Quản trị kinh doanh - Chapter 7: Making better decisions

Chapter 7Making Better DecisionsDescribe the seven steps of the decision making processIdentify problems by analyzing causes and effectsDescribe how managers generate alternativesPredict possible consequences of alternativesDemonstrate how managers select the most desirable alternativeLearning ObjectivesTypes of decisions (p. 171)Programmed decision – based on pre-established rules in response to a recurring situation (p. 172)Nonprogrammed decision – based on reason and/or intuition in response to a unique situation that requires a tailored decisionClassical model – normative model that leads to an optimal decision, assuming full availability of information, sufficient time, and rationality of the decision makerOptimal decision – best possible decision given all the needed information Decisions That Make a Difference (p. 170)Classical modelDecisions That Make a Difference (cont.)Figure 7.2Seven steps to better decision making (p. 173)Decisions That Make a Difference (cont.)Figure 7.3Adaptive management (p. 173)Approach to decision making that requires managers to use critical thinking, collaboration, and reflection skills to make nonprogrammed decisionsImportant in a rapidly changing business environmentDecisions That Make a Difference (cont.)Ambiguity (p. 174)Information about the situation, goals, or criteria that is incomplete or can be interpreted in multiple waysSymptomatic effects (p. 174)Observable behaviors related to underlying causal variables Problems – undesirable behaviorsAre noticed due to their symptomatic effectsIdentifying and Understanding the Problem (p. 173)Underlying causes (p. 175)Behaviors that lead to a desired or undesired symptomatic effectIntermediate causes – plausible and easily foundRoot causesRevealed by:Systemic-based analysis – takes into account the array of all known variables associated with a problem and its symptoms, including behavior over timePolicy-based analysis – isolates the variables in a system that can truly be addressed through management innovation (p. 177) Identifying and Understanding the Problem (cont.)Systems archetype of causal variables for customer satisfactionIdentifying and Understanding the Problem (cont.)Figure 7.6Drifting goals system archetypeIdentifying and Understanding the Problem (cont.)Figure 7.7Policy-based analysis (p. 178)Following a systemic-based analysis, can examine specific policies that could be contributing to undesirable effects with stock-and-flow diagrams Identifying and Understanding the Problem (cont.)Front desk manager’s “guest expectation gap” explanationIdentifying and Understanding the Problem (cont.)Figure 7.8Dolphin Resort: Annualized revenue and profitIdentifying and Understanding the Problem (cont.)Figure 7.9Dolphin Resort revenue per available roomIdentifying and Understanding the Problem (cont.)Figure 7.10Dolphin Resort: Annualized room rateIdentifying and Understanding the Problem (cont.)Figure 7.11Dolphin Resort: Annualized occupancy percentageIdentifying and Understanding the Problem (cont.)Figure 7.12Dolphin Resort: Guest expectation variablesIdentifying and Understanding the Problem (cont.)Figure 7.13CertaintyDecision maker knows all alternatives and their outcomesUncertainty all alternatives and outcomes are not knownLevel of certainty determined by:TimeCognitive abilityInformationGenerating Alternatives (p. 182)Groupthink (p. 182)Unconscious mode of group decision making in which individuals prioritize agreement over analysisProduction blockingLoss of productivity during a brainstorming session because individuals are overwhelmed by the number of possibilities being generatedHeuristics (“rule of thumb”)Set of informal rules used to simplify and expedite the decision making process Generating Alternatives (cont.)Expectation gap between price and drifting goalsGenerating Alternatives (cont.)Figure 7.15Brainstorming (p. 183)Creating as many alternatives as possible, without making value judgments about any idea Generating Alternatives (cont.)Figure 7.16Predict and assess the outcomes of each alternativeRisk – degree to which the outcomes of an alternative can be predictedNominal group techniqueGroup members rate proposed solutions and the total tally determines the final decisionDelphi techniqueGroup of experts propose and question ideas until a consensus is reachedEvaluating Alternatives (p. 184)Prior-hypothesis bias (p. 186)Basing decisions on beliefs or assumptions despite evidence to the contraryProcess may be unconsciousDialectical inquiryA proposal and a conflicting counterproposal are given equal considerationUsed to prevent prior-hypothesis bias Evaluating Alternatives (cont.)Intuitive (“gut”) decisionBased on feelings, previous experience, and existing knowledgeSatisficingChoosing an acceptable solution rather than an optimal solutionbalances time, information, and ability to consider and implement alternativesPath Selection (p. 186)Reasoned judgment (p. 187)Decision based on extensive information gathering, careful analysis, and generation of alternativesAdministrative modelRecognizes the limits of information, time, and individuals and seeks a satisfying rather than an optimum solutionBounded rationality – rational decision making that is limited by time, cognitive abilities, and available informationRepresentative bias – generalizing from too small a samplePath Selection (cont.)Successful implementation involves connecting strategy, people, and operationsIllusion of controlOverestimating one’s ability to control evens and activitiesImplementation (p. 188)