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MGMT 371 Class Notes - Decision Making Classical Rational...

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Decision Making Classical –Rational model How a decision maker should make decisions (normative) o Consider all alternatives and results o Logically calculate economic return of alternatives o Pick the one with most returns Bounded rationality We are not capable due to time and cognitive ability to use this model If we use too much brain power we become “cognitively lazy” by not putting enough brain power in any one thing. Heuristics- cognitive shortcuts and “rules of thumb” Administrative Model How most people actually make a decision (descriptive) o Consider limited alternatives o Uses simple decision tools (rules of thumb) o Selects the first one that satisfies minimum decisions criteria (Satisfies) Biasing Factors in Decisions Early information is given greater weight than later People fail to adjust from initial position (anchoring) If you can recall an example of something than you are more likely to believe it possible again (availability bias) o Space ship Being influenced by framing (lose vs. gains causes managers to make riskier decisions) Managers continue to invest resources in failing projects to justify their past decisions (escalation of commitment) Foundations of Management Understanding Management The attainment of organizational goals in an effective and efficient manner through planning, organizing, l eading, and controlling organizational resources. Effective o The degree to which the organization achieves a stated goal Efficiency/productivity o The amount of resources used to achieve an organizational goal o Efficiency isn’t always a good thing because it is not very flexible Companies like technology change so much it is hard to be efficient The Function of management Planning Defining goals for future organizational performance and deciding on tasks and resources to attain them. Organizing Assigning tasks, grouping tasks into departments, and allocating resources to departments
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Leading The use of influence to motivate employees to achieve the organization’s goals Controlling Monitoring employees’ activities, keeping the organization on track toward its goals, and making corrections as needed. Management perspectives Classical perspective (older) – Don’t recognize the imputes of people o Administrative Principles o Scientific Management o Bureaucratic Organizations Humanistic perspective (newer) – Recognize the impute of people o Human relations o Behavioral sciences o Human resources Quantitative perspective (management Science) Beliefs about people Theory X (classical) o People dislike work and will avoid it if possible o People must be coerced and directed to get them to put forth adequate effort o Fundamental attribution Error People tend to overestimate the influence of internal factors (and underestimate the influence of external factors) on the behavior of others.
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