Mgmt Ch. 4

a choice from 2 or more alternatives

set of 8 steps includes identifying a problem, selecting an alternative, and evaluating the decisions effectiveness

a discrepancy between an existing and a desired state of affairs

criteria that defines what is relevant in making a decision

• 1. identify a problem
• 2. identify decision criteria
• 3. allocate weights to criteria
• 4. develop alternatives
• 5. analyze alternatives
• 6. select an alternatives
• 7. implement the alternative
• 8. evaluate decision effectiveness

making decisions that are consistent and value-maximizing within specified constraints

• limitations on a person's ability to interpret, process, and act on info
• BOUNDED AWARENESS, people overlooking important info during the decision making process (music industry doesn't see danger of file sharing)
• BOUNDED ETHICALITY, personal ethnical preferences may not be in sync with our actual behaviour (
• BOUNDED RATIONALITY, shortcuts (heuristics) to help make sense of things (limited time leads to leads to decisions improper support)
• BOUNDED WILLPOWER, we give too much focus to the present and not enough to the future (not saving enough for retirement)
• BOUNDED SELF-INTEREST, attaching a priority to the outcomes of others rather than simply trying to maximize our own payoffs (being fair to competitors)

• accept solutions that are "good enough"
• one that meets acceptable levels of performance

• making decisions on basis of experience, feelings and accumulated judgement
• gut feeling

straight forward, familiar and easily defined problems

repetitive decisions that can be handled by a routine approach

series of interrelated sequential steps that a decision maker can use to respond to a structured problem

explicit statement that tells a decision maker what he can or can't do

guideline for making a decision

• new or unusual problems
• info is ambiguous or incomplete

• decisions that are unique and nonrecurring and require custom made solutions
• eg. office building floods accidentally

• certainty
• risk
• uncertainty

• condition in which a decision maker can make accurate decisions because the outcome of every alternative is known
• eg. investing money, you know exact rates

• decision maker able to estimate the likelihood of certain outcomes
• eg. using past data to make a decision

decision maker is not sure of the outcomes

• decision making style characterized by a low tolerance for ambiguity and a rational way of thinking
• minimal info, efficient

• decision making style characterized by a high tolerance for ambiguity and a rational way of thinking
• more info, consider alternatives
• careful, better with unique decisions

• decision making style characterized by a high tolerance for ambiguity and a rational way of thinking
• broad, consider alternatives, long run
• find creative solutions

• low tolerance for ambiguity, intuitive way of thinking
• sociable, friendly, supportive
• work well with others, concerned for achievments of those around them

• more complete knowledge and info - group brings diversity of experience
• more diverse alternatives - more options
• increased acceptance of a solution - groups tend not to fight a decision they developed
• increased legitimacy - these decisions are perceived as more legitimate

• increased time to reach a solution
• opportunity for minority domination - inequality of members makes for some members dominating
• ambiguous responsibility - group members share responsibility, but individuals responsibility is diluted
• pressures to conform - undermines critical thinking, harms final quality of decision

• witholding by group members of different views in order to be in agreement
• people conform because don't want to speak out

• decision structure - programmed decisions require less employee involvement
• source of decision knowledge - if participants may be against decision w/o their input, more involvement is needed
• risk of conflict - conflicting employee and organizational goals, involvement is useful to minimize conflict

• rules of thumb that managers use to simplify decision making
• overconfidence bias
• selective perception bias
• confirmation bias
• sunk-costs error
• escalation of commitment error
• self serving bias
• hindsight bias

• decision makers think they know more than they do
• hold themselves to highly
• eg. salesperson brags about presentation, then loses sale

• decision makers selectively organize and interpret events based on own biased view
• eg. interview w/ a candidate who went to same alma mater

• decision makers seek out info that confirms past choices were good and don't look at evidence that contradicts them
• eg. giving business to friends even though they are late

• decision makers forget that decisions now cannot change past
• eg. because of investment in something, unwilling to change

• increased commitment to a previous decision despite evidence that it might have been wrong
• eg. columbia space shuttle accident, people didn't want to go back and fix a prior decision b/c they didn't want to admit they were wrong

decision makers take credit for successes and blame failure on others

• decision makers falsely believe that they would have accurately predicted the outcome of the event, once the outcome has happened
• eg. someone claiming they knew a contract would fail, after it fails

• rules and principles that define right and wrong
• not always black and white

• utilitarian view
• rights view
• theory of justice
• integrative social contracts

• based on soley outcomes and consequences
• use quantitative method for making decisions by providing greatest good for greatest #

• respecting and protecting individual liberties and privileges
• eg. protecting free speech
• can hinder productivity

• Managers impose and enforce rules fairly and impartially
• follows legal rules and regulations
• protects interests of stakeholders
• employees lose desire to take risks and be innovative

ethical decisions based on existing ethical norms in industries and communities to determine right and wrong

• formal statement of an orgs primary values
• ethical rules it expects employees to follow
• 60 percent of canada's largest corps have one

business's obligation, beyond law and economics, to do the right things and act in good positive ways for society

mgmts only social responsibility is to maximize profits

• mgmts social responsibility goes beyond making profits
• protect and improve society's welfare

• avoidance of corporate social responsibility
• managers engage in unethical and illegal behaviour
• try to hide behaviour from stakeholders

• managers rely on on legally established rules to take minimal position toward corporate social responsibility
• employees behave legally

managers make choices that try to balance interests of shareholders w/ those of other stakeholders

• managers actively promothe interests of stockholders and stakeholders using orgs resources
• mgmt feels need to be socially responsible