MCS 2020 Chapter 8: Chapter 8 Decision Making and Business Intelligence

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University of Guelph
Marketing and Consumer Studies
MCS 2020
Trent Tucker

Chapter 8: Decision Making and Business Intelligence Q1: What Challenges do Managers Face When Making Decisions? It is the essence of management Decision making is a rational act in which individuals or groups consider the possible choices and the likely consequences and choose what they think is the best alternative The concept of rationality can be hard to define o Processes are considered rational if they result in outcomes that are deemed good or are likely to lead to good outcomes Good outcomes occasionally result from irrational processes, bad outcomes can result from good processes o Ex. Not rational to skip University to buy lottery tickets but for some this strategy was successful Bounded rationality: humans intend to be rational but there are limits to our cognitive capabilities o Humans satisfice: choose the most reasonable and available solution rather than the perfect choice o Settle with an alternative that is generally good across a set of criteria Managers sometimes make decisions first and find evidence to support their evidence later Computers are sometimes used for decision making Ackoffs Assumptions: 1. Managers will have no problem making decisions if they have the data they need o Countered that for most managers, too many possibilities exist so they may not make better decisions even with perfect data o Complexity and uncertainty makes them challenging 2. Managers make poor decisions because they lack relevant information o Countered that managers suffer more from an abundance of irrelevant data (information overload) 3. Managers know what data they need o Managers are not sure what data they need in reality o Tend to ask more due to uncertainty causing information overload Information Overload Data is growing at the rate of 40 a year Occurs inside organizations just as much as outside The useful information gets buried in the overload The challenge managers face is to find the appropriate data and incorporate them into their decisionmaking process Information systems can help and hinder this process Data Quality In most systems data quality is not always good Data from operational systems can be processed to create basic reports with few issues
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