Managerial Decision-Making Concepts

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Questions and Answers

What is the first step in learning from feedback?

Derive guidelines for future decision making

Compare what happened to what was expected (correct)

Assess the effectiveness of the decision

Explore why expectations were not met

Which of the following best describes heuristics in decision making?

Complex rules derived from statistical analysis

Simple rules based on individual experience (correct)

Systematic methods without bias considerations

Inflexible guidelines devoid of personal experience

What is a primary advantage of group decision making?

It allows access to more information and skills (correct)

It eliminates the risk of cognitive biases

It ensures unanimous agreement

It reduces the need for diverse perspectives

What role does devil's advocacy play in group decision making?

To challenge preferred alternatives constructively Signup and view all the answers

What is commonly identified as a flaw in groupthink?

Striving for harmony over accurate assessment Signup and view all the answers

How does diversity among decision makers help in group decision making?

It diminishes pressures for uniformity Signup and view all the answers

What does organizational learning primarily focus on?

Enhancing employees' understanding and management abilities Signup and view all the answers

Which of the following is characterized as a systematic error in decision making?

Making consistently poor decisions Signup and view all the answers

What is the first step in the decision-making process?

Recognize the need for a decision Signup and view all the answers

Which cognitive bias is characterized by the tendency to seek out information that confirms preexisting beliefs?

Confirmation bias Signup and view all the answers

Among Senge's principles for creating a learning organization, which principle focuses on collaborative improvement through group interactions?

Promote team learning Signup and view all the answers

In the decision-making process, what follows after assessing alternatives?

Choose among alternatives Signup and view all the answers

What principle of Senge emphasizes the importance of collective objectives and shared direction?

Build shared vision Signup and view all the answers

What does the Classical Decision-Making Model assume about the decision maker's abilities?

The decision maker can evaluate all possible alternatives. Signup and view all the answers

Which concept is part of the Administrative Model explaining the nature of decision making?

Satisficing Signup and view all the answers

What is a primary cause of incomplete information in decision making?

Ambiguous information Signup and view all the answers

What does 'bounded rationality' refer to in decision making?

Cognitive limitations affecting decision processes. Signup and view all the answers

In the context of satisficing, what are managers likely to prioritize in their decision-making process?

Finding the most acceptable response to problems. Signup and view all the answers

What is a primary characteristic of nonprogrammed decision-making?

Emerges from unusual or unpredictable circumstances Signup and view all the answers

Which of the following best describes the impact of time constraints on decision making?

They limit the range of alternatives considered. Signup and view all the answers

Which of the following types of decision-making is characterized by routine and established procedures?

Programmed decision making Signup and view all the answers

Which aspect distinguishes the Administrative Model from the Classical Model in decision making?

Acknowledgment of the uncertainty and risk involved. Signup and view all the answers

What type of decision-making process primarily relies on feelings and hunches?

Intuitive decision making Signup and view all the answers

What do managers often fail to achieve due to cognitive limitations and incomplete information?

The optimal decision for the organization. Signup and view all the answers

Which of the following best describes the role of cognitive biases in decision making?

They can lead to poor decision outcomes. Signup and view all the answers

What is one disadvantage of group decision making?

It can be time-consuming. Signup and view all the answers

What is a key feature of brainstorming as described in a learning organization context?

Ideas are discussed only after all are generated. Signup and view all the answers

Which of the following steps is NOT part of effective managerial decision making?

Ignoring risks involved Signup and view all the answers

In the context of managerial decision making, organizational learning primarily contributes to:

Improving decision efficiency Signup and view all the answers

Which technique allows group members to provide written suggestions without meeting each other?

Delphi Technique Signup and view all the answers

Which of the following is typically an outcome of nonprogrammed decision making?

Creative approaches to complex problems Signup and view all the answers

What role does a Product Champion play in a learning organization?

Provides leadership and vision for bringing projects to fruition. Signup and view all the answers

What condition is important for promoting individual creativity in an organization?

Freedom to experiment without fear of punishment. Signup and view all the answers

In the Nominal Group Technique, what is the main goal of discussing group members' suggestions?

To rank alternatives after hearing all suggestions. Signup and view all the answers

What is a disadvantage of the unstructured nature of brainstorming sessions?

Leads to production blocking and loss of productivity. Signup and view all the answers

Which of the following best describes skunkworks within an organization?

A detached unit focused entirely on new product development. Signup and view all the answers

What principle underpins the creation of a learning organization?

Enhancing individual and group creative potential. Signup and view all the answers

Study Notes

Learning Objectives

Understanding managerial decision-making involves differentiating between programmed and nonprogrammed decisions, explaining why nonprogrammed decision-making is complex and uncertain.
Managers should take six steps to make good decisions.
Cognitive biases can lead managers to make poor decisions.
Group decision-making has advantages and disadvantages. Techniques can improve group decision-making.
Organizational learning and creativity are vital for improving managerial decisions.

The Nature of Managerial Decision Making

Decision-making is the process where managers respond to opportunities or threats, analyzing options and determining specific organizational goals and action plans.
Managers respond to opportunities and threats by making decisions to improve the business and its stakeholders, like customers, employees, and other stakeholders.
Managers use decisions to respond to threats, which may be internal or external, adversely impacting business performance. Actions are taken to increase organizational performance.

Programmed and Non-Programmed Decisions

Programmed decisions follow established rules and guidelines. They involve recurring situations for which managers have made similar decisions in the past.
Non-programmed decisions are made in response to unusual or unpredictable situations, such as developing a new technology or entering a new market. They lack clear guidelines and involve significant risks.

Nonprogrammed Decision Types

Intuitive decisions rely on feelings, beliefs, and hunches. They are quick decisions, and information gathering is minimal.
Reasoned judgments involve careful information gathering, generating alternatives, and evaluating them before a decision. They take more time.

The Classical Model

A prescriptive model assumes the decision-maker can evaluate all possible alternatives and their consequences, choosing the optimal course of action.
This model assumes that managers have complete information and are rational in making decisions to achieve optimum results for the organization.

The Administrative Model

This approach explains that decision-making is uncertain and risky. Managers often make satisfactory, not optimum, choices.
Three key concepts underpin this model: bounded rationality( cognitive constraints), incomplete information(unknowable alternatives and uncertain outcomes), and satisficing( choosing acceptable rather than optimum options).

Why Information Is Incomplete

Uncertainty and Risk: Decision-making involves uncertain or unknown future outcomes and risks.
Ambiguous Information: Information could be interpreted in multiple, often-conflicting ways.
Time Constraints and Information Costs: Limited time and resources often mean not all information is gathered or considered.

Causes of Incomplete Information

Risk: Probability of various possible outcomes. Outcomes might not be known with certainty.
Uncertainty: Probabilities of outcomes cannot be determined, and future outcomes are unknown.
Ambiguity: Information can be interpreted in many different ways.

Steps in the Decision-Making Process

Recognizing the need for a decision.
Generating alternatives.
Assessing alternatives.
Choosing among alternatives.
Implementing the chosen alternative.
Learning from feedback.

General Criteria for Evaluating Possible Courses of Action

Economic feasibility: Is it affordable?
Practicality: Is it doable?
Ethical considerations

Learn from Feedback

Compare actual outcomes to expected outcomes.
Identify reasons for any unmet expectations.
Develop guidelines to improve future decisions.

Cognitive Biases and Decision Making

Heuristics: Rules of thumb that simplify the decision-making process, often based on past experiences.
Systematic errors: Recurring mistakes in decision-making.

Group Decision Making

Group decision-making is superior to individual decision-making.
Groups draw on diverse skills and perspectives, avoiding individual biases.
Groups can generate a wider variety of alternatives.
Effective group decisions involve processing more information.
Group members need to cooperate to arrive at decisions,

Group Decision Making Techniques

Groupthink: A pattern of faulty decision-making caused by group pressure.
Devil's Advocacy: A technique where a group member plays the opposing role to critically assess an idea.
Diversity among decision makers: Involves considering diverse perspectives to reduce the negative effect of groupthink.

Organizational Learning and Creativity

Organizational learning: Managers seek to improve employee abilities to understand and manage the organization and its environment.
Learning organization: Individuals and groups are encouraged to be creative, maximizing organizational learning potential.

Promoting Individual Creativity

Encourage opportunities and freedom for new ideas.
Provide opportunities for experimentation and learning from mistakes.
Avoid punishing outlandish ideas; instead, focus on constructive feedback.

Promoting Group Creativity

Brainstorming: Generating a multitude of ideas without criticizing each, then evaluating them later.
Production blocking: Loss of productivity when team members can't contribute to brainstorming simultaneously, or are not allowed to evaluate each other's ideas during the generation stage.
Nominal group technique: Writing down ideas, sharing ideas, and then ranking them.
Delphi technique: Group members respond to questions in writing without face-to-face interaction.

Intrapreneurship and Organizational Learning

Product champion: A manager who takes ownership of a project.
Skunkworks: A separate group focused on developing new products or ideas

Glossary (where applicable)

Terms are included in the notes above.

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Description

This quiz explores the fundamental concepts of managerial decision-making, including the differences between programmed and nonprogrammed decisions. It covers the decision-making process, cognitive biases, and the importance of group dynamics in making effective organizational decisions. Additionally, it highlights the role of organizational learning and creativity.