Test 2 Review

Test 2 Review - Chapter 7 Individual and Group Decision Making How Managers Make Things Happen Two Kinds of Decision Making Rational Nonrational

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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 (classical method) , 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. Evidence-based management - translating principles based on best evidence into organizational practice. o It is intended to bring rationality to the decision-making process. Scholars Jeffrey Pfeffer and Robert Sutton identify seven implementation principles to help companies that are committed to doing what it takes to profit from evidence-based management o treat your organization as an unfinished prototype o “no brag, just facts” o see yourself and your organization as outsiders do o have everyone, not just top executives, be guided by the responsibility to gather and act on quantitative and qualitative data
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o you may need to use vivid stories to sell unexciting evidence to others in the company o you should slow the spread of bad practices o you should learn from failure by using the facts to make things better. Applying the
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This note was uploaded on 12/20/2011 for the course MGT 3304 taught by Professor Cpneck during the Fall '07 term at Virginia Tech.

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Test 2 Review - Chapter 7 Individual and Group Decision Making How Managers Make Things Happen Two Kinds of Decision Making Rational Nonrational

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