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Chapter 13

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Ryerson University
Global Management Studies
GMS 200
Shavin Malhotra

Chapter 13: Information and Decision-Making Information, Technology, and Management (Pages 385-388) -career success requires two “must have” competencies: computer competency-the ability to understand computers and to use them to their best advantage; and information competency –the ability to use technology to locate, retrieve, evaluate, organize, and analyze information for decision-making. What is useful information? -Data does not equal to Information Data – are raw facts and observations Information – is data made useful for decision-making -The management process of planning, organizing, leading, and controlling is driven by information -Information that is truly useful in management meets the test of these five criteria:  Timely-the information is available when needed; it meets deadlines for decision-making and action  High quality-the information is accurate and it is reliable; it can be used with confidence  Complete-the information is complete and sufficient for the task at hand; it is as current and up to date as possible  Relevant-the information is appropriate for the task at hand; it is free from extraneous or irrelevant materials  Understandable-the information is clear and easily understood by the user; it is free from unnecessary detail Information needs in organizations Information technology – helps us acquire, store, and process information. Information and the External Environment Figure 13.1 Internal and external information needs in organization -Managers use intelligence information to deal with customers, competitors, and other stakeholders such as government agencies, creditors, suppliers, and stakeholders -Organizations also send vast amounts of public information to stakeholders and the external environment. This serves a variety of purposes, ranging from image building to product advertising to financial reporting. Information and the Internal Environment -Within organizations, people need vast amounts of information  To make decisions and solve problems in their daily work  To act individually and in team  From their immediate work setting, from other parts of the organization, and from the organization‟s external environment How information technology is changing organizations Information systems – use IT to collect, organize, and distribute data for use in decision-making Management information systems (MIS) – meet the information needs of managers in making daily decisions -The new IT-intensive organizations are „flatter” and operate with fewer levels than their more traditional organizational counterparts; computers replace people whose jobs were primarily devoted to moving information. -This creates opportunities for faster decision making, better use of timely information, and better coordination of decisions and actions Figure 13.2 Information technology is breaking barriers and changing organizations. -IT plays an important role in customer relationship management by quickly and accurately providing information regarding customer needs, preferences, and satisfaction. Information and Managerial Decisions (Pages 388-394) -Information is the centre point in all three phases  Information helps a leader sense the need for a decision  Frame an approach to it  Communicate about it with others Managers as information processors -IT offers many advantages.  Planning advantages of IT – better and more timely access to useful information, involving more people in the planning process  Organizing advantages of IT – more ongoing and informed communication among all parts, improving coordination and integration  Leading advantages of IT – more frequent and better communication with staff and diverse stakeholders, keeping objectives clear  Controlling advantages of IT – more immediate measures of performance results, allowing real-time solutions to problems Figure 13.3 The manager as an information-processing nerve centre in the management process Managers as problem solvers Problem solving – involves identifying and taking action to resolve problems A decision – is a choice among possible alternatives courses of action -The most obvious problem situation is a performance deficiency – this is when actual performance is less than desired -Another important problem situation emerges as a performance opportunity – this is when an actual situation either turns out better than anticipated or offers the potential to do so Openness to Problem Solving -some managers are problem avoiders who ignore information that would otherwise signal the presence of a performance opportunity or deficiency  They are passive in information gathering, not wanting to make decisions and deal with problems -Other managers are problem solvers who are willing to make decisions and try to solve problems, but only when forced to by the situation  They are reactive in gathering information and tend to respond to problems after they occur  They may deal reasonably well with performance deficiencies, but they may miss many performance opportunities -The managers above actively process information and constantly look for problems to solve -Problem seekers on the other hand are proactive and forward-thinking Systematic and Intuitive Thinking Systematic thinking – approaches problems in a rational and analytical fashion Intuitive thinking – approaches problems in a flexible and spontaneous fashion -Systematic managers can be expected to make a plan before taking action, but intuitive managers jump quickly from one issue to another. Multidimensional Thinking Multidimensional thinking – is an ability to address many problems at once Strategic opportunism – focuses on long-term objectives while being flexible in dealing with short-term problems Cognitive Styles -these styles are based on a contrast of approaches toward information gathering (sensation vs. intuition) and information evaluation (feeling vs. thinking) Types of managerial decisions Programmed and Nonprogrammed Decisions Structured problems – are straightforward and clear with respect to information needs Programmed decision – applies a solution from past experience to a routine problem Unstructured problems – have ambiguities and information deficiencies A nonprogrammed decision – applies a specific solution crated for a unique problem Crisis Decisions A crisis – is an unexpected problem that can lead to disaster if not resolved quickly and appropriately. Crisis management – is preparation for the management of crisis that threaten an organization‟s health and well-being. -anticipation is one aspect of crisis management; preparation is another Decision Conditions -There are three different decision conditions or environments  Certainty  Risk  Uncertainty Figure 13.4 Three environments for managerial decision-making and problem solving Certain Environment A certain environment – offers complete information on possible action alternatives and their consequences -the decision-makers task is simple: study the alternatives and choose the best solution -certain environments are nice and comfortable for decision-makers Risk Environment A risk environment – lacks complete information but offers “probabilities” of the likely outcomes for possible action alternatives -Entrepreneu
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