09 26 Lecture 9-1

09 26 Lecture 9-1 - Chapter 7: Individual and Group...

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Chapter 7: Individual and Group Decision Making: How Managers Make Things Happen Decision- a choice made from among available alternatives. Decision making is the process of identifying and choosing alternative courses of action. Two models managers follow in making decisions are rational and nonrational. In the rational model, there are four steps in making a decision o identifying the problem or opportunity. problem- a difficulty that inhibits the achievement of goals. Opportunity- a situation that presents possibilities for exceeding existing goals. o thinking up alternative solutions. o evaluating the alternatives and selecting a solution. Alternatives should be evaluated according to cost, quality, ethics, feasibility, and effectiveness. o implementing and evaluating the solution chosen. The rational model of decision making assumes managers will make logical decisions that will be the optimum in furthering the organization’s best interests. The rational model is prescriptive, describing how managers ought to make decisions. Nonrational models of decision making assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimum decisions. Three nonrational models are satisficing, incremental, and intuition. o Satisficing falls under the concept of bounded rationality—that is, that the ability of decision makers to be rational is limited by enormous constraints, such as time and money. These constraints force managers to make decisions according to the satisficing model—that is, managers seek alternatives until they find one that is satisfactory, not optimal. o Incremental model- managers take small, short-term steps to alleviate a problem rather than steps that will accomplish a long-term solution. o Intuition is making choices without the use of conscious thought or logical inference. The sources of intuition are expertise and feelings.
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09 26 Lecture 9-1 - Chapter 7: Individual and Group...

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