Ch 6- Notes.docx

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Ch. 6 Managers as Decision Makers The Decision-Making Process Step 1: Identifying the Problem Every Decision starts with a Problem, a gap between an existing and desired condition. Managers have to be cautious not to confuse between problems and symptoms of problems Problem identification is subjective Step 2: Identifying Decision Criteria Criteria that are important or relevant to resolve the problem Step 3: Allocating Weights to the Criteria If the relevant criteria are not equally important, the decision maker must weigh the items in order to give them the correct priority in the decision. Give the most important criteria a weight of 10 Step 4: Developing Alternatives List the alternatives that could work to solve the problem This step is where decision maker should be creative Alternatives only listed, and not evaluated Step 5: Analyzing Alternatives Decision maker must evaluate each alternative by using the criteria Step 6: Selecting an Alternative Choosing the best alternative or the one that the generated the highest total in step 5 Step 7: Implementing the Alternative Put the decision into action by communicating it to those affected and getting their commitment to it. Managers should reassess the environment for any changes, especially with a long-term decision—“Are the criteria, alternatives and choices still the best ones, or has the environment changed in such a way that you need to reevaluate? Step 8: Evaluating Decision Effectiveness Evaluating the outcome of the decision to see if the problem was resolved.
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Managers Making Decisions There are three perspectives on how managers make decisions Rationality In many cases, managers cannot decide with complete rationality, because, among other things, information is off-limits or not available to them, or because they do not have time to assess every possible alternative and contingency. We assume that manager’s decision making will be rational—we assume that they will make logical and consistent choices to maximize value.
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