Principles of Management - Decision Making.pptx

Principles of Management - Decision Making.pptx

1. 20CEM17I Principles of Management 2020/2021 Semester 1 Instructor: Dr. Mohamed Ibrahim Lecture # 8 Decision-Making & Problem Solving

2. Lecture’s Objectives 2 2. Identify the steps of the decision-making process 3. Explain how to perform SWAT analysis 1. Highlight the importance of decision making

3. Introduction 3 Management is essentially a decision making process . In every section of management, a manager has to make a choice among alternative courses of action; whatever a manager does, he/she does it through making decisions . In fact management is a continuous series of decisions . Decision making is the process of generating and evaluating alternatives and making choices among them.

4. Introduction 4 Why do managers need to make decisions? Managers need to make decisions when they face a problem, or an opportunity: Problem: is a deviation between the current and desired situation. Opportunity: is a deviation between current expectations and the recognition of a potentially better situation which is neither planned nor expected.

5. Introduction 5 There are three main categories of decisions based on the level at which they occur:

6. Decision-Making Models 6 There are four main models for decision-making :

7. Rational Decision-Making Process 7 The rationale decision-making process is a complex process that involves eight main steps:

8. Rational Decision-Making Process 8 Involves the establishment of the boundaries for the problem and defining its scope. During this step, the manager should follow these recommended guidelines: Cause/effect relationships are not missed because of under scoping the problem. Not to develop a scope that is too broad that nothing is accomplished. Avoid being overly influenced by the presence of a present solution. The manager should identify the real problem accurately as this step affects all the following decision making steps Step 1: Identify of the problem

9. Rational Decision-Making Process 9 During this step, the manager should follow these recommended guidelines: This can be done by identifying the problem separately from its symptoms. The most obviously troubling situations found in an organization can usually be identified as symptoms of a specific problem. These symptoms all indicate that something is wrong within an organization, but they don’t identify root causes. A successful manager doesn’t just work on symptoms; but digs to uncover the factors that cause these symptoms Step 1: Identify of the problem

10. Rational Decision-Making Process 10 Step 1: Identify of the problem

11. Rational Decision-Making Process 11 Step 2 & 3: Analysis of the problem Consists of relatively detailed phrasing of the characteristics of the problem, including restrictions and the criteria (monetary or intangibles) to evaluate alternatives; such as: Budget Quality Safety Environmental…etc.

12. Rational Decision-Making Process 12 Step 4: Generate Alternatives Involves the use of engineer’s creativity in developing feasible solutions to the addressed problem. However, “Rarely is one person able to generate the range of creative options generated by a team, particularly a team that is diverse in experience, education, personalities, and ethnicity.” Therefore, group process techniques should be used to stimulate the creativity of the team members ; such as: B rainstorming and Delphi technique .

13. Rational Decision-Making Process 13 Step 4: Generate Alternatives Is a group creativity technique by which efforts are made to find a conclusion for a specific problem by gathering a list of ideas spontaneously contributed by its members. Brainstorming:

14. Rational Decision-Making Process 14 Step 4: Generate Alternatives Members are selected for the Delphi panel due to their expertise. They are kept separated and answer through an open-ended questionnaires, surveys, etc. in order to solicit specific information about a subject or content area. Keeping them separated avoids the negative effects of face-to-face discussions and avoids problems associated with group dynamics. Members are asked to share their assessment and explanation of a problem or predict a future state of affairs. The facilitator (panel director) controls the interactions among the participants by processing the information and filtering out irrelevant content. Replies are gathered, summarized, and then fed back to all the group members. Members then make another decision based upon the new information. The process is repeated until the responses converge satisfactory yields consensus. Delphi Technique

15. Rational Decision-Making Process 15 Steps 5 & 6: Selection of the Best Alternative Consists of the measurement of the alternatives, using the appropriate criteria through conducting the following steps: The alternatives are compared with the constraints and infeasible alternatives are eliminated. Then, the benefits/pros of the feasible solutions are compared. Among the criteria considered for selection is the economic performance of each alternative The best alternative is the one that produces the most advantages and the fewest serious disadvantages.

16. Rational Decision-Making Process 16 Step 5 & 6: Selection of the Best Alternative Sometimes, the selection process can be fairly straightforward, such as the alternative with the most pros and fewest cons. Other times, the optimal solution is a combination of several alternatives. Correct timing in the execution of decision minimizes the resistance to change. Almost every decision introduces a change and people are hesitant to accept a change. Implementation of the decision at the proper time plays an important role in the execution of the decision.

17. Rational Decision-Making Process 17 Steps 7 & 8: Planning, Implementation & Control Consists of a detailed description of the solution to be implemented: Managers are paid to make decisions, but they are also paid to get results from these decisions. So, positive results must follow decisions. Everyone involved with the decision must know his or her role in ensuring a successful outcome. Correct timing in the execution of decision minimizes the resistance to change. Almost every decision introduces a change and people are hesitant to accept a change. Implementation of the decision at the proper time plays an important role in the execution of the decision Ongoing actions need to be monitored & evaluated .

18. Rational Decision-Making Process 18 Steps 7 & 8 : Planning, Implementation & Control Consists of a detailed description of the solution to be implemented: An evaluation system should provide feedback on how well the decision is being implemented, what the results are, and what adjustments are necessary to get the results that were intended when the solution was chosen. According to Peter Drucker, the monitoring system should be such that the manager can go and look for himself for first hand information which is always better than the written reports or other second-hand sources. In many situations, however, computers are very successfully used in monitoring.

19. Creative Decision-Making Process 19 The creative decision-making model involves five main steps : Immersion is the step in which the decision maker thinks about the problem consciously and gathers information. During incubation , the individual sets the problem aside and does not think about it for a while. At this time, the brain is actually working on the problem unconsciously. Illumination or the insight moment, when the solution to the problem becomes apparent to the person. Verification & Application starts when the decision maker consciously verifies the feasibility of the solution and implements the decision.

20. Creative Decision-Making Process 20 Team Composition: Diversify your team to give them more inputs to build on and more opportunities to create functional conflict while avoiding personal conflict. Change group membership to stimulate new ideas and new interaction patterns. Leaderless teams can allow teams freedom to create without trying to please anyone up front. How to Enhance Creativity within Organizational Teams

21. Creative Decision-Making Process 21 Team Process: Engage in brainstorming to generate ideas: remember to set a high goal for the number of ideas the group should come up with, encourage wild ideas, and take breaks. Use the nominal group technique in person or electronically to avoid some common group process pitfalls. Consider anonymous feedback as well. Use analogies to envision problems and solutions. How to Enhance Creativity within Organizational Teams

22. Creative Decision-Making Process 22 Leadership: Challenge teams so that they are engaged but not overwhelmed. Let people decide how to achieve goals, rather than telling them what goals to achieve. Support and celebrate creativity even when it leads to a mistake. But set up processes to learn from mistakes as well . Model creative behavior. How to Enhance Creativity within Organizational Teams

23. Creative Decision-Making Process 23 Culture : Institute organizational memory so that individuals do not spend time on routine tasks. Build a physical space conducive to creativity that is playful and humorous—this is a place where ideas can thrive. Incorporate creative behavior into the performance appraisal process. How to Enhance Creativity within Organizational Teams

24. Group Decision-Making 24 There are some pros and cons associated with group decision-making:

25. SWOT Analysis 25 Before making a decision, managers and organizations need to analyze their internal & external environment and how each alternative impacts them. This is often done through analyzing the following aspects of the organization’s environment: Strengths Weaknesses Opportunities Threats Internal Environment E xternal Environment Hence, the term SWOT Analysis

26. SWOT analysis helps to identify strategic alternatives that address the following questions: Strengths and Opportunities ( SO): How can you use your strengths to take advantage of the opportunities? Strengths and Threats ( ST): How can you take advantage of your strengths to avoid real and potential threats? Weaknesses and Opportunities ( WO): How can you use your opportunities to overcome the weaknesses you are experiencing? Weaknesses and Threats ( WT): How can you minimize your weaknesses and avoid threats? SWOT Analysis 26

27. SWOT Analysis 27 1- Strengths Strengths could be related to employees; for example: well qualified, motivated, have a good spirit within work, commitment, and punctual, and as for the company itself; for instance: updated technology , and quality control. 2 - Weaknesses Weaknesses of the organization could be employees losing interests as they are not motivated, committed or facing difficulties.

28. SWOT Analysis 28 3 - Opportunities External opportunities provide an organization with a means to improve its performance and competitive advantage in a market environment. Stable environment is considered as an opportunity. 4 - Threats External threats are anything from your organization's outside environment that can adversely affect its performance or achievement of its goals. Examples of external threats include new and existing regulations, new and existing competitors, new technologies that may make your products or services obsolete, unstable political and legal systems in foreign markets and economic downturns.

29. SWOT Analysis 29 Example From an Investor point of view

30. SWOT Analysis 30 Example From a contractor point of view

31. Questions