Chapter Nine

1
Chapter Nine Making Decisions
2
Introduction

• Basic issue pick the right decision from a set
  of alternatives
• Decisionmaking process
• Define decision problem
• Create alternatives
• Choose an alternative using decision criteria

3
Problem solving versus decision making

• Problem solving finding root cause of deviation
  (cause analysis)
• Decision making choosing from alternative
  courses of action (choice analysis)

Problemsolving
Decisionmaking
4
Problem Solving Process
Identify problem
Find root causes
Develop alternatives
Decisionmaking process
5
Individual vs. Group

• Individual decision making
• Use for wellstructured problems with several
  tightly coupled parts
• Group decision making
• Use for illdefined problems with loosely coupled
  parts
• Decision maker person at any organizational
  level who chooses a course of action

6
The Rational Model of Decision Making

• Consists of a structured four-step sequence
  identifying the problem generating
  alternative solutions selecting a solution
  implementing and evaluating the solution

7
Simons Normative Model of Decision Making

• Based on premise that decision making is not
  rational
• Decision making is characterized by limited
  information processing use of judgmental
  heuristics sacrificing

8
Political Model

• People and groups pursuing selfinterests
• Powerbased and conflictbased process
• Bargaining and compromise conflict management
• View power as a central feature of decision
  process
• Especially true of resource allocation decisions

9
Judgmental Heuristics

• Availability Heuristic A decision makers
  tendency to base decisions on information that is
  readily available in memory.
• Representativeness Heuristic The tendency to
  assess the likelihood of an event occurring based
  on ones impressions about similar occurrences.
• Satisficing Choosing a solution that meets a
  minimum standard of acceptance

10
A Contingency Model for Selecting a Solution
Strategies toselect a solution Aided
analytic Unaided-analytic Nonanalytic
11
Decision Making Styles
High
Analytical
Conceptual
Directive
Behavioral
Tolerance for Ambiguity
Low
Tasks and TechnicalConcerns
People and SocialConcerns
Value Orientation
12
Stages Underlying the Creative Process

• Preparation
• Concentration
• Incubation
• Illumination
• Verification

13
Advantages and Disadvantages of Group-Aided
Decision Making
Advantages
Disadvantages

• 1. Greater pool of knowledge 1. Social pressure
• 2. Different perspectives 2. Minority
  domination
• 3. Greater comprehension 3. Logrolling
• 4. Increased acceptance 4. Goal displacement
• 5. Training ground 5. Groupthink

14
Group Problem Solving Techniques

• Consensus
• Brainstorming
• Nominal Group Technique
• Delphi Technique
• Devils Advocate
• Dialectical Inquiry
• Computer Based

15
International Implications

• Differences in decision orientations
• U.S. decision makers attack and solve problems
• Non-U.S.
• Malaysian, Thai, Indonesian decision makers
  adjust to problem accept situation
• Proceeds slowly in Egyptian organizations
• Decision makers in Singapore and Denmark take
  bigger risks than decision makers in Portugal and
  Greece
• Decision makers in Japan and China usually
  consider all alternatives before choosing