Rational approaches to decision making.

Optimizing Approach

Satisficing Approach

Optimizing Approach

Selecting the best possible alternative.

1. Recognize the need for a decision.2. Establish, rank, and weigh the decision

criteria. 3. Gather available information and data.

4. Identify possible alternatives.5. Evaluate each alternative with respect

to all criteria.6. Select the best alternative.

Limitations of the Optimizing Approve.

1. The relative weights people assign to the criteria are stable.

2. People have knowledge of all relevant alternative.

3. People have the ability to evaluate each alternative and arrive at an overall rating for each.

4. People have the self-discipline to choose the alternative that rates the highest.

Satisficing Approach

Selecting the first alternative that meets the decision maker’s minimum

standard of satisfaction.

1. A person’s knowledge of alternatives and criteria is limited.2. People act on the basis of a simplified ,

mental abstraction of the real world; this is influenced by personal perceptions, biases and so forth.

3. People will take the first alternative that satisfies their current level of aspiration.

4. An individual’s level of aspiration fluctuates upward and downward

Skill building Question

Identify a significant decision recently made by management of a major company

In the decision you identify , did the manager or managers satisfice or

optimize ?

Family Firms Sometimes Have to Fire Family members.

Causes

• Underperforming family members cause business morale to be artificially crimped.

• Employees see family members getting away with poor performance, and they think they can as well.

>> Satisficing decision for the employees

• Customers wonder about the family’s commitment to quality and high standards.

• The family itself experiences turmoil.

Is firing your family members optimize or satisficing decision ?

For optimize decision

• The father saw his son performed bad at the company but other workers performed better so he decide to fire his son.

For satisficing decision

• The father fire the worker out just because he wanted to run his business with family members.

Sometimes, the only way to repair broken family relations is to prune the family business tree and terminate the business association which helped cause the family binds to fray in the first place.

Source

• http://www.decision-making-confidence.com/satisfice.html

• http://blogs.wsj.com/experts/2014/08/26/why-family-firms-sometimes-have-to-fire-family/?KEYWORDS=Company+make+a+decision

Presented by

• 1. Kamonwan Ketdam 5710545058

• 2. Natchanon Goyedul 5710545112

• 3. Jakarin Klaynak 5710546674