Management Decision Making Overview

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Questions and Answers

What is the primary distinction between data and information?

Data includes completed information, while information is incomplete.

Information is raw facts while data is processed.

Data refers to analyzed data, while information refers to raw facts.

Data is processed and analyzed; information is raw facts. (correct)

Which attribute of useful information refers to its availability when needed?

Relevance

Completeness

Quality

Timeliness (correct)

What type of decision process involves structured problems that are straightforward and familiar?

Unstructured decision-making

Ad hoc analysis

Nonprogrammed decision-making

Programmed decision-making (correct)

In the context of decision-making, what does ambiguity refer to?

Situations where information can be interpreted in multiple ways. Signup and view all the answers

Which step is NOT part of the decision-making process?

Ensure complete information is available Signup and view all the answers

What does the concept of 'risk' entail in decision-making?

A known list of possible outcomes with assigned probabilities. Signup and view all the answers

As managers rise in the organizational hierarchy, which type of problems do they typically confront more often?

Problems that are unstructured and new Signup and view all the answers

What distinguishes transformational leaders from transactional leaders?

Transformational leaders create and inspire vision for change. Signup and view all the answers

Which statement correctly describes economic profit in contrast to accounting profit?

Economic profit reflects a firm's ability to generate future profit. Signup and view all the answers

What is a key requirement of social responsibility according to the socioeconomic view?

Considering the welfare of society beyond profit-making. Signup and view all the answers

What critical aspect does the triple bottom line evaluate regarding organizations?

The performance on social, environmental, and financial criteria. Signup and view all the answers

How does managerial ethics impact organizational behavior?

It guides the standards of behavior in various economic interactions. Signup and view all the answers

Which type of decision relies on established guidelines and has occurred repeatedly in the past?

Programmed decisions Signup and view all the answers

What refers to a guideline for making decisions, often used to navigate complex scenarios?

Policy Signup and view all the answers

Which condition indicates that decision-makers have incomplete information about alternatives and future events?

Uncertainty Signup and view all the answers

What is the tendency to fixate on initial information while ignoring later details called?

Anchoring effect Signup and view all the answers

Which decision-making approach is characterized by making logical choices to maximize value?

Rational decision making Signup and view all the answers

What term best describes the practice of accepting solutions that are satisfactory rather than optimal?

Satisficing Signup and view all the answers

Which innovative decision-making technique involves utilizing a group of people to generate a variety of ideas?

Brainstorming Signup and view all the answers

What type of system integrates business processes across an organization to improve productivity?

Enterprise Resource Planning (ERP) Signup and view all the answers

What role do managers generally play in organizations of all types and sizes?

Providing management oversight Signup and view all the answers

Which characteristic is essential for effective goal-setting?

Linked to rewards Signup and view all the answers

What is one key element of an organizational structure that directly affects how work is coordinated?

Authority hierarchy Signup and view all the answers

Which department type is NOT a form of departmentalization?

Task-oriented Signup and view all the answers

What describes a mechanistic organization?

Rigid departmentalization Signup and view all the answers

In the context of human resource management, what is the purpose of performance appraisal?

To assess and provide feedback on employee performance Signup and view all the answers

Which leadership style fosters employee participation in decision-making?

Democratic leader Signup and view all the answers

What best defines 'centralization' within an organization?

Focusing decision-making at upper management levels Signup and view all the answers

What is a significant drawback of work specialization?

Reduced job satisfaction Signup and view all the answers

What does 'feedback control' focus on?

Analyzing outcomes after work completion Signup and view all the answers

What is a difference between management and leadership?

Management maintains stability while leadership inspires change. Signup and view all the answers

What is the primary function of an organization's board of directors?

To ensure proper management and alignment with the owners’ interests. Signup and view all the answers

Which of the following is NOT one of Mintzberg's managerial roles?

Public relations officer Signup and view all the answers

In the context of a company's administrative body, what is the minimum required number of members on the board of directors?

Three members Signup and view all the answers

Which skill described by Katz is least concerned with specific technical abilities?

Conceptual skills Signup and view all the answers

What managerial function involves setting goals and developing plans to integrate activities?

Planning Signup and view all the answers

What is a characteristic of first-line managers?

They manage the work of non-managerial employees. Signup and view all the answers

Which of the following is an example of a decisional role as defined by Mintzberg?

Resource allocator Signup and view all the answers

Which of the following statements about management efficiency is correct?

Efficiency refers to maximizing output with minimal inputs. Signup and view all the answers

What aspect of planning helps managers to minimize redundancy?

By outlining potential responses to changes Signup and view all the answers

Which type of manager primarily focuses on coordinating several departments performing different functions?

General manager Signup and view all the answers

Study Notes

Data and Information

Data is raw, unanalyzed facts.
Information is processed and analyzed data.
Useful information has quality (accuracy and reliability), timeliness, completeness (providing needed information for control/decisions), and relevance (meeting manager needs).

Incomplete Information

Managers lack all needed information due to risk, uncertainty, ambiguity, and time/cost constraints.
Risk involves known outcomes with assigned probabilities.
Uncertainty involves unknown future outcomes with indeterminate probabilities.
Ambiguity allows for multiple, often conflicting interpretations of information.
Time constraints and information costs limit managerial search and evaluation.

Decision Making

Decision making involves identifying a problem, defining criteria, weighting criteria, developing alternatives, analyzing alternatives, selecting an alternative, implementing the alternative, and evaluating effectiveness.
Managers use programmed or nonprogrammed decisions based on structured or unstructured problems.
Structured problems are straightforward, familiar, and easily defined.
Unstructured problems are new or unusual.
Programmed decisions have guidelines for repeated situations (procedure, rule, policy).
Nonprogrammed decisions are unique and require custom solutions.

Decision Making Conditions

Certainty involves full information availability.
Risk involves known probabilities of successful/failed outcomes.
Uncertainty has known goals but incomplete information on alternatives/future events.
Ambiguity involves unclear goals/problems, undefined alternatives, and unavailable outcome information.

Decision-Making Biases and Errors

Overconfidence bias: Overestimating knowledge/performance.
Immediate gratification bias: Prioritizing immediate rewards.
Anchoring effect: Focusing on initial information.
Confirmation bias: Seeking confirming information.
Hindsight bias: Believing past outcomes were predictable.
Sunk cost error: Focusing on past investments rather than future outcomes.
Self-serving bias: Attributing success to oneself and failure to others.

Decision Making Approaches

Rational decision making assumes logical choices maximizing value.
Assumptions of rationality: logical decision-making, clear goals, knowledge of all alternatives/consequences.
Bounded rationality acknowledges limitations in processing information (satisficing).
Satisficing is accepting "good enough" solutions.
Intuitive decision making relies on experience, feelings, and judgments.

Information Systems and Management

Information Technology (IT) provides methods for acquiring, organizing, manipulating, and transmitting information.
IT impacts business through remote offices, improved service, efficient organizations, collaboration, global exchange, enhanced management processes, and customized flexibility.
Information systems use IT to process data becoming information for decision making.
Customer Relationship Management (CRM) systems manage customer information.
Enterprise Resource Planning (ERP) systems integrate organizational processes.

Business Administrators and Managers

Management is universal in all organizations, at all levels.
Company owners are responsible for appointing administration and management.
Boards of directors ensure proper management and strategic direction.
Boards for listed companies are elected by shareholders.
Minimum board size: Three members.
Board members can be internal or external.
A CEO (or equivalent title) is responsible for making decisions.

The Nature of the Manager's Job

Managers coordinate and oversee work toward organizational goals.
Management ensures efficient and effective work activity fulfillment.
Efficiency is maximizing output from minimal inputs.
Effectiveness is achieving organizational goals.
Types of managers (by hierarchical level): first-line, middle, top.
Types of managers (by scope of activities): functional, general.
Katz's skills for managers: technical, interpersonal, conceptual.
Mintzberg's managerial roles: interpersonal, informational, decisional.

Management Functions: Planning

Planning provides direction, reduces uncertainty, minimizes waste, and establishes control standards.
Goal characteristics: specific, linked to rewards, challenging but realistic, defined time period, covering key areas.

Management Functions: Organizing

Organizational structure is the formal arrangement of jobs.
Key elements of organizational structure: work specialization, departmentalization, chain of command, span of control, centralization/decentralization, formalization.
Work specialization divides work into tasks.
Departmentalization groups related jobs.
Chain of command clarifies reporting relationships.
Span of control refers the number of workers managed efficiently by a manager.
Centralization and decentralization refer to the decision-making level in an organization.
Formalization describes the level of standardization and procedure guidance in the structure.
Organizational forms include mechanistic (rigid) and organic (flexible).

Management Functions: Leading

Human resource management ensures effective use of human capital.
HRM activities involve attracting, rewarding, developing, and maintaining employees.
HRM impact includes higher employee productivity, and stronger financial results. HRM activities include recruitment, selection, orientation, training, performance appraisal, and compensation.

Management Functions: Controlling

Managers control activities in feedforward, concurrent, and feedback phases.
Feedforward control (prevention) is taking place before the work activity.
Concurrent Control (monitoring) is taking place while a work activity is in progress.
Feedback control (correction) is taking place after the work activity.
The control process involves measuring actual performance against a standard, and taking corrective action.

Leadership

Leadership influences, motivates, and guides people to achieve goals.
Leadership styles include autocratic, democratic, and laissez-faire.
Management focuses on stability, while leadership fosters change.
Management and leadership require different types of skills and characteristics.
Transformational leaders inspire change and vision, while transactional leaders maintain efficiency.

Economic Goal and Value Creation

Firms aim to maximize accounting profit.
Accounting profit is revenue minus costs over a period (usually a year).
Profitability measurement helps compare different firms.
Economic profit measures value creation and future profit potential.

Classical view emphasizes profit maximization; socioeconomic view considers social welfare.
Social responsibility is a firm's commitment beyond legal/economic obligations in long-term societal benefit.
Areas of social responsibility include customer, employee, investor, natural environment, and social welfare.
Sustainability meets present needs without compromising future generations.
Ethics are personal beliefs about right conduct.
Managerial ethics guide behavior in organizations.
Code of ethics ensures employees follow expected behavior standards.

The Growth of a Firm

Strategy is a plan to compete and satisfy customers.
SWOT analysis identifies internal (strengths, weaknesses) and external factors (opportunities, threats).
Organizational strategies include corporate, competition, and functional levels.
Corporate strategy determines industries to enter and growth forms.
Competitive strategy focuses on competition within a business.
Functional strategy focuses on efficient operations within functions.
Scope of the firm includes vertical, horizontal, and geographical factors.
Vertical integration encompasses the production process.
Specialization/concentration and diversification involve horizontal scope.
Internationalization affects geographical scope.
Competitive strategies include cost leadership, differentiation strategies.
Growth forms include internal growth, mergers/acquisitions, and strategic alliances.

Innovation

Creativity creates unique ideas, while innovation turns them into useful products or processes.
Innovative organizations can implement new ideas into useful outputs.
Factors stimulating innovation involve organizational structure, culture, and human resource practices.
Innovation types: product, process, radical, and incremental.

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Description

This quiz explores the concepts of data vs. information and the challenges managers face due to incomplete information. It also delves into the decision-making process, including identifying problems and analyzing alternatives.