6 - 5 Some cautions about problem identification Some cautions about problem identification include the following: 1.Make sure its a problem and not just a symptom. 2.Problem identification is subjective\personal judgment. 3.Before a problem can be determined, a manager must be aware of any discrepancies. 4.Discrepancies can be found by comparing current results with some standard. 5.Pressure must be exerted on the manager to correct the discrepancy. 6.Managers arent likely to characterize some discrepancy as a problem if they perceive that they dont have the authority, money, information, or other resources needed to act on it. Example. Buying a new laptop computer by a sales representative.
6 - 11 PERVASIVENESS\frequency OF DECISION MAKING. Decision making is important to every aspect of a managers job. A.Decision making is part of all four managerial functions. In performing these functions, managers are often called decision makers. (See Exhibit 6.5 on p. 155.)
6 - 15 Bounded/limited rationality In spite of these limits to perfect rationality, managers are expected to appear rational as they make decisions. But because the perfectly rational model of decision making isnt realistic, managers tend to operate under assumptions of: bounded rationality, which is behavior that is rational within the parameters of a simplified decision-making process that is limited (or bounded) by an individuals ability to process information.
6 - 27 Decision-Making Styles Managers have different styles when it comes to making decisions and solving problems. One perspective proposes that people differ along two dimensions in the way they approach decision making. (See Exhibit 6.12 on p. 166.) 1.One dimension is an individuals way of thinkingrational or intuitive. The other is the individuals tolerance for ambiguitylow or high. 2.These two dimensions lead to a two by two matrix with four different decision-making styles. a.The directive style is one thats characterized by low tolerance for ambiguity and a rational way of thinking. b.The analytic style is one characterized by a high tolerance for ambiguity and a rational way of thinking. c.The conceptual style is characterized by an intuitive way of thinking and a high tolerance for ambiguity. d.The behavioral style is one characterized by a low tolerance for ambiguity and an intuitive way of thinking. 3.Most managers realistically probably have a dominant style and alternate styles, with some relying almost exclusively on their dominant style and others being more flexible depending on the situation.
6 - 32 Discussion In the first step of the decision- making process, how do managers know when there is a problem? Before something can be characterized as a problem (a discrepancy between an existing and a desired state of affairs), managers have to be aware of the discrepancy, they have to be under pressure to take action, and they must have the resources necessary to take action.
6 - 33 Discussion Why is the allocation of weights to criteria important in making decisions? because all criteria are not equally important, so the decision maker must weight the items in order to give them the correct priority
6 - 34 Discussion How do managers develop, analyze, select, and implement alternatives and then assess whether the decision was effective? Developing alternatives requires decision makers to list the viable alternatives that could resolve the problem. In analyzing alternatives, the decision maker assesses the strengths and weaknesses of each alternative as it compares with the established criteria and weights. Selecting an alternative is simply a matter of identifying the one with the highest weighted score. In the implementation phase, the decision is conveyed to those affected and their commitment to it is obtained. To assess whether the decision was effective, managers should ask whether it accomplished the desired result.
6 - 35 Discussion Describe decision making from the rationality and bounded rationality viewpoints. Managerial decision making is assumed to be rational; that is, managers are assumed to make consistent, value- maximizing choices within specified constraints. In bounded rationality, managers construct simplified models that extract the essential features from problems without capturing all their complexity. Then, given information processing limitations and constraints imposed by the organization, managers attempt to behave rationally within the parameters of the simple model. The result is a satisficing decision rather than a maximizing one.
6 - 36 Discussion Why is decision making often described as the essence of the managers job? As shown in Exhibit 6.5, decisions are made in all four functions of management. Almost anything a manager does in terms of planning, organizing, leading, and controlling involves decision making. The pervasiveness of decision making in management explains why managers are often called decision makers.
6 - 37 Discussion How might an organizations culture influence the way in which managers make decisions? An organizations culture might influence how managers make decisions by emphasizing how much risk taking is permitted and by the importance placed on effectiveness of the decisions made. For example, if the organizational culture rewards decisions that reinforce the status quo, chances are good that those types of decisions will be made.
6 - 38 Discussion As managers use computer and software tools more often, theyll be able to make more rational decisions. Do you agree or disagree with that statement? Why? Although computer and software tools will allow managers to more easily gather information and analyze it, its doubtful that utilizing computers will allow managers to be more rational. If we look at the assumptions of rationality (problem clarity, goal orientation, known options, clear preferences, and so forth as shown in Exhibit 6.6), its obvious that even by adding computers to the decision-making process, managers decision making still wont be perfectly rational.