BBA 1564 Principles of Management PDF

ninth edition BBA 1564 STEPHEN P. ROBBINS MARY COULTER PRINCIPLES OF MANAGEMENT 1PowerPoint Presentation by Charlie Cook The University of West Alabama BBA 1564...

ninth edition BBA 1564 STEPHEN P. ROBBINS MARY COULTER PRINCIPLES OF MANAGEMENT 1PowerPoint Presentation by Charlie Cook The University of West Alabama BBA 1564 ninth edition STEPHEN P. ROBBINS MARY COULTER Decision Making TOPIC 3 PowerPoint Presentation by Charlie Cook The University of West Alabama Chapter 3: Decision Making Learning Outcomes Successful students will be able to: - Define decision making - Describe the types of decisions - Explain the decision-making process - Identify factors that affects decision making 3 Decision Making Is the process of identifying problems or opportunities, developing alternatives solutions, choosing an alternative and implementing it. Decision making is performed by all levels of management in an organization. 4 How Do Managers Make Decision? 2005V1.0 MGT104 5 How Do Managers Make Decision? Step 1 - What defines a decision problem? Step 2 - What is relevant in the decision- making process? Step 3, 4, 5 - How does the decision maker weight the criteria and analyse alternatives? Step 6 - What determines the best choice? Step 7 - What happens in decision implementation? Step 8 - What is the last step in the decision process? 2005V1.0 MGT104 6 Decision Making Process MGT104 7 Decision Making Process Step 1: Defining the problem / opportunity Problem / opportunity must be defined correctly, to ensure that the following steps will not be based on the wrong issue. Example : My sales reps need new computers. 8 Decision Making Process (cont’d) Step 2: Identifying Memory and 10 limiting factors storage or decision criteria Display quality 8  Identify factors that are constraints which may not allow certain alternative solutions to be taken. 6 Example : Battery Life Memory and storage Display quality Warranty 4 Batter life Warranty Carrying weight 3 Carrying weight And allocate weights to criteria 9 Decision Making Process (cont’d) Step 3: Developing potential alternative solutions Managers look for as many alternatives to solve the problem. The alternatives must eliminate, correct the problem or maximize the opportunity. 10 Decision Making Process (cont’d) Step 4: Analyzing the alternatives  Analyze and evaluate each alternative and find out their advantages and disadvantages.  Ask two questions: Q1. Does the alternative fit the limiting factors. Q2. What are the consequences of using this alternative. 11 Types of Computers Available? Toshiba Protege Dell Ispiron HP Pavillion Apple ibook Sony Vaio Gateway Toshiba Qosmio Lenovo Thinkpad 12 Decision Making Process (cont’d) Step 5: Selecting the best alternatives Choose the alternative with the most advantages and the fewest serious disadvantages. Also ensure that the alternative chosen will not create other problems. ( Example : You may have chosen the Toshiba Qosmio based on accumulative weighting) 13 Assessed values of laptop computers using criteria values/accumulated weightings 14 Decision Making Process (cont’d) Step 6: Implementing the decision This step is to carry out the alternative chosen. The solution / alternative must be implemented well to obtain the desired results. 15 Decision Making Process (cont’d) Step 7: Establishing a control and evaluation system Monitor and provide feedback on how well the decision has been implemented and is there any adjustment or corrective action needed. 16 What Are the Three Approaches Managers Can Use to Make Decisions? 1. Rational Model This approach assumes: Decision makers MUST ACT RATIONALLY. Managerial decision making is assumed to be rational. 2. Bounded Rationality Managers make rational decisions but are limited (bounded) by their ability to process information. 3. Role of Intuition Intuitive making decisions based on experience, feelings, and accumulated judgement. 2005V1.0 MGT104 17 Managerial Style Influences on Decision Making (DM) 1. Rational / Logical Decision Model  Managers examine thoroughly the situation or problem in a systematic and orderly manner focuses on facts and logic. 18 Managerial Style Influences on Decision Making (DM) 2. Bounded Rationality No one can possibly analyse all information on all alternatives, so they satisfice – that is, accept solutions that are good enough. Managers satisfice rather than maximize. 19 Managerial Style Influences on Decision-Making (DM) (cont’d) 3. Intuitive decision model  Managers make decisions base on their feelings and intuition (experience, hindsight, and feelings). 20 Factors in Intuitive Decision Making 21 Rational, Bounded, and Intuitive Decision-Making Styles  What’s my decision making style? 22 What Types of Decisions and Decision-Making Conditions Do Managers Face? Managers will be faced with different types of problems and decisions as they do their jobs. Depending on the nature of the problem, the manager can use different types of decisions. 2005V1.0 MGT104 23 Three Types of Decisions 1. Organizational versus Personal Decisions  Organizational decisions – made by managers within their authority in accordance with organizational goals, policies, procedures, strategies.  Personal decisions – decision is made based on manager’s personal choice and preference. 24 Types of Decisions (cont’d) 2. Strategic versus Tactical Decisions  Strategic decision – deals with long term plans which is important for the growth and survival of organization.  Tactical decision – deals with routine and operational activities. 25 Types of Decisions (cont’d) 3. Programmed versus Unprogrammed Decisions  Programme decision - decisions which involves problems or situations that have occurred often enough that the problems and solutions are predictable. 26 Types of Decisions (cont’d) Unprogrammed decision - decisions made involves problems and opportunities that have unique circumstances, unpredictable results and important consequences to the company. The situation has never occurred before and no decision has been made before for this situation. 27 2005V1.0 MGT104 28 Managerial Style Influences on Decision Making (DM) (cont’d) Predisposed decision model  Managers may decide on a solution and then gather the information to support the decision.  Manager choose or favor specific information to influence the solution. 29 Managerial Style Influences on Decision Making (cont’d) Ability to set priorities  The manager’s ability to prioritize which decision should be made first.  Some make decision base on the boss’s importance, some base on decision having the greatest impact on organization’s goals, some prioritize by avoiding the difficult decision and only concentrate on easy ones first. 30 Managerial Style Influences on Decision Making (cont’d) Time of decisions  Managers must make sure the timing to implement the decision is correct. 31 Managerial Style Influences on Decision Making (cont’d) Tunnel vision  Managers with tunnel vision has a narrow viewpoint and therefore have limited choices or alternatives. 32 Managerial Style Influences on Decision Making (cont’d) Commitment to previous decisions  Managers make decision base on previous decision.  The commitment from previous decision may influence subsequent decisions. 33 Managerial Style Influences on Decision Making (cont’d) Creativity  Managers that are innovative and creative can influence decision making.  They are able to think and do things differently. 34 Creating Environment for Effective DM Provide time for decisions to be made  Managers should not rush and be pushed to make a decision, especially crucial decisions.  Negotiate for more time and make good quality decisions. 35 Creating Environment for Effective DM (cont’d) Have self-confidence  Managers must have self confidence and courage especially when making risky decisions. 36 Creating Environment for Effective DM (cont’d) Encourage others to make decision  Managers should trust subordinates and allow them to make decisions.  This will get their commitment when they are involved. 37 Creating Environment for Effective DM (cont’d) Learn from past decisions  Managers should look at decisions that worked and decisions that did not and use them as a guide. 38 Creating Environment for Effective DM (cont’d) Recognize the differences in DM situations  Different situations requires different ways to make decisions.  So managers must be aware of the different ways when making decisions. 39 Decisions in Management Functions 40 Creating Environment for Effective DM (cont’d) Recognize the importance of quality information  Managers must ensure that there is quality information in order to make the right decision. 41 Creating Environment for Effective DM (cont’d) Make tough decision  Even though it is a difficult decision, managers should not put it to the last or procrastinate. 42 Creating Environment for Effective DM (cont’d) Be ready to ask for help  Managers should not be shy to ask for help from those who have knowledge and experiences because they may be able to provide good ideas and guidance. 43 Characteristics of an Effective Decision-Making Process  It focuses on what is important.  It is logical and consistent.  It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking.  It requires only as much information and analysis as is necessary to resolve a particular dilemma.  It encourages and guides the gathering of relevant information and informed opinion.  It is straightforward, reliable, easy to use, and flexible. 44 What Contemporary Decision- Making Issues Do Managers Face? 1. National culture affect managers’ decision making.  Understand cultural differences.  Use an effective decision-making process. 2. Creativity and design thinking is important in decision making.  Design thinking has been described as approaching management problems as designers’ approach design problems.  Design thinking means opening your perspective and gaining insights by using observation and inquiry skills, and not relying simply on rational analysis. 3. Big Data Is Changing the Way Managers Make Decisions  Big data is the vast amount of quantifiable information that can be analysed by highly sophisticated data processing. 45