1. DECISION MAKING
A managerial focus

2. Management decision making
“Managerial decision making is synonymous with the whole process of management” (Simon 1977)
Three phases of decision making:
Intelligence
Design
Choice

3. Simon’s Three Phases INTELLIGENCE PHASE:
Problem identification and ownership
Problem definition
Data collection/ search
DESIGN PHASE:
Formulation of a means to analyse the options
Identification of criteria and constraints for the choice
Evaluation of the alternatives
CHOICE:
Selection of the best or appropriate option
Plan for implementation

4. Computerised Support INTELLIGENCE PHASE: data search and collection
Reporting systems
Demand and exception reports
Monitoring/ tracking facilities
DESIGN PHASE: method formulation
Modelling software (mathematical, statistical)
e.g. linear programming packages (optimisation problems)
project management; forecasting packages (“what if”; “goal seeking” analysis)
CHOICE PHASE: selection of appropriate option
understanding the solution offered
selecting the appropriate course of action

5. Decision Support Framework (Gorry and Scott Morton 1971)
Matrix combines Simon’s decision making steps and Anthony’s taxonomy of levels of information requirements
STRUCTURED DECISIONS- more likely to be operational
‘programmed’, repetitive, routine, clearly defined problem, standard solution(s) apply
UNSTRUCTURED- more likely to be strategic
‘unprogrammed’ ad hoc, one-off, ‘fuzzy’, not clearly defined, no objective right solution, intuition required
SEMI-STRUCTURED- tactical/ middle managers?
in between the two extremes, most business problems are not purely structured or unstructured

6. Later additions to the framework
NOVELTY DIMENSION:-
first time decisions vs familiar decisions
SPECIFICITY DIMENSION:-
specific, targeted decisions vs general, wide reaching decisions
OUTCOME STATE:-
Certainty vs Uncertainty (how much ‘risk’)

7. Characteristics of rational decision making:
Clear, Unambiguous objective e.g minimise the cost
Objective can be quantified
Outcomes and alternatives are known
Alternatives expressed in terms of objectives
Alternatives ranked
Best is chosen i.e the cheapest option

8. Human Decision Making
Usually there are Multiple objectives, priorities.
Also:
Objective versus Subjective rationality?
Selective perception
memory bias
Stereotyping-understanding how representative is your own experience
Seeing ‘correlations’ where limited observations
Interpretation of probability and risk
Self-fulfilling prophesies
Pressure for consistency
Accepting the ‘Problem statement’ as given
Hindsight affect
Simon’s concept of ‘Bounded Rationality’, ‘Satisficing’

9. Decision styles: Autocratic vs Democratic Heuristic vs Analytic
Heuristic: action oriented, trial and error, intuitive, spontaneous, waits for feedback
Analytic: theory oriented, planned systematic approach, uses formal analysis to test the outcomes
What affects our personal style?
The way we think, perceive
Our values
The types of information we prefer
How reliable is our own ‘personal style’?