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Principles of Management

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Principles of Management ­ MGT503
VU
Lesson 6.17
NATURE AND TYPES OF MANAGERIAL DECISIONS
Nature of Managerial Decision-making:
The situations in which managers have to act differ according to the types of problems that must be
handled.
Programmed decisions are those made in routine, repetitive, well-structured situations through the use of
predetermined decision rules.
Many programmed decisions are derived from established practices and procedures or habit. Computers are
an ideal tool for dealing with several kinds of complex programmed decisions.
Most of the decisions made by first-line managers and many by middle managers are Programmed
decisions.
Non-programmed decisions are those for which predetermined decision rules are impractical because the
situations are novel and/or ill-structured.
Types of Problems and Decisions:
Managers will be faced with different types of problems and will use different types of decisions.
1.
Well-structured problems are straightforward, familiar, and easily defined. In handling this
situation, a manager can use a programmed decision, which is a repetitive decision that can be
handled by a routine approach. There are three possible programmed decisions.
a.
A procedure is a series of interrelated sequential steps that can be used to respond to a structured
problem.
b.
A rule is an explicit statement that tells managers what they ought or ought not to do.
c.
A policy is a guide that establishes parameters for making decisions rather than specifically stating
what should or should not be done
2.
Poorly structured problems are new or unusual problems in which information is ambiguous or
incomplete. These problems are best handled by a non-programmed decision that is a unique
decision that requires a custom-made solution.
General Organizational Situations:
a.
At the higher levels of the organization, managers are dealing with poorly structured problems and
using non-programmed decisions.
b.
At lower levels, managers are dealing with well-structured problems by using programmed
decisions.
Since managers can make decisions on the basis of rationality, bounded rationality, or intuition, let us try to
understand them one by one:
1.
Assumptions of Rationality.
Managerial decision making is assumed to be rational; that is, choices that is consistent and value
maximizing within specified constraints. The assumptions of rationality are summarized below.
a.
These assumptions are problem clarity (the problem is clear and unambiguous); goal orientation (a
single, well-defined goal is to be achieved); known options (all alternatives and consequences are
known); clear preferences; constant preferences (preferences are constant and stable); no time or
cost constraints; and maximum pay off.
b.
The assumption of rationality is that decisions are made in the best economic interests of the
organization, not in the manager's interests.
c.
The assumptions of rationality can be met if: the manager is faced with a simple problem in which
goals are clear and alternatives limited, in which time pressures are minimal and the cost of finding
and evaluating alternatives is low, for which the organizational culture supports innovation and risk
taking, and in which outcomes are concrete and measurable.
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Principles of Management ­ MGT503
VU
The rational model is flawed in that it does not apply to actual decision aiming for two reasons.
a.
Perfect information is not available.
b.
Manager's values and personality factors enter into their decisions.
The rational model presents an ideal against which actual decision-making patterns can be measured
Decision-Making Styles
Managers have different styles when it comes to making decisions and solving problems. One perspective
proposes that people differ along two dimensions in the way they approach decision making.
1.
One dimension is an individual's way of thinking--rational or intuitive. The other is the individual's
tolerance for ambiguity--low or high.
2.
These two dimensions lead to a two by two matrix with four different decision-making styles.
a.
The directive style is one that's characterized by low tolerance for ambiguity and a rational way of
thinking.
b.
The analytic style is one characterized by a high tolerance for ambiguity and a rational way of
thinking.
c.
The conceptual style is characterized by an intuitive way of thinking and a high tolerance for
ambiguity.
d.
The behavioral style is one characterized by a low tolerance for ambiguity and an intuitive way of
thinking.
3.
Most managers realistically probably have a dominant style and alternate styles, with some relying
almost exclusively on their dominant style and others being more flexible depending on the
situation.
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Table of Contents:
  1. HISTORICAL OVERVIEW OF MANAGEMENT:The Egyptian Pyramid, Great China Wall
  2. MANAGEMENT AND MANAGERS:Why Study Management?
  3. MANAGERIAL ROLES IN ORGANIZATIONS:Informational roles, Decisional roles
  4. MANAGERIAL FUNCTIONS I.E. POLCA:Management Process, Mistakes Managers Make
  5. MANAGERIAL LEVELS AND SKILLS:Middle-level managers, Top managers
  6. MANAGEMENT IDEAS: YESTERDAY AND TODAY, Anthropology, Economics
  7. CLASSICAL VIEW OF MANAGEMENT:Scientific management
  8. ADMINISTRATIVE VIEW OF MANAGEMENT:Division of work, Authority
  9. BEHAVIORAL THEORIES OF MANAGEMENT:The Hawthorne Studies
  10. QUANTITATIVE, CONTEMPORARY AND EMERGING VIEWS OF MANAGEMENT
  11. SYSTEMíS VIEW OF MANAGEMENT AND ORGANIZATION:Managing Systems
  12. ANALYZING ORGANIZATIONAL ENVIRONMENT AND UNDERSTANDING ORGANIZATIONAL CULTURE
  13. 21ST CENTURY MANAGEMENT TRENDS:Organizational social Responsibility
  14. UNDERSTANDING GLOBAL ENVIRONMENT WTO AND SAARC
  15. DECISION MAKING AND DECISION TAKING
  16. RATIONAL DECISION MAKING:Models of Decision Making
  17. NATURE AND TYPES OF MANAGERIAL DECISIONS:Decision-Making Styles
  18. NON RATIONAL DECISION MAKING:Group Decision making
  19. GROUP DECISION MAKING AND CREATIVITY:Delphi Method, Scenario Analysis
  20. PLANNING AND DECISION AIDS-I:Methods of Forecasting, Benchmarking
  21. PLANNING AND DECISION AIDS-II:Budgeting, Scheduling, Project Management
  22. PLANNING: FUNCTIONS & BENEFITS:HOW DO MANAGERS PLAN?
  23. PLANNING PROCESS AND GOAL LEVELS:Types of Plans
  24. MANAGEMENT BY OBJECTIVE (MBO):Developing Plans
  25. STRATEGIC MANAGEMENT -1:THE IMPORTANCE OF STRATEGIC MANAGEMENT
  26. STRATEGIC MANAGEMENT - 2:THE STRATEGIC MANAGEMENT PROCESS
  27. LEVELS OF STRATEGIES, PORTERíS MODEL AND STRATEGY DEVELOPMENT (BCG) AND IMPLEMENTATION
  28. ENTREPRENEURSHIP MANAGEMENT:Why Is Entrepreneurship Important?
  29. ORGANIZING
  30. JOB DESIGN/SPECIALIZATION AND DEPARTMENTALIZATION
  31. SPAN OF COMMAND, CENTRALIZATION VS DE-CENTRALIZATION AND LINE VS STAFF AUTHORITY
  32. ORGANIZATIONAL DESIGN AND ORGANIC VS MECHANISTIC VS VIRTUAL STRUCTURES
  33. LEADING AND LEADERSHIP MOTIVATING SELF AND OTHERS
  34. MASLOWíS NEEDS THEORY AND ITS ANALYSIS
  35. OTHER NEED AND COGNITIVE THEORIES OF MOTIVATION
  36. EXPECTANCY, GOAL SETTING AND RE-ENFORCEMENT THEORIES
  37. MOTIVATING KNOWLEDGE PROFESSIONALS LEADERSHIP TRAIT THEORIES
  38. BEHAVIORAL AND SITUATIONAL MODELS OF LEADERSHIP
  39. STRATEGIC LEADERSHIP MODELS
  40. UNDERSTANDING GROUP DYNAMICS IN ORGANIZATIONS
  41. GROUP CONCEPTS, STAGES OF GROUP DEVELOPMENT AND TEAM EFFECTIVENESS
  42. UNDERSTANDING MANAGERIAL COMMUNICATION
  43. COMMUNICATION NETWORKS AND CHANNELS EFFECT OF ICT ON MANAGERIAL COMMUNICATION
  44. CONTROLLING AS A MANAGEMENT FUNCTION:The control process
  45. CONTROLLING ORGANIZATIONAL PERFORMANCE THROUGH PRODUCTIVITY AND QUALITY