Ch 11.docx

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University of Toronto Mississauga
Multiple Professors

Ch 11Introductiondecision making is arguably the most important of all managerial activitiesit is the most common activity and most crucial role of senior managersdecisions in organizations can be divided into various groups and each division has various phases For instanceoperational decisions usually with shortterm effects and of a routine naturetactical decisions usually with mediumterm effects and of a nonroutine nature but not going sstrategic decisions usually with longterm effects and concerning the organizations goalsresearch on decisionmaking is concerned with very specific issues such as how people infer information from data how personal preferences affect decisionmaking and the deciding process itselfin essence ppl are frequently not rational Hastie and Dawes 2001 note that a rational choice can be defined as one that meets 4 criteria1 it is baed on the decisionmakers current assets Assets include not nly money but physiological state psychological capactities social relationships and feelings2 it is based on the possible consequences of the choice3 when these consequences are uncertain their likelihood is evaluated according to the basic rules of probability theory4 it is a choice that is adaptive within the constraints of those probabilities and the a persons ability experience and motivation have a powerful influence on how they see things Second cognitive dissonance has shown how ppl feel pressured to be consistent in their beliefs and behaviours Third there is a wealth of studies suggesting that our memory of events is very select Finally there are wellknown context affectsthere are many wellresearched traps that ppl fall into when making biz decisions These include overconfidence in personal ability to make the right choice it occurs when judgements are difficult and can have disastrous consequences Another is selffulfilling prophecies which is seeking only confirmatory evidence that selfperpetuates beliefsGood and cheap but not so fastthis is where speed is traded off for quality and price In this sense quality can be costeffective but at the price of speedGood and fast but not cheapthis is where price is traded off for speed and qualityFast and cheap but not goodthis is where quality is traded off for speed and pricesome organizations have departments of strategic planning which are dedicated to helping senior managers make better decisions Other organizations believe better decisions are made if particular processes are followedmore recently there has been increasing interest in decision making by computer and expert systems We can now build computerized chess programs that can beat Grand Masters Given the number of human errors we constantly find in decision making and accepting that computers excel at logical deductions following simple and robust algorithms it is quite possible that many mundane but also many highorder decisions can be better made with computer assistance The sheer speed and accuracy with which computers are able to process large amounts of data means that many managers are now dependent on computer analysis for their decisionmakingmost decisionmaking involves going through a series of specific stepsthe issue problem or topic need to be identified and delineatednext step is top define the objective or outcomes of the decisionhow to make the decision
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