1. Chapter 14 Decision Making – A Book Review
John M. Ivancevich
Michael T. Matteson
Slides Prepared by Bruce R. Barringer
University of Central Florida
© McGraw-Hill Companies, Inc., 1999

2. Learning Objectives Slide 1 of 2
Contrast programmed with nonprogrammed decisions.
Identify the steps in the decision-making process.
Discuss priority setting.
Describe the conditions governing alternative-outcome relationships.
© McGraw-Hill Companies, Inc., 1999

3. Learning Objectives Slide 2 of 2
Explain the role of behavioral influences on decision making.
Compare individual and group decision making.
Identify specific techniques for stimulating creativity.
© McGraw-Hill Companies, Inc., 1999

4. © McGraw-Hill Companies, Inc., 1999
Types of Decisions
Programmed Decisions
Nonprogrammed Decisions
Situation in which specific procedures have been developed for repetitive and routine problems.
Decisions required for unique and complex management problems.
© McGraw-Hill Companies, Inc., 1999

5. Programmed Decisions Slide 1 of 2
Type of Problem
Frequent, repetitive, routine, much certainty regarding cause-and-effect relationships.
Procedure
Depending on policies, rules, and definite procedures.
© McGraw-Hill Companies, Inc., 1999

6. Programmed Decisions Slide 2 of 2
Examples
Business firm
Periodic reorders of inventory.
University
Necessary grade-point average for good academic standing.
Health care
Procedures for admitting patients.
© McGraw-Hill Companies, Inc., 1999

7. Nonprogrammed Decisions Slide 1 of 2
Type of Problem
Novel, unstructured, much uncertainty regarding cause-and-effect relationships
Procedure
Necessity for creativity, intuition, tolerance for ambiguity, creative problem solving.
© McGraw-Hill Companies, Inc., 1999

8. Nonprogrammed Decisions Slide 2 of 2
Examples
Business firm
Diversification into new products and markets.
University
Construction of new classroom facilities.
Health care
Purchase of experimental equipment.
© McGraw-Hill Companies, Inc., 1999

9. The Decision-Making Process
Attributes of Decisions
Decisions should be thought of as a means rather than ends.
Decisions are the organizational mechanism through which an attempt is made to achieve a desired state.
Decisions are, in effect, an organizational response to a problem.
© McGraw-Hill Companies, Inc., 1999

10. Exhibit 14.2: The Decision-Making Process
Establishing
specific goals &
objectives and
measuring results
Problem
identification and
definition
Establishing
priorities
Revise
Revise
Consideration
of causes
Development of
alternative
solutions
Evaluation of
alternative
solutions
Revise
Revise
Solution selection
Implementation
Follow-up
Revise
Revise
© McGraw-Hill Companies, Inc., 1999

11. Behavioral Influence on Decision Making Slide 1 of 2
Values
In the context of decision making, values can be thought of as the guidelines a person uses when confronted with a situation in which a choice must be made.
Propensity for Risk
An individuals propensity for taking risks influences the decision making process.
© McGraw-Hill Companies, Inc., 1999

12. Behavioral Influence on Decision Making Slide 2 of 2
Potential for Dissonance
Decision makers often experience cognitive dissonance, which is a lack of harmony among the decision maker’s various cognitions after a decision has been made.
Escalation of Commitment
Refers to an increasing commitment to a previous decision when a “rational” decision maker would withdraw.
© McGraw-Hill Companies, Inc., 1999

13. © McGraw-Hill Companies, Inc., 1999
Exhibit 14.3: Probable Relationship Between Quality of Group Decision and Method Utilized
Probable quality of decision
More
Less
Average individual
Minority control
Majority control
Individual
Consensus
© McGraw-Hill Companies, Inc., 1999

14. Brainstorming Slide 1 of 2
Brainstorming Defined
The generation of ideas in a group through noncritical discussion.
Potential Results
Brainstorming often has been found to enhance the creative output of groups.
© McGraw-Hill Companies, Inc., 1999

15. Brainstorming Slide 2 of 2
Basic Rules of Brainstorming 1.
No idea is too ridiculous. Group members are encouraged to state any extreme or outlandish idea.
Each idea presented belongs to the group, not to the person stating it. In this way, it is hoped that group members will utilize and build on the ideas of others. 2. 3.
No idea can be criticized. The purpose of the session is to generate, not evaluate, ideas.
© McGraw-Hill Companies, Inc., 1999

16. The Delphi Technique Slide 1 of 2
Delphi Technique Defined
A technique used to improve group decision making that involves the solicitation and comparison of anonymous judgments on the topic of interest though a set of sequential questionnaires interspersed with summarized information and feedback of opinions from earlier responses.
© McGraw-Hill Companies, Inc., 1999

17. The Delphi Technique Slide 2 of 2
Advantages of the Delphi Process
The Delphi process retains the advantage of having several judges while removing the biasing effects that might occur in face-to-face interaction.
The basic approach has been to collect anonymous judgments by mail questionnaires.
© McGraw-Hill Companies, Inc., 1999

18. The Nominal Group Technique
Nominal Group Techniques Defined
A technique to improve group decision making that brings people together in a very structured meeting that does not allow of much verbal communication. The group decision is a mathematically pooled outcome of individual votes
© McGraw-Hill Companies, Inc., 1999

19. Differences Between the Delphi Technique and the Nominal Group Technique (NGT)
Basic Differences Between the Two Techniques 1.
Delphi participants typically are anonymous to one another, while NGT participants become acquainted.
NGT participants meet fact-to-face around the table, while Delphi participants are physically distant and never meet face-to-face. 2. 3.
In the Delphi process, all communication between participants is by way of written questionnaires and feedback from the monitoring staff. In NGT, communication is direct between participants
© McGraw-Hill Companies, Inc., 1999