Chapter 6: Managerial Decision Making

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definitions

decision

a choice made from available alternatives

decision making

the process of identifying problems and opportunities and then resolving them

programmed decision

a decision made in response to a situation that has occurred often enough to enable decision rules to be developed and applied in the future

non programmed decision

a decision made in response to a situation that is unique, is poorly defined and largely unstructured, and has important consequences for the organization

certainty

the situation in which all the information the decision maker needs is fully available

risk

a situation in which a decision has clear-cut goals and good information is available but the future outcomes associated with each alternative are subject to chance

uncertainty

the situation that occurs when managers know which goals they wish to achieve, but information about alternatives and future events is incomplete

ambiguity

a condition in which the goals to be achieved or the problem to be solved is unclear , alternatives are difficult to define, and information about outcomes is unavailable

classical model

a decision-making model based on the assumption that managers should make logical decisions that will be in the organization's best economic interests

normative

an approach that defines how a decision maker should make decisions and provides guidelines for reaching an ideal outcome for the organization

administrative model

a decision-makng model that describes how managers actually make decisions in situations characterized by non-programmed decisions, uncertainty, and ambiguity

descriptive

an approach that describes how manages actually make decisions rather than how they should make decisions according to a theoretical idea

bounded rationality

the concept that people have the time and cognitive ability to process only a limited amount of information on which to base decisions

satisficing

to choose the first solution alternative that satisfies minimal decision criteria, regardless of whether better solutions are presumed to exist

intuition

the immediate comprehension of a decision situation based on past experience but without conscious thought

coalition

an informal alliance among managers who support a specific goal

problem

a situation in which organizational accomplishments have failed to meet established goals

opportunity

a situation in which managers see potential organizational accomplishments that exceed current goals

diagnosis

the step in decision making process in which managers analyze underlying casual factors associated with the decision situation

risk propensity

the willingness to undertake risk with the opportunity of gaining an increased payoff

implementation

the step in the decision making process that involves using managerial, administrative, and persuasive abilities to translate the chosen alternative into action

decision style

differences among people with respect to how they perceive problems and make decisions

brainstorming

a technique that uses a face-to-face group to spontaneously suggest a broad range of alternatives for decision making

electronic brainstorming

bringing people together in an interactive group over a computer network to suggest alternatives; sometimes called brain-writing

devil's advocate

a decision-making technique in which an individual is assigned the role of challenging the assumptions and assertions made by the group to prevent premature consensus

point-counterpoint

a decision making technique in which people are assigned to express competing points of view

groupthink

the tendency of people in groups to suppress contrary opinions

escalating commitment

continuing to invest time and resources in a failing decision

information technology (IT)

the hardware, software, telecommunications, database management, and other technologies used to store, process, and distribute information

knowledge management

the process of systematically gathering knowledge, making it widely available throughout the organization, and fostering a culture of learning

data

raw, unsummarized, and unanalyzed facts and figures

information

data that have been converted into a meaningful and useful context for the receiver

knowledge

a conclusion drawn from information after it is linked to other information and compared o what is already known

knowledge management portal

a single point of access for employees to multiple sources of information that provides personalized access on corporate intranet

wiki

a Web site that allows anyone with access, inside or outside the organization, to create, share, and edit content through a simple, browser-based user interface

business intelligence software

software that analyzes data from multiple sources and extracts useful insights, patterns, and relationships that might be significant

management information system (MIS)

a computer-based system that provides information and support for effective managerial decision making

enterprise resource planning (ERP) system

a networked information system that collect, processes, and provides information about an organization's entire enterprise from identification of customer needs and receipt of orders to distribution of products and receipt of payments

blog

Web log that allows individuals to post opinions and ideas

social networking

online interaction in a community format where people share personal information and photos, produce and share all sorts of information and opinions, or unify activists and raise funds

peer-to-peer file sharing

file sharing that allows PCs to communicate directly with one another over the Internet, bypassing central databases, servers, control points, and Web pages.

e-business

any business that takes place by digital processes over a computer network rather than in physical space

e-commerce

business exchanges or transactions that occur electronically

intranet

an internal communications system that uses the technology and standards of the internet but is accessible only to people within the organization

extranet

an external communications system that uses the Internet and is shared by two or more organizations

market expansion

a systematic attempt to increase sale through adding target groups

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