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Chapter_3_-_Decision_Making - Chapter 3 Managerial Decision...

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Chapter 3 Managerial Decision Making MNGT 215 Dr. Haitham Khoury [email protected] Ext. 3778 Room 369 - OSB
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Managerial decisions Problems and opportunities occur all the time Decisions differ in Simplicity/complexity immediacy of action needed Some managers ignore problems and avoid action
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Why are managerial decisions challenging? Conflict Risk Uncertainty Lack of Structure
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Lack of structure For most decisions, there is no automatic procedure to follow Programmed decisions Encountered previously Objective, correct answer Non-programmed decisions No clear solution/outcome
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Uncertainty and Risk Certainty You have have accurate and comprehensive information Interested in what did happen not what might have happened Uncertainty manager has insufficient information to know the consequences of different actions Risk Probability of an action being successful is less than 100%
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Conflict Opposing pressures from different sources Psychological All options attractive or none Example? Between people Opposing views on action • Example?
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“The business executive is by profession a decision maker. Uncertainty is his opponent. Overcoming it is his mission.” -John McDonald
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What do we want to change? How could we make the change? What’s the best way to do it? Are we following the plan? How well did it work out? What’s preventing us from the desired state?
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Identifying and Diagnosing the Problem Recognize a problem exists by comparing the current state (the way things are) to the desired state (the way things ought to be Past, present, and future performance Deviation Causes Set critical goals
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Generating Alternative Solutions Ready-made solutions Ideas that have been seen or tried before Custom-made solutions New and creative solutions designed specifically or the problem
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Evaluating Alternatives Contingency plans are alternative courses of action that can be implemented based on how the future unfolds. Choosing the best solution Is information complete and current? If not, can we get more and better information? Does the alternative meet our primary objective? What problems could we have if we implement the alternative?
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Making the Choice Maximizing Making the best possible decision Greatest benefit with lowest cost Time constraint; best for large consequential decisions (e.g. company strategy) Satisficing Choosing an option that is acceptable, although not necessarily the best or perfect Compare against goal, not other options Optimizing Achieving the best possible balance among several goals
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Implementing the Decision Those implementing the decision must understand and be committed to its successful implementation Implementation requires: What will the end result look like?
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