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Chapter Thirteen: Information and Decision Making
GMS 200
WHAT IS USEFUL INFORMATION?
Data raw facts and observations
Information useful data for decision making
- Information that is useful must be timely, of high quality, complete, relevant and
understandable
Information technology helps us acquire, store and process information
Intelligence information gathered from stakeholders and external environment
Internal information flows up, down, around and across organizations
Public information disseminated to stakeholders and external environment
- ranges from image building to product advertising to financial reporting
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
Problem solving the process of identifying a problem and taking action to resolve it (ex. performance
deficiency)
Decision a choice among possible alternative courses of action
Problem avoiders managers who ignore information that would otherwise signal the presence of a
performance opportunity or deficiency
Problem solvers managers who are willing to make decisions and try to solve problems, but only when
forced into the situation
Problem seekers managers who actively process information and constantly look for problems to solve
Systematic thinking one who approaches problems in a rational and analytical fashion
Intuitive thinking one who approaches problems in a flexible and spontaneous fashion
Multidimensional thinking an ability to address more than one problem at once
Strategic opportunism focuses on long term objectives while being flexible in dealing with short term
problems
Cognitive styles the way people deal with information while making decisions
Sensation thinkers those who emphasize the impersonal rather than the personal and take a realistic
approach to problem solving. They like hard facts, certainty, etc.
Sensation feelers those who emphasize both analysis and human relations. They tend to be realistic and
prefer facts
Intuitive thinkers comfortable with abstract and unstructured situations. Tend to avoid details.
Internal and external
information flows are
essential to problem
solving and decision
making in organizations
Intuitive feelers those who prefer broad and global issues. They are insightful and tend to avoid details.
Structured problems ones that are familiar, straightforward, and clear with respect to information needs
Programmed decision applies a solution from past experience to a routine problem
Unstructured problem have ambiguities and information deficiencies
Nonprogrammed decision applies a specific solution crafted for a unique problem
Crisis an unexpected problem that can lead to disaster if not resolved quickly and appropriately
Crisis management preparation for the management of crises that threaten an organization’s health and
well-being
6 rules for crisis management
1. Figure what is going on take time to understand what’s happening
2. Remember that speed matters attack the crisis as quickly as possible
3. Remember that slow counts, too know when to back off and wait for a better opportunity
4. Respect the danger of the unfamiliar understand the danger of your surroundings
5. Value the skeptic don’t look for and get too comfortable with agreement
6. Be ready to “fight fire with fire” – when things are going wrong and no one is paying attention, start a crisis
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
Decision Making Process begins with identification of a problem and ends with evaluation of solutions
Steps in the Decision Making Process
1. Find and define the problem
2. Generate and evaluate alternative solutions
3. Make decision and conduct ethics double check
4. Implement the decision
5. Evaluate results
Cost-benefit analysis involves comparing the costs and benefits of each potential course of action
Classical Decision model describes decision making with complete information
- views the manager as acting rationally in a certain world
Optimizing Decision chooses the alternative giving the absolute best solution to a problem
Bounded rationality describes making decisions within the constraints of limited information and
alternatives
Behavioural decision model described decision making with limited information and bounded rationality
Satisficing decision chooses the first satisfactory alternative that comes to one’s attention
Lack of participation error failure to involve in a decision the persons whose support is needed to
implement it
Heuristics strategies for simplifying decision making
Availability heuristic bases a decision on recent information or events
Representativeness heuristic bases a decision on similarity to other situations
Anchoring and adjustment heuristic bases a decision on incremental adjustments from a prior decision
point
Framing error tying to solve a problem in the context in which it is perceived (for example, if a company has
40 percent of the market share, a negative frame would suggest that the manager would ask a
question like “why are we doing wrong?” because we are missing 60%)
Confirmation error occurs when focusing only on information that confirms a decision already made
Escalating commitment the continuation of a course of action even though it is not working