1. Introduction to Management 11e
John Schermerhorn
Chapter 7Chapter 7
TheThe
Decision-Making ProcessDecision-Making Process
2. Planning Ahead — Chapter 7 Study Questions
1. What is the role of information in the
management process?
2. How do managers use information to make
decisions?
3. What are the steps in the decision-making
process?
4. What are the current issues in managerial
decision making?
Management 11e Chapter 7 2
3. Study Question 1: What is the role of information in the
management process?
Information, technology and management
Managers must have
Computer competency
Ability to understand computers and use them to their
best advantage
Information competency
Ability to gather, analyze and use information for
decision making and problem solving
Management 11e Chapter 7 3
4. Study Question 1: What is the role of information in the
management process?
What is useful information?
Data
Raw facts and observations
Information
Data made useful for
decision making
Information drives
management functions
Management 11e Chapter 7 4
5. Study Question 1: What is the role of information in the
management process?
Characteristics of useful information:
Timely
High quality
Complete
Relevant
Understandable
Management 11e Chapter 7 5
6. Study Question 1: What is the role of information in the
management process?
Information needs of organizations
Information exchanges with the external
environment:
Gather intelligence information
Provide public information
Information exchanges within the
organization:
Facilitate decision making
Facilitate problem solving
Management 11e Chapter 7 6
7. Study Question 1: What is the role of information in the
management process?
Management 11e Chapter 7 7
8. Figure 7.1 Internal and external information needs of an
organization
Management 11e Chapter 7 8
9. Study Question 1: What is the role of information in the
management process?
Information systems
Use IT to collect, organize and distribute data
for use in decision making
Management information
systems
Meet the information
needs of managers in
making daily decisions
Management 11e Chapter 7 9
10. Figure 7.2 Information technology is breaking barriers and
changing organizations
Management 11e Chapter 7 10
11. Study Question 2: How do managers use information to make
decisions?
Managerial advantages of IT utilization:
Planning advantages
Better and more timely access to useful
information
Involving more people in planning
Organizing advantages
More ongoing and informed communication
among all parts of the organization
Improved coordination and integration
Management 11e Chapter 7 11
12. Study Question 2: How do managers use information to make
decisions?
Managerial advantages of IT utilization
(cont.):
Leading advantages
Improved communication with staff and
stakeholders
Keeping objectives clear
Controlling advantages
More immediate measures of performance results
Allows real-time solutions to performance
problems
Management 11e Chapter 7 12
13. Figure 7.3 The manager as an information-processing nerve center
Management 11e Chapter 7 13
14. Study Question 2: How do managers use information to make
decisions?
Problem solving
The process of identifying a discrepancy between
actual and desired performance and taking action to
resolve it
Management 11e Chapter 7 14
15. Study Question 2: How do managers use information to make
decisions?
Problem-solving approaches or styles:
Management 11e Chapter 7 15
16. Study Question 2: How do managers use information to make
decisions?
Systematic versus intuitive thinking
Management 11e Chapter 7 16
17. Study Question 2: How do managers use information to make
decisions?
Multidimensional thinking applies both
intuitive and systematic thinking
Effective multidimensional thinking requires
skill at strategic opportunism
Management 11e Chapter 7 17
18. Study Question 2: How do managers use information to make
decisions?
Management 11e Chapter 7 18
Managers use
different
cognitive
styles
19. Study Question 2: How do managers use information to make
decisions?
Types of problems
Structured problems are ones that are
familiar, straightforward, and clear with
respect to information needs
Programmed decisions apply solutions that
are readily available from
past experiences to solve
structured problems
Management 11e Chapter 7 19
20. Study Question 2: How do managers use information to make
decisions?
Types of problems
Unstructured problems are ones that are full
of ambiguities and information deficiencies
Nonprogrammed decisions apply a specific
solution to meet the demands of a unique
problem
Commonly faced by
higher-level management
Management 11e Chapter 7 20
21. Study Question 2: How do managers use information to make
decisions?
Crisis decision making
A crisis involves an unexpected problem that
can lead to disaster if not resolved quickly
and appropriately
Management 11e Chapter 7 21
22. Study Question 2: How do managers use information to make
decisions?
Management 11e Chapter 7 22
23. Study Question 2: How do managers use information to make
decisions?
Managers make decisions with various amounts of
information
Management 11e Chapter 7 23
24. Figure 7.4 Three environments for managerial decision making and
problem solving
Management 11e Chapter 7 24
25. Study Question 3: What are the steps in the decision-making
process?
Five-step decision-making process:
Identify and define the problem
Generate and evaluate alternative solutions
Make decision
Implement the decision
Evaluate results
Management 11e Chapter 7 25
26. Study Question 3: What are the steps in the decision-making
process?
Step 1 — Find and define the problem
Focuses on information gathering,
information processing, and deliberation
Decision objectives should be established
Common mistakes in defining problems:
Defining the problem too broadly or too narrowly
Focusing on symptoms instead of causes
Choosing the wrong problem
Management 11e Chapter 7 26
27. Study Question 3: What are the steps in the decision-making
process?
Step 2 — generate and evaluate
alternative courses of action
Potential solutions are formulated and more
information is gathered, data are analyzed ,
the advantages and disadvantages of
alternative solutions are identified
Approaches for evaluating alternatives:
Stakeholder analysis
Cost-benefit analysis
Management 11e Chapter 7 27
28. Study Question 3: What are the steps in the decision-making
process?
Step 2 — generate and evaluate possible
solutions (cont.)
Criteria for evaluating alternatives:
Benefits
Costs
Timeliness
Acceptability
Ethical soundness
Management 11e Chapter 7 28
29. Study Question 3: What are the steps in the decision-making
process?
Step 2 — generate and
evaluate possible solutions
(cont.)
Common mistakes:
Selecting a particular solution
too quickly
Choosing a convenient
alternative that may have
damaging side effects or may
not be as good as other
alternatives
Management 11e Chapter 7 29
30. Study Question 3: What are the steps in the decision-making
process?
Step 3 — decide on a
preferred course of action
Two different approaches
Behavioral model leads to
satisficing decisions
Classical model leads to
optimizing decisions
Management 11e Chapter 7 30
31. Figure 7.6 Differences in the classical and behavioral decision-
making models
Management 11e Chapter 7 31
32. Study Question 3: What are the steps in the decision-making
process?
Step 4 — implement the decision solution
Involves taking action to make sure the
solution decided upon becomes a reality
Managers need to have willingness and
ability to implement action plans
Lack-of-participation error
should be avoided
Management 11e Chapter 7 32
33. Study Question 3: What are the steps in the decision-making
process?
Step 5 — evaluate results
Involves comparing actual and desired
results
Positive and negative consequences of
chosen course of action should be examined
If actual results fall short
of desired results, the
manager returns to
earlier steps in the
decision-making process
Management 11e Chapter 7 33
34. Study Question 3: What are the steps in the decision-making
process?
Check ethical reasoning
Ask these spotlight questions
Management 11e Chapter 7 34
35. Study Question 4: What are the current issues in managerial
decision making?
Issues in decision making
How do decision errors happen?
Hueristics are strategies for simplifying
decision making
Management 11e Chapter 7 35
36. Study Question 4: What are the current issues in managerial
decision making?
Management 11e Chapter 7 36
37. Study Question 4: What are the current issues in managerial
decision making?
Creative Decision making:
Creativity is the generation of a novel idea or
unique approach that solves a problem or
crafts an opportunity
creativity is more likely when decision makers are
highly task motivated
Organizations should create an environment
that supports and encourages creativity
Management 11e Chapter 7 37
38. Study Question 4: What are the current issues in managerial
decision making?
Personal creativity drivers
Management 11e Chapter 7 38
39. Study Question 4: What are the current issues in managerial
decision making?
Situational creativity drivers
Team creativity skills
Management support for creative ideas
Organizational culture
Management 11e Chapter 7 39
40. Study Question 4: What are the current issues in managerial
decision making?
Situational creativity drivers
Management 11e Chapter 7 40