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Slide content created by Charlie Cook, The University of West Alabama
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Chapter Nine
Managing DecisionMaking and Problem
Solving
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Learning Objectives
After studying this chapter, you should be able to:
1. Define decision making and discuss types ofdecisions and decision-making conditions.
2. Discuss rational perspectives on decision making,including the steps in rational decision making.
3. Describe the behavioral aspects of decision making.
4. Discuss group and team decision making, including
the advantages and disadvantages of group andteam decision making and how it can be moreeffectively managed.
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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 decisionsituation, identifying alternatives, choosing thebest alternative, and putting it into practice.
An effective decision optimizes some set of factors such
as profits, sales, employee welfare, and market share. Managers make decisions about both problems and
opportunities.
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Types of Decisions
Programmed Decisions A decision that is a fairly structured
decision or recurs with somefrequency or both.
Example: Starting your car in themorning.
Nonprogrammed Decisions A decision that is relatively
unstructured and occurs much lessoften a programmed decision. Example: Choosing a vacation
destination.
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Decision-Making Conditions
Decision Making UnderCertainty The decision maker knows with reasonable
certainty what the alternatives are and whatconditions are associated with each alternative.
Decision Making Under Risk The availability of each alternative and its potential
payoffs and costs are all associated with risks.
Decision Making Under Uncertainty The decision maker does not know all the
alternatives, the risks associated with each, or theconsequences of each alternative.
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Figure 9.1: Decision-Making
Conditions
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Figure 9.2: The Classical Model
of Decision Making
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Table 9.1:Steps in
the
RationalDecision-
making
Process
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Figure 9.3: Evaluating
Alternatives in the Decision-
making Process
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Figure 9.4: The Administrative
Model of Decision Making
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Behavioral Aspects of
Decision Making (contd) Bounded Rationality
Decision makers are limited by their values andunconscious reflexes, skills, and habits.
Satisficing The tendency to search for alternatives only untilone is found that meets some minimum standardof sufficiency to resolve the problem.
Coalition A positive or negative political force in decision
making which consists of an informal alliance ofindividuals or groups formed to achieve a goal.
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Group and Team Decision
Making in Organizations Forms of Group Decision Making
Interacting group or team Consists of an existing group or newly formed team
interacting and then making a decision.
Delphi groups Developing a consensus of expert opinion from a panel
of experts who individually contribute through amoderator.
Nominal groups
Generating ideas through the individual contributions ofalternatives that are winnowed down to reach a decision.
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Table 9.2: Advantages and
Disadvantages ofGroup and
Team Decision Making
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Managing Group and Team
Decision-Making Processes Managers can promote the effectiveness of group
and team decision making by:
Being aware of the pros and cons of having a group or teammake a decision.
Setting deadlines for when decisions must be made. Avoiding dominance problems by managing group
membership.
Having each group member individually critically evaluate allalternatives.
Not making your position known too early. Appointing a group member to be a devils advocate.
Holding a follow-up meeting to recheck the decision.
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Key Terms
decision-making
decision-makingprocess
programmed decision
nonprogrammeddecision
state of certainty
stage of risk
state of uncertainty classical decision model
steps in rationaldecision making
administrative model
bounded rationality
satisficing
coalition
intuition
escalation ofcommitment
risk propensity
interacting groups
Delphi group nominal group
groupthink