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Exam2 - Peter Drucker is considered to be the"Father of...

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Peter Drucker is considered to be the “Father of Modern Management”. 6. Decision - making a choice from two or more alternatives. Decision-making Process : Identifying a problem and decision criteria and allocating weights to the criteria; developing, analyzing, and selecting an alternative that can resolve the problem; implementing the selected alternative; evaluating the decision’s effectiveness. Problem- a discrepancy between an existing and desired state of affairs. A problem becomes a problem when a mgr becomes aware of it. There is pressure to solve the problem. The mgr must have the authority, information, or resources needed to solve the problem. Decision Criteria- factors that are important (relevant) to resolving the problem. Costs that will be incurred, risks likely to be encountered, outcomes that are desired. Rational decision-making- managers make consistent, value-maximizing choices with specific constraints. Bounded rationality- mgrs make decisions rationally but are limited(bounded) by their ability to process info. Satisficing- accepting solutions that are “good enough”. Escalation of commitment- an increased commitment to a previous decision despite evidence that it may have been wrong. Intuitive decision-making- making decisions on the basis of experience, feelings, and accumulated judgment. Structured problems- goals that are clear, are familiar(have occurred before) are easily and completely defined- information about the problem is available & complete. Programmed decision- a repetitive decision that can be handled by a routine approach Procedure- series of interrelated steps that a mgr can use to respond (applying a policy) to a structured problem Ex.Follow all steps for completing merch return documentation. Rule- An explicit statement that limits what a mgr or employee can or cannot do. Ex. Mgrs must approve all refunds over $50.00. No credit purchases are refunded for cash. Policy- A general guideline for making a decision about a structured problem. Ex. Accept all customer-returned merchandise. Unstructured problems- Problems that are new or unusual and for which information is ambiguous or incomplete. Problems that will require custom-made solutions. Nonprogrammed decision- Dec’s that are unique and nonrecurring. Decisions that generate unique responses. Certainty- a mgr can make an accurate decision b/c the outcome of every alternative choice is known. Risk- A situation in which the mgr is able to estimate the likelihood (probability) of outcomes that result from the choice of particular alternatives. Uncertainty- Limited information prevents estimation of outcome probabilities for alternatives associated with the problem and may force mgrs to rely on intuition, hunches, and “gut feelings”.
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