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Bahçeşehir University

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

2 The cognitive process of reaching a decision.
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. Bahçeşehir University - Organizational Theory

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
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. Bahçeşehir University - Organizational Theory

9 Decision Making Comlexity Categories
Programmed Non Programmed Repetitive and well defined Procedures exist Criteria of performance are normally clear Good information about performance is available Alternatives are easily specified 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

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. Bahçeşehir University - Organizational Theory

11 Bahçeşehir University - Organizational Theory
Decision Making Parts 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. Definition: Organizational Decision making as the process of identifying and solving problems. It has 2 major parts: Problem Identification Problem Solution Bahçeşehir University - Organizational Theory

12 Individual Decision Making
Rational Approach 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 . Bahçeşehir University - Organizational Theory

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

14 Define the Decision Problem
Rational Approach 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. Bahçeşehir University - Organizational Theory

15 Develop Alternative Solutions
Diagnose the Problem Rational Approach 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. Bahçeşehir University - Organizational Theory

16 Evaluate Alternatives
Rational Approach 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. Bahçeşehir University - Organizational Theory

17 RESULT of Rational Approach Model
Implement the Chosen Alternative Rational Approach 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. Bahçeşehir University - Organizational Theory

18 Individual Decision Making
Bounded Rationality Perspective 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. Bahçeşehir University - Organizational Theory

19 Constraints and Tradeoffs
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. Bahçeşehir University - Organizational Theory

20 Bahçeşehir University - Organizational Theory
The Role of Intution 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. Bahçeşehir University - Organizational Theory

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

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 Organizational Decision Making
Decisions are made about organization strategy, structure, innovation and acqusitions. 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. Bahçeşehir University - Organizational Theory

24 Organizational Decision Making
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 Types of Organizational Decision Making The Management Scieince Approach The Carnagie Model The Incremental Decision Process Model Garbage Can Model Bahçeşehir University - Organizational Theory

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

26 Organizational Decision Making
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 Bahçeşehir University - Organizational Theory

27 Organizational Decision Making
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. Bahçeşehir University - Organizational Theory

28 Organizational Decision Making
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 Bahçeşehir University - Organizational Theory

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

30 Organizational & Individual Decision Making
Organizational 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. 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. Decision Making

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

32 Questions and Explanations
Bahçeşehir University - Organizational Theory

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