Quizzes for 1sy year of BSBA Major in Business Management, Quizzes of Philosophy

Download Quizzes for 1sy year of BSBA Major in Business Management and more Quizzes Philosophy in PDF only on Docsity! Chapter 4 MANAGING DECISION MAKING The Nature of Decision Making ➢ Decision making The act of choosing one alternative from among a set of alternatives ➢ Decision-making process Recognizing and defining the nature of a decision situation, identifying alternatives, choosing the best alternative, and putting it into practice. Types of Decision Making • Programmed decision A decision that is relatively structured or recurs with some frequency (or both) • Non-programmed decision A decision that is relatively unstructured and occurs much less often than a programmed- decision Decision-Making Conditions • Decision Making Under Certainty: ➢ State of certainty A condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative. ➢ Decision Making Under Risk: A condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates. Rational Perspectives on Decision Making • The Classical Model of Decision Making: A prescriptive approach to decision making that tells managers how they should make decisions; it assumes that managers are logical and rational and that their decisions will be in the organization’s best interest. ❖ Classical model views the decision-making process: 1. Decision makers have complete information about the decision situation and possible alternatives. 2. They can effectively eliminate uncertainty to achieve a decision condition of certainty. 3. They evaluate all aspects of the decision situation logically and rationally. As we see later, these conditions rarely, if ever, actually exist. Evidence-Based Management ➢ A commitment to finding and using the best theory and data available at the time to make decision. Behavioral Aspects of Decision Making • Administrative model A decision-making model that argues that decision makers (1) use incomplete and imperfect information, (2) are constrained by bounded rationality, and (3) tend to “satisfice” when making decisions • Bounded rationality A concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits • Satisficing The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency • Coalition An informal alliance of individuals or groups formed to achieve a common goal Intuition and escalation of commitment • Intuition An innate belief about something, without conscious consideration • Escalation of commitment When a decision maker stays with a decision even when it appears to be wrong Ethics and Decision Making ➢ Managerial Ethics Individual ethics: (personal beliefs about right and wrong behavior) combine with the organization’s ethics to create managerial ethics. Components of managerial ethics: • Relationships of the firm to employees • Employees to the firm • The firm to other economic agents Group and Team Decision Making in Organizations ➢ ➢ Forms of Groups and Team Decision Making • Interacting group or team A decision-making group or team in which members openly discuss, argue about, and agree on the best alternative