Académique Documents
Professionnel Documents
Culture Documents
• Programmed decision is
one that is fairly
structured or recurs with
some frequency (or both).
• Nonprogrammed decision
is one that is unstructured
and occurs much less
often than a programmed
decision.
Programmed Decisions. . .
Many decisions regarding basic operating
systems and procedures and standard
organizational transactions fall into this
category.
McDonald’s employees are trained to make the Big
Mac according to specific procedures.
Starbucks, and many other organizations, use
programmed decisions to purchase new supplies
[coffee beans, cups and napkins].
Nonprogrammed Decisions. . .
Most of the decisions made by top managers
involving strategy and organization design are
nonprogrammed.
Decisions about mergers, acquisitions and takeovers, new
facilities, new products, labor contracts and legal issues are
nonprogrammed decisions.
Managers faced with nonprogrammed decisions
must treat each one as unique, investing great
amounts of time, energy and resources into
exploring the situation from all views.
Intuition and experience are major factors in
these decisions.
Decision-Making Conditions
Classical
Decision
Model
Rational
Decision
Making
Classical Decision Model
• An approach to decision making that tells
managers how they should make decisions.
• Approach assumes that managers are logical
and rational.
• Approach assumes that managers’ decisions will
be in the best interests of the organization.
• Conditions suggested in this approach rarely, if
ever, exist.
See Figure 9.2, page 281.
The Classical Model of Decision
Making
…and end up with a
decision that best
serves the interests
of the organization.
2) Identifying alternatives
a) Managers must realize that their alternatives may
be limited by legal, moral and ethical norms,
authority constraints, available technology,
economic considerations and unofficial social
norms.
Rational Decision Making. . . (continued)
3) Evaluating alternatives
a) Each alternative must pass successfully through three
stages before it may be worthy of consideration as a
solution.
1. Feasibility – Is it financially possible? Is it legally
possible? Are there limited human, material and/or
informational resources available?
2. Satisfactory – Does the alternative satisfy the conditions
of the decision situation? [50% increase in sales]
3. Affordability – How will this alternative affect other parts
of the organization? What financial and non-financial
costs are associated?
b) The manager must put ‘price tags’ on the consequences of
each alternative.
c) Even an alternative that is both feasible and satisfactory
must be rejected if the consequences are too expensive for
the total system.
Rational Decision Making. . . (continued)
4) Selecting an alternative
a) Choosing the best alternative is the real test of
decision making.
b) Optimization is the goal because a decision is
likely to affect several individuals or departments.
c) Finding multiple acceptable alternatives may be
possible; selecting one and rejecting the others
may not be necessary.
Rational Decision Making. . . (continued)
Organizational culture is
a prime ingredient in
encouraging different
levels of risk.
Behavioral Forces Influencing Decisions
Ethics
Managerial ethics involves a
wide variety of decisions:
Relationships of the firm
to its employees [closing a dept
to save money]
Relationships of the
employees to the firm
Relationships of the firm
to other economic agents