TThe Manager as a o Decision Maker CThe McGraw-Hill Companies, Inc, 2000
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 6-1 The Manager as a Decision Maker 6
6-2 Managerial Decision Making aDecision making: the process by which managers respond to opportunities and threats by analyzing options, and making decisions about goals and courses of action. o Decisions in response to opportunities managers respond to ways to improve organizational performance. o Decisions in response to threats: occurs when managers are impacted by adverse events to the organization " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 6-2 Managerial Decision Making ⚫Decision making: the process by which managers respond to opportunities and threats by analyzing options, and making decisions about goals and courses of action. ⚫Decisions in response to opportunities: managers respond to ways to improve organizational performance. ⚫Decisions in response to threats: occurs when managers are impacted by adverse events to the organization
6-3 Types of Decision Making pRogrammed Decisions: routine, almost automatic process. Managers have made decision many times before There are rules or guidelines to follow Example: Deciding to reorder office supplies S Non-programmed Decisions: unusual situations that have not been often addressed No rules to follow since the decision is new These decisions are made based on information and a mangers intuition, and judgment Example: Should the firm invest in a new technology? " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 6-3 Types of Decision Making ⚫Programmed Decisions: routine, almost automatic process. ◼ Managers have made decision many times before. ◼ There are rules or guidelines to follow. ◼ Example: Deciding to reorder office supplies. ⚫Non-programmed Decisions: unusual situations that have not been often addressed. ◼ No rules to follow since the decision is new. ◼ These decisions are made based on information, and a manger’s intuition, and judgment. ◼ Example: Should the firm invest in a new technology?
6-4 The Classical model o Classical model of decision making: a prescriptive model that tells how the decision should be made Assumes managers have access to all the information needed to reach a decision Managers can then make the optimum decision by easily ranking their own preferences among alternatives uNfortunately, mangers often do not have all (or even most required information. " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 6-4 The Classical Model ⚫Classical model of decision making: a prescriptive model that tells how the decision should be made. ◼ Assumes managers have access to all the information needed to reach a decision. ◼ Managers can then make the optimum decision by easily ranking their own preferences among alternatives. ⚫Unfortunately, mangers often do not have all (or even most) required information
6-5 The Classical model Figure 6.1 List alternatives Assumes all information consequences is available to manager Rank each alternative Assumes manager can from low to high process information Assumes manager knows Select best the best future course of alternative the organization " win/MeGraw-HHill OThe McGraw-Hill Companies. Inc, 2000
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 6-5 The Classical Model List alternatives & consequences Rank each alternative from low to high Select best alternative Assumes all information is available to manager Assumes manager can process information Assumes manager knows the best future course of the organization Figure 6.1