Chapter Outline Fundamentals of decisions -Definition of a decision -Types of decision Diversity Spotlight: -The Responsibility for Making Organizational

Decision -Elements of the Decision Making The Decision-Making Process -Identifying an Existing Problem -Listing Alternative Solution -Selecting the most Beneficial Alternative

The Decision-Making Process -Identifying an Existing Problem -Listing Alternative Solution -Selecting the most Beneficial Alternative Cutting Edge: Decision Alternative Should reflect Organizational Values -Implementing the Chosen Alternative -Gathering Problem-Related Feedback People Perspectives: Decision at John Deere: Eliminating Problems by building Employee Involvement

Decision-Making Condition -Complete Certainly Condition -Complete Uncertainly Condition -Risk Condition Decision-Making tools -Probability Theory -Decision Trees Group Decision Making -Advantages and Disadvantages of Using Groups to Make Decision -Process for Making Group Decision

Two Factors The Scope of the Decision- proportion of the total management system that a particular decision will affect. - The boarder the scope of a decision, the higher the level of the manager responsible for making that decision. LEVELS OF MANAGEMENT Consensus-agreement on a decision by all individuals involved in making that decision. Adv.- the method is that it focuses several heads on the decision if they halped make it. Disadvantage-this method is that it often involves time-consuming discussions relating to the decision that can easily to the organization.

FUNDAMENTALS OF DECISION DECISION- is a choice made between two or more available alternatives. DECISION MAKING- process of choosing the best alternative for reaching objectives. -covered in the planning section of this text, but since managers must also make decisions when performing the other three managerial functions Organizing, Influencing, Controlling TYPES OF DECISION 1.Programmed Decision-decision that are routine and repetitive and that typically require specific handling methods. 2.Nonprogrammed Decision-decision that are one-shot, illstructure novel policy decision -handled by general problem solving process.

Programmed and Nonprogrammed Decision -Should be thought of as being at opposite ends of the decision programming continuum. The Responsibility for Making Organizational Decision Many diff. kinds of decisions must be made with in organization such as how to manufacture a product, how to maintain machines, how to ensure product quality, and how to establish advantageous relationships by customers.

ELEMENTS OF THE DECISION SITUATION *The Decision Makers-individuals/ group that actually make the choice among alternatives. Acc. Date- weak decision makers usually have one of four orientations *Receptive Orientation-believe that the source of all good is outside themselves, and therefore they rely heavily on suggestions from other organization members. *Eploitative Orientation-the source of all good is outside themselves, and they are willing to steal ideas as necessary I order to make good decisions. *Boarding Orientation- characterized by the desire to preserve the status quo as much as possible.

Marketing Oriented- look upon themselves as commodities that are only as valuable as the decision they make. -they try to make decision that will onhance their value and are highly conscious of what others think of their decisions. IDEALDECISION_MAKING ORIENTATION -emphasizes the realization of the organizations potential as well as that of the decision maker. -try to use all of their talents when making a decision and are characterized by reason and sound judgement. - they are largely free of the qualities of the four undersirable decision making orientations just described

GOALS TO BE SERVED- the goals that decision makers seek to attain are another element of the decision situation. RELEVANT ALTERNATIVES-the decision situation is usually composed of at least 2 relevant alternatives. -one that is considered feasible for solving on existing problem and for implementation. ORDERINLY OF ALTERNATIVES-the decision situation requires a process of mechanism for ranking alternatives from most desirable to least desirable. CHOICE OF ALTERNATIVES-the decision situation is the actual choice between available alternatives.

THE DECISION-MAKING PROCESS A Decision is a choice of one alternatives from a set of available alternatives. The decision-making process comprises the steps the decision maker takes to arrive this choice.
DECISION-MAKING STEPS THIS MODEL DEPICTS 1.Identify an existing problem. 2.List possible alternatives for solving the problem. 3.Select the most beneficial of these alternatives. 4.Implement the selected alternatives. 5.Gather feedback to find out if the implemented alternative is solving the identified problem.

LIST ALTERNATIVE PROBLEM SOLUTIONS

SELECT MOST BENEFICIAL ALTERNATIVE

IDENTIFY EXISTING PROBLEM

IMPLEMENT CHOSEN ALTERNATIVE

GATHERING PROBLEM RELATED FEEDBACK

IDENTIFYING AN EXISTING PROBLEM First step in this elimination process is identifying exactly what the problems or barriers are for only after the barriers have been adequately identified can management take steps to eliminate them. LISTING ALTERNATIVE SOLUTIONS Before searching for solutions, however, managers should be aware of five limitations on the number of problem solving alternatives available. 1.Authority factors 2.Biological or human factors 3.Physical factors 4.Technological factors 5.Economic factors

SELECTING THE MOST BENEFICIAL ALTERNATIVE First, decision makes should list, as accurately as possible, the potential effects of each alternative had already been chosen and implemented. Second, they should assign a probability factor to each of potential effects, that is, indicate how probable the occurrence of the effect would be if the alternative were implemented. Third, keeping organizational goals in mind, decision makes should compare each alternatives expected effects and the respective probabilities of those effects.

DECISION ALTERNATIVES SHOULD REFLECT ORGANIZATIONAL VALUES According to more current management thinking, however, alternatives should be evaluated not only as means of solving such problems but also ways of exemplifying and achieving important organizational values. IMPLEMENTING THE CHOSEN ALTERNATIVE The next step is to put the chosen alternative into action. Decisions must be supported by appropriate action they are to have a chance of success.

GATHERING PROBLEMS-RELATED FEEDBACK After the chosen alternative has been implemented, decision makers must gather feedback to determine the effect of the implemented alternative on the identified problem. If the identified problem is not being solved, managers need to search out and implement some other alternative. DECISION-MAKING CONDITION In most instances, it is impossible for decision makers to know exactly what the future consequences of an implemented alternatives will be. The word FUTURE is the key in discussing decision-making conditions. Because organizations and their environment are constantly changing, future consequences of implemented decision are not perfectly predictable

3 different condition 1.Complete certainty 2.Complete uncertainty 3.Risk COMPLETE CERTAINLY CONDITION -exists when decision makers exactly what the result of an implemented alternative will be. COMPLETE UNCERTAINLY CONDITION - exist when decision makers have absolutely no idea what the results of an implemented alternative will be. RISK CONDITION - is that decision makers have only enough information about the outcome of each alternative to estimate hoe probable the outcome will be if the alternative is implemented

Psalm 32:8 I will instruct you and teach you in the way you should go; I will counsel you with my eye upon you.

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