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• Manager as • Decision Maker

• Models of Managerial Decisions Making:• Prof. Simon• 2. Non-Rational Model• Models suggesting information gathering and

processing limitation make it difficult for managers to make optimal decisions

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• Manager As• Decision Maker

• Satisfice• Accept solutions that are “Good Enough”

• Escalation of Commitment• Increased commitment to a previous decision

despite evidence that it may have been wrong

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• Non Rational Models

• 1. Satisfying Model

• Managers seek alternatives only until they find one which looks satisfactory, rather than seeking an optimal decision.

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• Factors Influencing the • Satisfying Decision

Satisfying Decision

Limited Search

Inadequate Information

InformationProcessing

Bias

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Limited ability to Understand all factors

TimeConstraints

Inadequate base ofInformation

Limited memory ofDecision-Makers

Poor perception of factorsto be considered

in decision process

SatisfyingDecisionMaking

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• Non Rational Models

• 2. Incremental Model

• Managers makes the smallest response possible to reduce the problem to at least a tolerable level.

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• Non Rational Models

• 3. Rubbish bin Model

• Managers behave in virtually (by use of mind, memory,

experience, knowledge, intuition) a random way in making non-programmed decisions.

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Intuitive Decision Making

Subconscious process of making decisions on the basis of experience and accumulated judgment.

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What is Intuition?

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• The MD’s Diary

• I would like to think that most decisions in organization are made in the team environment. I say this while realizing that there always remains the need for a final point of arbitration, and in this organization that rest with me.

• However, generally decisions are not reached unilaterally, but through the broad involvement of all the stakeholders.

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Group Decision Making

• Advantages

1. Moe information available

2. More alternative solutions

3. Increases solution, understanding & acceptance

4. Builds members knowledge & skill base

• Disadvantages

1. Time consuming2. Delays & ill feeling

possible (criticize the idea not the person)

3. Domination by individuals

4. Risk/disease of group thinking

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•Creativity In

•Decision Making

Creativity is the cognitive process of developing an idea, concept, commodity or discovery viewed as novel by its creator or target audience.

“Idea brings money but money doesn’t bring idea”

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•Creativity In

•Group Decision Making

1. Brainstorming

2. Nominal Group Technique

3. Delphi Technique

4. Scenario Analysis

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Enhancing Creativity In Group Decision Making

1. Brainstorming Technique

i. What features would you like cars to have 10 years from now?

Rules:

i. Criticism is ruled out

ii. All ideas are welcomed

iii. Quantity is wanted

iv. Combinations and improvement are required

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Enhancing Creativity In Group Decision Making

2. Nominal Group Technique

Enhancing creativity and decision making by integrating individuals working independently and then presenting it for group interaction and discussion. Voting for best idea or Ranking!

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Enhancing Creativity In Group Decision Making

3. Delphi Technique

This technique is specifically used in log term planning.

Basic Steps are:

i.A questionnaire is sent to a group of experts

ii.A summary of the first round is prepared

iii.A summary of the second round is prepared

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Enhancing Creativity In Group Decision Making

4. Scenario Analysis

Reasons for using scenarios are:

i. Provide a vide range of possibilities against which to evaluate strategies (analysis the current scenario and see the future scenario)

ii. Provide a broad vision of possible events

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Devil’s Advocacy

i. Generate a potential solution

ii. Assign a devil’s advocate to criticize

iii. Present the critique of the solution to key decision makers

iv. Gather additional information

v. Decide whether to use, change, or not to use the originally proposed solution

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• Creativity In • Decision Making

• Creativity also requires:

1. Convergent Thinking: Attempting to move logically to a problem solution.

2. Divergent Thinking: Generating new ways of viewing a problem and seeking a novel alternatives.

3. Vertical Thinking: Sequential and Rational Style.

4. Lateral Thinking: Step wise but not sequential.

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Decision-Making Styles

• Types of Decision MakersDirective

Use minimal information and consider few alternatives.Analytic

Make careful decisions in unique situations.Conceptual

Maintain a broad outlook and consider many alternatives in making long-term decisions.

Behavioral Avoid conflict by working well with others and being

receptive to suggestions.