Unit 7 Lecture Notes

UNIVERSITY OF TECHNOLOGY, JAMAICA
SCHOOL OF BUSINESS ADMINISTRATION

Introduction to Management (MAN1006)
UNIT 7 – LECTURE NOTES
Managerial Decision Making

The Importance of Decision Making
• Managers as Decision Makers: The role of managers inherently involves making

decisions that impact the entire organization.
• Impact of Decisions: Decisions made by managers influence how the organization
addresses problems, allocates resources, and achieves its goals.
• Good Decision Making: The ability to make sound decisions is a crucial aspect of
effective management.
The Nature of Decisions
• Decision: A choice made from a set of available alternatives.

• Decision Making: The process of identifying problems and opportunities and then taking
action to resolve them.
• The Decision-Making Process: It's an ongoing process that involves effort both before
and after the actual choice is made.
Types of Decisions
• Programmed Decisions:
o Repetitive and routine decisions.
o Decision rules can be developed and applied in the future.
o Example: Reordering office supplies when inventory reaches a certain level.
• Non-programmed Decisions:
o Unique and unstructured decisions.
o Often involve complex and uncertain situations.
o Example: Launching a new product or entering a new market.
Decision Environments
• Certainty: All necessary information is fully available, and the outcomes of each
alternative are known.
• Risk: Clear goals and good information are available, but future outcomes are subject to
chance. Statistical analysis can be used to calculate probabilities.
• Uncertainty: Goals are clear, but information about alternatives and future events is
incomplete. Managers may need to use creativity and judgment.
• Ambiguity: The goals or the problem itself is unclear, alternatives are difficult to define,
and information about outcomes is unavailable.
Decision-Making Models
• Classical Model:
o Based on assumptions of rationality and complete information.
o The decision-maker seeks to maximize economic returns.
o Most useful for programmed decisions and situations with certainty or risk.
• Administrative Model:
o Describes how managers actually make decisions in complex situations.
o Recognizes bounded rationality and satisficing behavior.
o Useful for non-programmed decisions and situations with uncertainty and
ambiguity.
• Political Model:
o Acknowledges that decision-making involves multiple stakeholders with
conflicting goals.
o Managers engage in coalition building and negotiation.
o Useful for non-programmed decisions and situations with uncertainty, limited
information, and conflict.
The Decision-Making Process
1. Recognition of Decision Requirement: Identify the problem or opportunity.

2. Diagnosis and Analysis of Causes: Gather information and analyze the underlying
causes.
3. Development of Alternatives: Generate possible solutions or courses of action.
4. Selection of Desired Alternative: Choose the best alternative based on evaluation
criteria.
5. Implementation of Chosen Alternative: Put the decision into action.
6. Evaluation & Feedback: Monitor the outcomes and adjust as needed.
Personal Decision-Making Styles
• Directive Style: Prefers simple, clear-cut solutions and makes decisions quickly.
• Analytical Style: Considers complex solutions based on extensive data analysis.
• Conceptual Style: Takes a broad perspective and considers many alternatives, focusing
on creativity and innovation.
• Behavioral Style: Focuses on the impact of decisions on people and emphasizes
collaboration and communication.
Improving Decision Making
• Brainstorming: Generating a wide range of creative ideas.

• Rigorous Debate: Encouraging constructive conflict and challenging assumptions.
• Avoiding Groupthink: Preventing the tendency to suppress contrary opinions in groups.
Conclusion
Effective decision-making is a critical skill for managers. By understanding the different types of
decisions, decision-making models, and personal styles, managers can enhance their ability to
make sound choices that lead to organizational success.

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UNIVERSITY OF TECHNOLOGY, JAMAICA

SCHOOL OF BUSINESS ADMINISTRATION

UNIT 7 – LECTURE NOTES

Managerial Decision Making

• Managers as Decision Makers: The role of managers inherently involves making

The Nature of Decisions

• Decision: A choice made from a set of available alternatives.

The Decision-Making Process

1. Recognition of Decision Requirement: Identify the problem or opportunity.

Personal Decision-Making Styles

Improving Decision Making

• Brainstorming: Generating a wide range of creative ideas.

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