• Decision making in response to opportunities occurs when managers
search for ways to improve organizational performance to benefit customers,
Decision Making: The process by which managers respond to employees, and other stakeholder groups.
opportunities and threats by analyzing options and making
determinations about specific organizational goals and courses of
actions. • Decision making in response to threats occurs when events inside or
outside the organization adversely affect organizational performance, and
managers search for ways to increase performance.
▪ Programmed decisions = decisions that have been made so many times in the past
that managers have developed rules or guidelines to be applied when certain situations
inevitably occur.
▪ Is a routine, virtually automatic process.
1) Programmed Decision Making ▪ This decision making is called programmed because office managers, for example,
don’t need to repeatedly make new judgements of what should be done. They can rely
on long-established decision rules:
1. When the storage shelves are three-quarters empty, order more copy paper.
2. When ordering paper, order enough to fill the shelves.
.Programmed and Non-programmed Decision Making
1. They may rely on their intuition:
Feelings, beliefs, and hunches that come readily
to mind, require less/ little effort and
information gathering and may result in on-the-
▪ Nonprogrammed decisions are made in response to unusual opportunities and threats. spot decisions.
▪ Required for non-routine decisions (no policy in place). rules dont exist because the How do managers make decisions in the
2) Non-programmed Decision Making:
situation is unexpected/ uncertain + managers lack the info they would need to dev rules absence of decision rules?
to cover it 2. Or they may make use of reasoned
judgments:
Decisions that require time and effort and
result from careful information gathering and
the generation and evaluation of alternatives.
the nature of managerial decision
making ✓ A prescriptive approach to decision-making that specifies how decisions should be
made.
✓ Based on the assumption that the decision maker can identify and evaluate the
alternatives and consequences rationally.
✓ Result: Optimum decision, which is the most appropriate decision possible in light of
what they believe to be the most desirable consequences for the organization.
1)The Classical Model
.Decision Making Theories/ models: ✓ An approach that explains why decision making is inherently uncertain and risky and
why managers usually makes satisfactory rather than optimum decisions.
1. Bounded rationality - Cognitive limitations
that constraints one’s ability to interpret,
process and act on information. situation in
which no. of aalt ways so vast its difficult to
evaluate and come to a conclusion
2. Incomplete information-Information is
incomplete because the full range of decision- risk = the degree of probability that the
Based on three important concepts: making alternatives is unknowable and the possible outcomes of a particular course of
consequences are uncertain. incomplete due to action will occur
risk, uncertainty, ambiguity, time constraint
3. satisficing - searching for+ choosing an
2)The Administrative Model: acceptable/ satisfactory response to
problems+ opp rather than trying to make the
best decision
~Risk is present when managers know the
possible outcomes of a particular course of
Uncertainty and Risk: action and can assign probabilities for them.
~When uncertainty exist the possibilities of
alternative outcomes cannot be determined
and future outcomes are unknown.
~Information that can be interpreted in multiple
Ambiguous information
and often conflicting ways.
~Managers have neither the time nor the money
to search for all possible alternative solutions
Time constraints and information costs:
and evaluate all the potential consequences of
alternatives.
1. Legality - Managers must ensure that a possible course of action will not violate any
domestic or international laws or government regulations.
2. Ethicalness - Managers must ensure that a possible course of action is ethical and
will not unnecessarily harm any stakeholder group.
General Criteria for evaluating Possible Courses of Action:
3. Economic feasibility - Managers must decide whether the alternatives can be
accomplished given the organization’s goals.
steps in the decision making 4. Practicality - Managers must decide whether they have the capabilities and
process resources required to implement the alternative, and they must be sure the alternative
will not threaten the attainment of other organizational goals.
formal procedure with which they can learn from the results of past decisions
Heuristics - Are rules of thumb that simplify the process of making decisions.
- Rules of thumb are often useful because they help decision
• Decision makers are subject to bounded rationality, they tend to use makers make sense of complex, uncertain, and ambiguous information
heuristics. • Can lead to systematic errors in the way decision
makers process information. Systematic errors - Errors that people make over and over and that result in
poor decision making.
1. Prior Hypothesis Bias:
cognitive biases in decision making ▪ Decisions based on those beliefs even when presented with evidence that their beliefs
are wrong.
2. Representativeness Bias:
▪ Tendency to inappropriately generalize from a small sample or even from a single vivid
Four sources of bias that can adversely affect the way managers make case or episode.
Decision making and decisions:
3. Illusion of Control Bias:
creativity ▪ Tendency of decision makers to overestimate their ability to control activities and
events.
4. Escalating commitment Bias:
▪ Tendency commit more resources to the project even if the project is failing.
1.1) Choices of alternatives are less likely to fall victim to the biases and errors
discussed previously.
1.2) Draw on the combined skills, competencies and knowledge of group
members.
1.Advantages of Group Decision Making: 1.3) Process more information and correct one another’s errors.
1.4) And in the implementation phase, all managers affected by the decisions
agree to cooperate.
1.5) When a group of managers makes a decision the probability that the
decision will be implemented successfully increases.
group decision making
2.1) Groupthink - A pattern of faulty and biased decision making that occurs in
groups whose members strive for agreement among themselves at the
expense of accurately assessing information relevant to the decision.
2.2) Devil’s Advocacy - Critical analysis of a preferred alternative, made in
2.Disadvantages of Group Decision Making response to challenges raised by a group member who is playing the role of
devil’s advocate. devils advocate crtiques+ challenges the way the grp
evaluated + chose one over the other
2.3) Dialectical Inquiry - Critical analysis of two preferred alternatives in
order to find an even better alternative for the organization to adopt-time
consuming.
✓ Organizational Learning: The process through which managers seek
to improve employees’ desires and ability to understand and managed
the organization and its task environment.
✓ Learning organization: An organization in which managers try to
maximize the ability of individuals and groups to think and behave
creatively and thus maximize the potential for learning to take place.
✓ Creativity: A decision maker’s ability to discover original and novel
ideas that lead to feasible alternatives courses of action.
1. For organizational learning to occur top managers must allow every person in
the organization to develop a sense of personal mastery. Managers must
empower employees and allow them to experiment, create and explore what
organisational learning + creativity they want.
2. As part of attaining personal mastery, organizations need to encourage
employees to develop and use complex mental models- sophisticated ways of
thinking that challenge them to find new or better ways of performing a task-
to deepen their understanding of what is involved in a particular activity.
• Group solving technique in which managers
meet face-to-face to generate and debate a
wide variety of alternatives of which to make a
1. Brainstorming: decision.
• 5-15 managers meet.
• A decision-making technique in which group
3. Managers must do everything they can to promote group creativity. Team
members write down ideas and solutions, read
learning is more important than individual learning in increasing organizational Promoting group Creativity 2. Nominal Group technique:
their solutions to the whole group and discuss
learning.
and then rank the alternatives
• A decision-making technique in which group
3. Delphi Technique members do not meet face-to-face but
respond in writing questions posted by the
group leader.
4. Managers must emphasize the importance of building a shared vision- a
common mental model that all organizational members use to frame problems
or opportunities.
5. Managers must encourage system thinking.
▪ Entrepreneur: An individual who notices opportunities and decides
how to mobilize the resources necessary to produce new and improves
goods and services.
▪ Social entrepreneur: An individual who pursues initiatives and
opportunities and mobilizes resources to address social problems and
needs in order to improve society and well-being through creative
entrepreneurship + creativity solutions.
1-Product Champion: A manager who takes “ownership” of a project and provides the
leadership and vision that take a product from the idea stage to the final customer.
▪ Intrapreneur: A manager, scientist, or researcher who works inside an 2- Skunkworks: A group of intrapreneurs who are deliberately separated from the
organization and notices opportunities to develop new or improved Intrapreneurship and Organizational Learning normal operation of an organization to encourage them devote all their attention to
products and better ways to make them. developing new products.
3-Rewards for innovation: To encourage managers to bear the uncertainty and risk
associated with the hard work of entrepreneurship; it’s necessary to link performance to
rewards.
search for ways to improve organizational performance to benefit customers,
Decision Making: The process by which managers respond to employees, and other stakeholder groups.
opportunities and threats by analyzing options and making
determinations about specific organizational goals and courses of
actions. • Decision making in response to threats occurs when events inside or
outside the organization adversely affect organizational performance, and
managers search for ways to increase performance.
▪ Programmed decisions = decisions that have been made so many times in the past
that managers have developed rules or guidelines to be applied when certain situations
inevitably occur.
▪ Is a routine, virtually automatic process.
1) Programmed Decision Making ▪ This decision making is called programmed because office managers, for example,
don’t need to repeatedly make new judgements of what should be done. They can rely
on long-established decision rules:
1. When the storage shelves are three-quarters empty, order more copy paper.
2. When ordering paper, order enough to fill the shelves.
.Programmed and Non-programmed Decision Making
1. They may rely on their intuition:
Feelings, beliefs, and hunches that come readily
to mind, require less/ little effort and
information gathering and may result in on-the-
▪ Nonprogrammed decisions are made in response to unusual opportunities and threats. spot decisions.
▪ Required for non-routine decisions (no policy in place). rules dont exist because the How do managers make decisions in the
2) Non-programmed Decision Making:
situation is unexpected/ uncertain + managers lack the info they would need to dev rules absence of decision rules?
to cover it 2. Or they may make use of reasoned
judgments:
Decisions that require time and effort and
result from careful information gathering and
the generation and evaluation of alternatives.
the nature of managerial decision
making ✓ A prescriptive approach to decision-making that specifies how decisions should be
made.
✓ Based on the assumption that the decision maker can identify and evaluate the
alternatives and consequences rationally.
✓ Result: Optimum decision, which is the most appropriate decision possible in light of
what they believe to be the most desirable consequences for the organization.
1)The Classical Model
.Decision Making Theories/ models: ✓ An approach that explains why decision making is inherently uncertain and risky and
why managers usually makes satisfactory rather than optimum decisions.
1. Bounded rationality - Cognitive limitations
that constraints one’s ability to interpret,
process and act on information. situation in
which no. of aalt ways so vast its difficult to
evaluate and come to a conclusion
2. Incomplete information-Information is
incomplete because the full range of decision- risk = the degree of probability that the
Based on three important concepts: making alternatives is unknowable and the possible outcomes of a particular course of
consequences are uncertain. incomplete due to action will occur
risk, uncertainty, ambiguity, time constraint
3. satisficing - searching for+ choosing an
2)The Administrative Model: acceptable/ satisfactory response to
problems+ opp rather than trying to make the
best decision
~Risk is present when managers know the
possible outcomes of a particular course of
Uncertainty and Risk: action and can assign probabilities for them.
~When uncertainty exist the possibilities of
alternative outcomes cannot be determined
and future outcomes are unknown.
~Information that can be interpreted in multiple
Ambiguous information
and often conflicting ways.
~Managers have neither the time nor the money
to search for all possible alternative solutions
Time constraints and information costs:
and evaluate all the potential consequences of
alternatives.
1. Legality - Managers must ensure that a possible course of action will not violate any
domestic or international laws or government regulations.
2. Ethicalness - Managers must ensure that a possible course of action is ethical and
will not unnecessarily harm any stakeholder group.
General Criteria for evaluating Possible Courses of Action:
3. Economic feasibility - Managers must decide whether the alternatives can be
accomplished given the organization’s goals.
steps in the decision making 4. Practicality - Managers must decide whether they have the capabilities and
process resources required to implement the alternative, and they must be sure the alternative
will not threaten the attainment of other organizational goals.
formal procedure with which they can learn from the results of past decisions
Heuristics - Are rules of thumb that simplify the process of making decisions.
- Rules of thumb are often useful because they help decision
• Decision makers are subject to bounded rationality, they tend to use makers make sense of complex, uncertain, and ambiguous information
heuristics. • Can lead to systematic errors in the way decision
makers process information. Systematic errors - Errors that people make over and over and that result in
poor decision making.
1. Prior Hypothesis Bias:
cognitive biases in decision making ▪ Decisions based on those beliefs even when presented with evidence that their beliefs
are wrong.
2. Representativeness Bias:
▪ Tendency to inappropriately generalize from a small sample or even from a single vivid
Four sources of bias that can adversely affect the way managers make case or episode.
Decision making and decisions:
3. Illusion of Control Bias:
creativity ▪ Tendency of decision makers to overestimate their ability to control activities and
events.
4. Escalating commitment Bias:
▪ Tendency commit more resources to the project even if the project is failing.
1.1) Choices of alternatives are less likely to fall victim to the biases and errors
discussed previously.
1.2) Draw on the combined skills, competencies and knowledge of group
members.
1.Advantages of Group Decision Making: 1.3) Process more information and correct one another’s errors.
1.4) And in the implementation phase, all managers affected by the decisions
agree to cooperate.
1.5) When a group of managers makes a decision the probability that the
decision will be implemented successfully increases.
group decision making
2.1) Groupthink - A pattern of faulty and biased decision making that occurs in
groups whose members strive for agreement among themselves at the
expense of accurately assessing information relevant to the decision.
2.2) Devil’s Advocacy - Critical analysis of a preferred alternative, made in
2.Disadvantages of Group Decision Making response to challenges raised by a group member who is playing the role of
devil’s advocate. devils advocate crtiques+ challenges the way the grp
evaluated + chose one over the other
2.3) Dialectical Inquiry - Critical analysis of two preferred alternatives in
order to find an even better alternative for the organization to adopt-time
consuming.
✓ Organizational Learning: The process through which managers seek
to improve employees’ desires and ability to understand and managed
the organization and its task environment.
✓ Learning organization: An organization in which managers try to
maximize the ability of individuals and groups to think and behave
creatively and thus maximize the potential for learning to take place.
✓ Creativity: A decision maker’s ability to discover original and novel
ideas that lead to feasible alternatives courses of action.
1. For organizational learning to occur top managers must allow every person in
the organization to develop a sense of personal mastery. Managers must
empower employees and allow them to experiment, create and explore what
organisational learning + creativity they want.
2. As part of attaining personal mastery, organizations need to encourage
employees to develop and use complex mental models- sophisticated ways of
thinking that challenge them to find new or better ways of performing a task-
to deepen their understanding of what is involved in a particular activity.
• Group solving technique in which managers
meet face-to-face to generate and debate a
wide variety of alternatives of which to make a
1. Brainstorming: decision.
• 5-15 managers meet.
• A decision-making technique in which group
3. Managers must do everything they can to promote group creativity. Team
members write down ideas and solutions, read
learning is more important than individual learning in increasing organizational Promoting group Creativity 2. Nominal Group technique:
their solutions to the whole group and discuss
learning.
and then rank the alternatives
• A decision-making technique in which group
3. Delphi Technique members do not meet face-to-face but
respond in writing questions posted by the
group leader.
4. Managers must emphasize the importance of building a shared vision- a
common mental model that all organizational members use to frame problems
or opportunities.
5. Managers must encourage system thinking.
▪ Entrepreneur: An individual who notices opportunities and decides
how to mobilize the resources necessary to produce new and improves
goods and services.
▪ Social entrepreneur: An individual who pursues initiatives and
opportunities and mobilizes resources to address social problems and
needs in order to improve society and well-being through creative
entrepreneurship + creativity solutions.
1-Product Champion: A manager who takes “ownership” of a project and provides the
leadership and vision that take a product from the idea stage to the final customer.
▪ Intrapreneur: A manager, scientist, or researcher who works inside an 2- Skunkworks: A group of intrapreneurs who are deliberately separated from the
organization and notices opportunities to develop new or improved Intrapreneurship and Organizational Learning normal operation of an organization to encourage them devote all their attention to
products and better ways to make them. developing new products.
3-Rewards for innovation: To encourage managers to bear the uncertainty and risk
associated with the hard work of entrepreneurship; it’s necessary to link performance to
rewards.
