Understanding

Management
First Canadian Edition

Slides prepared by
Janice Edwards
College of the Rockies
Copyright 2009 Nelson Education Ltd.

Chapter 6

Managerial Decision
Making and
Information
Technology
6-2

Learning Objectives
1.

2.

3.

4.

Explain the difference between programmed and non

programmed decisions and the decision characteristics
of risk, uncertainty, and ambiguity.
Describe the classical, administrative, and political
models of decision making and their applications.
Explain why decision making is an important component
of good management.
Identify the six steps used in managerial decision
making.

Copyright 2009 Nelson Education Ltd.

6-3

Learning Objectives (contd.)

5.

6.

7.

8.

9.

Explain four personal decision styles used by

managers.
Discuss the advantages and disadvantages of
participative decision making.
Identify techniques for improving decision making in
todays turbulent environment.
Describe the importance of information technology
(IT) for organizations and the attributes of quality
information.
Discuss IT trends that affect the workplace.

Copyright 2009 Nelson Education Ltd.

6-4

Decisions and Decision Making

A decision is a choice made from available

alternatives.

Decision making is the process of identifying

problems and opportunities and then resolving
them.

Copyright 2009 Nelson Education Ltd.

6-5

Types of Decisions
Programmed decisions

situations that occur often enough to enable

decision rules to be developed.
Nonprogrammed decisions

are made in response to situations that are

unique, are poorly defined and largely
unstructured.

Copyright 2009 Nelson Education Ltd.

6-6

Decision Making Conditions

Certainty

All of the information the decision maker needs

is fully available
Risk

A decision has clear goals and good information

is available, but the future outcomes associated
with each alternative are subject to chance.

Copyright 2009 Nelson Education Ltd.

6-7

Decision Making Conditions (Contd)

Uncertainty

Managers know which goals they wish to achieve.

Information about alternatives and future events is

incomplete.

Managers may have to come up with creative

approaches to alternatives.

Copyright 2009 Nelson Education Ltd.

6-8

Decision Making Conditions (Contd)

Ambiguity

The goals to be achieved or the problem to be

solved is unclear

Alternatives are difficult to define

Information about outcomes is unavailable.

Copyright 2009 Nelson Education Ltd.

6-9

Ex. 6.1

Conditions That Affect the Possibility

of Decision Failure
Organizational
Problem

Low

Possibility of Failure

Certainty

Risk

Uncertainty

Programmed
Decisions

High
Ambiguity

Nonprogrammed
Decisions
Problem
Solution

Copyright 2009 Nelson Education Ltd.

6-10

Three Decision Making Models

Classical Model

Administrative Model

Political Model

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6-11

Selecting a Decision Making Model

Depends on:

The managers personal preference.

Whether the decision is programmed or nonprogrammed.

The extent to which the decision is characterized by risk,

uncertainty, or ambiguity.

Copyright 2009 Nelson Education Ltd.

6-12

Classical Model

Based on economic assumptions

Is considered to be normative

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6-13

Assumptions of the Classical Model

Accomplishes goals that are known and agreed upon.

Strives for certainty by gathering complete information.
Criteria for evaluating alternatives are known.
Decision maker is rational and uses logic.

Copyright 2009 Nelson Education Ltd.

6-14

Administrative Model

How managers actually make decisions in situations

characterized by non-programmed decisions,
uncertainty, and ambiguity.
Two concepts are instrumental in shaping the
administrative model:

Bounded Rationality: people have limits or

boundaries on how rational they can be.

Satisficing: decision makers choose the first

solution alternative that satisfies minimal decision
criteria.

Copyright 2009 Nelson Education Ltd.

6-15

Political Model

Closely resembles the real environment in which

most managers and decision makers operate.
Decisions are complex.
Information is often ambiguous.
Disagreement and conflict over problems and
solutions are normal.
Coalition building is important.

Copyright 2009 Nelson Education Ltd.

6-16

Ex. 6.2

Characteristics of Classical, Administrative,

and Political Decision-Making Models

Classical Model

Administrative Model

Clear-cut problem and goals.

Vague problem and goals.

Pluralistic; conflicting goals.

Condition of certainty.

Condition of uncertainty.

Condition of uncertainty/ambiguity.

Full information about

alternatives and their outcomes.

Limited information about

alternatives and their outcomes.

Inconsistent viewpoints; ambiguous

information.

Rational choice by individual

for maximizing outcomes.

Satisficing choice for resolving

problem using intuition.

Bargaining and discussion among

coalition members.

Copyright 2009 Nelson Education Ltd.

Political Model

6-17

Ex. 6.3

Six Steps in the Managerial

Decision Making Process

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6-18

Ex. 6.5

Personal Decision Framework

Situation:
Programmed/non-programmed
Classical, administrative,
political
Decision steps

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Personal Decision Style:

Directive
Analytical
Conceptual
Behavioural

Decision Choice:
Best Solution to Problem

6-19

The Vroom-Jago Model

The Vroom-Jago Model helps gauge the appropriate amount
of participation for subordinates, based on:

leader participation styles

a set of diagnostic questions with which to analyze a
decision situation
a series of decision rules.

Copyright 2009 Nelson Education Ltd.

6-20

Vroom-Jago Model: Diagnostic Questions

1.
2.
3.
4.
5.
6.
7.

Decision significance
Importance of commitment
Leader expertise
Likelihood of commitment
Group support for goals
Group expertise
Team competence

Copyright 2009 Nelson Education Ltd.

6-21

New Decision Approaches for Turbulent Times

1.
2.
3.
4.
5.

Start with brainstorming.

Learn; do not punish.
Know when to bail.
Practise the 5 Whys.
Engage in rigorous debate.

Copyright 2009 Nelson Education Ltd.

6-22

Management Implications of
Information Technology

Improved employee effectiveness.

Increased efficiency.

Empowered employees.

Information overload.

Enhanced collaboration.

Copyright 2009 Nelson Education Ltd.

6-23