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Questions and Answers
What is the primary goal of Step 6 in the decision-making process?
What is the primary goal of Step 6 in the decision-making process?
Which action is emphasized in Step 7 of the decision-making process?
Which action is emphasized in Step 7 of the decision-making process?
What does Step 8 of the decision-making process involve?
What does Step 8 of the decision-making process involve?
What should a manager do if the decision evaluation indicates the problem still exists?
What should a manager do if the decision evaluation indicates the problem still exists?
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What is a key aspect of decision-making when implementing an alternative?
What is a key aspect of decision-making when implementing an alternative?
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What is the first step in the decision-making process as outlined?
What is the first step in the decision-making process as outlined?
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What weight was assigned to memory and storage in Amanda's decision-making process?
What weight was assigned to memory and storage in Amanda's decision-making process?
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In Step 4 of the decision-making process, what is the primary task for the decision maker?
In Step 4 of the decision-making process, what is the primary task for the decision maker?
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Which of the following criteria received the lowest weight in Amanda's example?
Which of the following criteria received the lowest weight in Amanda's example?
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What condition might allow a decision maker to skip analyzing alternatives?
What condition might allow a decision maker to skip analyzing alternatives?
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What is the purpose of Step 3 in the decision-making process?
What is the purpose of Step 3 in the decision-making process?
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How did Amanda rate the alternatives after identifying them?
How did Amanda rate the alternatives after identifying them?
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What does the weighted assessment of alternatives provide to a decision maker?
What does the weighted assessment of alternatives provide to a decision maker?
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What happens when managers adhere strictly to the assumptions of rationality?
What happens when managers adhere strictly to the assumptions of rationality?
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Why did HP's performance suffer after acquiring Compaq?
Why did HP's performance suffer after acquiring Compaq?
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What does the concept of bounded rationality suggest about decision makers?
What does the concept of bounded rationality suggest about decision makers?
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What is the term used when managers opt for a satisfactory solution instead of the best one?
What is the term used when managers opt for a satisfactory solution instead of the best one?
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What is a key characteristic of a rational decision maker?
What is a key characteristic of a rational decision maker?
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Which behavior is expected of a 'good' decision maker?
Which behavior is expected of a 'good' decision maker?
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What is a consequence of a manager not being rational in decision-making?
What is a consequence of a manager not being rational in decision-making?
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How did Carly Fiorina impact HP's acquisition of Compaq?
How did Carly Fiorina impact HP's acquisition of Compaq?
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What is a rule in the context of decision making?
What is a rule in the context of decision making?
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What differentiates a policy from a rule?
What differentiates a policy from a rule?
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Which of the following is an example of an unstructured problem?
Which of the following is an example of an unstructured problem?
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What characterizes nonprogrammed decisions?
What characterizes nonprogrammed decisions?
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Which of the following statements illustrates a policy?
Which of the following statements illustrates a policy?
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As managers ascend the organizational hierarchy, how do their problems typically change?
As managers ascend the organizational hierarchy, how do their problems typically change?
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Which of the following is NOT a characteristic of structured problems?
Which of the following is NOT a characteristic of structured problems?
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What is the main advantage of using rules in decision making?
What is the main advantage of using rules in decision making?
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What is the ideal decision-making condition for managers where outcomes are known?
What is the ideal decision-making condition for managers where outcomes are known?
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In which condition can a manager estimate the likelihood of certain outcomes?
In which condition can a manager estimate the likelihood of certain outcomes?
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What is the process of calculating the expected return from different outcomes called?
What is the process of calculating the expected return from different outcomes called?
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What type of decisions do lower-level managers typically handle?
What type of decisions do lower-level managers typically handle?
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What historical data might a ski resort manager use to influence their decision about adding another lift?
What historical data might a ski resort manager use to influence their decision about adding another lift?
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What expected revenue was calculated for adding a new ski lift?
What expected revenue was calculated for adding a new ski lift?
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Which decision-making condition does NOT apply to a situation where outcomes are completely unknown?
Which decision-making condition does NOT apply to a situation where outcomes are completely unknown?
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Which of the following is NOT a characteristic of decision-making under risk?
Which of the following is NOT a characteristic of decision-making under risk?
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What decision-making style does an optimistic manager typically adopt under uncertainty?
What decision-making style does an optimistic manager typically adopt under uncertainty?
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Which of the following is NOT an assumption of the classical decision-making model?
Which of the following is NOT an assumption of the classical decision-making model?
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In what situation is the classical decision-making model most valuable?
In what situation is the classical decision-making model most valuable?
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What factor primarily drives decision-making under conditions of uncertainty?
What factor primarily drives decision-making under conditions of uncertainty?
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What is the main goal of a manager using a maximin choice?
What is the main goal of a manager using a maximin choice?
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Which aspect of decision-making is specifically highlighted in the classical model?
Which aspect of decision-making is specifically highlighted in the classical model?
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How do managers typically deal with uncertainty in decision-making situations?
How do managers typically deal with uncertainty in decision-making situations?
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Which statement most accurately reflects the assumption that a decision maker has in the classical model?
Which statement most accurately reflects the assumption that a decision maker has in the classical model?
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Study Notes
Managerial Decision Making
- Decision making is a process of choosing among alternatives, not just a simple act of choosing.
- Decision-making is a process that includes developing alternatives, analyzing them, and choosing the best one.
- Problems arise when there's a gap between a desired and an actual situation. Managers need to identify problems first.
- Identifying problems is subjective: what one manager sees as a problem might not be a problem for another.
Steps in the Decision-Making Process
- Step 1: Identifying a Problem: Every decision begins with a problem, a gap between the current and desired states.
- Step 2: Identifying Decision Criteria: Determine criteria significant to resolving the problem.
- Step 3: Allocating Weights to Criteria: Assign weights to criteria based on importance, e.g., highest weight = 10, others are assigned accordingly.
- Step 4: Developing Alternatives: List all viable solutions to address the problem.
- Step 5: Analyzing Alternatives: Evaluate each alternative based on the established criteria.
- Step 6: Selecting an Alternative: Choose the solution with the highest weighted score.
- Step 7: Implementing the Alternative: Put the chosen solution into action, involving those affected.
- Step 8: Evaluating Decision Effectiveness: Assess whether the chosen solution solved the problem.
Types of Decisions
- Programmed Decisions: Straightforward, repetitive, and familiar problems. Solutions are often standardized. Example: Returning a store purchase, dealing with a fast-breaking news event, processing a request for inventory supplies.
- Nonprogrammed Decisions: Complex, unique, and ambiguous problems. Decisions require creativity and judgment. Example: Building a new factory, managing unusual problems.
Decision-Making Conditions
- Certainty: Outcome of each alternative is known. Example: Government depositing funds in bank & knowing the interest rate.
- Risk: Likelihood of alternative outcomes is known or can be estimated. Example: Forecasting snowfall levels at a ski resort.
- Uncertainty: Outcomes cannot be estimated or predicted. Example: Business decisions with little prior data.
Decision-Making Models
-
Classical Model: Assumes managers make logical decisions maximizing organizational interests, with complete information, clear goals, and criteria.
- Assumptions: Decision maker operates toward known goals; complete information gathering; evaluating alternatives rationally.
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Administrative Model: Refers to the fact that people can only handle limited information and don't always maximize profits.
- Assumptions: Decision goals may be vague and conflicting; procedures are not always used. People only seek satisfactory solutions.
Tools for Decision Making
- Analytical software can automate many programmed decisions. Financial software aids companies like Home Depot in using historical sales data to make markdown decisions.
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Description
This quiz explores the steps involved in the managerial decision-making process. It covers the identification of problems, criteria setting, and developing alternatives. By understanding these concepts, managers can make informed choices that align with their goals.
