Ch. 4.2-4.3 Notes
Ch. 4.2-4.3 Notes MGMT 301
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This 3 page Class Notes was uploaded by Stephanie Donovan on Thursday February 19, 2015. The Class Notes belongs to MGMT 301 at Pennsylvania State University taught by Ronald Johnson in Winter2015. Since its upload, it has received 40 views.
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Date Created: 02/19/15
Management 301 Chapter 4 1 42 What Are Five Steps in the DecisionMaking Process l Decision making process involves a straightforward series of steps identify the problem generate and evaluate alternative solutions decide on preferred course of action implement the decision evaluate results U39lbUUNH II The Ajax Case a decided to close down its Murphysboro plant b market conditions forced layoffs c under company policy employees who were laid off will be given severance pay equal to one weeks pay per year of service lll Step 1 is to Identify and de ne the problem a gather and process information b goals are clari ed i the more speci c the goal the easier it is to see the results c 3 mistakes in the rst step of decisionmaking i de ning the problem too broadly or narrowly ii focusing on symptoms instead of causes 1 symptoms only indicate problems MAY exist they aren t the actual problems iii focusing on wrong problem to begin with d Ajax Case Connection i de nes the problem how to minimize the opposing impact of the plant closing on the employees IV Step 2 is to generate and evaluate alternative courses of action after the problem is de ned gather information needed stakeholders need to be identi ed identify outcomes of every possible course of action costbene tting analysis involves comparing the costs and bene ts of each potential course of action i the better alternatives and better analysis the more likely it is to be a good decision e Ajax Case Connection i de nitely will close the plant ii alternatives are considered 1 close the plant on schedule and be done with it 2 offer to sell the plant to employees 3 offer transfers to employees V Step3 3 is to decide on a preferred course of action a two ways alternatives get explored classical and behavioral models b classical decision model described decision making with complete information i views the manager as acting rationally and in fully informed manner c optimizing decision chooses the alternative providing the absolute best solution to a problem goom Management 301 Chapter 4 VI VII VIII d classical model sounds idea but is not always best i there are limits to our information processing capabilities cognitive limitations e behavioral decision model describes decision making with limited information and bounded rationality f satis cing decision chooses the rst alternative that presents itself g Ajax Case Connection i executives decide to close down plant offer employees transfers to company plants and offer to help them nd new jobs Step 4 is to Implement the decision a requires determination and creativity to get a decision b lackof participation error is failure to include the right people in the decisionmaking process i when managers use participation in a good way the right people get involved in the beginning 1 builds commitments to take actions to support the decisions being made c Ajax Case Connection i put an add in the newspapers ii described their workers and skills and good workers 1 ad encouraged employers to hire these employees Step 5 is to Evaluate Results a decisionmaking process is not nished until the results are reviewed b Ajax Case Connection i was the Ajax decision effective 1 we need more information to evaluate this Ethical Reasoning is important at all steps in decision making a attention to ethical analysis helps see moral problems b rst set of ethics questions is based on 4 criteria described by Gerald Cavanagh ethicist i Utility does the decision satisfy all stakeholders ii Rights Does the decision respect the rights and duties of everyone iii justice is the decision consistent with the canons ofjustice iv caring is the decision consistent with my responsibilities to care c second set of ethics questions opens a decision to public disclosure and prospect of shame d spotlight questions highlight the risk of public disclosure of one s actions 43 What Are Some Current Issues in Managerial Decision Making Creativity can be unlocked and enc09uraged for better decision making a creativity the generation of a novel idea or unique approach that solves a problem or crafts an opportunity b BigC creativity occurs when extraordinary things are done by exceptional people c LittleC creativity occurs when average people come up worth unique ways to deal with daily events and situations d creative decisions are more likely to occur when the person or team has a lot of task expertise i also more likely when people are highly task motivated Management 301 Chapter 4 3 e characteristics of creative people i work with high energy ii hold one s ground in the face of criticism iii be resourceful even if dif cult situations iv think quotoutside the boxquot divergent thinking v Use quotlateral thinkingquot look at diverse ways to solve problems vi transfer learning from one setting to others vii able to quotstep backquot be objective and question assumptions II Group decision making both advantages and disadvantages a effective managers switch between group and individual decision making b Advantages of Groups i greater collection of information knowledge and expertise ii expands creativity iii participation helps groups understand the decision better iv will accept decisions and work hard to implement them c Disadvantages of Groups i time consuming ii more people the longer it takes iii more personalities and opinions more likely problems will arise iv social pressure v minority domination lll judgmental heuristics and other biases and traps may cause decisionmaking errors a people make bad decisions sometimes because there is limited information tine and energy heuristics b availability heuristic uses readily available information to assess a current situation c representativeness heuristic assesses the likelihood of an occurrence using a stereotype of similar events d anchoring and adjustment heuristic adjusts a previously existing value or starting point to make a decision e framing error is solving a problem in the context perceived i is it positive or negative ii quotglass if half empty or half fullquot f another tendency is trying to justify a decision after we make it i quotNo one will nd outquot ii con rmation error when we attend only to information that con rms a decision already made iii escalating commitment the continuation of a course of action even though it is not working 1 an inability or willingness that calls it quits even when facts suggest this is the best decision IV Managers must be prepared for crisis decision making a crisis an unexpected problem that can lead to disaster if not resolved quickly and appropriately b managers sometimes react to crisis in by doing the wrong things they try and solve the problem themselves many organizations are developing formal crisis management programs an
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