Management Ch 5, 6, 7 PDF

The Nature of Managerial Decision Making Decision Making: The process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action. © McGraw...

The Nature of Managerial Decision Making Decision Making: The process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action. © McGraw Hill  Decision Making 1 Programmed Decision Making: Routine, virtually automatic decision making that follows established rules or guidelines. Managers have made the same decision many times before. There are rules or guidelines to follow based on experience with past decisions. © McGraw Hill  Decision Making 2 Nonprogrammed Decisions: Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats. © McGraw Hill  Decision Making 3 Intuition; Reasoned Judgment: Feelings, beliefs, Decisions that and hunches that take time and effort to make and come readily to result from careful mind, require little information effort and gathering, information generation of gathering and alternatives, and result in on-the- evaluation of spot decisions. alternatives. © McGraw Hill  The Classical Model Classical Decision-Making Optimum Decision: Model: The most appropriate A prescriptive model of decision in light of decision making that what managers assumes the decision believe to be the maker can identify and most desirable evaluate all possible consequences for the alternatives and their organization. consequences and rationally choose the most appropriate course of action. © McGraw Hill  The Classical Model of Decision Making Figure 5.1 Access the text alternative for slide image. © McGraw Hill Copyright © McGraw-Hill Education. Permission required for reproduction or display.  The Administrative Model 1 Administrative Model An approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions. © McGraw Hill  The Administrative Model 2 Bounded Rationality: Incomplete Information: Cognitive Happens because limitations that the full range of constrain one’s decision-making ability to interpret, alternative is process, and act unknowable in most on information. situations and the consequences are uncertain. © McGraw Hill  Why Information Is Incomplete Figure 5.2 © McGraw Hill Copyright McGraw-Hill Education. Permission required for reproduction or display.  Causes of Incomplete Information 1 Risk: Uncertainty: The degree of The probabilities probability that the of alternative possible outcomes outcomes cannot of a particular be determined and course of action future outcomes will occur. are unknown. © McGraw Hill  Causes of Incomplete Information 2 Figure 5.3 Young Woman or Old Woman? Ambiguous Information: Information that can be interpreted in multiple and often conflicting ways. © McGraw Hill Chronicle of World History/Alamy Stock Photo  Causes of Incomplete Information 3 Time Constraints and Information Costs: Managers have neither the time nor money to search for all possible alternatives and evaluate potential consequences. © McGraw Hill  Causes of Incomplete Information 4 Satisficing: Satisficing is a strategy of searching for and choosing an acceptable, or satisfactory, response to problems and opportunities, rather than trying to make the best decision. Managers search for and choose acceptable, or satisfactory, ways to respond to problems and opportunities rather than trying to make the optimal decision. © McGraw Hill  Steps in the Decision-Making Process Figure 5.4 Access the text alternative for slide images. © McGraw Hill Copyright © McGraw-Hill Education. Permission required for reproduction or display.  General Criteria for Evaluating Possible Courses of Action Figure 5.5. Is the possible course of action… © McGraw Hill Copyright McGraw-Hill Education. Permission required for reproduction or display.  Group Decision Making 1 Superior to individual making. Choices less likely to fall victim to bias. Able to draw on combined skills of group members. Improve ability to generate feasible alternatives. Allows managers to process more information. Managers affected by decisions agree to cooperate. © McGraw Hill  Group Decision Making 2 Groupthink: A pattern of faulty and biased decision making that occurs in groups whose members strive for agreement among themselves at the expense of accurately assessing information relevant to a decision. © McGraw Hill  Group Decision Making 3 Devil’s Advocacy: Critical analysis of a preferred alternative, made in response to challenges raised by a group member who, playing the role of devil’s advocate, defends unpopular or opposing alternatives for the sake of argument. © McGraw Hill  The Classic Model of Decision Making, Text Alternative Return to slide. The following steps are presented in the graphic: 1. List all the alternative courses of action possible and the consequences of the different alternatives, which assumes all information about alternatives is available to managers. 2. Rank each alternative from least preferred to most preferred according to personal preferences, which assumes managers possess the mental facility to process this information. 3. Select the alternative that leads to desired future consequences, which assumes that managers know when future course of action is best for the organization. Copyright McGraw-Hill Education. Permission required for reproduction or display. Return to slide containing the image. © McGraw Hill  Steps in the Decision-Making Process, Text Alternative Return to slide. The graphics shows steps in the decision-making process. 1. recognize the need for a decision, 2. generate alternatives, 3. assess alternatives, 4. choose among alternatives, 5. implement the chosen alternative, and 6. learn from feedback. Return to the slide containing images. © McGraw Hill  Planning and Strategy 1 Planning: Strategy: Identifying and A cluster of selecting decisions about appropriate goals what goals to and courses of pursue, what action for an actions to take, organization. and how to use resources to achieve goals. © McGraw Hill  Planning and Strategy 2 Mission Statement: A broad declaration of an organization’s purpose that identifies the organization’s products and customers and distinguishes the organization from its competitors. © McGraw Hill Tom Merton/AGE Fotostock  Three Steps in Planning Figure 6.1 Access the text alternative for slide image. © McGraw Hill Copyright © McGraw-Hill Education. Permission required for reproduction or display.  The Nature of the Planning Process 1. Establish and discover where an organization is at the present time. 2. Determine where it should be in the future, its desired future state. 3. Decide how to move it forward to reach that future state. © McGraw Hill  Why Planning Is Important 1 1. Planning is necessary to give the organization a sense of direction and purpose. 2. Planning is a useful way of getting managers to participate in decision making about the appropriate goals and strategies for an organization. © McGraw Hill Ryan McVay/Getty Images  Why Planning Is Important 2 3. A plan helps coordinate managers of the different functions and divisions of an organization to ensure that they all pull in the same direction and work to achieve its desired future state. 4. A plan can be used as a device for controlling managers within an organization. © McGraw Hill  Levels of Planning at General Electric Figure 6.2 Access the text alternative for slide image. © McGraw Hill Copyright © McGraw-Hill Education. Permission required for reproduction or display.  Levels and Types of Planning 1 Corporate-Level Plan: Corporate-Level Strategy: Top A plan that indicates management’s in which industries decisions and national markets pertaining to the an organization organization’s intends to compete. mission, overall strategy, and structure. © McGraw Hill  Levels and Types of Planning 2 Figure 6.3 Access the text alternative for slide image. © McGraw Hill Copyright © McGraw-Hill Education. Permission required for reproduction or display.  Levels and Types of Planning 3 Business-Level Plan: Business-Level Strategy: Divisional Outlines the specific managers’ methods a division, decisions business unit, or pertaining to a organization will use division’s long- to compete effectively term goals, overall against its rivals in an strategy, and industry. structure. © McGraw Hill  Levels and Types of Planning 4 Functional-Level Plan: Functional-Level Strategy: Functional A plan of action to improve the ability of managers’ each of an decisions organization’s pertaining to the functions in order to goals that they perform its task- propose to pursue specific activities in to help the division ways that add value to attain its business- an organization’s level goals. goods and services. © McGraw Hill  Time Horizons of Plans Time Horizon is the intended duration of a plan. Long-term plans are usually 5 years or more. Intermediate-term plans are 1 to 5 years. Short-term plans are less than 1 year. © McGraw Hill  Types of Plans Standing Plans: Single-Use Plans: Use in Developed for a programmed one-time, decision nonprogrammed situations. issue. © McGraw Hill  Standing Plans Policies: General guides to action. Rules: Formal written specific guides to action. Standard Operating Procedures (SOP): Specify an exact series of actions to follow. © McGraw Hill  Single-Use Plans Programs: Integrated plans achieving specific goals. Project: Specific action plans to complete programs. © McGraw Hill  Three Mission Statements COMPANY MISSION STATEMENT LinkedIn Our mission is simple: Connect the world’s professionals to make them more productive and successful. Twitter Our mission: To give everyone the power to create and share ideas and information instantly, without barriers. Facebook Facebook’s mission is to give people the power to share and make the world more open and connected. Figure 6.4 Sources: Company website,