DECISION MAKING MODELS.pptx

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1. Organizational Decision making Models

2.  Organizational decision making: the process of responding to a problem by searching for and selecting a solution or course of action that will create value for organizational stakeholders   Types: Programmed Decision Non-Programmed Decision

3. De c i s i on M ak i ng - T ypes Programmed Decision Routine, virtually automatic decision making that follows established rules or guidelines. Non-Programmed Decision Nonroutine decision made in response to unusual or novel opportunities and threats. The are no rules to follow since the decision is new.

4. Individual Decision Making Rational approach – ideal method for how managers should make decisions Bounded rationality perspective – how decisions are made under severe time and resource constraints

5. Steps in the Rational Approach

6. Limitations for the Rational Decision Making Model requires a great deal of time requires great deal of information assumes rational, measurable criteria are available and agreed upon assumes accurate, stable and complete knowledge of all the alternatives, preferences, goals and consequences assumes a rational, reasonable, non – political world

7. Bounded Rationality Perspective There is a limit to how rational managers can be—time and resource constraints Nonprogrammed decisions Constraints and Tradeoffs Constraints impinge the decision maker The Role of Intuition Experience and judgment rather than logic

8. Constraints and Tradeoffs During Nonprogrammed Decision Making

9. Organizational Decision Making Management Science Approach Carnegie Model Incremental Decision Model Garbage Can Model Unstructured model

10. Management Science Approach Similar to rational individual approach – Structured Based on technology

11. Management Science Approach Use of statistics to identify relevant variables Remove human element Very successful for military problems Good tool for decisions where variables can be indentified and measured A drawback of management science is that quantitative data are not rich and lack tacit knowledge

12. The Carnegie Model Introduces a set of more realistic assumptions about the decision-making process Satisficing: limited information searches to identify problems and alternative solutions Bounded rationality: a limited capacity to process information Organizational coalitions: solution chosen is a result of compromise, bargaining, and accommodation between coalitions

13. Carnegie Model

14. Differences Between the Rational and Carnegie Models Rational model Carnegie model Information is available Limited information is available Decision making is costless Decision making is costly Possible alternatives are generated Limited range of alternatives are generated Solution is chosen by unanimous agreement Solution is chosen by bargaining and compromise Soln chosen is best for the orgn Soln chosen is satisficing for the orgn

15. Incremental Decision Process Model  Focuses on sequence of events from problem discovery to solution

16. Garbage Can Model - a theory that contends that decisions in organizations are random and unsystematic Solutions Choice oppo r t un i t i e s P r ob l e m s P a r t i c i pa nts Garbage Can Model

17. Garbage Can Model Pattern or flow of multiple decisions Think of the whole organization Explain decision making in high uncertainty - organized anarchy: Problematic preferences Unclear, poorly understood technology Turnover Streams of events instead of defined problems and solutions

18. Consequences of the Garbage Can Model Solutions may be proposed even when problems do not exist Choices are made without solving problems Problems may persist without being solved A few problems are solved

19. Garbage Can Model

20. Unstructured Decision Making Model Takes place when uncertainty is high Unprogrammed decisions Not a sequential process Involves unpredictable decisions

21. Contingency Decision-Making Two dimensions Problem consensus Technical knowledge about solutions

22. Design Essentials Most decisions are not made in a logical manner Individuals make decisions, but organizational decisions are not made by a single individual Conflict exists when problems are not agreed on The garbage can model has become a description of decision-making Organizations operate in high-velocity environments Allowing biases to cloud decision making can have negative consequences

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