Introduction to Management
Stephen P. Robbins & Mary Coulter, THIRTEENTH EDITION
Chapter 2 .
Making
Decisions
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© 2024 Reem Ghaddar
IT IS IN YOUR MOMENTS OF
DECISION THAT YOUR DESTINY IS
SHAPED
Tony Robbins
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Don't be optimistic or
pessimistic, be rational.
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Decision
A choice among two or
more alternatives
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Mike
Harvey
Anna
Anna is an engineer. She is
25 years old.
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Step 1.
Problem
Defined
Anna wants to
choose her life
partner
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Existing Condition: I am very confused.
Mentally drained.
Desired Condition: I want to make the
right choice
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Step 2. Based on which criteria I will choose
Identify Decision my life partner?
Criteria
Ability to forgive Ability to cope
and forget with your family
Love
Trust
Shared Physical
values Appearance
Friendship
Intellectual level
Income Level
Respect of that partner
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Step 3. Criteria Weight
Trust 10
Allocating
Friendship 9
Weights to
Shared values 8
the Criteria Respect 7
Anna
love 6
If I want to
allocate weight to Intellectual level 5
the criteria. Ability to cope with your family 4
Use any number as Ability to forgive and forget 3
the highest weight.
Then assign weights Physical Appearance 2
to the rest using that
standard
[Anna will pick 10] Income level 1 9
Step 4. In this case what are our possible alternatives? Mike
Develop and Harvey
Alternatives The assessed values that Anna gave each
alternative
Trust Friendship Shared Respect love Intellectual Ability to cope Ability to Physical Income
values level with your forgive Appeara level
family and nce
forget
Mike 9 5 4 8 5 10 5 6 8 7
Harvey 5 10 9 8 7 6 9 10 6 4
10
Now what do I do? I multiply each
alternative by the assigned weight, to get
the weighted alternatives.
Multiply 9 by 10, you get 90 for mike on
trust.
Trust Friendship Shared Respect love Intellectual Ability to cope Ability to Physical Income
values level with your forgive Appeara level
family and nce
forget
Mike 9 5 4 8 5 10 5 6 8 7
Harvey 5 10 9 8 7 6 9 10 6 4
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Step 5.
Analyze
Alternatives
If one alternative scores highest on every criterion,
you wouldn’t need to consider the weights
Trust Friendsh Share Respect love Intellectu Ability to cope Ability Physical Income
ip d al level with your to Appeara level
value family forgive nce
s and
forget
Mike 90 45 32 56 30 50 20 18 16 7 364
Harvey 50 90 72 56 42 30 36 30 12 4 422
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Step 6.
Select an
Alternative
I will select
Harvey
Harvey scored higher than Mike
(422 total)
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Step 7.
Implement the Put your decision into action
Alternative
Step 8.
Evaluating the outcome or result
Evaluate Decision of the decision to see whether
Effectiveness the problem was resolved.
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Decision Making Process STEP 8
If the evaluation shows that Evaluate
the problem still exists, then the manager needs to assess what went wrong. Was the
Decision
problem incorrectly defined? Were errors made when evaluating alternatives? Was
the right alternative selected but poorly implemented? Effectiveness
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 STEP 6 STEP 7
Identify Allocating Select
Define the Develop Analyze Implementing
Decision Weights to an
problem Alternatives Alternatives the
Criteria the Criteria Alternative
Alternative
*problem Decision Use the criteria
weight the items choosing the Put the decision
An obstacle criteria are List viable established in
in order to give best alternative into action, but
that makes it criteria that alternatives that step 2.
them the correct or the still reassess the
difficult to define what’s could resolve the
priority in the one that environment for
achieve a important or problem. Multiply each
decision. generated the any changes,
desired goal relevant to alternative by the
Use any number highest total in especially if it’s a
or purpose resolving a assigned
as the highest Step 5 long-term
problem weight.
*Objective + weight. Then decision
you get the
Obstacle = assign weights to
weighted
problem the rest using
alternatives
that standard
Step 1. Example in your book
Problem
Defined
Amanda is a sales manager.
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Her reps need new laptops
because their old ones are
outdated and inadequate for
doing their job.
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Problem
A disparity between the sales reps’ current computers
(existing condition) and their need to have more
efficient ones (desired condition).
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Step 2.
Identify
Decision
Criteria
Amanda decides that memory
and storage capabilities, display
quality, battery life, warranty, and
carrying weight are the relevant
criteria in her decision.
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Step 3.
Allocate
weights to
the criteria
Since the relevant criteria aren’t
equally important, the decision
maker must weight the items in
order to give them the correct
priority in the decision. 20
Step 4.
Develop
alternatives
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Step 5.
Analyze
Alternatives
By using the criteria established in
Step 2. we multiply the weight of the
criteria with the alternative
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Step 6.
Select an
alternative
Amanda
would choose the Dell
Inspiron because it
scored higher than all
other alternatives
Step 7. Step 8.
Implement Evaluate decision
the alternative effectiveness 23
SUMMARY
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MANAGERS Making Decisions
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Decision Making Approach
Making Decisions: Rationality
Rational decision making: describes choices that are logical
and consistent and maximize value.
Assumptions of Rationality: A
rational decision maker would
be fully objective and logical.
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Decision Making Approach
Making Decisions: Bounded Rationality
Bounded Rationality: decision making that’s rational, but
limited (bounded) by an individual’s ability to process
information, time and availability of information.
Satisfice: accept
solutions that are
“good enough”
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Decision Making Approach
Making Decisions: The Role of Intuition
Intuitive decision making: making decisions on the basis of
experience, feelings, and accumulated judgment.
Intuition is “the subconscious
integration of all the experiences,
conditioning, and knowledge of a
lifetime, including the cultural and
emotional biases of that lifetime.” - -
Bruce Henderson, founder of the Boston Consulting
Group
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Types of Decisions: Programmed Decisions
Structured
Rule:
problems:
An explicit statement that tells
straightforward,
managers what can or cannot
familiar, and easily
be done
defined problems
Policy:
A guideline for
making decisions
Procedure:
Programmed decision:
a series of sequential
a repetitive decision
steps used to respond
that can be handled by
to a well-structured
a routine approach
problem 31
Types of Decisions: Nonprogrammed Decisions
Unstructured problems:
Problems that are new or
unusual and for which
information is ambiguous or
incomplete
Nonprogrammed decisions:
Unique and nonrecurring
decisions that
require a custom-made
solution 32
Decision-Making Conditions
Certainty a situation in
which a manager can make
accurate decisions because
all outcomes are known
Uncertainty a situation in Risk: a situation in which
which a decision maker has the decision maker is able
neither certainty nor to estimate the likelihood of
reasonable probability certain outcomes
estimates available
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Decision-Making Styles
nonlinear thinking style
decision style characterized
by a person’s preference for
linear thinking style internal sources of
decision style characterized information and processing
by a person’s preference for this information with
using external data and internal insights, feelings,
facts and processing this and hunches
information through
rational, logical thinking
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Decision-Making: Biases and Errors
Overconfidence bias When decision makers tend to think they know more than
they do or hold unrealistically positive views of themselves
and their performance
Immediate gratification bias Decision makers who tend to want immediate rewards and
to avoid immediate costs. For these individuals, decision
choices that provide quick payoffs are more appealing than
those with payoffs in the future
Anchoring effect describes how decision makers fixate on initial information
as a starting point and then, once set, fail to adequately
adjust for subsequent information.
Selective perception bias When decision makers selectively organize and interpret
events based on their biased perceptions. This influences
the information they pay attention to, the problems they
identify, and the alternatives they develop.
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Confirmation bias Decision makers who seek out information that reaffirms
their past choices and discounts information that
contradicts past judgments
The sunk costs error (escalation of commitment) occurs when decision makers forget that current choices
can’t correct the past. They incorrectly fixate on past
expenditures of time, money, or effort in assessing choices
rather than on future consequences. Instead of ignoring
sunk costs, they can’t forget them
Self-serving bias decision makers who are quick to take credit for their
successes and to blame failure on outside factors. .
Stereotyping Generalized belief about a particular category of people
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In addition to the PowerPoint slides, you are responsible for the
following pages in your book
(“let’s get real & future vision” parts are optional, you can skip them)
Pages 77 – 78 – 79 – 80 – 81 – 82 – 83 – 86 – 87
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