May 2 2012
Chapter 13: Information and Decision Making
Lecture 2 continued….
Problem Solving is coming up with potential ways to come up with a result
Decision Making is from the options made in Problem solving choosing one option to follow.
Data vs Information
- Data is raw collected information. Raw facts and observation
o Can be processed to create useful information
o View of past (rise-fall)
o Helps better decisions in future
o Useful for generating graphs, reports and stats
- Information: Data made useful and meaningful for decision making.
o The manipulated and processed form of data
o Used for making decision
Information drives management functions – Census data generates different
information- literacy rate. Customer’s data.
Characteristics of useful information:
- Timely- available when needed
- High quality: accurate and reliable
- Complete: and sufficient for problem at hand
- Relevant: appropriate for the task at hand
- Understandable: easily understandable and clear
- Examples of data
- Examples of useful and useless information
- How does information Technology help managers
o Transmit Information What is the purpose of receiving and sending information to external environment?
- By law (packaging)
What is the role of exchanging information inside the organization?
- For decision making
Role of Information Technology in the organization
- Facilitation of communication and information sharing
- Operating with fewer middle managers
- Flattening of organizational structures
- Faster decision making
- Increased coordination and control.
Management Information Systems
- Information system
o Use of the latest IT to collect, organize, and distribute data for use in decision making.
- Management information system (MIS)
o Specifically designed to meet the information needs of managers in daily decision
Problem Solving in Organizations:
- Problem Solving
o The process of identifying a discrepancy between actual and desired performance and
taking action to resolve it.
- A decision
o A choice among possible alternative course of action.
Types of Managers- Problem Solving approaches
- Managers are different in their openness to problems solving:
o Problem avoiders
Inactive in information gathering and solving problems
o Problem Solvers
Reactive in gathering information and solving problems
o Problem seekers
Proactive in anticipating problems and opportunities and taking appropriate
action to gain an advantage. Systematic vs intuitive thinking and multidimensional
- Systematic thinking: approaches problem in a rational, step by step, and analytical fashion
- Intuitive thinking: approaches problems in a flexible and spontaneous fashion- creative
- Multidimensional thinking applies both intuitive and systematic thinking.
- Structural problems: are ones that are familiar, straightforward, and clear with respect to
information needs. They are predictable issues
o Programmed decisions:
Apply solutions that are readily available from past experiences to solve
Best applied to routine problems that can be anticipated
Example: Quantities to produce each day.
- Unstructured problems: are full of ambiguities and information deficiencies
o Non-programmed decisions:
Develop novel solutions to meet the demands of unique situation that present
New, unusual situation, uncertain
Commonly faced by higher level management
Example: which global markets provide the most potential.
Discussion: Write 2 programmed and nonprogrammed decisions and which level of manager is
- Lower manager that does scheduling
- Middle manager that does ordering for a product
- Top Management: did not see a recession coming requiring cuts
- Top management: Supplier going out of business
- Top Management: medial Scandal
Crisis Decision Making:
- A crisis involves an unexpected problem that can lead to disaster if not resolved quickly and
o The ultimate test of manager’s problem solving capability
o Common mistake: isolating themselves (solve alone or in small group. Denies access to
crucial information and assistant at needed time. Crisis Decision Making:
- Rules for crisis management:
o Figure out what is going on
o Remember that speed matters
o Remember that slow counts, too
o Respect the danger of the unfamiliar
o Value the skeptic
o Be read to fight fire with fire
- Aspect of Crisis management:
Decision environments or decision condition:
- Certain environments:
o Offer complete information about possible action alternatives and their utcomes
- Risk environments
o Lack complete information about action alternatives and their consequences, but offer
some estimates of probabilities of outcomes for possible action alternatives
- Uncertain environments
o Information is so poor that probabilities cannot be assigned to likely outcomes of known
action alternatives. May 7 2012
5 Steps of decision making:
- Find and define the problem
o Focuses on information gathering, information processing, and deliberation
o Establish objectives
o Common problems when defining the problem
Defining the problem too broadly or too narrowly
Focusing on symptoms instead of causes. (example= medicine)
Choosing the wrong problem.
- Generate and evaluate alternative solutions
o Identify alternative courses of action
o Anticipate conse