MEMBERS THAT PARTICIPATED IN THE ACTIVITY

INITIALS & SURNAME STUDENT NUMBER CONTRIBUTION L.M.J MPHUTHI 30514304 Defined decision-making T. SEHERI 30826322 Explained the role of decision-making for managers and employees N.C MOGOROSI 30985668 Explained the conditions of certainty and risk under which decisions are made B.R MADUNA 28572203 Explained the conditions of uncertainty under which decisions are made  C.N.M HARRIS 29049768 Described the characteristics of routine and innovative decisions  Z.R CLOETE 29800145 Described the characteristics of adaptive decisions K. LUBISI 31762069 Explained how goals affect decision -making T. SOMO F,R DICHABA 32556055 31305776 T. SOMO- compared the rational, bounded rationality and political models F.R DICHABA- contrasted the rational, bounded rationality and political models

 SU 4. FUNDAMENTALS OF DECISION MAKING

LEARNING OUTCOMES

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

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

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

4.Explain how goals affect decision-making

5.Compare and contrast the rational, bounded rationality and political models of decision making

 

1. Define decision making

Decision making is the process of choosing the best option or making choices by identifying a decision that best suits the situation or for any other reason, gathering information about the disadvantage and advantages of the decision and assessing alternative resolutions. Decision making includes defining the problem, gathering information, generating alternatives and choosing the course of an action. Decision making also has three different types of conditions which are certainty, risk and uncertainty.

Decision making has three categories namely:

❖ Consumer decision making ❖ Business decision making ❖ Personal decision making

The role of decision making for managers and employees

2. EXPLAIN THE CONDITIONS OF CERTAINTY, RISK AND UNCERTAINTY

1. Certainty­ is the condition under which individuals are fully informed about a problem. Alternative solutions are obvious and the likely of each solution are clear. The condition of certainty at least allows anticipation of events as well as its outcomes.

2. Risk­ is the condition under which individuals can define problems, specify the probability of certain events, identify alternative solutions and state the probability of each solution leading to the desired results. Probability is then the percentage of times that a specific outcome would occur if any individual were to make a particular decision a large number of times.

3. Uncertainty – is the condition under which an individual does not have the necessary information to assign probability to the outcomes of the alternative solution. Individual may not be able to define the problem, identify solutions and outcomes .

3.CHARACTERISTICS OF ADAPTIVE AND INNOVATIVE DECISIONS

Routine decisions

Routine decisions are normal, typically not above options chosen in response to common issues by finding more than one way of dealing with it. Covered by ground rules and standard operating procedures.

 

-Adaptive decisions often involves modifying and improving upon past routine decisions and

practices.

-Continuous improvement is the key to total quality management.

-Adaptive decisions are choices made in response a combination of moderately unusual and unfair

uncommon problems with alternative solutions.

-Continuous improvement requires a commitment to constantly diagnose technical, organisational

and managerial processes for improvement.

-Decisions about continuous improvement are driven by the goals of providing better quality,

improving efficiency and being responsive to customers.

INNOVATIVE DECISIONS

-Innovative decisions are choices based on the discovery, identification and diagnosis of unusual and

ambiguous problems and the development of unique or creative alternative solutions.

-The solutions often involve small interrelated decisions made of a period of months or even years.

-They are often based on incomplete and rapidly changing information and may be made before problems are fully defined and understood Explain the conditions of certainty, risk and uncertainty under which decisions are made .

4.Explain how goals affect decision making 

Setting goals is important in innovative and adaptive decision-making. Goals give employees, managers and organisations a sense of order, direction and meaning. They play part in the division of work where work specified according to the employee’s abilities and talents. They help benefit in areas like planning, motivation and attainment of rapid results. The result of specific goals lead to less wasted time; employees already know what their duties are and know their deadline, goals also lead to the organisation knowing its targets, purpose standards and quotas.

5. COMPARE AND CONTRAST THE RATIONAL, BOUNDED RATIONALITY AND POLITICAL MODELS OF DECISION MAKING

Rational model:

- It is a model that prescribes a series of steps that individuals follow to increase the likelihood that their decision will be logical and sound. It favours objectivity and analysis as compared to subjectivity and insight.

- People make choices that maximises benefits and minimises any costs.

E.g Most people want to purchase day-to-day products at the lowest prices, as a result, judge the benefits of a certain product based on how useful/attractive it is. Greater reward at the lowest price.

 

Bounded rationality:

- It is particularly useful because it emphasizes the limitations of rationality and thus provides a better picture of the day-to-day decision-making process used by most people.

- People act on the basis of limited information.

 

Political model:

- Particular interests and goals of powerful external and internal stakeholders.

- Disagreements over choice of goals and people who are searching for alternative solutions.