Chapter 7 - Chapter 7-Decision making is the process of...

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Chapter 7: - Decision making is the process of identifying and choosing alternative courses of action, may be rational, BUT often is nonrational. -Decision: a choice made from among suitable alternatives *curse of knowledge: as our knowledge and expertise grow, we may be less and less able to see things from an outsiders perspective-hence, we are often apt to make irrational decisions - Rational model of decision making: (Classical Model)- explains how managers SHOULD make decisions, it assumes managers will make logical decisions that will be the optimum in furthering the organization’s best interests. Stages: 1) Identify the problem or opportunity 2) Think up alternative solutions-both the obvious AND creative 3) 4) Implement and evaluate the solution chosen Stage 1 : Problems : difficulties that inhibit the achievement of goals-customer complaints, supplier breakdowns, staff turnover, sales shortfalls, competitor innovations). Opportunities: situations that present possibilities for exceeding existing goals. Whether you are confronted with a problem or opportunity, the decision relates to the improvements-how to change conditions from the present to the desirable. Matter of diagnosis : analyzing the underlying causes. Stage 3: evaluate according to COST, QUALITY , and the questions: 1) Is it ethical ? 2) is it feasible ? 3) is it ultimately effective? Stage 4 : Successful implementation -TWO THINGS NEED TO BE DONE- - Plan carefully -Be sensitive to those affected (will people be inconvencienced, insecure, fearful) Evaluation :**Law of Unintended Consequences, if the action is not working, do this: -give it more time -change it slightly-“tweaking” -try another alternative -start over ** WHAT IS WRONG WITH THIS MODEL?? It is PRESCRIPTIVE, describing how managers ought to make decisions, not how they actually do.
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Nonrational Model of Decision Making -explain how managers make decisions, they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions . DESCRIPTIVE -describe how managers actually make decisions. -Bounded Rationality/Satisficing Model -Herbert Simon proposed that managers could not act logically because their rationality was bounded by so many restrictions ( Bounded rationality : the concept suggests that the ability of decision makers to be rational is limited by numerous constraints; complexity, time, money . Satisficing model : managers seek alternatives until they find one that is satisfactory, not optimal. Don’t do exhaustive search, making snap decisions may backfire. - Incremental Model- “the least that will solve the problem”-managers take small, short term steps to allievate a problem, rather than steps to accomplish long term solutions. -
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Chapter 7 - Chapter 7-Decision making is the process of...

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