Managerial Decision Making Process
45 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary goal of Step 6 in the decision-making process?

  • To select the alternative with the highest total score (correct)
  • To redefine the problem statement
  • To implement the chosen alternative
  • To evaluate the effectiveness of the decision

Which action is emphasized in Step 7 of the decision-making process?

  • Evaluating the effectiveness of the chosen solution
  • Reassessing the decision criteria
  • Getting commitment from those affected by the decision (correct)
  • Choosing an alternative with the highest score

What does Step 8 of the decision-making process involve?

  • Redefining the criteria for decision-making
  • Assessing if the selected alternative is still the best
  • Evaluating the outcome of the decision (correct)
  • Selecting an alternative from the options available

What should a manager do if the decision evaluation indicates the problem still exists?

<p>Determine if the problem was defined incorrectly or if errors occurred (A)</p> Signup and view all the answers

What is a key aspect of decision-making when implementing an alternative?

<p>Engaging stakeholders in the implementation process (B)</p> Signup and view all the answers

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

<p>Identifying relevant criteria (C)</p> Signup and view all the answers

What weight was assigned to memory and storage in Amanda's decision-making process?

<p>10 (A)</p> Signup and view all the answers

In Step 4 of the decision-making process, what is the primary task for the decision maker?

<p>Identifying viable alternatives (C)</p> Signup and view all the answers

Which of the following criteria received the lowest weight in Amanda's example?

<p>Display quality (C)</p> Signup and view all the answers

What condition might allow a decision maker to skip analyzing alternatives?

<p>One alternative scores highest on every criterion (B)</p> Signup and view all the answers

What is the purpose of Step 3 in the decision-making process?

<p>To allocate weights to the criteria (B)</p> Signup and view all the answers

How did Amanda rate the alternatives after identifying them?

<p>Using the established criteria (C)</p> Signup and view all the answers

What does the weighted assessment of alternatives provide to a decision maker?

<p>A clearer picture of strengths and weaknesses (D)</p> Signup and view all the answers

What happens when managers adhere strictly to the assumptions of rationality?

<p>They may overlook customer perceptions and market realities. (D)</p> Signup and view all the answers

Why did HP's performance suffer after acquiring Compaq?

<p>They ignored the negative perception of Compaq products. (D)</p> Signup and view all the answers

What does the concept of bounded rationality suggest about decision makers?

<p>They are limited by cognitive constraints and available information. (D)</p> Signup and view all the answers

What is the term used when managers opt for a satisfactory solution instead of the best one?

<p>Satisficing (D)</p> Signup and view all the answers

What is a key characteristic of a rational decision maker?

<p>Full awareness of all possible alternatives. (A)</p> Signup and view all the answers

Which behavior is expected of a 'good' decision maker?

<p>To gather extensive data before acting. (D)</p> Signup and view all the answers

What is a consequence of a manager not being rational in decision-making?

<p>Risk of poor customer satisfaction. (D)</p> Signup and view all the answers

How did Carly Fiorina impact HP's acquisition of Compaq?

<p>She disregarded customer feedback about Compaq. (D)</p> Signup and view all the answers

What is a rule in the context of decision making?

<p>An explicit statement detailing what can or cannot be done (D)</p> Signup and view all the answers

What differentiates a policy from a rule?

<p>Policies contain ambiguous terms, while rules offer specific directives (C)</p> Signup and view all the answers

Which of the following is an example of an unstructured problem?

<p>Determining whether to build a new facility in China (A)</p> Signup and view all the answers

What characterizes nonprogrammed decisions?

<p>They require unique, custom-made solutions for new problems (B)</p> Signup and view all the answers

Which of the following statements illustrates a policy?

<p>Customer satisfaction is our top priority. (B)</p> Signup and view all the answers

As managers ascend the organizational hierarchy, how do their problems typically change?

<p>They become more unstructured and unique (C)</p> Signup and view all the answers

Which of the following is NOT a characteristic of structured problems?

<p>They typically require unique and creative solutions (C)</p> Signup and view all the answers

What is the main advantage of using rules in decision making?

<p>They ensure consistency and simplicity in decisions (B)</p> Signup and view all the answers

What is the ideal decision-making condition for managers where outcomes are known?

<p>Certainty (D)</p> Signup and view all the answers

In which condition can a manager estimate the likelihood of certain outcomes?

<p>Risk (D)</p> Signup and view all the answers

What is the process of calculating the expected return from different outcomes called?

<p>Expected value calculation (A)</p> Signup and view all the answers

What type of decisions do lower-level managers typically handle?

<p>Routine decisions (A)</p> Signup and view all the answers

What historical data might a ski resort manager use to influence their decision about adding another lift?

<p>Snowfall levels from the last 10 years (D)</p> Signup and view all the answers

What expected revenue was calculated for adding a new ski lift?

<p>$687,500 (D)</p> Signup and view all the answers

Which decision-making condition does NOT apply to a situation where outcomes are completely unknown?

<p>Certainty (A)</p> Signup and view all the answers

Which of the following is NOT a characteristic of decision-making under risk?

<p>Knowledge of all variables (A)</p> Signup and view all the answers

What decision-making style does an optimistic manager typically adopt under uncertainty?

<p>Maximax choice (D)</p> Signup and view all the answers

Which of the following is NOT an assumption of the classical decision-making model?

<p>The decision maker operates under conditions of uncertainty. (D)</p> Signup and view all the answers

In what situation is the classical decision-making model most valuable?

<p>For decisions characterized by certainty or risk (B)</p> Signup and view all the answers

What factor primarily drives decision-making under conditions of uncertainty?

<p>Intuition and gut feeling (D)</p> Signup and view all the answers

What is the main goal of a manager using a maximin choice?

<p>To maximize the minimum possible payoff (A)</p> Signup and view all the answers

Which aspect of decision-making is specifically highlighted in the classical model?

<p>Using logical and rational processes (C)</p> Signup and view all the answers

How do managers typically deal with uncertainty in decision-making situations?

<p>By using intuitive, creative approaches (C)</p> Signup and view all the answers

Which statement most accurately reflects the assumption that a decision maker has in the classical model?

<p>Problems must be precisely defined. (A)</p> Signup and view all the answers

Flashcards

Step 3: Allocating Weights

Assigning importance values to decision criteria, prioritizing them.

Decision Criteria

Important factors considered when making a choice.

Weighted Criteria

Criteria with assigned numerical importance levels.

Step 4: Developing Alternatives

Generating possible solutions or options for the problem being considered.

Signup and view all the flashcards

Step 5: Analyzing Alternatives

Evaluating identified alternatives against pre-determined/weighted criteria.

Signup and view all the flashcards

Alternative Evaluation

Assessing each possible solution against stated criteria.

Signup and view all the flashcards

Weighted Alternatives

Alternatives with their criteria scores multiplied by their assigned weights.

Signup and view all the flashcards

Simplified Evaluation

Skip weighting step if one alternative scores highest for every criterion.

Signup and view all the flashcards

Step 6 in Decision Making

Choosing the best alternative from those evaluated in the previous step, based on the highest score.

Signup and view all the flashcards

Implementing a Decision

Putting the chosen decision into action by communicating it and securing commitment from those affected.

Signup and view all the flashcards

Evaluating Decision Effectiveness

Assessing the outcome of a decision to determine if the problem was resolved.

Signup and view all the flashcards

Decision Re-evaluation

Assessing if criteria, alternatives, and the chosen solution are still valid in case of significant environmental changes.

Signup and view all the flashcards

Decision Making Perspective

Approaches to decision-making, including rational methods.

Signup and view all the flashcards

Rational Decision Making

A process where managers logically and consistently choose options to maximize value. It assumes complete information, objective evaluation, and clear goals.

Signup and view all the flashcards

Bounded Rationality

The idea that managers make decisions within limits of time, information, and cognitive ability, leading to simplified choices rather than perfect ones.

Signup and view all the flashcards

Satisficing

Choosing a satisfactory option instead of the absolute best, due to limited resources and time. It's about finding a good enough solution, not necessarily the ideal.

Signup and view all the flashcards

Assumptions of Rationality

These include full objectivity, clear goals, knowledge of all alternatives and consequences, and consistent choice for maximum goal attainment.

Signup and view all the flashcards

HP and Compaq Example

HP's acquisition of Compaq failed because they didn't conduct market research on Compaq's brand perception, leading to negative customer feedback and financial consequences.

Signup and view all the flashcards

Managerial Decision Making

Decision-making within an organizational context, influenced by resources, goals, and stakeholder expectations.

Signup and view all the flashcards

Good Decision-Making Behaviors

These include identifying problems, considering alternatives, gathering information, and acting decisively yet prudently.

Signup and view all the flashcards

Realistic Approach to Management

Recognizes that managers make decisions within constraints and imperfect information, leading to satisfying choices rather than maximizing outcomes.

Signup and view all the flashcards

Programmed Decision

A routine decision with a clear procedure or rule to follow, often based on past experiences or policies.

Signup and view all the flashcards

Nonprogrammed Decision

A unique and unstructured decision that requires creativity and judgment, as no established rule exists for handling the situation.

Signup and view all the flashcards

Decision-Making Conditions

The environmental factors influencing a decision, ranging from certainty to uncertainty.

Signup and view all the flashcards

Certainty

A decision-making condition where the outcome of each alternative is perfectly known, allowing for accurate predictions.

Signup and view all the flashcards

Risk

A decision-making condition where the likelihood of different outcomes can be estimated using past data or probabilities.

Signup and view all the flashcards

Uncertainty

A decision-making condition where the outcomes of alternatives are unknown and unpredictable, making decision-making more challenging.

Signup and view all the flashcards

Expected Value

The average return expected from a decision, calculated by multiplying potential outcomes by their respective probabilities.

Signup and view all the flashcards

What influences the decision to build a new ski lift?

Several factors, including anticipated revenue generation based on snowfall probabilities, historical weather data, and operational costs, are considered when deciding to build a new ski lift at a resort.

Signup and view all the flashcards

What is a rule?

A clear statement guiding managers on acceptable or unacceptable actions. It's often used for quick and consistent decision-making.

Signup and view all the flashcards

What is a policy?

A guideline that sets general parameters for decisions, allowing for interpretation. It's like a blueprint for handling certain situations.

Signup and view all the flashcards

What is unstructured problem?

A problem that is new, unusual, and lacks clear information or solutions. It requires unique and creative thinking.

Signup and view all the flashcards

Why do managers face more unstructured problems at higher levels?

Senior managers deal with broader and more complex issues, often with fewer clear guidelines and precedents.

Signup and view all the flashcards

What's the benefit of using rules?

They simplify decision making by eliminating ambiguity and providing a framework for consistency.

Signup and view all the flashcards

How do policies differ from rules?

Policies offer general guidelines with some flexibility, while rules are specific and directive, leaving no room for interpretation.

Signup and view all the flashcards

Uncertainty in Decision Making

A decision-making situation where outcomes are unknown and probabilities can't be estimated.

Signup and view all the flashcards

Maximax Choice

An optimistic approach where the manager chooses the alternative with the highest possible payoff.

Signup and view all the flashcards

Maximin Choice

A pessimistic approach where the manager chooses the alternative with the highest minimum possible payoff.

Signup and view all the flashcards

Minimax Choice

A strategy focused on minimizing regret, where managers choose the option that minimizes the maximum potential regret.

Signup and view all the flashcards

Classical Decision Making Model

Assumes managers make logical decisions in the best economic interests of the organization.

Signup and view all the flashcards

Assumptions of Classical Model

  1. Clear goals & problem definition, 2. Complete information for decision-making, 3. Known criteria for evaluation, 4. Rational decision-maker.
Signup and view all the flashcards

Classical Model's Applicability

Best suited for programmed decisions (routine tasks) and situations with certainty or risk where information is available and probabilities can be calculated.

Signup and view all the flashcards

Limitations of Classical Model

Often unrealistic in real-world organizations due to incomplete information, complex problems, and human biases.

Signup and view all the flashcards

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.
  • 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.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Unit 5 Managerial Decision Making PDF

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.

More Like This

10. Agency problems in practise
117 questions

10. Agency problems in practise

ComprehensiveChrysocolla avatar
ComprehensiveChrysocolla
Managerial Problem Solving and Decision Making Notes
5 questions

Managerial Problem Solving and Decision Making Notes

AdoredAlexandrite avatar
AdoredAlexandrite
Decision-Making Process Overview
8 questions

Decision-Making Process Overview

UsableMiami avatar
UsableMiami
Decision Making Fundamentals
17 questions

Decision Making Fundamentals

EnergyEfficientGiant9801 avatar
EnergyEfficientGiant9801
Use Quizgecko on...
Browser
Open
Browser
Browser