Chapter6 Part1
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THE NATURE OF MANAGERIAL DECISION MAKING BY: Nathaniel Navarro
Definition:
Decision making- the process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action.
•
Decision making in response to opportunities Decision making in response to threats
•
Decision making: Programmed or non- Programmed
Programmed decision making - routine, virtually automatic decision making that follows established rules or guidelines
Examples of establish rules. An office manager. 6. When the storage shelves are three-quarters empty, order more copy paper 7. When ordering paper, order enough to fill the shelves
Non programmed decision making
Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats.
Occurs when there are no ready-made decision rules.
Question: How do managers make decisions in the absences of decision rules?
Answer!? Search for information about alternative course of action, then - Reply on intuition and judgment to choose wisely among alternatives -
Model
1.The classical model( economic) A
perspective approach to decision making based on the assumption that the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action
Classical model of decision making List of alternative courses of action/ consequences
Rank (least- most preferred) according to personal pref.
Select alternatives that lead to desired future consequences
Classical model
Assumes all information about alternatives is available to managers Assumes managers possess the mental facility to process this information
Assumes that managers know what future courses of action is best for organization
Optimum decision
2. Administrative model (March and Simon)
An approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions.
Three important concept: 1. Bounded rationality 2. Incomplete information 3. Satisficing
Why Information incomplete? Uncertainty and risk
Ambiguous information
Incomplete information
Time constraints and information costs
Thank you
Definition:
Decision making- the process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action.
•
Decision making in response to opportunities Decision making in response to threats
•
Decision making: Programmed or non- Programmed
Programmed decision making - routine, virtually automatic decision making that follows established rules or guidelines
Examples of establish rules. An office manager. 6. When the storage shelves are three-quarters empty, order more copy paper 7. When ordering paper, order enough to fill the shelves
Non programmed decision making
Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats.
Occurs when there are no ready-made decision rules.
Question: How do managers make decisions in the absences of decision rules?
Answer!? Search for information about alternative course of action, then - Reply on intuition and judgment to choose wisely among alternatives -
Model
1.The classical model( economic) A
perspective approach to decision making based on the assumption that the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action
Classical model of decision making List of alternative courses of action/ consequences
Rank (least- most preferred) according to personal pref.
Select alternatives that lead to desired future consequences
Classical model
Assumes all information about alternatives is available to managers Assumes managers possess the mental facility to process this information
Assumes that managers know what future courses of action is best for organization
Optimum decision
2. Administrative model (March and Simon)
An approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions.
Three important concept: 1. Bounded rationality 2. Incomplete information 3. Satisficing
Why Information incomplete? Uncertainty and risk
Ambiguous information
Incomplete information
Time constraints and information costs
Thank you
