MGT 340 Exam 2 - M GT 340 Exam 2 Review CHAPTER 6 How Managers Make Decisions 1 Decision-making Process a Problemidentify the problem dont get

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MGT 340 Exam 2 Review CHAPTER 6: How Managers Make Decisions 1. Decision-making Process a. Problem—identify the problem, don’t get caught up on symptoms b. Decision Variables—time, money, effort, etc. c. Develop Alternatives d. Analyze Alternatives (design weights) e. Selection and Implementation—choose best and put into action f. Evaluation—see if problem has been resolved 2. Explain a. Rational decision making—choices are consistent and value-maximizing within specified constraints b. Bounded rationality—rational but limited by an individual’s ability to process information; temporary solution NOT later viewed as a mistake (fallback plan) c. Intuitive decision making—decisions based on experience, feelings, and accumulated judgment 3. Really a ‘problem’? What is created by rules, procedures, and policies? a. Structured problems—straightforward, familiar, and easily defined i. Programmed decision—repetitive decision that can be handled by a routine approach 1. Procedure—series of interrelated sequential steps that a manager can use to respond to a structured problem; broad guidelines 2. Rule—explicit statement that tells a manager what he or she can or cannot do 3. Policy—guideline for making a decision; establishes general parameters for the decision maker rather than specifically stating what should or should not be done; way to implement policy 4. Decision making conditions a. Certainty—situation in which a manager can make accurate decisions because all outcomes are known b. Risk—situation in which the decision maker is able to estimate the likelihood of certain outcomes; can anticipate values c. Uncertainty—situation in which a decision maker has neither certainty nor reasonable probability estimates available; too many unknowns 5. Decision making styles 1
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MGT 340 Exam 2 Review a. Directive—characterized by low tolerance for ambiguity and a rational way of thinking; orderly, process based, short term b. Analytic—characterized by a high tolerance for ambiguity and a rational way of thinking; more information, careful, ability to adapt c. Conceptual—characterized by a high tolerance for ambiguity and an intuitive way of thinking; long term, creativity d. Behavioral—characterized by a low tolerance for ambiguity and an intuitive way of thinking; consensus style, involvement, empowerment 6. Why do biases and errors affect decisions? a.
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This note was uploaded on 09/27/2011 for the course MGT 340 taught by Professor Staff during the Spring '08 term at Missouri State University-Springfield.

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MGT 340 Exam 2 - M GT 340 Exam 2 Review CHAPTER 6 How Managers Make Decisions 1 Decision-making Process a Problemidentify the problem dont get

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