DECISION MAKING
Chapter 5
with Duane Weaver
Outline
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Decision Making Process
Making Decisions
Decision Making Conditions
Decision Making Styles
Decision Making Process
1.
2.
3.
4.
5.
6.
7.
8.
9.
Identify Problem
Identify Decision Criteria
Allocate Weights to Criteria
Develop Alternatives
Analyze Alternatives
Select Alternative
Implement Alternative
Evaluate Decision Effectiveness
Reiterate as Necessary
Making Decisions
• Rationality – fully objective and logical.
Assumes decisions made in best interests of the
organization. Hmmm?
• Bounded Rationality – managers make rational
decisions limited by their ability to process
information. Tend to “satisfice” rather than
maximize (what is “good enough”)
• Intuition – making decisions on the basis of
experience, feelings, and accumulated
judgement. Gut feeling.
Decision Making Conditions
• Certainty – a condition in which a decision
maker can maker accurate decisions because of
the outcome of every alternative is known.
• Risk – a condition in which a decision maker is
able to estimate or assess the likelihood of
certain outcomes. (risk assessment)
• Uncertainty – the choice of the alternative is
influenced by the limited amount of information
available to the decision maker and their
psychological orientation. (optimist = maximax,
pessimist = maximin, minimize the maximum
regret = minimax)
Decision Making Styles
• Directive – low tolerance for ambiguity and are
rational.
• Analytic – greater tolerance for ambiguity.
• Conceptual – very broad in their outlook and
look at many alternatives. (even expand or
extrapolate).
• Behavioural – low tolerance for ambiguity and
an intuitive way of thinking. Avoid conflict.
Decision Making Styles
• Exercise:
– In your teams, identify a manager for each of
the decision making styles that you may have
worked for, know, or have observed.
– Describe the benefits and disadvantages of
each style by providing an example of what
they did.
Thank You