Initial & Surname	Student number	Contribution
S.v Mosaya  (manager)	27576132	Outcome 4
L.Moutung	33657637	Outcome 1 (1/2)
R.Viljoen	30467179	Outcome 1 (1/2)
O.Moloi	27767353	Outcome 3
TS.Zitha	30021855	Outcome 2
L.A Lehlojane	31641679	Outcome 5 (1/2)
T.Rapasa	31505805	Outcome 5 (1/2)

 

Group name: Golden Unity pty 

Chapter 14 Blog

Learning outcomes:

1. Define decision-making and explain the role of decision-making for managers and employees

2. Discuss the conditions of certainty, risk, and uncertainty under which decisions are made

3. Describe the characteristics of the types of decisions: routine, adaptive, and innovative decisions

4. Explain how goals affect decision-making

5. Differentiate between the rational, bounded rationality and political models of decision-making.

Outcome 1

Definition:

Decision-making is a process of choosing or selecting, a option or course of action

 

Decisions made by managers or employees are based on different aspects that influence the decision, such as;

• The nature of the current problem.

• What solutions there are for the problem.

• What risks are involved in the problem or possible decision.

 

The fundamentals of decision-making are:

 Decision-making models:

• Rational
• Bounded rationality 
• Political

Managerial competencies:

• Communication

Planning and administration 

•  Teamwork
•  Strategic action
•  Global awareness

Emotional intelligence and self-management 

 Decision-making conditions:

• Certainty
•  Risk
• Uncertainty 

 Types of problems:

• Programmed (well structured)
•  Non-programmed (unstructured )

 Types of decision:

•  Routine
• Adaptive
• Innovative 

 Goals and decision-making:

•  Nature of goals
•  Why people set goals
•  General and operational goals
•  Role of stakeholders 

Outcome 2

Conditions of certainty, risk and uncertainty under which decisions are made

Certainty
It is the condition where individuals know about the challenges or problems they have because they have the information.
Individuals know which steps to take to overcome the problem and they do not feel pressure because the problem will be solved. 
Both problem and solution are recognised and well understood.
It is easy for individuals to identify solutions to the problems.
Mostly middle management, top managers and professionals are the ones who set decisions.

Risk 
It is the condition where individuals can identify the problem and chances of the solution happening to achieve their goal.

Risk generally means that the solutions to the problem are not promised but individuals are willing to lose some things with the purpose of being successful on their solutions.
Individuals can investigate on where they can fail or succeed.

Probability
Probability are the chances or possibility of something to happen.
It can be checked using percentages.

Objective Probability 
Objective probability are the results of an outcome based on hard facts and numbers.
For example, checking past records.

Selective Probability
Possible results of an outcome based on personal judgement and beliefs.
Judgement differ from individuals depending on their intuition, previous experience and situations, for example preference for risk taking

Uncertainty 
Uncertainty is the condition where individuals do not have full information to apply probabilities to the outcome of the solution. 
Individuals may not even be able to identify the problem nor the solution.
It suggests that both problem and solution are unusual. 
Causes of problems are hard to be investigated and predicted.

Outcome 3

Routine decision 

• Standard choices in response to well-defined and common problems with alternative.
• Rules or standard operating procedures must be established 
• Routine decisions are now made by computer software which will need adaptive decision making

Adaptive decisions

• They are choices made in response to a combination of moderately unusual and fairly uncommon problems with alternative solutions
• Involve modifying and improving upon past routine decisions and practices.
• Continuous improvement is key to total quality control 
• Requires commitment to construct diagnosis
• Are decisions driven by goals
• Enhance value, reduce errors, increase responsiveness to customer changes and expecrations.
• Promotes resourcefulness in terms of production and efficiancy.

Innovative decisions

• Are cholives based on the discovery, identification and diagnosis of unusual and ambiguous problems and/or the development of unique or creative alternative solutions.
• Involves small, interrelated decisions made over a period of months or even years.
• Not often in a logical sequence 
• Based on incomplete and forever changing information

 

Outcome 4

GOALS AND DECISION-MAKING

The decision-making process is triggered by a search for better ways to achieve established goals and also by an effort to discover new goals, revise current goals or drop outdated goals.

THE NATURE OF GOALS
Goals are results to be attained, and thus indicate the direction in which decisions and actions should be aimed. Clear goals specify the quality or quantity of the desired results. Goals are also called objectives, ends, purposes, standards, deadlines, targets and quotas. Goals can cover the long term or the short term. Long term refers to survival, growth and profitability in which remains stable. Short term goals requires constant managerial and employee attention.

WHY PEOPLE SET GOALS

Goals serve to focus individual and organisational decisions and efforts. Setting goals also provide a set of stated expectations that everyone can understand and work to achieve. Also goals aid the planning process. Goals motivates people and stimulate better performance. Goals assist in performance evaluation and control.

GENERAL AND OPERATIONAL GOALS

General goals provide broad direction for decision-making in qualitative terms. Operational goals state what is to be achieved in quantitative terms, for whom and within what time period.

ROLE OF STAKEHOLDERS

Stakeholders play a crucial role in shaping the demands, constraints and choices of alternatives that managers and employees face when setting goals. Demands refers to the desires expressed by powerful stakeholders that an organisational make certain decisions and achieve particular goals. Constraints refers to the limit.

Outcome 5

THE RATIONAL MODEL

The rational model prescribers a series of step that individuals or team should follow to increase the likelihood that their decisions will be logically and sound. A rational decision permits the maximum achievement of goal within limitations of the situations. This definition addresses means not ends.

The rational decision model includes 7 steps processes.

STEP 1: DEFINE AND DIAGNOSE THE PROBLEM
Problem definition and diagnosis involves three skills that are part of a manager s planning and administration competency ,which include noticing ,in which it involves identifying and monitoring numerous external and internal environment forces and deciding which ones are contributing to the problems and also include interpreting which assesses the forces noticed and determining which are courses not merely symptoms of the real problems or problems and finally it also include incorporating involves relating those interpretations to the current desired goals of the department or organisation .If  noticing  interpreting and incorporating are haphazardly or incorrectly the individual  or team is eventually likely to choose a poor solution .

STEP 2: SET GOALS
Setting precise goals can ba extremely difficult under the condition of uncertainty. Individuals or team may have to identify alternative goals, compare and evaluate them and chose among them as best they can.

STEP 3: SEARCH FOR ALTERNATIVE SOLUTONS 
Individuals or team s must search for alternative solutions to achieve goals. this step might include actions such as seeking additional information thinking creatively, consulting experts and undertaking research. however, when there seems to be no feasibility solutions for reaching a goal there may be a need to modify a goal.

Step 4: compare and evaluate alternative solutions 
After individuals have identified alternative solutions, they must compare and evaluate them this step emphasises expected results and determining the relative cost of each alternative.

Step 5: choose among alternatives solutions
Decision making is commonly associated with having made a final choice, choosing a solution however is only one step in the rational decision making process. although choosing among alternatives solutions might appear to be straight forward, it may prove to be difficult when the problem is complex and ambiguous, and involves high degrees of risk or uncertainty.

STEP 6: IMPLEMENT THE SOLUTION SELECTED
A well-chosen solution is not always successful. a technically correct decision has to be accepted and supported by those responsible for implementing it if it is to be acted on effectively. if selected solution cannot be implemented for some reason another one should be considered.

STEP 7: FOLLOW UP AND CONTROL 
Implementing the preferred solution will not automatically achieve the desired goals. Individuals or teams must control implementation activities and follow up by evaluating results .if the implantation does not produce satisfactory results if implementation does not produce satisfactory results , corrective action will be needed .

Bounded rationality model  

 

This mode was introduced by management scholar, Herbert Simon in the mid-50s, this model contributed significantly to the decision of the Swedish academy at science to award him in 1978 Nobel prize for economics for his pioneering research into the decision making process within economics organisation

This model refers to an individual s tendency to do;

• Select less than the best goal (satisficing)

Satisficing 

An acceptable gaol might be easier to identify and achieve, less controvertible and safer than the best available goal. factors that results in a satisficing decision sure often a limited search inadequate information

 

Limited search 

Individuals usually make only a limited search fo possible goals or alternative solutions to a problem considering option until they find one that seems adequate 

Inadequate or misinterpreted information 

bounded rationality also recognise that individuals frequently have inadequate information about problems and that they cannot control

Information processing biases 

Individuals often fall prey to information processing biases when they engage in bounded rationality decision making 

 Five types of bias 

• availability bias

• selective perception bias

• concrete information bias

• low and small bias

• gambler fallacy bias