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Managerial Decision Making

This document discusses managerial decision making. It describes decision making as a process that must occur amid changing factors, unclear information, and conflicting views. Decisions are choices made from available alternatives, while decision making is the process of identifying problems, generating solutions, and resolving issues. The document outlines different types of decisions and factors that affect decision outcomes, providing steps in the managerial decision making process.

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santhosh prabhu
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32 views

Managerial Decision Making

This document discusses managerial decision making. It describes decision making as a process that must occur amid changing factors, unclear information, and conflicting views. Decisions are choices made from available alternatives, while decision making is the process of identifying problems, generating solutions, and resolving issues. The document outlines different types of decisions and factors that affect decision outcomes, providing steps in the managerial decision making process.

Uploaded by

santhosh prabhu
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Managerial Decision Making

Managerial Decision Making


• Decision making is not easy

• It must be done amid


– ever-changing factors
– unclear information
– conflicting points of view
Decisions and Decision Making

• Decision = choice made from available


alternatives

• Decision Making = process of identifying


problems and opportunities and resolving
them
Categories of Decisions

• Programmed Decisions
– Situations occurred often enough to enable
decision rules to be developed and applied in
the future
– Made in response to recurring organizational
problems
• Nonprogrammed Decisions – in response to
unique, poorly defined and largely unstructured, and have
important consequences to the organization
Decisions and Decision Making

• Many decisions that managers deal with


every day involve at least some degree of
uncertainty and require nonprogrammed
decision making
 May be difficult to make
 Made amid changing factors
 Information may be unclear
 May have to deal with conflicting points of view
Certainty, Risk, Uncertainty, Ambiguity

● Certainty
● all the information the decision maker needs is fully available

● Risk
● decision has clear-cut goals
● good information is available
● future outcomes associated with each alternative are subject to chance

● Uncertainty
● managers know which goals they wish to achieve
● information about alternatives and future events is incomplete
● managers may have to come up with creative approaches to alternatives

● Ambiguity
● by far the most difficult decision situation
● goals to be achieved or the problem to be solved is unclear
● alternatives are difficult to define
● information about outcomes is unavailable
Conditions that Affect the Possibility of
Decision Failure
Organizational
Problem

Low Possibility of Failure High


Certainty Risk Uncertainty Ambiguity

Programmed Nonprogrammed
Decisions Decisions

Problem
Solution
Six Steps in the Managerial
Decision-Making Process


Evaluation 
and Recognition of
Feedback Decision
Requirement

Implementation Decision- 
of Chosen Making
Alternative Diagnosis
Process
 and Analysis
 of Causes

Development of
Alternatives
Selection of
Desired 
Alternative


Diagnosis and Analysis of Causes
• Diagnosis = analyze underlying causal factors
associated with the decision situation

• Managers make a mistake if they jump into


generating alternatives without first exploring
the cause of the problem more deeply
• What is the state of disequilibrium affecting us?
• When did it occur?
• Where did it occur?
• How did it occur?
• To whom did it occur?
• What is the urgency of the problem?
• What is the interconnectedness of events?
• What result came from which activity?
Selection of Desired Alternatives
• Risk Propensity = willingness to undertake risk
with the opportunity of gaining an increased
payoff

• Implementation = using managerial,


administrative, and persuasive abilities to
translate the chosen alternative into action
Decision Styles

• Differences among people with respect to how


they perceive problems and make decisions
• Not all managers make decisions the same
– Directive style
– Analytical style
– Conceptual style
– Behavioral style
Directive Style
• People who prefer simple, clear-cut solutions
to problems
• Make decisions quickly
• May consider only one or two alternatives
• Efficient and rational
• Prefer rules or procedures
Analytical Style
• Complex solutions based on as much data as
they can gather
• Carefully consider alternatives
• Base decision on objective, rational data from
management control systems and other
sources
• Search for best possible decision based on
information available
Conceptual Style
• Consider a broad amount of information
• More socially oriented than analytical style
• Like to talk to others about the problem and possible
solutions
• Consider many broad alternatives
• Relay on information from people and systems
• Solve problems creatively
Behavioral Style

• Have a deep concern for others as individuals


• Like to talk to people one-on-one
• Understand their feelings about the problem and the
effect of a given decision upon them
• Concerned with the personal development of others
• May make decisions to help others achieve their goals

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