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Decision Making, Learning, Creativity, and Entrepreneurship

Decision Making- The process by which managers respond to opportunities and threats by analyzing options, and making determinations about specific organizational goals and
courses of action

Types of decision making:

ü Programmed Decisions

– Routine, virtually automatic decision making that follows established rules or guidelines.

• Managers have made the same decision many times before

• There are rules or guidelines to follow based on experience with past decisions

• Little ambiguity involved

ü Non-Programmed Decisions

– Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats.


• Intuition - feelings, beliefs, and hunches that come readily to mind, require little effort and information gathering and result in on-the-spot decisions

• Reasoned judgment- decisions that take time and effort to make and result from careful information gathering, generation of alternatives, and evaluation of alternatives.


  1. Classical Model of Decision Making- A prescriptive model of decision making that assumes the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action.
  2. Administrative Model of Decision Making- An approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions. Bounded rationality, incomplete information.

Why is information incomplete?



Risk- The degree of probability that the possible outcomes of a particular course of action will occur.

Uncertainty- the probabilities of alternative outcomes cannot be determined and future outcomes are unknown.

Ambiguous Information- Information that can be interpreted in multiple and often conflicting ways.

Time constraints and information costs- managers have neither the time nor money to search for all possible alternatives and evaluate potential consequences

Satisficing- managers tend to choose satisfactory decisions, dropping looking for a perfect decision

Step 1. Recognize Need for a Decision- Sparked by an event such as environment changes. Managers must first realize that a decision must be made.

Step 2. Generate Alternatives- Managers must develop alternative courses of action

Step 3. Evaluate Alternatives- What are the advantages and disadvantages of each alternative? Managers should specify criteria, then evaluate.

Step 4. Choose Among Alternatives -Rank the various alternatives

and make a decision Tendency is for managers to ignore critical

information, even when available

Step 5. Implement Chosen Alternative- Managers must now carry out the alternative. Often a decision is made and not implemented.

Step 6. Learn From Feedback- Compare what happened to what was expected to happen. Explore if all went accordingly. Derive conclusions.


Group Decision Making:

• Superior to individual making

• Choices less likely to fall victim to bias

• Able to draw on combined skills of group members

• Improve ability to generate feasible alternatives

• Allows managers to process more information

• Managers affected by decisions agree to cooperate



-Groupthink- groups seek to agree at all cost

-Devil’s Advocacy- critical analysis of a preferred alternative to point its strengths and weaknesses before it is implemented.




Organizational Learning- The process through which managers seek to improve a employee’s understanding of the organization to raise effectiveness.


• Creativity- ability to discover original and novel ideas

• Innovation- implementing creative ideas in an organization.


• Brainstorming

– Managers meet face-to-face to generate and debate many alternatives.

– Group members are not allowed to evaluate alternatives until all alternatives are listed.

– When all are listed, then the pros and cons of each are discussed and a short list created.

– Bad brainstorming leads to ‘production blocking’ (no conclusions)

• Nominal Group Technique- group members write down ideas and solutions, read their suggestions to the whole group, and discuss and then rank the alternatives

• Delphi Technique- members do not meet face-to-face but respond in writing to questions posed by the group leader


Creative actions:

• Entrepreneur - notices opportunities and decides how to mobilize the resources necessary to produce new and improved goods and services.

• Social entrepreneurs- pursue initiatives and opportunities to address social problems and needs in order to improve society and well-being

• Intrapreneur- works inside an organization and notices opportunities to develop new or improved products and better ways to make them


• Entrepreneurship Mobilization of resources to take advantage of an opportunity to provide customers with new and improved goods and services

• Product champion- a manager who takes “ownership” of a project and provides the leadership and vision that take a product from the idea stage to the final customer

• Skunkworks- a group who is deliberately separated from normal operations to encourage them to devote all their attention to developing new products


Date: 2015-02-16; view: 1606

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