B MGT 341 Lecture Notes - Lecture 16: Satisficing, Bounded Rationality
Decision Making
Decision Making
• Identifying and choosing alternative solutions that lead to a desired state of affairs
• Two models:
o Rational
o Nonrational
Rational Model
• Explains how managers should make decisions
• Assumes managers are completely objective and possess complete information
• Deisios thus deostrate exellet logi ad optiize the orgaizatio’s est iterests.
• Stage 1
o Identify the problem or opportunity
o Determine the actual versus the desirable
• Stage 2
o Generate alternative solutions
o Can use brainstorming
o Need to slow down to evaluate a broader set of alternatives
o Invest in studying a greater number of potential solutions
• Stage 3
o Evaluate alternatives and select a solution with consideration for:
▪ Ethics
▪ Feasibility
▪ Whether it removes the causes and solves the problem
• Stage 4
o Implement and evaluate the solution chosen
o Stakeholders need to evaluate how effectively the solution solves the problem
o If solution fails management can return to Stage 1
Rational Decision Making Considerations:
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Document Summary
Identifying and choosing alternative solutions that lead to a desired state of affairs: two models, rational, nonrational. Rational model: explains how managers should make decisions, assumes managers are completely objective and possess complete information, de(cid:272)isio(cid:374)s thus de(cid:373)o(cid:374)strate ex(cid:272)elle(cid:374)t logi(cid:272) a(cid:374)d opti(cid:373)ize the orga(cid:374)izatio(cid:374)"s (cid:271)est i(cid:374)terests, stage 1. Identify the problem or opportunity: determine the actual versus the desirable, stage 2, generate alternative solutions, can use brainstorming, need to slow down to evaluate a broader set of alternatives. Invest in studying a greater number of potential solutions: stage 3, evaluate alternatives and select a solution with consideration for, ethics, feasibility, whether it removes the causes and solves the problem, stage 4. Implement and evaluate the solution chosen: stakeholders need to evaluate how effectively the solution solves the problem. If solution fails management can return to stage 1. Leaving emotions out: obstacles to evaluating alternatives honestly and accurately. Limit of time and resources: people may be unwilling to implement and support decisions.
