UNIT 4: PROBLEM SOLVING AND DECISION MAKING

OBJECTIVES

1. Differentiate between non-programmed

and programmed decisions

2. Explain steps in making non-

programmed decisions.

3. Understand the major factors that

influence decision making in organizations

READING 1

NONPROGAMMED VERSUS PROGRAMMED DECISIONS

A. Discussion

- Name kinds of decision that managers may make daily

B. Reading

Managerial workers face a variety of decisions. A problem that has not taken the same form
as in the past or is extremely complex or significant calls for non non-programmed decisions.
A complex problem contains many elements. Significant problems affect an important aspect
of an organization such as the introduction of a new service. Virtually all strategic decisions
are nonprogrammer. A well - planned and highly structured organization reduces the number
of non-programmed decisions. It does so by formulating hundreds of policies to help
managers know what to do when faced with a given problem. In contrast, many small firms
do not offer much guidance about decision making.

Within the category of monogrammed decisions, there are wide variations in complexity. A
complex decision is more demanding than a less complex decision, just as studying some
subjects may be more difficult than studying others.

Programmed decisions are repetitive, or routine, and made according to a specific

procedure. Procedures specify how to handle these routine, uncomplicated decisions.
Under ideal circumstances, top - level management concerns itself almost exclusively with
non-routine decisions, and lower - level management handles all routine ones. In reality,
executives do make many small, programmed decisions in addition to non-programmed ones.
Some executives sign expense account vouchers and answer routine e-mail inquiries. Middle
managers and first-level managers generally make both routine and non-routine decisions. A
well-managed organization encourages all managers to delegate as many non-programmed
decisions as possible.

Steps in problem solving and decision making

Learning how to solve problems and make decisions properly is important because, according
to a long-term study, being systematic about decision making helps avoid bad decisions.
Most instances of decision-making failure were attributed to poor tactics, including not
exploring enough alternatives, and not obtaining enough input from group members.
Managers are more likely to find better major decisions-when they follow an orderly process.
Drawing a consistent distinction between problem solving and decision making is difficult
because they are part of the same process. The basic purpose of making a decision is to solve
a problem, but you must analyze the problem prior to making the decision.

Problem solving and decision making can be divided into steps.

Identify and Diagnose the Problem

Problem solving and decision making begins with the awareness that a problem exists. In
other words, the first step in problem solving and decision making is identifying a gap
between desired and actual conditions. Being attentive to the environment helps the manager
identify problems, such as noticing that the department is receiving frequent criticism from
outsiders and insiders. At times, a problem is imposed on a manager, such as when customer
complaints increase. At other times, he or she has to search actively for a worthwhile problem
or opportunity. For example, a sales manager actively pursued a problem by conducting an
audit to find out why former customers stopped buying from the company.

A thorough diagnosis of the problem is important because the real problem may be different
from the one that a first look suggests. The ability to think critically helps a person get at the
real problem. To diagnose a problem properly, you must clarify its true nature. A frequent
example is that a manager might attempt to reduce turnover by increasing wages. The
manager assumes that the workers would stay with the company longer if their wages were
higher. Yet the real problem is inflexible working hours that are triggering turnover.
Develop Alternative Solutions

The second step in decision making is to generate alternative solutions. In this intellectually
freewheeling aspect of decision making, all kinds of possibilities are explored, even if they
seem unrealistic. Often the difference between good and mediocre decision makers is that the
former do not accept the first alternative they think of. Instead, they keep digging until they
find the best solution. When Jeff Bezos, the founder of Amazon.com, was searching for a
way to commercialize the Internet, he made a list of the top 20 mail-order products. He then
looked for where he could create the most value for customers, and finally decided on the
alternative of selling books. Often the problem solver will find a creative alternative solution
to the problem. At other times, a standard solution will work adequately.

Evaluate Alternative Solutions

The next step involves comparing the relative value of the alternatives. The problem solver
examines the pros and cons of each one and considers the feasibility of each. Some
alternatives may appear attractive, but implementing them would be impossible or
counterproductive. Comparing relative value often means performing a cost and savings
analysis of each alternative. Alternatives that cost much more than they save are infeasible.
The possible outcome of an alternative should be part of the analysis. If an unsatisfactory
outcome is almost a certainty, the alternative should be rejected. For example, if a firm is
faced with low profits, one alternative would be to cut pay by 20 percent. The outcome of this
alternative would be to lower morale drastically and create high turnover, so a firm should
not implement that alternative. High employee turnover is so expensive that it would override
the cost savings. One approach to examining the pros and cons of each alternative is to list
them on a worksheet. This approach assumes that virtually all alternatives have both positive
and negative consequences.

Choose One Alternative Solution

The process of weighing each alternative must stop at some point. You can-not solve a
problem unless you choose one of the alternatives-that is, make a decision. Several factors
influence the choice. A major is the goal the decision should achieve. The goals sought for in
making the decision are also referred to as the decision criteria. The alternative chosen
should be the one that appears to come closest to achieving it. If two alternatives appear
almost equally good after considerable deliberation, it might be helpful to seek the opinion of
one more person to decide which alternative is slightly better. Despite a careful evaluation of
alternatives, ambiguity remains in most decisions. The decisions faced by managers are often
complex, and the factors involved in them are often unclear. Even when quantitative evidence
strongly supports a particular alternative, the decision maker may be uncertain. Human
resources are often the most ambiguous because making precise predictions about human
behavior is so difficult. Deciding which person to hire from a list of several strong candidates
is always a challenge.

A problem some managers have in choosing an alternative is that they have a tendency to say
yes to many alternatives proposed by staff members. The task for the manager is to choose to
pursue what is most important and disregard the less critical alternatives. Being selective in
this way helps the manager and the organization on those alternatives that hold the most
promise.

Implement the Decision

Converting a decision into action is the next major step. Until a decision is implemented, it is
not really a decision at all. A fruitful way of evaluating the merit of a decision is to observe
its implementation. A decision is seldom a good one if people resist its implementation or if it
is too cumbersome to implement. Suppose a firm tries to boost productivity by decreasing the
time allotted for lunch or coffee breaks. If employees resist the decision by eating while
working and then taking the allotted lunch break, productivity will decrease. Implementation
problems indicate that the decision to boost productivity by decreasing break time would be a
poor one.

Another perspective on implementation is that it represents execution, or putting plans into

action. Implementation therefore involves focusing on the operations of a company or
business unit.

Evaluate and Control

The final step in the decision-making framework is to investigate how effectively the chosen
alternative solved the problem. Controlling means ensuring that the results the decision
obtained are the ones set forth during the problem identification step. Evaluating and
controlling your decisions will help you improve your decision-making skills. You can learn
important lessons by comparing what actually happened with what you thought would
happen. You can learn what you could have improved or done differently and use this
information the next time you face a similar decision.
C. Exercises

I. Read the text and answer the following questions.

1. What are programmed decisions?

2. Under ideal circumstances, what does top - level management concern?

3. In reality, what decisions do executives make?

4. What are the good points of learning how to make decisions?

5. What is the basic purpose of making a decision?

6. What is the first step in problem solving and decision making?

7. What do you do to diagnose a problem properly?

8. What is difference between good and mediocre decision makers?

9. What is a problem some managers have in choosing an alternative?

10. What is the role of evaluating and controlling decisions?

II. Find words or phrases in the text which mean the same as the following

1. A decision that is difficult because of its complexity and the fact that the person faces it
infrequently. (Paragraph 1)

2. A decision that is repetitive, or routine, and made according to a specific procedure.

(Paragraph 3)

3. Managers who supervise operatives. (Paragraph 4)

4. An action or strategy carefully planned to achieve a specific end. (Paragraph4)

5. A systematic review or assessment of something. (Paragraph 5)

6.The identification of the nature of an illness or problem by examining the symptoms.

(Paragraph 6)

7. A means of solving a problem. (Paragraph 7)

8.The state or degree of being easily or conveniently done. (Paragraph 8)

9. Long and careful consideration. (Paragraph 9)

10. The available body of facts or information indicating whether a belief or proposition is
true. (Paragraph 9)
III. Fill in the blank with an appropriate word from the passage. If possible, do not look
back at the original reading.

1. Significant problems affect an important ________________ of an organization such as

the introduction of a new _________________.

2. Within the category of monogrammed decisions, there are wide ____________ in

__________________

3. Programmed decisions are ____________, or _________________, and made

according to a ____________________ procedure.

4. The process of _______________ each alternative must stop at some point.

5. Until a decision is _________________, it is not really a decision at all.

6. The final step in the decision-making ______________ is to investigate how effectively

the chosen alternative solved the problem.

1.

READING 2: DECISION MAKING

A. Discussion

Read the following case study. Then, working in groups of two or three, answer the questions
below. Finally, compare your answers with those of the other groups.

The time is almost midnight. Sheldon, Chief Executive of Reprox, a photocopying equipment
firm, sits in an armchair, looking shocked. He has just had a phone call from Donald, his
Marketing Manager, and what Donald has told him is very worrying. Sheldon pours himself
out a stiff whisky and considers the facts.
Apparently, the previous night, Donald had gone to a local restaurant with his wife. There, he
had seen the firm’s top salesman, Melvin, having dinner with a woman. Donad had been
amazed at Melvin’s choice of a dining companion, for the woman was Lois Markham, an
executive from Hitex, one of their main competitors.

The next day, Donald called Melvin to his office, intending to give the top salesman a quiet
warning about mixing with the enemy. However, the conversation did not go as planned.
‘If you must know, I’ve been living with Lois for about a year now. And I might very well
marry her,’ Melvin said, ‘but I don’t see that it’s any business of this company’s.’

‘Come on now, don’t be so naïve,’ Don answered. ‘Think of the security aspect. We’re in a
competitive business – it’s dog eat dog.’

‘I haven’t done anything wrong. You’ve got no right to interfere in my private life. And if
you start doing so, maybe I’ll have to look for another job.’

Sheldon considered the problem. Should he turn a blind eye to what was going on? Or was
some sort of action needed on his part?

1. Summarize briefly the problem that Sheldon must solve.

2. What factors should he take into account before taking a decision?

3. How should he deal with the situation?

4. Can firms do anything to avoid this type of problem?

B. Reading: Decision making

In carrying out management functions, such as planning, organising, motivating and

controlling, a manager will be continually making decisions- making is a key management
responsibility.

Some decisions are of the routine kind. They are decisions which are made fairly quickly, and
are based on judgment. Because a manager is experienced, he knows what to do in certain
situations. He does not have to think too much before taking action. For example, a
supervisor in a supermarket may bring back a product. The manager does not have to gather a
great deal of additional information before making the decision.

Other decisions are often intuitive ones. They are not really rational. The manager may have
hunch or a gut feeling that a certain course of action is the right one. He will follow that
hunch and act accordingly. Thus when looking for a agent in an overseas market a sales
manager may have several companies to choose from. However, he may go for one
organization simply because he feels it would be the most suitable agent. He may think that
the chemistry between the two firms is right. Such a decision is a based on hunch, rather than
rational thought.
Many decisions are more difficult to make since they involve problem - solving. Very often,
they are strategic decisions involving major courses of action which will affect the future
direction of the enterprise. To make good decisions, the manager should be able to select,
rationally, a course of action. In practice, decisions are usually made in circumstances which
are not ideal. They must be made quickly, with insufficient information. It is probably rare
that a manager can make an entirely rational decision.

When a complex problem arises, like where to locate a factory or which new products to
develop, the manager has to collect facts and weigh up courses of action. He must be
systematic with dealing with the problem. A useful approach to this sort of decision-making
is as follows: the process consists of four phases: i) defining the problem; ii) analyzing and
collecting information; iii) working out options and iv) deciding on the best solution.

As a first step, the manager must identify and define the problem. And it is important that he
does not mistake the symptoms of a problem for the real problem he must solve. Consider the
case of a department store which finds that profits are falling and sales decreasing rapidly.
The falling profits and sales are symptoms of a problem. The manager must ask himself what
the store’s real problem is.Does the store have the wrong image? Is it selling the wrong goods
or the right goods at the wrong prices? Are its costs higher than they should be?

At this early stage, the manager must also take into account the rules and principles of the
company which may affect the final decision. These factors will limit the solution of the
problem.

One company may have the policy of buying goods only from home suppliers; another firm
might, on principle, be against making special payments to secure a contract; many
enterprises have a rule that managerial positions should be filled by their own staff, rather
than by hiring outside personnel. Rules and policies act as constraints, limiting the action of
the decision-taker.

The second step is to analyse the problem and decide what additional information is
necessary before a decision-making. However, as already mentioned, the manager will rarely
have all the knowledge he needs. This is one reason why making decision involves a degree
of risk. It is the manager's job to minimise that risk.

Once the problem has been defined and the facts collected, the manager should consider the
options available for solving it. This is necessary because there are usually several ways of
solving a problem. In the case of the department store, the management may decide that the
store has the wrong image. A number of actions might be possible to change the image. New
products could be introduced and existing lines dropped; advertising could be stepped up; the
store might be modernized and refurbished or customer service might be improved.

It is worth nothing that, in some situations, one of the options may be to take no action at all.
This is a decision just as much as taking a more positive course of action. Peter Drucker, in
his book The Pratice of Management, gives a good example of the no-action option. He
writes about a shipping company which, for twenty years, had problems filling a top position.
Each person selected got into difficulties when doing the job.

Before making a decision, the managerwill carefully assess the options, considering the
advantages and disadvantages of each one. Having done this, he will have to take a decision.
Perhaps he will compromise, using more than one option. Thus, the manager of the
department store may solve his problem by making changes in the product range, increasing
advertising and improving the interior of the store.

C. Exercises

I. Understanding the main points: Decide whether the following statements are true or
false.

1 Before taking a routine decision managers must collect a great deal of

information.

2 When choosing an overseas agent most managers rely on their intuition

3 When a firm dismisses one of its junior managers it is making a strategic

decision.

4 Managers cannot always wait until they have all the necessary information
before taking important decisions

5 The first thing managers must do when solving a problem is to collect all the
facts

6 Because of their company’s rules and policies managers may not be able to
 take certain actions in order to solve a problem

7 After collecting all of the necessary information managers have to identify the
various actions they could take to solve a problem

8 When important decisions have to be made managers need to use a systematic

process of decision-making

II. Find words or phrases in the text which mean the same as the following:

1. Very important (paragraph 1)

2. Immediately, without hesitation (pr 2)
3. Occurs, appears (pr 5)
4. Put, build, establish (pr 5) -
5. Consider carefully, assess (pr 5) -
6. Bear in mind, consider, remember (pr7) –
7. Succeed in getting, win (pr8)
8. Choices, possible courses of action (pr10)
9. Increased (pr10)
10. Take a middle course of action (pr 12)

III. The phrases Make a decision Take a decision, Take into account, Solve a problem are
examples of collocation. This refers to words which are frequently grouped together.
Complete the following sentences with appropriate verbs.

1. Although our company wants to expand rapidly, we must………..in mind that we

have limited cash to do so.
2. It is important to ………. into account all options before……………. a decision.
3. The Finance Director has …………..the conclusion that we must reduce costs by
10%.
4. Finally, the Chairman …………. his opinion about the matter. After we had listened
to him, we were able to ……………. to an agreement.
5. Patricia ……………… an interesting suggestion at the meeting.
6. If we don’t come up with new products, we …………. the risk of falling behind our
competitors.
 7. Our chairman is too old for the job. Some of the directors have ………… pressure on
him to resign.
8. The writer has ……. some recommendations in the report.
9. What conclusion have you ………..from the facts given in his letter?
10. I have ……….a great deal of thought to our financial problems
11. After 5 hours’ negotiation, we finally………… agreement.
12. I don’t want to …… action until I’ve heard everyone’s opinion.

READING 3:BOUNDED RATIONALITY AND INFLUENCES ON DECISION MAKING

A. Discussion
What do you think are the factors that influence on decision making?
B. Reading

Bounded rationality and influences on decision making

Decision making is usually not entirely rational, because so many factors influence the
decision maker. Awareness of this fact stems from the research of psychologist and
economist Herbert A. Simon. He proposed that bounds (or limits) to rationality are present in
decision making. These bounds are the limitations of the human, particularly related to the
processing and recall of information. Bounded rationality means that people's finite
(somewhat limited) mental abilities, combined with external influences over which they have
little or no control, prevent them from making entirely rational decisions.

In more recent year, the irrational side of decision making became incorporated into a branch
of behavioral economics called neuro-economics. Behavioral economics emphasizes that
people are not entirely rational decision makers, such as trying hard to avoid losing money in
the stock market instead of on increasing profits. An individual might hang on to a losing
product for too long.

Research and opinion on bounded rationality emphasizes that humans use problem -solving
strategies which are reasonably rapid, reasonably accurate, and that fit the quantity and type
of information available. In short, people do the best with what they have while making
decisions.
As a result of bounded rationality, most decision makers do not have the time or resources to
wait for the best possible. Instead, they search for satisficing decisions, or those that suffice
in providing a minimum standard of satisfaction. Such decisions are adequate, acceptable, or
passable. Many decision makers stop their search for alternatives when they find a satisficing
one. Successful managers recognize that it is difficult to obtain every possible fact before
making a decision.

Accepting the first reasonable alternative may only postpone the need to implement a
decision that truly solves the problem and meets the decision criteria.

Partly because of bounded rationality, decision makers often use simplified strategies, also
known as heuristics.

Intuition

Effective decision makers do not rely on analytical and methodological techniques alone
.They also use their hunches and intuition. Intuition is an experience –based way of knowing
or reasoning in which weighing and balancing evidence are done unconsciously and
automatically. Intuition is also a way of arriving at a conclusion without using the step-by-
step logical process. Intuition can be based mostly on experience or mostly on feeling. The
fact that experience contributes to intuition means that decision makers can become more
intuitive by solving many difficult problems because accumulated facts are an asset to
intuition .It also means that decision makers will have better intuition if they perform the
same work for a relatively long period of time.

Although the use of intuition in managerial decision making is now widely recognized,
researchers have also found limitations to intuition. At the same time, intuition could help
point the executive in the right direction, such as sizing up the overall merits of the company
to be acquired .Major decisions usually begin with intuition.

Personality and cognitive intelligence

The personality and cognitive intelligence of the decision maker influence his or her ability to
find effective solutions. A particularly relevant personality dimension is a person’s
propensity for taking risks. A cautious, conservative dimension is a person typically opts for
a low-risk solution. An extremely cautious person may avoid making major decisions for fear
of being wrong. Organizational pressures can also influence a person’s propensity for risk
taking. In addition to being related to risk taking, cautiousness and conservatism influence
decisiveness, the extent to which a person makes up his or her mind promptly and prudently
.Good decision makers, by definition, are decisive.

Perfectionism exerts a notable impact on decision making. People who seek the perfect
solution to a problem are usually indecisive because they hesitate to accept the fact that a
particular alternative is good enough. Optimism versus pessimism is another relevant
personality dimension. Optimists are more likely to find solutions than pessimists are.
Pessimists are more likely to give up searching, because they perceive situations as being
hopeless.

Emotional intelligence

How effective you are in managing your feeling and reading other people can affect the
quality of your decision making. For example, if you cannot control your anger you are likely
to make decisions motivated by retaliation, hostility and revenge. An example would be
shouting and swearing at your team leader because of a word assignment you received.
Emotional intelligence refers to qualities such as understanding one’s own feelings, empathy
for others, and the regulation of emotion to enhance living. This type of intelligence generally
affects the ability to connect with people and understand their emotions. If you cannot read
the emotions of others you are liable to make some bad decisions involving people, such as
pushing your boss too hard to grant a request. Emotional intelligence contains four key
factors, all of which can influence the quality of our decisions.

1. Self-awareness. The ability to understand your own emotions is the most essential of the
four emotional intelligence competencies. Having high self-awareness allows people to
know their strengths and limitations and have high self-esteem

2. Self-management. The ability to control one’s emotions and act with honesty and
integrity in a consistent and adaptable manner. The right degree of self-management helps
prevent a person from throwing temper tantrums when activities do not go as planned.
Effective workers do not let their occasional bad moods ruin their day.

3. Social awareness. This competency includes having empathy for others and having
intuition about organizational problems. Socially aware workers go beyond sensing the
emotions of others by showing that they care.

4. Relationship management. Includes the interpersonal skills of being able to communicate

clearly and convincingly, disarming conflicts and building strong personal bonds.Effective
 individual use relationship management skills to spread their enthusiasm and solve
disagreements, often with kindness and humor.

Quality and Accessibility of Information

Reaching an effective decision usually requires high-quality, valid information. The ability to
supply managers with high-quality information forms the major justification for information
systems. Part of having quality information is being able to base decisions upon solid data.

Accessibility may be even more important than quality in determining which information is
used or not used. Sometimes it takes so much time and effort to search for quality
information that the manager relies on lower quality information that is close at hand. A
frequent accessibility problem is to rely on information from the Internet because it is easy to
access, without stopping to investigate the date of the information.

Closely related to quality and accessibility of information is the tendency on be influenced by

the first information we receive when attempting to solve a problem or make a decision.
Anchoring occurs during decision making when the mind gives too much weight to the first
information it receives. Initial impressions, estimates, or data hold back, or anchor, later
thoughts and judgments. The manager who uses the old information found on the Internet
might be overly influenced by that information. Having been received first, the anchored
information becomes the standard against which to judge other information. Anchoring can
therefore lead to wasting useful information received after the first information.

Another decision- making trap is overconfidence. The risk here comes from associating
confidence with accuracy. The problem then arises because accuracy reflects what we know,
whereas confidence reflects what we think we know. You can test your opinions by searching
for information that challenges your beliefs or facts as a way to help combat the
overconfidence trap and thereby avoid the natural tendency to look only for supporting
information.

Political Considerations

Under ideal circumstances, managers make organizational decisions on the basis of the
objective merits of competing alternatives. In reality, many decisions are based on political
considerations, such as favoritism, alliances, or the desire of the decision maker to stay in
favor with people who wield power.
Political factors sometimes influence which data are given serious consideration in evaluating
alternatives. The decision maker may select data that support the position of an influential
person whom he or she is trying to please.

Degree of Certainty

The more certain a decision maker is of the outcome of a decision, the more calmly and
confidently the person will make the decision. Degree of certainty is divided into three
categories: certainty, risk, and uncertainty. A condition of certainty exists when the facts are
well known and the outcome can be predicted accurately. A retail store manager might
predict with certainty that more hours of operation will lead to more sales.

A condition of risk exists when a decision must be made based on incomplete, but accurate,
factual information. Effective managers often accept a condition of risk. A calculated risk is
where the potential return is well worth the cost that will be incurred if the effort fails.

Crisis and Conflict

In a crisis, many decision makers panic. They become less rational and more emotional than
they would in a calm environment. Decision makers who are adversely affected by crisis
perceive it to be a stressful event. As a consequence, they concentrate poorly, use poor
judgment, and think impulsively. Under crisis, some managers do not bother dealing with
differences of opinion because they are under so much pressure. A smaller number of
managers perceive a crisis as an exciting challenge that energizes them toward their best level
of problem solving and decision making.

A recommendation for becoming more adept at making decisions under crisis conditions is to
anticipate crises. Visualize ahead of time how you will react to the situation. Visualization
serves somewhat as a rehearsal for the real event.

Conflict relates to crisis because both can be an emotional experience. When conflict if not
overwhelming, and is directed at real issues, not personalities, it can be an asset to decision
making. By virtue of opposing sides expressing different points of view, problems can be
solved more thoroughly, which leads to better decisions.

Values of the Decision Maker

Ultimately, all decisions are based on values. A manager who places a high value on the
personal welfare of employees tries to avoid alternatives that create hardship for workers and
implements decisions in ways that lessen turmoil. Another value that significantly influences
decision making is the pursuit of excellence. A manager who embraces the pursuit of
excellence will search for the high-quality alternative solution.

Attempting to preserve the status quo mentioned above as a political factor is also a value. If
you value the status quo too highly, you many fail to make a decision that could bring about
major improvements.

Procrastination

Many people are poor decision makers because they procrastinate, or delay taking action
without a valid reason. Procrastination results in indecisiveness and inaction and is a major
cause of self-defeating behavior. Procrastination is a deeply ingrained behavior pattern, and
may be based on such factors as being concerned about being judged as poorly.

Although too much procrastination may interfere with effective decision making, rapid
decision making is not always the most effective. Good decision makers recognize the
balance between procrastination and impulsiveness.

Decision - Making Styles

The various factors that influence the quality of decision making also contribute to a manger's
typical pattern of making decisions, or decision-making style. For example, a manager who
relies heavily on intuition will tend to make decisions quickly without agonizing over data.
And a manager with procrastination tendencies will ponder over as much information as
possible and consult many people before reaching a decision.

According to the Decision Dynamic research, decision styles differ in two fundamental ways:
how information is used, and how options are created. In terms of information, some
managers want to pore over reams of information before making a decision. The opposite
approach is to come to a decision as soon as enough information is available. (This approach
is referred to as satisficing, as described earlier.). In terms of creating options, single focus
decision makers are committed to taking one course of action. In contrast, their multifocused
counterparts generate lists of possible options and many pursue multiple courses. Combining
the dimensions of using information and creating options results in four styles, as follows:

1. Decisive (one option, less information). Decisive decision makers value action, speed,
efficiency, and consistency. After a plan is in place they stick with it and move on to the next
decision. Time is precious to this type of decision maker.
2. Flexible (many options, less information). The flexible style also focuses on speed, yet
adaptability is emphasized. Flexible decision makers gather just enough data to choose a line
of attack, and quickly change course if needed.

3. Hierarchic (one option, more information). People using the hierarchic style analyze a
great deal of information, and seek input from others. They expect a decision to be final and
relatively permanent. An information technology manager might say, "We have studied the
problem for several months, and have received inputs from hundreds of intelligent users. Our
single source of new desktops and laptops will be Gateway Computer." (Gateway is now part
of Acer.)

4. Integrative (many options, more information). Instead of looking for a single best solution,
managers using the integrative style frame problems broadly. The integrative style uses input
from many sources, and makes decisions involving multiple courses of action. Also, the
decision may be modified in the future as circumstances change. An executive at Target
might say, "For now, we are going to increase the proportion of full-time staff works."

A key suggestion in relation to decision-making styles is to be aware that they exist. Next,
reflect on your style, including receiving feedback from others. You might recognize, for
example, that you tend to collect too much date before making a decision. You are much like
the potential homebuyer who collects so much information before making a purchase offer
that the property is sold to someone else.

C. Exercises

I. Read the text and decide whether the following statements are True or False.

1. Decision making is usually logical as no factors influence the decision maker.

2. Bounded rationality means that people's finite mental abilities and external
influences, over which they have little or no control, helping them make entirely
rational decisions.

3. Thanks to bounded rationality, most decision makers have the time or resources to
wait for the best possible.

4. The personality and cognitive intelligence of the decision maker influence his or her
ability to find effective solutions.

5. People who seek the perfect solution to a problem are usually decisive.
6. Effective decision makers only rely on analytical and methodological techniques to
make decisions.

7. Your effectiveness in managing your feeling and reading other people can affect the
quality of your decision making.

8. Decision – making style can influence the quality of decision making.

9. Good decision makers recognize the balance between procrastination and

impulsiveness.

10. Values of the Decision Maker cannot influence decision making.

 II. Match the terms in the left column with the equivalents in the right column.

1. Bounded rationality A. A decision that meets the minimum standard of

2. Satisficing decision satisfaction.

3. Heuristics. B. An experience –based way of knowing or reasoning in

which weighing and balancing evidence are done
4. Intuition
unconsciously and automatically.
5. Emotional intelligence
C. The observation that people’s limited mental abilities,
6. Decision-Making Styles combined with external influences over which they have
7. Procrastination little or no control, preventing them from making rational
decisions.
8. Conflict
D. A manager’s typical pattern of making decisions.
9. Visualization
E. The simultaneous arousal of two or more incompatible
10. Feedback
motives.

F. The delaying of action for no good reason.

G. A rule of thumb used in decision making.

H. An imagination of something in advance

I. The communication stage in which the receiver responds

to the sender’s message.

J. The ability to connect with people and understand their

emotions.

III. Complete the following sentences with appropriate words or phrases in the text.
If possible, do not look back at the original reading.

1. Decision making is usually not entirely ___________, because so many factors

____________ the decision maker.

2. Intuition can be based mostly on ______________or mostly on _______________.

3. The more_______________ a decision maker is of the __________of a decision, the

more _____________and ____________the person will make the decision

4. ____________intelligence contains four key factors, all of which can influence the
_______________of our decisions
 TERMS

 Programmed decision  Bounded rationality

 Non programmed decision  Heuristics

 Alternative decision  Personality

 Hunch/ gut feeling  Cognitive intelligence

 Intuition  Emotional intelligence

 Procrastination  Satisficing decision

TOPICS FOR WRITING

1. Do you agree or disagree with the following statement? A person should never make
an important decision alone. Use specific reasons and examples to support your answer. |

2. Decisions can be made quickly, or they can be made after careful thought. Do you
agree or disagree with the following statement: “The decisions that people make quickly
are always wrong.” Use reasons and specific examples to support your opinion.