Sithole	LP
Qhongwane	SP
Ntsizwane	A
Nkosi	SCC
Ndlambewu	N
Mhlaba	NK
Moatshe	B
Mabatha	TA
Gabela	AS

Outcome1. Define decision-making

The cognitive process resulting in the selection of a course of action among several alternatives

 

What is the role of decision-making for managers?

and employees. The role of decision-making is to help managers and employees to define problems, gather information about the problem such as what caused it and what can be implemented, generating alternatives this include finding various solutions to the problem e.g. having plan A, B AND C. The final step is choosing a course of action which best alternatives generated either plan A, B or c that will be efficient for the business.

 

Learning outcome 2

 

1. Certainty condition- this condition arises when it can be reasonably

expected by managers to know the expected outcome when a decision is

made.

• Under this condition the decision maker is fully informed about the problem itself, alternative solutions to the problems and the outcomes of all the possible solutions.

• This condition exists in case of routine decisions such as allocation of resources for production, payment of salaries etc.

• Decision making under the certainty condition is the exception for most middle managers, top managers and various professionals.

 

2. Uncertainty condition-the uncertainty condition exists when the probabilities of the various results are not known.

• Under this condition the decision maker might not even be able to define the problem at hand or even come up with alternative solutions and expected outcomes.

• Such a condition often arises when an organization introduces a new innovative product or service, adopts new technology etc.

• In order to make effective decisions under this condition, managers must acquire as much information as possible.

 

3. Risk condition-Risk: is the condition under which individuals can define a problem, specify the probability of certain events, identify alternative solutions and state the probability of each solution leading to the desired result.

Risk generally means that the problem and alternative solutions fall somewhere between the extremes of being relatively common and well defined, and bribge unusual and ambiguous

 

Probability: Is the percentage of fines that a specific outcome would occur is an individual were to make a particular decision a large number of times

 

Objective probability; The likehood that a specific outcome will occurs based on hard facts and numbers, is known as objective probability.

 

Subjective probability: The likehood that a specific outcome will occur based on personal judgment and beliefs is known as subjective probability

 

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

Routine decisions: These are standard choices made in response to well-defined problems with alternative solutions. The way in which to make routine decisions is covered by established rules or standard procedures.

Adaptive decisions: The choices made in response to a combination of fairly unusual and uncommon problems with alternative solutions, often involves modifying or improving upon past routine decisions and practises. It is necessary for continuous improvement.

 

Innovative decisions: The choices based on the discovery, identification and diagnosis of unusual and ambiguous problems and the development of unique and creative solutions. The solutions involve a series of small, interrelated decisions made over a period of months or even years.

 

Outcome 4.

The decision making process is triggered by a search for better ways to achieve established goals

The decision-making process is triggered by an effort to discover new goals, revise current goals or drop outdated goals.

Goals are crucial in giving employees, managers and organizations a sense of order, direction and meaning

Goals specify the quantity and quality of the desired results

Goals indicate the direction in which decisions and actions should be aimed

Goals serve to focus individual and organizational decisions and efforts

Goals aid the planning process 

Goals provide a set of expectations that everyone can in and work to achieve 

Clear and specific goals often raise productivity and improve the quality of work

Goals assist in performance evaluation control 

 

 

Outcome 5

Bounded Rationality Model

Bounded rationality is the idea that rationality is limited when individuals make decisions: by the tractability of the decision problem, the cognitive limitations of the mind, and the time available to make the decision. Examples of Bounded Rationality can be found in game strategy, management science, administration decision-making, economics, etc. For example, ‘Bounded Rationality and Chess’.

The bounded rationality model refers to an individual’s tendency to do the following:

• Select less than the best goal or alternative solution (known as satisficing)

• Engage in a limited search for alternative solution

• Have inadequate information and control over external and internal environmental forces influencing the outcomes of decisions.

1. Satisficing

Satisficing is the practice of selecting an acceptable goal or alternative solution. An acceptable goal might be easier to identify and achieve, less controversial and safer than the best available goal. The factors that that result in a satisficing decision are often a limited search, inadequate information and information processing bias. Here are some examples of how satisficing actually works for the average person: Finding the Lowest Price. Bargain shopping is smart, but overdoing it is not. For example, it makes sense to save money on gasoline, but not if you drive all around town to find the optimal price.

a. Limited search

Individuals usually make only a limited search for possible goals or alternative solutions to problems, considering options until they find one that seems adequate. For example, when trying to choose the ‘best’; career field, students cannot evaluate every career field in the labour market. In the bounded rationality model, individuals stop searching for alternatives as soon as they hit on an acceptable one. Even the rational decision-making model recognises that identifying and assessing alternative solutions costs time, energy and money.

b. Inadequate or misinterpreted information

Bounded Rationality also recognizes that individuals frequently have inadequate information about problems and that events that they cannot control will influence the results of their decisions. Faced with increasing customer resistance to high motor car prices, Honda and Toyota believd that the only way to produce a less expensive car was to skimp on features. In the US, Honda replaced the rear disc brakes on the Civic with lower cost drum brakes, and used cheaper fabric for the back seat, hoping that customers would not notice. Toyota tried to sell a version of its best selling Corolla in Japan with unpainted bumpers and cheaper seats. Management at both Honda and Toyota made these decisions without adequate information. As soon as customers rebelled, they quickly reversed their decision.

c. Information processing biases

Consistent with the bounded rationality model, individuals often fall prey to information processing biases when they engage in bounded rationality decision-making. The following are 5 of these biases:

1. The availability bias means that people who easily recall specific instances of an event may overestimate how frequently the event occurs. People who have been in serious plane crashes often overestimate how often such accidents occur.

2. The selective perception bias means that what people expect to see is often what they do see. People seek information that is consistent with their own views and downplay conflicting information. For example, some people are willing to swim with sharks, with nothing but a ski suit and mask as protection, yet these same people may not be willing to swim in a public swimming pool, which poses no threat to their lives.

3. The concrete information bias means that vivid, direct experience usually prevails over abstract information. A single personal experience can outweigh statistical evidence. For example, an initial bad experience in the classroom can lead a student to conclude that lectures and teachers are not to be trusted and are simply out to exploit students.

4. The law of small numbers bias means that people may view a few incidents or cases as representative of a larger population, ie a few cases ‘prove the rule’. The fact that apartheid occurred when a “white” president was in power, has led many people into believing preconceived notions of how apartheid will be brought back to South Africa should a white government be put into power.

5. The gambler’s fallacy bias means that seeing an unexpected number of similar events can lead people to the conviction that an event not seen will occur. For example, 5 successive dice rolls sum up to 8, a player might incorrectly believe that the chances of a 8 on the next roll are greater than 50/50, which is false.

 

POLITICAL MODEL 

- the political model describes the decision making process in terms of particular interests and goals of powerful external and internal stakeholders. 

-power i the ability to influence or control individual, departmental, team organizational decisions and goals. 

-Political processes are most likely to occur when decisions involve powerful stakeholders, disagreements over choice of goals and people who are not searching for alternative solutions 

 

Problem definition--external and internal stakeholders try to define problems for their own advantage. 

Divergence in goals- the political model recognizes the likelihood of conflicting goals among stakeholders and that the choice of goals will be influenced strongly by the relative power of stakeholders. 

Divergence in solutions - some goals or the ways used to achieve them may be perceived as a win-lose situation. In such a situation stakeholders ofte distor and withhold information selectively to further their own interests.  

 

 

Rational Model 

The rational model is made up of a set of steps that can be used to achieve routine goals. Individuals can easily follow these steps when making routine decisions. Routine decisions under conditions that approximate certainty obviously do not require use of all the steps in this model. For example, if a particular problem tends to recur, decisions may be written as standard operating procedure/rules. These seven steps are rarely followed by individuals or teams when making adaptive or innovative decisions. 

Step One: Define and diagnose the problem  

Problem definition and diagnosis involves three skills that are part of a manager’s planning and administration competency. 

1. Noticing: The identifying and monitoring numerous external and internal environment forces, and deciding which ones are contributing to the problem/problems. 2. Interpreting: Assessing the forces noticed and determining which are causes, not merely symptoms of the real problem/problems. 3. Incorporating: Involves relating those interpretations to the current or desired goals (the second step) of the department or organization. 

If noticing, interpreting and incorporating are done haphazardly or incorrectly, the individual or team is eventually likely to choose a poor solution. 

Step Two: Set goals  

After individuals or teams have defined a problem, they can set specific goals for eliminating it. Management could set a hierarchy of goals for the various levels in the organization, from the division manager to the operator, to solve the seeming problem or could identify the real problem, and then set a hierarchy of goals to correct it. Setting precise goals can be extremely difficult under the condition of uncertainty. Individuals or teams may have to identify alternative goals, compare and evaluate them, and choose among them as best they can. For example, a business career might be your overall goal, but you could be uncertain about which specific path to follow, to arrive at an answer, you will have to consider the alternative paths for achieving your general goal. 

Step Three: Search for alternative solutions  

Individuals or teams must look for alternative ways to achieve a goal. This includes actions such as seeking additional information, thinking creatively, consulting experts and undertaking research. 

Step Four: Compare and evaluate alternative solutions  

After individuals or teams have identified alternative solutions, they must compare and evaluate them. This step emphasizes expected results and determining the relative cost of each alternative. Several aids for comparing and evaluating alternative solutions rationally can be found in chapter nine. 

Step Five: Choose from among alternative solutions 

Although choosing among alternative solutions might appear to be straightforward, it may prove to be difficult when the problem is complex and ambiguous, and involves high degrees of risk or uncertainty. 

Step Six: 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. Another solution should be considered if the one selected cannot be implemented for some reason. 

Step Seven: Follow up and control 

Implementing the preferred solution will automatically achieve the desired goal. Individuals or teams must control implementation activities and follow up by evaluating results. If implementation does not produce satisfactory results, corrective action will be needed. 

Conclusion 

When dealing with some type of problems, people do not even attempt to follow the rational model’s seven steps. Instead, they may apply the bounded rationality or political models.