Decision Making: Types and Conditions

• Decision making is a systematic process of defining problems, gathering information, generating alternatives, and selecting a course of action
• The nature of the problem affects the solutions and risk levels in decision making
• Environmental forces play a role in determining the conditions for decisions

Conditions for Decision-Making

• Decisions occur under conditions that influence solutions and risks
• Certainty exists when decision-makers have complete information and predictable outcomes
• Uncertainty occurs when decision-makers lack complete information
• Risk is when the problem is defined and probabilities can be estimated, requiring risk assessment

Types of Decisions

• Decisions vary based on conditions, falling into three categories
• Routine Decisions involve standard choices for well-defined problems, using established rules
• Adaptive Decisions respond to unusual problems by modifying past routines
• Innovative Decisions occur when problems lack definite solutions, relying on experience and strategy

Role of Goals in Decision Making

• Decisions aim to achieve, revise, or eliminate organizational goals
• Goals give employees, managers, and organizations direction and purpose
• Decision-making aligns with the nature and evolution of organizational goals

Decision-Making Models

• Managers use models to optimize decision-making
• The Rational Model uses a structured approach to increase problem-solving likelihood
  • Steps include defining the problem, setting goals, searching for solutions, evaluation, choosing the best, implementing, and following up
• The Bounded Rationality Model recognizes limitations and biases in decision-making
• The Political Model describes decision-making based on stakeholder interests and power dynamics

Knowledge Management and Decision Making

• Knowledge management is essential, involving creation, measurement, distribution, and integration of knowledge
• It includes managing intellectual assets and ensuring information sharing
• Explicit Knowledge is documented information
• Tacit Knowledge is personal insights and experiences
• Enabling Technologies are tools that facilitate knowledge sharing

Forecasting in Decision Making

• Forecasting helps anticipate conditions for informed decisions
• Extrapolation extends past trends into the future
  • Scenarios are written descriptions of future events
  • Delphi Technique is a consensus approach using expert opinions
  • Simulation uses models to represent real systems for analysis
• Creativity enhances forecasting

Quality in Decision Making

• Quality decision-making helps meet expectations
• Benchmarking compares an organization to industry leaders to identify best practices
• The Deming Cycle (PDCA) includes:
  • Plan: analyze the situation/develop plans
  • Do: test solutions
  • Check: evaluate implemented changes
  • Act: implement the final solutions based on evaluation
• Pareto Analysis identifies the most significant causes of problems using the 80/20 principle
• Fishbone Diagrams identify root causes by categorizing problems

Organizational Structure

• The fundamental process that impacts an organizations success
• Conditions, decision types and models, enhance managerial effectiveness
• Knowledge management, forcasting and quality improvements lead to superior outcomes
• Organizational structure is critical for strategy, influencing goal achievement
• It's the formal arrangement of jobs; changing it is organizational design
• Organizational structure separates and integrates tasks, clarifying responsibilities while ensuring coordination
• A well-structured organization allows employees to collaborate effectively

Organization in Organization

• This involves coordinating activities and allocating work for organizational goals

Key Elements of Organizational Structure

Specialization

• This divides into smaller jobs for people with certain skills to increase effeciency

Standardization

• This process ensures consistent procedures via rules and regulations to ensure consistancy

Coordination

• This involves using formal and informal procedures to syncronize activities to meet objectives
• Essential qualities including:
  • Managerial sensitivity
  • Willingness to share responsibility
  • Interpersonal communication

Principles of Coordination

• Unity of Command: Each employee reports to one supervisor
• Scalar Principle: Clear hierarchy ensures authority flow
• Span of Control: Limits subordinates per manager for efficiency

Authority

• Authority is making decisions and carrying them out
• Elements of responsibility, acountability and delegation are involved
  • Line authority gives direct control
  • Staff authority provide advisory roles without command

Centralization and Decentralization

• Centralization concentrates decisions at the top while decentralization distributes power

Organizational Design

• Involves structuring the organization
• It is important for supporting strategies and goals

Organizational Chart

• Visually represents an organization's structure, showing relationships and authority lines

Departmentalization

• This organizes jobs to achive organizational goals
• Departmentalization involves the division of work into specialized groups and setting performace expectations

Departmentalization Structures

• Function: organised via skillsets like (marketing, finance, HR)
• Product or Service: each product line is managed by a specialist
• Place: geographic location to allow for region specific strategies
• Customer: structure based on customers, which is usefully for service tailoring
• Network: uses external orgainzations centrally or in virtual systems
• Matrix: (functional + product) allows people to work under multiple managers to maximize skill and expertise
• There is no universal superior structure - it depends on things like strategy and circumstances of the organization