharing
. Community building

2.3. Classify decisions and decisions-making styles:

Decision-making in management includes conveying issues that are divided in to familiar and
routine problems, on the other hand it is divided in to new and unfamiliar problems.

Managers tackle these issues by using 2 types of decisions such as:

. Programmed decisions for structured problems

. Non programmed decisions for unstructured problems

+. Structured Problems:

Structured Problems refer to the kind of problems which are familiar, straightforward, and can
defined it easily.

+. Programmed decisions
Programmed decisions refer to the decisions which already have a rule or plan in solving them.

In other term, managers have made these decisions before and it is repeating the decisions again.

There are 3 types of programmed decisions:

. Procedure

. Rule

. Policy

+. Unstructured problems

Unstructured problems refer to the kind of problems which are unfamiliar, unclear, and there is
no clear solution as well.

These problems are ambiguous, complex, and lack of information.

+. Non programmed decisions:

Non programmed decisions refer to the decision-making process which managers use to deal
with unstructured problems.

These types of problems require managers to stand on their feet and manage the solutions
regarding the current issues.

Comparing Decision Types:

. Lower-level managers mostly rely on programmed decision

. As the managers move up in the order of rank, they face more unstructured problems.

. Decision making moves from programmed to non-programmed decisions at higher levels

Decision making styles:

. Distinct Decision-making styles

. Four Decision-making styles (Directive, analytic, conceptual, and behavioral)

. Flexible Decision-making styles

. Analytic Style in Business Education

2.4. Describe how biases affect Decision-making:

Decision Heuristics refers to the shortcuts for dealing with problems in a fast way that generate
a useful result in a given time.

+. Benefits of heuristics:

. fast decision-making

. dealing with uncertainty

. simplicity of complex information

+. Drawbacks for Heuristics:

. it leads to errors and biases during the information process

. decision makers make decisions based on shortcuts which are not reliable

+. Common errors and biases:

. overconfidence biases

. framing biases

. anchoring effects

. sunk cost errors

. randomness biases

+. Mitigating decision errors:

. Awareness: managers should be aware of errors and biases

. Avoidance: avoid using heuristics

. Training: it could reduce biased decision-making

+. Improving decision-making
. Critical evaluation of heuristics used

. seeking feedback: asking trusted individuals for feedbacks

. continuous improvement: addressing the weaknesses in decision-making styles

2.5. cutting edge approaches for improving decision making:

Design thinking is a method used by managers for making decision by addressing management
problems as designers address design problems.

+ What is Big Data and Artificial Intelligence?

Big data refers to big and complex datasets that normal software cannot handle it.

Artificial intelligence: it duplicates human reasoning functions and goes beyond simple
processing.

AI learning tools includes:

. Machine learning

. Deep learning

. Analytics