Managerial Decision Making Quiz

Contemporary Management - Chapter 7

• Decision Making: The process where managers respond to opportunities and threats by analyzing options and determining organizational goals and courses of action. This involves responding to opportunities to improve performance, or threats that adversely affect performance.
• Programmed Decisions: Routine decisions based on established rules or guidelines. These decisions have been made repeatedly in the past and managers have rules/guidelines to follow.
• Example of Programmed Decision: A manufacturing supervisor hiring new workers when existing workers work overtime more than 10%
• Nonprogrammed Decisions: Non-routine decisions made in response to unusual or unpredictable opportunities and threats. No pre-existing rules or guidelines apply, as the situation is unexpected or uncertain.
• Intuition: Feelings, beliefs, hunches, that lead to on-the-spot decisions, requiring only minimal information gathering.
• Reasoned Judgment: Decisions requiring time and effort for information gathering, generating alternatives, and evaluating alternatives.
• Classical Decision-Making Model: A prescriptive approach assuming the decision-maker can identify all possibilities and rationally choose the best possible course of action.
• Optimum Decision: The most appropriate decision in light of what managers believe are the most desirable consequences for the organization.
• Administrative Model: An approach that explains why decision-making is uncertain & risky and why managers often choose satisfactory instead of optimum decisions. It is based on bounded rationality, incomplete information, and satisficing.
• Bounded Rationality: Cognitive limitations that constrain one's ability to interpret, process, and act on information.
• Incomplete Information: A result of risk, uncertainty, ambiguity, and time constraints.
• Risk: The degree of probability that the possible outcomes of a particular course of action will occur.
• Uncertainty: The situation where the probabilities of alternative outcomes cannot be determined and future outcomes are unknown.
• Ambiguous Information: Information that can be interpreted in multiple and often conflicting ways.
• Satisficing: Choosing a satisfactory response rather than the best possible response to problems or opportunities.
• Six Steps in Decision Making: Recognizing the need for a decision, generating alternatives, assessing alternatives, choosing among alternatives, implementing the chosen alternative, and learning from feedback.
• Criteria for Evaluating Possible Courses of Action: Legal, ethical, economical, and practical considerations.
• Feedback Procedures: Compare actual results to expected outcomes, explore why expectations were not met, and derive guidelines for future decision-making.
• Cognitive Biases: Systematic errors that lead to poor decision making.
• Heuristics: Rules of thumb used to simplify decision-making.

Group Decision Making

• Superior to Individual Decisions: Groups offer diverse perspectives and skills, reducing the risk of falling victim to bias compared to single individuals.
• Groupthink: A pattern of faulty and biased decision making where group members prioritize agreement over accurately assessing information about a decision.
• Potential Disadvantages: Group decision-making can be time-consuming, difficult to reach consensus, and potentially swayed by group biases.
• Devil's Advocacy: A decision-making technique where one member is assigned to critically evaluate the favored alternative. This process helps to find weaknesses and consider alternatives.
• Dialectical Inquiry: A decision-making technique where opposing viewpoints about an issue are presented and debated.

Organizational Learning and Creativity

• Organizational Learning: Managers improve an employee's desire and ability to understand and manage organizational and task environments, maximizing the potential for organizational learning to take place.
• Learning Organization: An organization where managers maximize individuals' and groups' capacity for creative thinking and behavior. This promotes organizational learning.
• Creativity: A decision-maker's ability to discover original and novel ideas.
• Brainstorming: A group meeting to generate and debate many possible alternatives.
• Production Blocking: Potential loss of productivity in brainstorming due to the unstructured nature of brainstorming.
• Nominal Group Technique: A decision-making technique where group members write suggestions, the group collectively discusses, and then alternatives are ranked.
• Delphi Technique: A decision-making process where members do not meet face-to-face, but rather respond in writing to questions posed by the group leader.

Entrepreneurship

• Entrepreneurs: Individuals who identify opportunities and mobilize resources to produce new, improved goods and services.
• Social Entrepreneurs: Individuals pursuing initiatives to address social problems and improve society.
• Intrapreneurs: Managers, scientists, or researchers who identify opportunities to develop new or improved products/improve production methods within an organization.
• Characteristics of Entrepreneurs: Open to experience, internal locus of control, high self-esteem, high need for achievement.
• Entrepreneurship vs Management: Entrepreneurship is not the same as management; founding entrepreneurs may lack the necessary management skills and experience.
• Product Champion: A manager who takes ownership of a project and guides it from idea to final customer.
• Skunkworks: A group of intrapreneurs separated from the normal operations of an organization to focus on developing new products.
• Xerox PARC: Research division of Xerox that led to innovations, such as the laser printer, personal workstation, WYSIWYG printing, and GUI.