Principles Chapter 3

Principles Chapter 3 - CHAPTER THREE Managerial Decision...

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Unformatted text preview: CHAPTER THREE Managerial Decision Making I. CHARACTER IST ICS OF DEC ISIONS A. Decision: A choice made from available alternatives. Decision making provides a substrate for planning, organizing, leading, and controlling. You have to decide something for each aspect. Decision making underlies all of the management functions B. Importance of decision making a. Linking process: Pervades all management functions. Decision making is important because of the relationship to the linking process and responsibility. i. Youll be making decisions constantly (p.88) b. Relationship to responsibility i. E.g. Elliot Jaques = modern day renaissance person. He examined many jobs to determine nature of work. His conclusion was that all jobs had two components: 1. Prescribed content: Those components of the job that you are required to do whether you like it or not. a. E.g. Mr. Gordon must teach this class. Not his decision. If you dont do this component, then you are being insubordinate. This is a matter of following orders. 2. Discretionary content: The decision making part of the job. You have to decide how to do tasks and which ones should be done first. a. Sensed as responsibility: The greater the discretionary content, the more the employee feels responsible. b. Equitable pay: The greater the discretionary content, the more people want to be paid for doing that job. The longer the period of time between reviews, the more people want for doing that job. c. Programmed Decision: You have confronted or done this decision before. Because you have done this before, the decision should be in your mind. The number of alternatives should be known. i. Problem type=Routine. E.g. fixing equipment failure for Delta airlines is a programmed decision. ii. Alternatives: Limited iii. Resolution Method: Decision Rule (SOP-Standard Operating Procedure) 1. You can coordinate through standardization through formalization. iv. Decision Maker: Lower level d. Nonprogrammed Decision: Blank i. Problem Type: unique ii. Alternatives: unknown iii. Resolution Method: Problem Solving iv. Decision maker: Top level. e. Certainty (pg. 89) the state that exists when decision makers have accurate and comprehensive information. f. Uncertainty: State that exists when decision makers have insufficient information. This is more characteristic of a decision making environment. g. Risk (p.90) The state that exists when the probability of success is less than 100 percent and losses may occur. You can identify what the alternatives are, and all of the possibilities. i. BP oil: BP knew what potential solutions were for sealing the well and the risks associated. This is how risk differs from uncertainty....
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Principles Chapter 3 - CHAPTER THREE Managerial Decision...

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