Professional Documents
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Decision Making and Rules of Thumbs
Decision Making and Rules of Thumbs
Decision Making and Rules of Thumbs
PREPARED BY
JEFFREY ANGELO REANDELAR
Decisions and Decision
Making
• A Decision is a choice made from
available alternatives.
Political
PoliticalModel
Model
Administrative
AdministrativeModel
Model
Classical
ClassicalModel
Model
Classical Model
Generating
alternative
solutions
Evaluating
alternatives
Making the
choice
Implementing
the decision
Evaluating
the decision
Stages Of Decision Making
• Identifying and diagnosing the problem
– Generating alternative recognize that a problem exists and
must be solved
• problem - discrepancy between current state and past
performance, current performance of other organizations, or
future expected performance
• decision maker must want to resolve the problem and have
the resources to do so
• Solutions
– ready-made solutions - ideas that have been tried before
• may follow the advice of others who have faced similar problem
– custom-made solutions - combining new ideas into creative
solutions
• Evaluating alternatives
– determining the value or adequacy of the
alternatives
– predict the consequences that will occur if the
various options are put into effect
– contingency plans - alternative courses of
action that can be implemented based on how
the future unfolds
• required to prepare for different scenarios
• Making the choice
– maximize - a decision realizing the best possible outcome
• greatest positive consequences and fewest negative
consequences
• greatest benefit at the lowest cost and the largest expected
total return
– satisfies - choose an option that is acceptable although not
necessarily the best or perfect
• compare the choice with the goal, not against other options
• search for alternatives ends when an okay solution is found
– optimizing - achieving the best possible balance among
several goals
• Implementing the decision
– those who implement the decision must:
• understand the choice and why it was made
• be committed to its successful implementation
– can’t assume that things will go smoothly
during implementation
• identify potential problems
• identify potential opportunities
• Evaluating the decision
– collecting information on how well the decision is
working
– if decision appears inappropriate, the process cycles
back to the first stage
• The best decision
– nothing can guarantee a “best” decision
– must be confident that the procedures used are likely to
produce the best decision given the circumstances
• vigilance - decision maker carefully and
conscientiously executes all stages of decision
making
Barriers To Effective
Decision Making
• Psychological biases
– biases that interfere with objective rationality
• Time pressures
– today’s economy places a premium on acting
quickly and keeping pace
• Social realities
– many decisions result from intensive social
interactions, bargaining, and politicking
Ethical Decision Making