Chapter 6 Decision Making- The Essence of the Manager's Job

Chapter 6 Decision Making- The Essence of the Manager's Job...

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Chapter 6 Decision Making: The Essence of the  Manager’s Job ANNOTATED OUTLINE 1. INTRODUCTION Every manager should strive to make good decisions because the overall quality of managerial decisions has a major influence on organizational success or failure. The concept of decision making is explored in this chapter. 2. THE DECISION-MAKING PROCESS A decision is a choice made from two or more alternatives. The decision-making process is a set of eight steps that include identifying a problem, selecting an alternative, and evaluating the decision’s effectiveness. (See Exhibit 6-1 and PowerPoint slide 6-6 for an illustration of the decision-making process.) A.Step 1: Identifying a problem. A problem is a discrepancy between an existing and a desired state of affairs. In order to identify a problem, you as a manager should recognize and understand the three characteristics of problems: 1. You must be aware of the problem. Be sure to identify the actual problem rather than a symptom of the problem. 2. You must be under pressure to act. A true problem puts pressure on the manager to take action; a problem without pressure to act is a problem that can be postponed. 3. You must have the authority or resources to act. When managers recognize a problem and are under pressure to take action but do not have necessary resources, they usually feel that unrealistic demands are being put upon them. B. Step 2: Identifying decision criteria . Decision criteria are criteria that define what is relevant in a decision. C. Step 3: Allocating weights to the criteria . The criteria identified in Step 2 of the decision-making process do not have equal importance, so the decision maker must assign a weight to each of the items in order to give each item accurate priority in the decision. Exhibit 6-2 and PowerPoint slide 6-9 list the criteria and weights for Joan’s franchise purchase decision. D.Step 4: Developing alternatives . The decision maker must now identify viable alternatives that could resolve the problem. E. Step 5: Analyzing alternatives . Each of the alternatives must now be critically
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analyzed by evaluating it against the criteria established in Steps 2 and 3. Exhibit 6-3 and PowerPoint slide 6-11 show the values that Joan assigned to each of her eight alternatives for a franchise opportunity. Exhibit 6-4 and PowerPoint slide 6-13 , showing evaluation of her alternatives, reflect the weighting for each alternative, as illustrated in Exhibits 6-2 and 6-3 . F. Step 6: Selecting an alternative . This step to select the best alternative from among those identified and assessed is critical. If criteria weights have been used, the decision maker simply selects the alternative that received the highest score in Step 5. G.Step 7:
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Chapter 6 Decision Making- The Essence of the Manager's Job...

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