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Chapter 11

BUSI 3103 Chapter Notes - Chapter 11: Sequential Logic, Tacit Knowledge, Bounded Rationality

Course Code
BUSI 3103
Rumisa Shaukat

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Organizational decision making: is formally defined as the process of identifying and solving
problems. The process has two major stages.
Problem Identification stage: information about environmental and organizational conditions is
monitored to determine if performance is satisfactory and to diagnose the cause of shortcomings.
Problem Solution stage: occurs when alternative courses of action are considered and one
alternative is selected and implemented.
Programmed decisions: are repetitive and well defined, and procedures exist for resolving the
Nonprogrammed decisions: are novel, ill structured, and poorly defined, and no procedure exists
for solving the problem.
Rational Approach: Monitor, Define, Decision Objectives, Diagnose Problem, Develop Alternatives,
Evaluate, Choose, Implement Alternative
Individual Decision Making: Rational Approach and Bounded Rationality Perspective
Bounded Rationality Perspective: which describes how decisions actually have to be made under
severe time and resource constraints. Often associated with individual decision making. Constraints
and Trade-offs.
Intuitive Decision making: experience and judgment rather than sequential logic or explicit
reasoning are used to make decisions.
Management Science approach: research and science meant to supplement decision making.
Quantitative data are not rich and do not convey tacit knowledge.
Carnegie Model: building agreement through a managerial coalition is a major part of
organizational decision making. Best for problem identification stage
Satisficing: means organizations accept a satisfactory rather than a maximum level of performance,
enabling them to achieve several goals simultaneously. A coalition is an alliance among several
managers who agree about organizational goals and problem priorities.
Problemistic search: means managers look around in the immediate environment for a solution to
quickly resolve a problem.
Incremental Decision process model: focuses the structured sequence of activities undertaken
from the discovery of a problem to its solution. Three major decision phases
Identification Phase: begins with recognition and is usually stimulated by a problem. Recognition
means one or more managers become aware of a problem and the need to make a decision
Development Phase: a solution is shaped to solve the problem defined in the identification phase.
Organization may search within their repertoire of solutions or design a custom one.
Selection Phase: is when the solution is chosen. May use judgement (single, experience), analysis
evaluation(systematic), bargaining (group)
Decision Interrupts: Minor problems arise that force a loop back to an earlier stage
Garbage Can Model: deals with the pattern or flow of multiple decisions within organizations.
Think of the organization as a whole.
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