uses computers to assists people in gathering, storing, and processing information.
taken from external environment, as well as from the stakeholders such as stockholders, suppliers, and regulatory agencies.
- presented to those outside the organization, including stakeholders and the general public.
a structure that utilizes information technology to gather, systemize, and disseminate data in order to make decisions.
use computerizes information-processing systems to assist managers in decision making.
Management information systems (MIS)-
Benefits of IT:
oPlanning- IT allows quicker information dissemination, as well as wider availability of information oOrganizing- IT allows easier stream of communication between different parties in the organization oLeading- IT allows managers to communicate goals and objectives with individuals both inside & outside the organization oControlling- manager can use IT to quickly learn current performance levels and make immediate decisions to solve problems.
involves recognizing and finding solutions to problems.
choice of action taken from among various alternative options
when a situation either has potential to turn out better than expected or actually turns out better than previously thought.
managers who ignore information that indicates a problematic situation.
willing to make decisions and propose solutions
proactive managers that actively search for signs of and anticipate a performance deficiency or performance opportunity--Considered the best.
using rational methods of solving problems
spontaneous style- making decisions based on quick and broad assessment
Ability to recognize and evaluate many problems at once and how they relate to each other.
resolving long term issues while prioritizing and resolving the everyday problems at a job.
hard, conclusive data and high-control situations. Focus on "the numbers"
comfortable with open communication, take personal feelings into account
prefer abstract situations that are broad in scope. Avoid details, logical, impersonal.
value personal relationships, flexible, prefer broad issues; do not take details into consideration.
can be solved by employing a clear sequence of activities with information that is readily available.
decisions that a person has already successfully implemented in the past
situations that are characterizes by incomplete information.
special solutions created for uncommon situations.
Non programmed decisions
an unanticipated situation that must be solved quickly in order to prevent a large scale calamity.
courses designed to prepare managers for crises that could compromise an organizations well- being.
Crisis management programs
has all the necessary information regarding each choice of action and its predicted outcome
the setting for a high number of management problems.
there is so little information that a manager cannot even assign probabilities of various outcomes occurring.
Decisions making model step 1
Step 1- Identify the problem
3 mistakes of step 1
1.trying to fix the symptoms of a situation rather than the root cause of the issues 2.Focusing on the wrong problem in the situation 3.Making the scope the problem too narrow or too broad.
Decision making model Step 2
Step 2- Generate and evaluation courses of action
5 criteria that should satisfy step 2
1. Costs- the negative side effects & necessary sacrifices 2. Benefits- the possible upside of the decision 3. Ethical soundness- whether decision meets ethical standards of the organization 4. Timeliness- how quickly the decision can be put into action 5. Acceptability- the degree to which the decision will be accepted
Decision making model Step 3
Decide of a preferred course of action
a manager is in a situation with all necessary information and makes decisions rationally, without bias.
Classical decision making model
choosing the highest- quality alternative possible
a person has access to all relevant information, they can accurately rate each of these factors, and they will choose the alternative that maximizes their utility.
assumes that humans are limited in their ability to be perfectly rational and unbiased in their decision making.
behavioral decision model
making decisions in situations with incomplete information and a restricted amount of alternatives
the first acceptable solution that one can think of.
Decision making model Step 4
Step 4- Implement the decision oThe most critical part of the decision-making process
Why does implementation sometimes fail? ________-neglecting to involve the people needed in the implementation of an alternative during the planning phase of decision making.
Lack of participation error
Decision making model step 5
Evaluate the results
common ways of simplifying the decision making process.
when a person makes decision primarily based on recent events and readily available information.
if a person makes a decision heavily rooted in assumptions that come from other situations that appear similar
when a person makes a decision using a previous decision as a reference point.
Anchoring and adjustment heuristic
a method of budget formulation that recognizes our tendency to assume that the base anchor is a valid number.
Zero based budgeting
when a person is blind to the undeniable truth that they have made a mistake. -It occurs because people have a difficult time processing sunk costs and persist in trying to find new ways to salvage what is already gone.
Escalation of commitment-
when one only takes into consideration the information that supports a previously made decision.
a misunderstanding of information due to the context in which it is perceived
when we look for alternatives only long enough to find out that satisfies our needs.
Danger of satisficing decision
The danger is that a better alternative could have been found if we continued to search.
When is it okay to use satisficing decision? (3)
1)We have limited time 2)The cost of making the wrong decision is low 3)We can easily accept and put to good use a sub-optimal product.
when you alter the criteria and assessment of the alternatives to confirm that your favorite is the most rational choice.
Implicit favorite decision making-
more information available, multiple points of view from diverse backgrounds, increased number of action alternatives, more acceptance of final decisions.
Advantages of group decision making
potential for conformity and lack of innovation if individual feel pressured to fit in, a vocal minority of the group may hold sway over the majority, may take longer with more people, scheduling and spatial constraints.