Kanwal irfan's summary of Chapter 6

In this chapter we will look at the ways manager make decisions & basis of manager's job.
Decision: it is a choice 4m two or more alternatives.
Decision making process: a set including 8 steps is the decision making process.

HOW DO MANAGERS MAKE DECISIONS?

1: Identification of a problem: to look at the main cause of the requirement
e.g the sales rep of a manager need new computers.
2: Identification of decision criteria: to observe decision criteria to see memory, display quality, battery life & warrenty of computers.
3: Allocating weights to the criteria: to give weights to the following
e.g memory & storage 10
battery life 8
carryng weight 6
warranty 4
display quality 3
4: Developing alternatives: it requires the decision maker to list viable alternatives that could resolve the problem.
5: Analyzing alternative: by identifying decision criteria the strengths & weaknesses of each alternative become evident.
6: Selecting an alternative: it depends on the quality criteria.
7: Implementing the alternative: means putting decisions into action.
8:Evaluating decision effectiveness: means taking benefit giving input & geting output.

HOW DECISIONS ARE MADE?

Decision making is important in a managers job.
let us see 3 prespectives on hiw decisions are made:
1: Rational decision making: decision making behaviour where decisions are consistant & value maximizing with inspecified constraints.
2: Bounded rationality: decision making behaviour that is rational but limited by an individuals ability to pocess information.
3: Intuitive decision making: making decisions on the basis of experience, feelings & accumulated judgements.

TYPES OF PROBLEMS & DECISIONS:

Structured problems: a straight 4ward, familiar & easily defined problem.
Programed decision: a reptative decision that can be handled by a routine approach.
it has 3 types:
1: Procedure: a series of sequential steps that can be used to respond a well structured problem.
2: Rule: an explict statement that tells a manager what they can do.
3: Policy: a guideline 4 making decisions.

Unstrctured problems: problems that are new or unusual & 4 which information is ambiguous or incomplete.
Non programmed decision: a unique decision that requires a custom made solution.

THE DECISIONS UNDER WHICH MANAGERS MAKE DECISIONS:

Certanity; a situation in which a manager can make accurate decisions bcoz all outcomes are known.
Risk; a situation in which the decision maker is able to estimate the likelihood of certain outcomes.
Uncertanity: a situation in which a decision maker has neither certanity nor reasonable probability estimates available.

HOW DECISION MAKING STYLE A MANAGER DECISION MAKING?

Directive style: a decision making style characterised by low tolerance for ambiguity & a rational way of thinking.
Analytic style: a decision maing style characterised by a high tolerance 4 ambiguity & a rational way of thinking.
Conceptual style: a decision making style characterised by a high tolerance 4 ambiguity & an intuitive way of thinking.
Behavioral style: a ddecision making style characterised by a low tolerance 4 ambiguity & an intuitive way of thinking.

THE ERRORS AFFECTING DECISION MAKING:

1:Overconfidence
2:Anchoring affect
3:Confirmation
4:Sunk costs
5:Representation
6:Self serving
7:Immediate gratification
8:Selective perception
9:Framing
10:Availability
11;Randomness
12:Hindsight.

WHY MANAGERS NEED TO KNOW ABOUT MAKING DECISIONS IN TODAY'S WORLD?

* To understand cultural differences.
*To know when its time to call it quits.
*To use an affective decision making process.
*To develop highly reliable orgnization.