Podcast
Questions and Answers
What is the first step in the decision-making process?
What is the first step in the decision-making process?
- Developing alternatives
- Implementing the selected alternative
- Evaluating the decision's effectiveness
- Identifying a problem and decision criteria (correct)
Which alternative demonstrates the highest battery life according to the given criteria?
Which alternative demonstrates the highest battery life according to the given criteria?
- HP ProBook
- Toshiba Satellite
- Lenovo IdeaPad
- Apple Macbook (correct)
In making a decision, what does allocating weights to the criteria help determine?
In making a decision, what does allocating weights to the criteria help determine?
- The financial cost of implementation
- The effectiveness of the decision
- The best selling alternative alone
- The importance of each criterion in evaluating alternatives (correct)
When evaluating the alternatives for new computers, which alternative appears to offer the best overall value according to the example provided?
When evaluating the alternatives for new computers, which alternative appears to offer the best overall value according to the example provided?
Which of the following is NOT a criterion listed for evaluating the new computers?
Which of the following is NOT a criterion listed for evaluating the new computers?
What is the purpose of the analysis of alternatives in the decision-making process?
What is the purpose of the analysis of alternatives in the decision-making process?
Which step follows the selection of an alternative in decision-making?
Which step follows the selection of an alternative in decision-making?
What is involved during the development of alternatives?
What is involved during the development of alternatives?
Why is it important to communicate the decision after selecting an alternative?
Why is it important to communicate the decision after selecting an alternative?
What does selecting an alternative depend on in the decision-making process?
What does selecting an alternative depend on in the decision-making process?
What defines a problem in the context of organizational management?
What defines a problem in the context of organizational management?
Which of the following is NOT a characteristic that makes a situation a problem for a manager?
Which of the following is NOT a characteristic that makes a situation a problem for a manager?
What aspect should be considered in decision criteria for problem resolution?
What aspect should be considered in decision criteria for problem resolution?
How should decision criteria be prioritized in organizational decision-making?
How should decision criteria be prioritized in organizational decision-making?
Which of the following factors is NOT identified as decision criteria for resolving problems?
Which of the following factors is NOT identified as decision criteria for resolving problems?
What should be evaluated to determine the effectiveness of a decision?
What should be evaluated to determine the effectiveness of a decision?
Which assumption about decision-makers indicates a flaw in the rational decision-making process?
Which assumption about decision-makers indicates a flaw in the rational decision-making process?
In the context of effective decision-making, which aspect is NOT a concern if the problem remains unresolved?
In the context of effective decision-making, which aspect is NOT a concern if the problem remains unresolved?
What characterizes a rational decision according to traditional models?
What characterizes a rational decision according to traditional models?
Which of the following is essential for a manager to be considered a rational decision-maker?
Which of the following is essential for a manager to be considered a rational decision-maker?
What does bounded rationality imply about decision makers?
What does bounded rationality imply about decision makers?
What is escalation of commitment in decision making?
What is escalation of commitment in decision making?
What role does intuition play in decision making for managers?
What role does intuition play in decision making for managers?
Which statement best describes 'satisficing' behavior in decision making?
Which statement best describes 'satisficing' behavior in decision making?
What factor is likely to influence a manager’s decision making the most?
What factor is likely to influence a manager’s decision making the most?
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Study Notes
Decision-Making
- A choice made from two or more alternatives
- Involves identifying a problem, decision criteria, allocating weights to criteria, developing, analyzing and selecting an alternative, implementing the selected alternative and evaluating effectiveness
- Decision needs are driven by problems that need resolving
Choosing New Computers: Example
- Example problem: sales reps need new computers
- Example decision criteria: Memory and storage, display quality, battery life, warranty, carrying weight
- Example decision weights: allocate numerical values to each criteria based on their importance to the problem
Steps in Decision Making
- Development of Alternatives: identify viable alternatives that can resolve the problem, list them without evaluating them
- Analysis of Alternatives: understand the strengths and weaknesses of each alternative, asses how well each alternative addresses the issues raised in step 2 and 3
- Selection of an Alternative: choose the best option that solves the problem, the one with the highest total weight
- Implementation of the Alternative: put the chosen alternative into action, communicate the decision and gain commitment from those involved in its execution
Bounded Rationality
- Decision makers are limited in their ability to process and understand information
- Decision makers may not have knowledge of all alternatives, so they will not analyze all alternatives
- Decision makers will satisfice - choose the first alternative that satisfactorily solves the problem rather than maximizing the outcome of their decision by considering all alternatives and choosing the best
Escalation of Commitment
- Keeping or increasing a commitment to a previous decision despite clear evidence it was the wrong one
Influences on Decision Making
- Role of Intuition: using experience, feelings, and accumulated judgment to make decisions
Evaluation of Decision Effectiveness
- The soundness of a decision is judged by its outcomes
- If a problem was not resolved, figure out why
Rationality in Decision Making
- Managers make consistent, value-maximizing choices within specified constraints
- Decision makers are assumed to be perfectly rational, fully objective, and logical
- Decision makers are assumed to have a clear and specific goal and will select the alternative that maximizes outcomes in the organization's interests rather than in their personal interests
Identification of a Problem
- A discrepancy between an existing and desired state of affairs
- A problem becomes a problem when a manager becomes aware of it
- There is pressure to solve the problem
- The manager must have the authority, information, or resources needed to solve the problem
Identification of Decision Criteria
- Factors that are important to resolving the problem
- Costs that will be incurred (investments required)
- Risks likely to be encountered (chance of failure)
- Outcomes that are desired (growth of the firm)
Allocation of Weights to Criteria
- Decision criteria are not of equal importance
- Weighting each decision criteria places them in the correct priority order of importance in the decision-making process
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