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SC MGMT 371 - Decision Making

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MGMT 371 1st Edition Lecture 8Outline of Last Lecture I. Video Clip notes on Strategic Managementa. Strategy definitionb. 3 Fundamental Q’sII. Strategic Management DefinitionIII. Strategy DefinitionIV. Strategic Management ProcessV. Example SWOT AnalysisOutline of Current Lecture I. Decision and decision making definitionsa. Programmed b. NonprogrammedII. Certainty and Uncertainty definitionsa. Riskb. AmbiguityIII. Decision Making Modelsa. Classicalb. Administrativec. PoliticalIV. Managerial Decision Making ProcessV. Personal Decision FrameworkVI. Why managers make bad decisionsVII. Innovative decision makingVIII. Creative decision making processCurrent LectureChapter 8 – Decision Making- Decision: choice made from available alternativeso Hasty or deliberateo Programmed Decision: response to situation that’s occurred often enough to enable decision rules to be developed o Nonprogrammed Decision: response to unique, poorly defined, largely unstructured situation that has important consequences for the organization- Decision Making: process of identifying problems and opportunities and resolving themThese 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.- Certainty: all the information you need is fully available- Risk: situation where decision has clear-cut goals and good information, but future outcomes associated with each alternative are subject to chanceo EX.  Insurance is overall based on historic precedent (certainty) and specific risks (uncertainty)- Uncertainty: situation that occurs when you know which goals you wish to achieve, but information about alternatives and future event is incompleteo Ambiguity: goal to be achieved or problem to be solved is unclear, alternatives are difficult to define and outcome information is unavailable- Decision Making Modelso Classical: based on assumptions that you should make logical decisions that will be in the organization’s best interest Clear-cut problems Conditions of certainty Full information about alternatives and outcomes Rational choice for maximizing outcomeso Administrative: describes how you actually made decisions in situations characterized by nonprogrammed decisions, uncertainty, and ambiguity Vague problems and goals Condition of certainty Limited information about alternatives and outcomes Satisfying choice for resolving problems using intuitiono Political: Useful when conditions are uncertain, information is limited, and there are internal conflicts about what goals to pursue or actions to take Pluralistic, conflicting goals Conditions of uncertainty and ambiguity Inconsistent viewpoints, ambiguous information Bargaining and discussion among members- Managerial Decision Making Process1. Recognition of decision requirement2. Diagnosis and analysis of causes3. Development of alternatives4. Selection of desired alternative5. Implementation of chosen alternative6. Evaluation and feedbacko Which is most important?  Recognition of decision requirement is very important because if you don’t make a decision you are inadvertently making a decisiono Which is most important to you?- Personal Decision Frameworko Situation  programmed or nonprogrammed? Classical, administrative, or political? Leads to decision stepso Personal decision style  Directive, Analytical, Conceptual, or Behavioralo Decision choice  best solution to the problem- Why do managers make bad decisions?o Influenced by initial impressionso Justify past decisionso Seeing what you want to seeo Perpetuating the status quoo Being influenced by problem framingo Overconfidence- Innovative Decision Makingo Brainstorming  involving asking a group a for possible solutions to a problemo Rigorous Debate  debating conflicting opinions, ideas, or solutionso Avoid Groupthinkgroupthink is influence from others’ opinionso Know when to bail- Creative Process1. Opportunity or problem recognition2. Immersion into the problem at hand3. Incubation  thinking over the problem4. Insight  coming up with a creative solution5. Application of solution and verification of the solution’s


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