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Bahçeşehir University Social Science Institutions Ph D. Business Program Management & Organization Organizational Theory Prof. Dr. Atilla DİCLE Decision.

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Presentation on theme: "Bahçeşehir University Social Science Institutions Ph D. Business Program Management & Organization Organizational Theory Prof. Dr. Atilla DİCLE Decision."— Presentation transcript:

1 Bahçeşehir University Social Science Institutions Ph D. Business Program Management & Organization Organizational Theory Prof. Dr. Atilla DİCLE Decision Making Prep. by: İlhan ÇİFTÇİ 1

2 Bahçeşehir University - Organizational Theory 2 Decision – Making is a indivual or corporate selection for future results. Sometimes It is difficult to choose a way that uncertanity sistuations.  The cognitive process of reaching a decision.  A position or opinion or judgment reached after consideration.  Choosing between alternative courses of action using cognitive processes - memory, thinking, evaluation, etc.  The process of mapping the likely consequences of decisions, working out the importance of individual factors, and choosing the best course of action to take.

3 Decision Mistakes and Learning- I

4 Decision Mistakes and Learning- II

5 Decision Mistakes and Learning- III

6 Decision Mistakes and Learning- IV

7 Decision Mistakes and Learning- V

8 Bahçeşehir University - Organizational Theory 8 Today’s Business Enviroment Demands more large - scale change via new strategies, reenginering, restructuring, mergersacqusitions, downsizing, new product or market development, and so on Decision Made Inside the Organization Are based on bigger, more complex, more emonitionally charged issues Are made more quickly Are made in a less certain enviroment, with less clarity about means and outcomes Require more cooperation from more people involved in making and implementing decisions A new Decision – Making Process Is required because no one individual has the information needed to make all major decisions Is required because no one indivual has the time and credibility needed convince lots of people to implement the decision Relies less on hard data as a basis for good decisions Is guided by a powerful coalition that can act as a team Permits decisions to evolve through trial and error and incremental steps as needed.

9 9 Decision Making Comlexity Categories Repetitive and well defined Procedures exist Criteria of performance are normally clear Good information about performance is available Alternatives are easily specified Repetitive and well defined Procedures exist Criteria of performance are normally clear Good information about performance is available Alternatives are easily specified Programmed Novel and poorly defined No procedure exist It is used when an organization has not seen a problem before and may not know how to respond Clear – cut Decision criteria do not exist. Alternatives fuzzy Novel and poorly defined No procedure exist It is used when an organization has not seen a problem before and may not know how to respond Clear – cut Decision criteria do not exist. Alternatives fuzzy Non Programmed

10 Bahçeşehir University - Organizational Theory 10 Individual Decision Making Individual Decision Making can be described in two ways: Rational Approach: It is suggested that, how Managers should try to make decisions. This is an ideal managers may work toward but never reach. Bounded Rationality Approach: It describes how decisions actually have to be made under severe time and resource constraints.

11 Bahçeşehir University - Organizational Theory 11 Definition: Organizational Decision making as the process of identifying and solving problems. It has 2 major parts: -Problem Identification -Problem Solution Problem Identification: Information about enviromental and organizational conditions is monitored to determine if performance is satisfactory and to diagnose the cause of shortcomings. Problem Solution: Stage is when alternative courses of action are considered and one alternative is selected and implemented. Decision Making Parts

12 Bahçeşehir University - Organizational Theory 12 PROBLEM IDENTIFICATION PROBLEM SOLUTION Monitor the Decision Enviroment Develop Alternative Solution Define the Decision Problem Evaluate Alternatives Specify Decision Objectives Choose the Best Alternative Diagnose the Problem Implement the Chosen Alternative RATIONAL APPROACH  Ratiıonal Approach model is an ideal not fully achievable in the real world of uncertanity, complexity, and rapid change.  This model help managers think about decisions more clearly and rationally.  It ensures make better decisions even when there is a lack of clear information.  It has broken 8 steps and illustrated left side. Individual Decision Making Rational Approach

13 13 Monitor the Decision Enviroment Competitors Activities Performance Evaluation So forth. Industry Incides Financial Statements Manager Reviews Manager monitor Internal and External Informatipon that will indicate deviations from planned or acceptable behavior. Bahçeşehir University - Organizational Theory Rational Approach

14 Bahçeşehir University - Organizational Theory 14 Define the Decision Problem Problem determination phases Who was affected, Who was involved Where, when occur How current activities influenced Specify Decision Objectives The manager determines what performance outcomes should be achieved by a decision. Rational Approach

15 Bahçeşehir University - Organizational Theory 15 Diagnose the Problem The manager digs below the surface to analyse the cause of the problem. Additional data might be gathered to facilitate this diagnosis. Develop Alternative Solutions Before amanager can move ahead with decisive action plan, he or she must have a clear understanding of the various options avaliable to achieve desired objectives. The manager may seek ideas and suggestions from other people. Rational Approach

16 Bahçeşehir University - Organizational Theory 16 Evaluate Alternatives This step may involve the use of statistical techniques or personnel experience to measure the probability of success. Choose The Best Alternative This step is CORE of the decision process. The manager uses his/her analysis of the problem, objectives, and alternatives to select a single alternative that has the best chance for success. Rational Approach

17 Bahçeşehir University - Organizational Theory 17 Implement the Chosen Alternative Finally, the manager uses managerial, administrative and persuasive abilities and gives directions to ensure that the decision is carried out. The monitoring activity begins again as soon as the solution implemented. RESULT of Rational Approach Model  First 4 step is related to problem identification and other 4 step is problem solution.  8 steps are integrated and can not be applied solely.  Deviations from the Rational Approaches are explained by the bounded rationallity perspective. Rational Approach

18 Individual Decision Making Bahçeşehir University - Organizational Theory 18 Managerial Decision Makings shows that, managers are unable to follow an ideal procedure. Rational Approach Model could not be worked with unideal cases. Time contstraints, internal and external factors, ill defined process lead to many decisions must be made very quickly. Managers have only so much time and mental capacity and, hence, cannot evaluate every goal, problem and alternative. Bounded Rationality Perspective

19 Constraints and Tradeoffs Bahçeşehir University - Organizational Theory 19 Not only are large organizational decisions too complex to fully comprehend, but several other constraints impinge (vurmak, çarpmak) on the decision maker. Corporate culture and ethical values also influence decision makings.

20 The Role of Intution Bahçeşehir University - Organizational Theory 20 The bounded rationally perspective is often associated with intuitive decision process. In intutive decision making, experience and judgement rather than sequential logic or explicit reasoning are used to make decisions. Intution is not arbitrary or irrational because it is based on years of practise and hands on experience, often stored in the subconscious. (bilinçaltı) Intution plays an increasingly important role in problem identification in today’s fast – paced and uncertain business enviroment. A study of manager problem finding showed that thirty of thirty – three problems were ambiguosu and ill defined. Managers may walk a fine line between two extremes: on the one hand, making arbitrary decisions without careful study, and on the other, rkying obsessively (saplantılı) on numbers and rational analysis.

21 Constraints and Tradeoffs during Nonprogrammed Decision Making Bahçeşehir University - Organizational Theory 21 Bounded Rationality: Limited time, information, resources to deal with complex, multidimensinal issues Organizational Constraints: Level of: agreement, shared perspective, cooperation, or support; corporate culture and structure, ethical values. Personal Costraints: Personel desire for prestige, success; personal decision style; and the desire to satisfy emotional needs, cope with pressure, maintain self - concept Decision /Choice Search for a high – quality decision alternative Samuel F.B. Morse Invented the Telegraph with a lots of Tradeoffs

22 Organizational Decision Making Today’s managers amd organizations are dealing with a higher percentage of non programmed decisions because of rapidly changing business environmet.

23 23 Organizational Decision Making Bahçeşehir University - Organizational Theory Executive Management interests long maturity strategic decisions and related to whole business, middle level management interests the applications middle and short maturities and others interest the very shot applications. This situation is shown best organization decision making structure. Decisions are made about organization strategy, structure, innovation and acqusitions.

24 Bahçeşehir University - Organizational Theory 24 Organizational Decision Making Types of Organizational Decision Making The Management Scieince Approach The Carnagie Model The Incremental Decision Process Model Garbage Can Model The process by which decisions are made in organizations are influenced by a number of factors, particularly the organization’s own internal structures and the degree of stability or instability of the external enviroment. It seperates four primary tyoes

25 Organizational Decision Making Bahçeşehir University - Organizational Theory 25 Management Sicence Approach The management Science Approach to Organizational Decision Making is the anlog to the rational approach by individual managers. Weakness Problems analyzable Variables identifies Measurable Problems analyzable Variables identifies Measurable Success Conditions Ignore human judgement Qualitative factors can not be considered such as competitor reactions, consumer tastes, product warmth Ignore human judgement Qualitative factors can not be considered such as competitor reactions, consumer tastes, product warmth

26 Organizational Decision Making Bahçeşehir University - Organizational Theory 26 Carnegie Model  Carnegie – Mellon University academic research helped formulate the bounded rationality approach to individual decision making, as well as provide new insights about organizational decisions.  Research by The Group indicated that, organization level, decisions involved many managers and that a final choice was based on a colalition among those managers.  Management coalitions are needed during decision making fro two reasons.  Organizational Goals are often Ambiguous, and operative goals of deparments are often inconsistent  Human cognitive Limitations Instead of Optimize Problem Solution, satisfice is used

27 Organizational Decision Making Bahçeşehir University - Organizational Theory 27 Incremental Decision Process Model  Twenty five Decisions made in organizations and traced the events associated with these decisions from Beginning to end.  One importance is that major organization choice are Usually a serises of small choices that combine to produce the major decision.  Based on this approach three major decisions are important: - Identification - Development - Selection Henry Mintzberg and his associates in MCGill University develop this.

28 Organizational Decision Making Bahçeşehir University - Organizational Theory 28 Garbage Can Model  This Model is not Directly comparable to the earlier models, bcs the garbage can model deals with the Pattern or flow of multiple decisions within Organizations. It ensures that and help us think of the whole organiztion and the frequent decisions begin made by managers throughout.  The unique characteristic of the garbage can model is that the decision process is not seen as a sequence of steos that begins with a problem end with a solution.  Indeed, problem identification and problem solution may not be connected to each other, An idea may be proposed as a solution when no problem is specified, A Problem may exist and never generate A solution and so forth. James March and his collegous developed the Organized Anarchy

29 Organizational Decision Making Management Science Approach Carnegie Model Incremental Decision Process Model Garbage Can Model Measurablity Coalition Ambiguous Satisfice rather than optimize Development Identification Participants Potential Solutions Problems Choice Opportunities Selection

30 30 Decision Making Single Manager Individual, a single view point Intangible and tangible results are more common. Affects the person and close familiy. Generally take a decision is faster than corporation and implementation is interested more narrow enviroment. Single Manager Individual, a single view point Intangible and tangible results are more common. Affects the person and close familiy. Generally take a decision is faster than corporation and implementation is interested more narrow enviroment. Several Manager May Departments play a role for problem identifiaction and solutuin, multiple view point Tangible Results only Affects corporate identity, shareholders, stakeholders, investors etc. Several Manager May Departments play a role for problem identifiaction and solutuin, multiple view point Tangible Results only Affects corporate identity, shareholders, stakeholders, investors etc. Individual Decision Making Organizational Decision Making Organizational & Individual Decision Making

31 31 Bahçeşehir University - Organizational Theory Some of The Successful Decision Owners

32 Questions and Explanations 32 Bahçeşehir University - Organizational Theory


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