Management 301 Exam 2 Textbook Outline Chapter 4 Managers as Decision Makers I 4 1 How Do Managers Use Information to Solve Problems a Managers use technological informational and analytical competencies to solve problems i Problem solving the process of identifying a discrepancy between an actual and a desired state of affairs and then taking action to resolve it ii Knowledge workers persons whose value to organizations rests with their intellect not physical capabilities iii Planning organizing leading controlling 1 Technological competency the ability to understand new technologies and to use them to their best advantage a Moving skills we already use everyday into work related applications 2 Information competency the ability to gather and use information to solve problems a Locating credible and valuable information not just something off of the internet 3 Analytical competency the ability to evaluate and analyze information to make actual decisions and solve real problems a Being able to digest and sort through information and then using it to make decisions that solve real problems b Managers deal with problems posing threats and offering opportunities i Performance threat a situation where something is wrong or likely to be wrong 1 Ex Hurricane Katrina lots of warnings about the storm but many underestimated it ii Performance opportunity a situation that offers the possibility of a better future if the right steps are taken 1 Ex taking notice of one store doing better than another and using their techniques to better other stores c Managers can be problem avoiders problem solvers and problem seekers i Problem avoiders ignore information that would otherwise signal the presence of a performance threat or opportunity not active in gathering information and prefer not to make decisions deal with problems ii Problem solvers make decisions and try to solve problems but only when required reactive gather information and respond to problems when they occur miss many performance opportunities iii Problem seekers always looking for problems to solve or opportunities to explore proactive as information gathers forward thinking anticipate threats and opportunities eager to take action to gain the advantage in dealing with them d Managers make programmed and nonprogrammed decisions when solving problems i Decision a choice among possible alternative courses of action ii Programmed decision applies a solution from past experience to a routine problem routine repetitive 1 Best for structured problems that are familiar straightforward clear iii Nonprogrammed decision applies a specific solution that has been crafted to address a unique problem 1 New and unusual situations 2 Ex financial crisis e Managers can use both systematic and intuitive thinking i Systematic thinking approaches problems in a rational and analytical fashion ii 1 Break up into smaller parts make a plan to solve Intuitive thinking approaches problems in a flexible and spontaneous fashion 1 Dealing with many of the aspects of the problem at once f Managers use different cognitive styles to process information for decision making i Fight 1549 1 Landing in the Hudson after both engines failed due to 2 Pilot needed to make a decision on how to handle the hitting flock of birds situation ii Cognitive styles the way an individual deals with information while making decisions 1 Sensation thinkers facts goals thinking sensing 2 Intuitive thinkers idealistic theoretical avoid details but are logical and impersonal thinking intuition Intuitive feelers thoughtful flexible feeling intuition 3 4 Sensation feelers facts feelings feeling sensing iii More diverse cognitive style more difficulty as they try to make g Managers make decisions under conditions of certainty risk decisions uncertainty i Certain environment offers complete information on possible action alternatives and their consequences Ideal decision situation 1 2 All decision maker needs to do is study the alternatives and choose the best solution 3 Ex fixed rate loan you know the rate you are getting and can make a certain decision ii Risk environment lacks complete information but offers probabilities of the likely outcomes for possible action alternatives 1 Consequences of decisions are based solely on probabilities 2 Handle by gathering as much information as possible 3 Ex variable rate loan interest rates will vary in the iii Uncertain environment lacks so much information that it is difficult to assign probabilities to the likely outcomes of alternatives 1 Most difficult decision condition more common than future expected 2 Decisions depend greatly on intuition judgment etc 3 Ex Japanese building a nuclear power plant at Fukushima on the seacoast and in an earthquake zone II 4 2 What Are Five Steps in the Decision Making Process a Step 1 is to identify and define the problem Information gathering processing and deliberation i ii Goals are clarified to specify exactly what a decision should accomplish iii Most common mistakes 1 Define the problem too broadly narrowly 2 Dealing with symptoms not real causes 3 Focusing on the wrong problem to begin with b Step 2 is to generate and evaluate alternative courses of action i Key stakeholders in the problem should be identified the effects of each possible course of action on them should be considered ii Cost benefit analysis involves comparing the costs and benefits of each potential course of action c Step 3 is to decide on a preferred course of action i Classical decision model 1 Describes decision making with complete information 2 Manager acting rationally and in a fully informed manner 3 Problem is clearly defined all possible action alternatives are known consequences are clear 4 Optimizing decision is made chooses the alternative providing the absolute best solution to a problem 5 Most of the time too good to be true ii Behavioral decision model 1 Describes decision making with limited information and 2 Likely to choose the first alternative that appears bounded rationality satisfactory 3 Satisficing decisions chooses the first satisfactory alternative that presents itself iii Step 4 is to implement the decision 1 Lack of support sabotages the implementation of many perfectly good decisions 2 Lack of participation error failure to include the right people in the decision making process 3 Using participation wisely from the start is key iv Step 5 is to evaluate results 1 A form of control gathering data so its
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