Management Decision Making Chapter 9

Questions and Answers

What is a devil's advocate?

A person who argues against a position to encourage critical thinking and debate.

Which innovative decision-making technique involves breaking people into subgroups to express competing points of view regarding the decision?

Point-Counterpoint

Which innovative decision-making technique refers to avoiding the suppression of contrary opinions in a desire for harmony?

Avoid Groupthink

Which innovative decision-making technique refers to knowing when to stop investing time and money in a failing decision?

Escalating Commitment Signup and view all the answers

Which innovative decision-making technique is a disciplined procedure for managers to review the results of decisions?

After-action review Signup and view all the answers

What is the definition of 'choice made from available alternatives'?

A Decision Signup and view all the answers

What is the process of identifying problems and opportunities and then resolving them?

Decision making Signup and view all the answers

What are the two categories of management decisions?

Programmed and nonprogrammed Signup and view all the answers

What decision category does the decision to reorder supplies fall into?

Programmed decisions Signup and view all the answers

What decision category do new product developments and entering new markets fall into?

Nonprogrammed decisions Signup and view all the answers

Every decision situation can be organized on a scale according to the availability of information and the possibility of failure. The four positions on the scale are __________.

Certainty, Risk, Uncertainty, Ambiguity Signup and view all the answers

What does 'certainty' mean in decision making?

All the information the decision maker needs is fully available Signup and view all the answers

What is the definition of 'risk' in decision making?

Decision has clear-cut goals and good information is available, but future outcomes are subject to chance of loss or failure Signup and view all the answers

What is 'uncertainty' in decision making?

Managers know which goals they wish to achieve, but information about alternatives and future events is incomplete Signup and view all the answers

What does 'ambiguity' refer to in decision making?

The goals to be achieved are unclear, alternatives are difficult to define, and information about outcomes is unavailable Signup and view all the answers

What is a 'wicked decision problem'?

Conflicts over goals and decision alternatives, rapidly changing circumstances, fuzzy information Signup and view all the answers

What decision-making model is based on rational economic assumptions?

The Classical Model Signup and view all the answers

What are the four assumptions of the Classical Model?

Operates to accomplish established goals, defined problem, strives for certainty, and maximizes economic return Signup and view all the answers

How is the Classical Model of decision making described?

Normative Signup and view all the answers

Which decision-making model describes how managers actually make decisions?

Administrative model Signup and view all the answers

What concepts did Herbert A. Simon propose that shaped the administrative model?

Bounded rationality and satisficing Signup and view all the answers

What does 'bounded rationality' mean?

People have limits on how rational they can be Signup and view all the answers

Managers must ________, meaning they choose the first alternative that satisfies minimal decision criteria.

Satisficing Signup and view all the answers

What is the definition of intuitive decision making?

A quick apprehension of a decision situation based on past experience but without conscious thought Signup and view all the answers

What is the political model of decision making?

Nonprogrammed decisions when conditions are uncertain, information is limited, and there is manager conflict Signup and view all the answers

What is the primary focus of the decision-making process?

Recognition of Decision Requirement Signup and view all the answers

What are the six steps of the Decision-Making Process?

<ol> <li>Recognition of Decision Requirement 2. Diagnosis and Analysis of Causes 3. Development of Alternatives 4. Selection of Desired Alternative 5. Implementation of Chosen Alternative 6. Evaluation and Feedback</li> </ol> Signup and view all the answers

What decision style is characterized by preference for simple, clear-cut solutions?

Directive Style Signup and view all the answers

What are the four main decision styles?

Directive, Analytical, Conceptual, Behavioral Signup and view all the answers

What decision style involves considering complex solutions based on data?

Analytical Style Signup and view all the answers

What decision style involves a broad analysis but is socially oriented?

Conceptual Style Signup and view all the answers

What decision style is used by managers with a deep concern for others?

Behavioral Style Signup and view all the answers

List reasons why managers make bad decisions.

<ol> <li>Being influenced by initial impressions 2. Justifying past decisions 3. Seeing what you want to see 4. Perpetuating the status quo 5. Being influenced by emotions 6. Overconfidence</li> </ol> Signup and view all the answers

What is 'anchoring bias'?

Occurs when initial impressions disproportionately influence subsequent thoughts and judgments Signup and view all the answers

What is the 'sunk cost effect'?

The tendency to continue investing in a failing project hoping to turn it around Signup and view all the answers

What is 'confirmation bias'?

The tendency to put too much value on evidence consistent with a favored belief Signup and view all the answers

What innovative decision-making technique involves spontaneous suggestion of alternatives?

Brainstorming Signup and view all the answers

What is 'electronic brainstorming'?

Brings people together in an interactive group over a computer network for decision making Signup and view all the answers

What does 'evidence-based decision making' involve?

Examining evidence rigorously and making informed decisions based on facts Signup and view all the answers

Who challenges the assumptions made by the group during decision making?

Devil's Advocate Signup and view all the answers

Study Notes

Decision Making Fundamentals

A decision is a choice made from available alternatives.
Decision making is the process of identifying problems and opportunities and resolving them, requiring effort before and after the choice.

Categories of Decisions

Management decisions fall into two main categories: programmed and nonprogrammed.
Programmed decisions deal with recurring organizational problems, such as reordering supplies when inventories drop to a specific level.
Nonprogrammed decisions respond to unique, poorly defined situations with significant consequences, like developing new products or entering new markets.

Decision Conditions

Decision situations can range from certainty, risk, uncertainty, to ambiguity.
Certainty involves complete information: programmed decisions can be made.
Risk features known goals, but with uncertain outcomes: information is available to estimate probabilities.
Uncertainty lacks complete information: reliance on creativity, judgment, and experience is necessary.
Ambiguity presents unclear goals, undefined alternatives, and unavailable outcome information, leading to wicked decision problems.

Decision Making Models

The Classical Model is prescriptive, based on rational economic assumptions guiding ideal decision-making.
Four assumptions of the Classical Model include well-defined problems, certainty in decision-making, known criteria for evaluating alternatives, and rational decision-making to maximize organizational goals.
The Administrative Model describes how managers actually make decisions under complex situations, acknowledging human limitations.
Herbert A. Simon's concepts of bounded rationality and satisficing emphasize limits on rationality and choosing the first satisfactory solution.

Decision-Making Process

Steps include recognizing the need for a decision, diagnosing and analyzing causes, developing alternatives, selecting the desired alternative, implementing it, and conducting evaluation and feedback post-decision.

Decision Styles

Directive Style focuses on clear-cut solutions with quick decisions based on existing rules.
Analytical Style bases decisions on thorough data analysis and objective reasoning.
Conceptual Style involves broad information consideration and creative problem-solving.
Behavioral Style emphasizes social interaction and understanding individuals' feelings about decisions.

Common Decision-Making Pitfalls

Initial impressions can lead to anchoring bias, where prior information disproportionately influences future judgments.
Justifying past decisions may create a sunk cost effect where further resources are committed to failing projects.
Confirmation bias occurs when managers favor information that aligns with their existing beliefs, ignoring contradictory evidence.
Emotional influences and overconfidence can impair judgment and lead to poor decision outcomes.

Innovative Decision-Making Techniques

Brainstorming encourages a broad range of alternatives in a group setting.
Electronic brainstorming uses technology for group problem-solving.
Evidence-based decision making commits to examining biases and rigorously analyzing available evidence.
A devil's advocate challenges group assumptions to prevent premature consensus.
Point-counterpoint introduces rigorous debate by breaking the group into subgroups with opposing views.

Post-Decision Strategies

Avoiding groupthink encourages open discussion without suppressing contrary views.
Escalating commitment highlights the need to recognize when to cease investing in unproductive decisions.
Conducting after-action reviews allows managers to evaluate decisions and improve future processes.

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Test your knowledge on decision making concepts in Chapter 9. This quiz covers key terms such as decisions, decision making processes, and types of management decisions. Ideal for students looking to reinforce their understanding of management principles.