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No reproduction or distribution without the prior written consent
of McGraw-Hill Education. Decision Making, Learning, Creativity,
and Entrepreneurship Chapter Five
2. 5-2 Farmers
3. 5-3 The Nature of Managerial Decision Making Decision Making
The process by which managers respond to opportunities and threats
by analyzing options, and making determinations about specific
organizational goals and courses of action
4. 5-4 Decision Making Programmed Decision Routine, virtually
automatic decision making that follows established rules or
guidelines. Managers have made the same decision many times before
There are rules or guidelines to follow based on experience with
past decisions Little ambiguity involved
5. 5-5 Decision Making Non-Programmed Decisions Nonroutine
decision making that occurs in response to unusual, unpredictable
opportunities and threats.
6. 5-6 Question? What are feelings, beliefs, and hunches that
come readily to mind and require little effort? A. Reasoned
Judgment B. Intuition C. Wild Guess D. Scientific Deduction
7. 5-7 Decision Making Intuition feelings, beliefs, and hunches
that come readily to mind, require little effort and information
gathering and result in on-the-spot decisions Reasoned judgment
decisions that take time and effort to make and result from careful
information gathering, generation of alternatives, and evaluation
of alternatives
8. 5-8 The Classical Model Classical Model of Decision Making A
prescriptive model of decision making that assumes the decision
maker can identify and evaluate all possible alternatives and their
consequences and rationally choose the most appropriate course of
action
9. 5-9 The Classical Model of Decision Making Figure 5.1
10. 5-10 The Administrative Model Administrative Model of
Decision Making An approach to decision making that explains why
decision making is inherently uncertain and risky and why managers
usually make satisfactory rather than optimum decisions Bounded
rationality, incomplete information
11. 5-11 Why Information Is Incomplete Figure 5.2
12. 5-12 Causes of Incomplete Information Risk The degree of
probability that the possible outcomes of a particular course of
action will occur Uncertainty the probabilities of alternative
outcomes cannot be determined and future outcomes are unknown
13. 5-13 Causes of Incomplete Information Ambiguous Information
Information that can be interpreted in multiple and often
conflicting ways. Figure 5.3 Young Woman or Old Woman
14. 5-14 Causes of Incomplete Information Time constraints and
information costs managers have neither the time nor money to
search for all possible alternatives and evaluate potential
consequences
15. 5-15 Causes of Incomplete Information Satisficing Searching
for and choosing an acceptable, or satisfactory response to
problems and opportunities, rather than trying to make the best
decision Managers search for and choose acceptable, or
satisfactory, ways to respond to problems and opportunities rather
than trying to make the optimal decision
16. 5-16 Six Steps in Decision Making Figure 5.4
17. 5-17 Discussion Question Which is the most important step
in the decision making process? A. Recognize the need for a
decision B. Generate Alternatives C. Assess Alternatives D. Choose
among Alternatives E. Implement the Chosen Alternative F. Learn
from Feedback
18. 5-18 Decision Making Steps Step 1. Recognize Need for a
Decision Sparked by an event such as environment changes. Managers
must first realize that a decision must be made.
19. 5-19 Decision Making Steps Step 2. Generate Alternatives
Managers must develop feasible alternative courses of action If
good alternatives are missed, the resulting decision is poor It is
hard to develop creative alternatives, so managers need to look for
new ideas
20. 5-20 Decision Making Steps Step 3. Assess Alternatives What
are the advantages and disadvantages of each alternative? Managers
should specify criteria, then evaluate.
21. 5-21 Figure 5.5 General Criteria for Evaluating Possible
Courses of Action
22. 5-22 Decision Making Steps Step 4. Choose Among
Alternatives Rank the various alternatives and make a decision
Tendency is for managers to ignore critical information, even when
available
23. 5-23 Decision Making Steps Step 5. Implement Chosen
Alternative Managers must now carry out the alternative Often a
decision is made and not implemented
24. 5-24 Decision Making Steps Step 6. Learn From Feedback
Compare what happened to what was expected to happen Explore why
any expectations for the decision were not met Derive guidelines
that will help in future decision making
25. 5-25 Group Decision Making Superior to individual making
Choices less likely to fall victim to bias Able to draw on combined
skills of group members Improve ability to generate feasible
alternatives Allows managers to process more information Managers
affected by decisions agree to cooperate
26. 5-26 Group Decision Making 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 a decision
27. 5-27 Group Decision Making Devils Advocacy Critical
analysis of a preferred alternative, made in response to challenges
raised by a group member who, playing the role of devils advocate,
defends unpopular or opposing alternatives for the sake of
argument.
28. 5-28 Organizational Learning and Creativity Organizational
Learning The process through which managers seek to improve
employees desire and ability to understand and manage the
organization and its task environment.
29. 5-29 Senges Principles for Creating a Learning Organization
Figure 5.6
30. 5-30 Question? What is a decision makers ability to
discover original and novel ideas that lead to feasible alternative
courses of action? A. Risk B. Decision-making C. Creativity D.
Inventiveness
31. 5-31 Organizational Learning and Creativity Creativity A
decision makers ability to discover original and novel ideas that
lead to feasible alternative courses of action
32. 5-32 Promoting Group Creativity Brainstorming Managers meet
face-to-face to generate and debate many alternatives. Group
members are not allowed to evaluate alternatives until all
alternatives are listed. When all are listed, then the pros and
cons of each are discussed and a short list created.
33. 5-33 Building Group Creativity Production blocking Loss of
productivity in brainstorming sessions due to the unstructured
nature of brainstorming Nominal Group Technique A decision-making
technique in which group members write down ideas and solutions,
read their suggestions to the whole group, and discuss and then
rank the alternatives
34. 5-34 Building Group Creativity Delphi Technique A
decision-making technique in which group members do not meet
face-to-face but respond in writing to questions posed by the group
leader
35. 5-35 Entrepreneurship and Creativity Entrepreneurs an
individual who notices opportunities and decides how to mobilize
the resources necessary to produce new and improved goods and
services Social entrepreneurs An individual who pursues initiatives
and opportunities and mobilizes resources to address social
problems and needs in order to improve society and wellbeing
through creative solutions.
36. 5-36 Entrepreneurship and Creativity Intrapreneur a
manager, scientist, or researcher who works inside an organization
and notices opportunities to develop new or improved products and
better ways to make them
37. 5-37 Entrepreneurship and Creativity Entrepreneurship
Mobilization of resources to take advantage of an opportunity to
provide customers with new and improved goods and services
38. 5-38 Intrapreneurship and Organizational Learning 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 Skunkworks a group who is deliberately
separated from normal operations to encourage them to devote all
their attention to developing new products
39. 5-39 Decisions, Decisions, Decisions
40. 5-40 Video: Decisions, Decisions How important are emotions
in making decisions? You are a shareholder. At the most recent
shareholders meeting the CEO explained his decision-making process
as one where he closely follows Jonah Lehrers suggestion to just go
for it. Do you have more confidence or less confidence in your
company leadership.