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NDSU MGMT 320 - Decision Making Part 2

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MGMT 320 1st Edition Lecture 10Outline of Last Lecture I. Current issuesa. Subordinate empowermentb. Self-managed teamsc. Qualityd. Customer focuse. Human capitalII. Decision makinga. Classical modelb. Administrative modelOutline of Current Lecture I. Decision makinga. Stepsb. Behavior decision trapsc. Victor VroomCurrent LectureMGMT 3201. Decision making (continued from 2-4)a. Programmed decisionsi. Simpleii. Routineiii. Reoccurringiv. Well established & understoodb. Non-programmed decisionsi. Complexii. Important – cost of mistakesiii. Non-routineThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.c. Contingency theory: the appropriate managerial action will dependon the situationi. Factors contributing to decision complexity1. Multiple criteria (different interest groups)2. Intangibles (goodwill, morale, etc.)3. Uncertainty4. Long-term implications5. Cross-functional area input6. Value judgmentii. Steps in the decision making process1. Recognition that a decision needs to be made2. Distinguish problems from symptoms3. Establish decision criteriaa. Determines the basis for evaluating a possible solutionb. Do this before developing alternative solutions4. Develop alternative solutions5. Analyze the solutions6. Decision & implementation7. Feedback & evaluationIndividualprogrammed & non-programmed go through the decision making processfactors contributing to complexity are dealt with through desicion making process aloneGroup+broader perspective+more alternatives can be evaluated+reduces uncertainty+leads to commitment+consensus among group-time-compromise may satisfy no one-wasted resources on programmed decisions-groupthink: the practice of thinking or making decisions as a group in a way that discourages creativity or individual responsibility --> everyone goes with what each other wants-group polarization: groups tend to make more extreme decisions than individuals-no focus of responsibility (mob mentality, may not accept manager's authority in the future)-ignoring unshared informationd. Individual vs. group decisionse. Behavioral decision trapsi. Framing error: information is perceived how it is presented1. Negatively presented information is interpreted as negative information2. Positively presented information is interpreted as positive informationii. Escalation of commitment: being locked into a decision because quitting is socially (peer pressure) or personally difficultiii. Overconfidence: the greater the degree of task difficulty, the more likely overconfidence may be a problemiv. Representative Heuristics: using simple rules to explain complex issuesv. Availability Heuristics: giving too much meaning to information because it is easy to rememberf. Victor Vroomg. What determines if subordinate participation in decision making isnecessary?i. Quality of the decision requirementii. Manager’s knowledge of the situationiii. Is the subordinate commitment needed to make the solution work?h. Levels of subordinate involvementi. None: The manager may make the decision on his/her ownii. Minimal: The manager asks questions of the subordinates but does not share the decision requirement with themiii. The manager asks questions of the individual subordinates & shares decision requirement with themiv. Manager brings the subordinates together, shares the decision requirement, asks for input & makes the decision with the subordinatesv. Complete: The manager turns the decision over to the


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