MNG201_STUDY_UNITS_4_to_7

MNG201_STUDY_UNITS_4_to_7 - MANAGEMENT STUDY UNIT 4 CHAPTER...

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MANAGEMENT STUDY UNIT 4 CHAPTER 6 ROLE OF MANAGERIAL DECISION MAKING AND INFORMATION MANAGEMENT THE RELATIONSHIP BETWEEN PROBLEMS, PROBLEM SOLVING AND DECISION MAKING Define Problem Def – Problem Solving A problem arises whenever managers perceive a difference between what has actually happened and what they want to happen. Problem solving the process of taking corrective action that will solve the problem and realign the organization with its goals. Decision-making the process of selecting an alternative course of action to solve a problem. Types of managerial decisions Programmed decisions NB Repetitive and routine Manager can handle programmed decisions by means of policies, standard operating procedures and rules In some decisions there are definite methods of obtaining a solution eg. processing of payroll vouchers, processing of graduation candidates. Non-programmed decisions NB Novel and unstructured Never occurred before, complex & elusive, no established method for dealing with them Made by managers at all levels of organization eg. decision to shift marketing strategy Decision making conditions NB 1. Certainty The available options and the benefits or costs associated with each are known in advance. No element of change intervenes between the option and its outcome.
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Managers are simply faced with identifying the consequences of available options and selecting the outcome with the greatest potential benefit. 2. Risk The manager does not know the outcome of each alternative in advance Can assign a probability to each outcome. Decisions under conditions of risk are perhaps most common. Probability is either - objective historical evidence - subjective, personal estimate and belief 3. Uncertainty There is a lack of information – the outcome of each alternative is unpredictable Manager cannot determine probabilities most difficult. No historical data available / circumstances novel and complex. What are the possible crises that may be sources of uncertainty and high risk for organisations? 7 categories of crises: 1. economic – recession 2. physical – product failure 3. personnel – strikes 4. criminal – product tampering 5. information –theft of information 6. reputation –slander 7. natural disasters –fires Explain various Decision making models Managers need to consider the-two primary decision – making models: The rational model and the bounded-rationality model. The decision maker should select the best possible solution. This is known as optimising To apply the rational model – when they are making nonprogrammed, high risk decisions in conditions of uncertainty. .
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In the case of the bounded-rationality model, the decision maker uses satisficing – selecting the first option that meets the minimal criteria. When managers are making programmed, low-risk, or uncertain decisions, they should select the first option that meets the minimal criteria, in other words, they should satisfice.
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The decision making process
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MNG201_STUDY_UNITS_4_to_7 - MANAGEMENT STUDY UNIT 4 CHAPTER...

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