DECISION MAKING

Chapter 5
with Duane Weaver
 Outline
• Decision Making Process
• Making Decisions
• Decision Making Conditions
• Decision Making Styles
 Decision Making Process
1. Identify Problem
2. Identify Decision Criteria
3. Allocate Weights to Criteria
4. Develop Alternatives
5. Analyze Alternatives
6. Select Alternative
7. Implement Alternative
8. Evaluate Decision Effectiveness
9. Reiterate as Necessary
 Making Decisions
• Rationality – fully objective and logical.
Assumes decisions made in best interests of the
organization. Hmmm?

• Bounded Rationality – managers make rational

decisions limited by their ability to process
information. Tend to “satisfice” rather than
maximize (what is “good enough”)

• Intuition – making decisions on the basis of

experience, feelings, and accumulated
judgement. Gut feeling.
 Decision Making Conditions
• Certainty – a condition in which a decision maker
can maker accurate decisions because of the
outcome of every alternative is known.

• Risk – a condition in which a decision maker is

able to estimate or assess the likelihood of certain
outcomes. (risk assessment)

• Uncertainty – the choice of the alternative is

influenced by the limited amount of information
available to the decision maker and their
psychological orientation. (optimist = maximax,
pessimist = maximin, minimize the maximum
regret = minimax)
 Decision Making Styles
• Directive – low tolerance for ambiguity and are
rational.

• Analytic – greater tolerance for ambiguity.

• Conceptual – very broad in their outlook and

look at many alternatives. (even expand or
extrapolate).

• Behavioural – low tolerance for ambiguity and

an intuitive way of thinking. Avoid conflict.
 Decision Making Styles
• Exercise:
– In your teams, identify a manager for each of
the decision making styles that you may have
worked for, know, or have observed.
– Describe the benefits and disadvantages of
each style by providing an example of what
they did.
Thank You