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Chapter 14Decision Making –

A Book ReviewJohn M. Ivancevich

Michael T. MattesonSlides Prepared by Bruce R. Barringer

University of Central Florida

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Learning ObjectivesSlide 1 of 2

• Contrast programmed with nonprogrammed decisions.

• Identify the steps in the decision-making process.

• Discuss priority setting.

• Describe the conditions governing alternative-outcome relationships.

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Learning ObjectivesSlide 2 of 2

• Explain the role of behavioral influences on decision making.

• Compare individual and group decision making.

• Identify specific techniques for stimulating creativity.

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Types of Decisions

Programmed Decisions

Nonprogrammed Decisions

Situation in which specific procedures have

been developed for repetitive and routine

problems.

Decisions required for unique and complex

management problems.

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Programmed DecisionsSlide 1 of 2

• Type of Problem– Frequent, repetitive, routine, much certainty

regarding cause-and-effect relationships.

• Procedure– Depending on policies, rules, and definite

procedures.

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Programmed DecisionsSlide 2 of 2

• Examples– Business firm

• Periodic reorders of inventory.

– University• Necessary grade-point average for good academic

standing.

– Health care• Procedures for admitting patients.

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Nonprogrammed DecisionsSlide 1 of 2

• Type of Problem– Novel, unstructured, much uncertainty

regarding cause-and-effect relationships

• Procedure– Necessity for creativity, intuition, tolerance for

ambiguity, creative problem solving.

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Nonprogrammed DecisionsSlide 2 of 2

• Examples– Business firm

• Diversification into new products and markets.

– University• Construction of new classroom facilities.

– Health care• Purchase of experimental equipment.

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The Decision-Making Process

• Attributes of Decisions– Decisions should be thought of as a means

rather than ends.– Decisions are the organizational mechanism

through which an attempt is made to achieve a desired state.

– Decisions are, in effect, an organizational response to a problem.

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Exhibit 14.2: The Decision-Making Process

Consideration of causes

Consideration of causes

Development ofalternativesolutions

Development ofalternativesolutions

Evaluation ofalternativesolutions

Evaluation ofalternativesolutions

Solution selectionSolution selection ImplementationImplementation Follow-upFollow-up

Establishingspecific goals &objectives and

measuring results

Establishingspecific goals &objectives and

measuring results

Problem identification and

definition

Problem identification and

definition

Establishingpriorities

Establishingpriorities

Revise

Revise

Revise Revise

Revise

Revise

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Behavioral Influence on Decision MakingSlide 1 of 2

• Values– In the context of decision making, values can

be thought of as the guidelines a person uses when confronted with a situation in which a choice must be made.

• Propensity for Risk– An individuals propensity for taking risks

influences the decision making process.

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Behavioral Influence on Decision MakingSlide 2 of 2

• Potential for Dissonance– Decision makers often experience cognitive

dissonance, which is a lack of harmony among the decision maker’s various cognitions after a decision has been made.

• Escalation of Commitment– Refers to an increasing commitment to a

previous decision when a “rational” decision maker would withdraw.

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Exhibit 14.3: Probable Relationship Between Quality of Group Decision and

Method UtilizedProbable quality of decision

More

Less

Individual Average individual

Minority control

Majority control

Consensus

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BrainstormingSlide 1 of 2

• Brainstorming Defined– The generation of ideas in a group through

noncritical discussion.

• Potential Results– Brainstorming often has been found to enhance

the creative output of groups.

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BrainstormingSlide 2 of 2

Basic Rules of Brainstorming

1.

3.

2.

No idea is too ridiculous. Group members are encouraged to state any extreme or outlandish idea.

Each idea presented belongs to the group, not to the person stating it. In this way, it is hoped that group members will utilize and build on the ideas of others.

No idea can be criticized. The purpose of the session is to generate, not evaluate, ideas.

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The Delphi TechniqueSlide 1 of 2

• Delphi Technique Defined– A technique used to improve group decision

making that involves the solicitation and comparison of anonymous judgments on the topic of interest though a set of sequential questionnaires interspersed with summarized information and feedback of opinions from earlier responses.

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The Delphi TechniqueSlide 2 of 2

• Advantages of the Delphi Process– The Delphi process retains the advantage of

having several judges while removing the biasing effects that might occur in face-to-face interaction.

– The basic approach has been to collect anonymous judgments by mail questionnaires.

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The Nominal Group Technique

• Nominal Group Techniques Defined– A technique to improve group decision making

that brings people together in a very structured meeting that does not allow of much verbal communication. The group decision is a mathematically pooled outcome of individual votes

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Differences Between the Delphi Technique and the Nominal Group Technique (NGT)

Basic Differences Between the Two Techniques

1.

3.

2.

Delphi participants typically are anonymous to one another, while NGT participants become acquainted.

NGT participants meet fact-to-face around the table, while Delphi participants are physically distant and never meet face-to-face.

In the Delphi process, all communication between participants is by way of written questionnaires and feedback from the monitoring staff. In NGT, communication is direct between participants