Information and Decision Making
Management11e John Schermerhorn
Planning Ahead
—Chapter 7 Study Questions
1.What is the role of information in the management process?
2.How do managers use information to make decisions?
3.What are the steps in the decision-making process?
4.What are the current issues in managerial decision making?
Study Question 1:
What is the role of information in the management process?
-Information, technology and management
§Managers
must have : Computer competency
-Ability to understand computers and use them to their best
advantage
§Information
competency:
§Ability to gather, analyze and
use information for decision making and problem solving
-What is useful information?
§Data :
Raw facts and observations
§Information : Data made useful
for decision making Information drives management functions
-Characteristics of useful information:
§Timely
§High
quality
§Complete
§Relevant
§Understandable
-Information needs of organizations
§Information
exchanges with the external environment:
§Gather
intelligence information
§Provide
public information
§Information
exchanges within the organization:
§Facilitate
decision making
§Facilitate
problem solving
-Information systems
§Use IT
to collect, organize and distribute data for use in decision making
-Management information systems
§Meet
the information needs of managers in making daily decisions
Study Question 2: How
do managers use information to make decisions?
-Managerial advantages of IT utilization:
§Planning
advantages
§Better
and more timely access to useful information
§Involving
more people in planning
§Organizing
advantages
§More
ongoing and informed communication among all parts of the organization
§Improved
coordination and integration
§Leading
advantages
§Improved
communication with staff and stakeholders
§Keeping
objectives clear
§Controlling
advantages
§More
immediate measures of performance results
-Problem solving
§The process of identifying a
discrepancy between actual and desired performance and taking action to resolve
it
-Problem-solving approaches or styles:
Study Question 2: How
do managers use information to make decisions?
-Systematic versus intuitive thinking
Systematic
thinking : approaches problems in a rational, step-by-step, and analytical
fashion
Intuitive thinking
:approaches problems in a flexible and spontaneous fashion
-Multidimensional thinking applies both intuitive and
systematic thinking
§Effective
multidimensional thinking requires skill at strategic opportunism
Managers use different cognitive styles
Sensation Thinkers
impersonal, realistic, prefer factsIntuitive Thinkers impersonal, abstract, idealistic, likes
unstructured problemsSensation Feelers relationship oriented, analytical,
realisticIntuitive Feelers relationship
oriented, abstract, flexible
-Types of problems
§Structured problems are ones
that are familiar, straightforward, and clear with respect to information needs
§Programmed decisions apply
solutions that are readily available from
past experiences to solve
structured problems
§Unstructured
problems are ones that are full of ambiguities and information deficiencies
§Nonprogrammed decisions apply a
specific solution to meet the demands of a unique problem
§Commonly
faced by higher-level management
-Crisis decision making
§A crisis involves an unexpected
problem that can lead to disaster if not resolved quickly and appropriately
Rules for crisis management:
•Figure out what is going on
•Remember that speed matters
•Remember that slow counts, too
•Respect the danger of the unfamiliar
•Value the skeptic
•Be ready to “fight fire with fire ”
Managers make decisions with various amounts of information
Certain environment : offers complete information on
possible action alternatives and their consequences
Risk environment: lacks complete information but offers
probabilities of the likely outcomes for possible action alternatives
Uncertain environment :lacks so much information that it is
difficult to assign probabilities to the likely outcomes of alternatives Figure
7.4 Three environments for managerial decision making and problem solving
Study Question 3:
What are the steps in the decision-making process?
Five-step decision-making process:
§Identify
and define the problem
§Generate
and evaluate alternative solutions
§Make
decision
§Implement
the decision
§Evaluate
results
Steps in managerial decision making and problem solving
§Step 1 —Find and define the problem
§Focuses
on information gathering, information processing, and deliberation
§Decision
objectives should be established
§Common
mistakes in defining problems:
§Defining
the problem too broadly or too narrowly
§Focusing
on symptoms instead of causes
§Choosing
the wrong problem
§Step 2 —generate and evaluate alternative courses of action
§Potential solutions are
formulated and more information is gathered, data are analyzed , the advantages
and disadvantages of alternative solutions are identified. Approaches for
evaluating alternatives:
§Stakeholder
analysis
§Cost-benefit
analysis
§Criteria
for evaluating alternatives:
§Benefits
§Costs
§Timeliness
§Acceptability
§Ethical
soundness
§Common
mistakes:
§Selecting
a particular solution too quickly
§Choosing a convenient
alternative that may have damaging side effects or may not be as good as other
alternatives
§Step 3 —decide on a preferred course of action
§Two
different approaches
§Behavioral
model leads to satisficing decisions
§Classical
model leads to optimizing decisions
§Step 4 —implement the decision solution
§Involves
taking action to make sure the solution decided upon becomes a reality
§Managers need to have willingness
and ability to implement action plans . Lack-of-participation error should be
avoided
§Step 5 —evaluate results
§Involves
comparing actual and desired results
§Positive
and negative consequences of chosen course of action should be examined
§If actual results fall short of
desired results, the manager returns to earlier steps in the decision-making
process
Check ethical
reasoning
§Ask
these spotlight questions
§Issues in decision making
§How do
decision errors happen?
§Hueristics
are strategies for simplifying decision making
• Utility :Does the decision satisfy all constituents or
stakeholders?
• Rights :Does the decision respect the rights and duties of
everyone?
• Justice :Is the decision consistent with the canons of
justice?
• Caring :Is the decision consistent with my
responsibilities to care
§Creative Decision making:
§Creativity is the generation of
a novel idea or unique approach that solves a problem or crafts an opportunity
§creativity
is more likely when decision makers are highly task motivated
§Organizations
should create an environment that supports and encourages creativity
§Situational creativity drivers
§Team
creativity skills
§Management
support for creative ideas
§Organizational
culture
§Personal
creativity drivers
§Situational
creativity drivers
§Amazon: One e-store rules them all