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Chapter 10 - 1 Chapter 10-Making decisions in organizations...

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1 Chapter 10-Making decisions in organizations The fundamental nature of decisions making A general model of decision making o This model highlights two important aspects of the decision-making process: formulation, the process of understanding a problem and making a decision about it and implementation the process of carrying out the decision made Identify the problem: to decide how to solve a problem, one must first recognize and identify it Define objectives: after a problem is identifies, the next step is to define the objective to be met in solving it Make a predecision: a predecision is a decision about how to make a decision. By assessing the type of problem in question and other aspects of the situation, managers many opt to make a decision themselves, delegate the decision to another, or have a group make the decision Generate alternatives: possible solutions to the problem are identified in this stage Evaluate alternative solutions Make a choice: after several alternatives are evaluated, one is considered acceptable and chosen Implement the chosen alternative Follow-up: monitoring the effectiveness of the decisions they put into action is important to the success of organizations Cultural differences in decision making o There are widespread differences in the way people from various nations go about making decisions o Important to become aware of such differences when doing business with people from around the world o Recognize problems People from different countries do not always agree on what constitutes a problem o Preferences for decision-making unit North America: individualistic orientation Asian countries: collectivist orientation o Time taken to make decisions There are some interesting and important differences in how people from various countries formulate and implement decisions Varieties of organizational decision Programmed versus nonprogrammed decisions o Programmed decisions-routine decisions, made by lower-level personnel, they rely on predetermined courses of action o Nonprogrammed decisions-ones for which there are no ready-made solutions. The decision maker confronts a unique situation in which the solutions are novel o Certain types of nonprogrammed decisions are known as strategic decisions Strategic decisions reflect a way of directing an organization in some specified fashion- that is, according to an underlying organizational philosophy or mission Certain versus uncertain decisions o Degrees of certainty and uncertainty are expressed as statements of risk o Minimize the riskiness for a decisions by gaining access to information relevant to the decisions o What makes an outcome risky or not is the probability of obtaining the desired outcome o Objective probabilities because they are based on concrete, verifiable data o Subjective probabilities- personal beliefs or hunches about what will happen
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