FUNDAMENTALS OF DECISION-MAKING

LO1- Define decision-making and the role of decision-making for managers and employees.

Decision-making is the act or process of deciding something especially with a group of people. Decision-making in management is an essential skill required for the organisation to succeed.

Role of decision making for:

MANAGERS

• Better utilization of resources
• Facing problems and challenges
• Business growth
• Achieving objectives
• Increases efficiency
• Facilitate innovation
• Motivates employees

Employees

• Improves morale
• More inputs
• Create teamwork
• More responsibility

LO2- Discuss the conditions of certainty, risk and uncertainty under which decisions are made.

1. Certainty is the condition under which individuals are fully informed about a problem, solutions are clear and results of each solution is clear. Certainty allows us to have control over every situation because we would be well informed about the problem and all solutions. Being well informed about a problem insures that decisions can be made easily in order to solve the problem.
2. Risk is the condition under which individuals define a problem, specify the probability of events and identify alternative solutions. The more one is well informed about a problem the less the risk is involved, because one will know how to solve every situation which might be risky. Probability s the likelihood or chance of an event occurring. Objective probability is based on statistics, experiments and research while subjective probability is derived from a persons personal judgement or experience about it an outcome is likely to occur.
3. Uncertainty is the condition were a person does not have the necessary information to assign probability to an outcome. The person may not be able to come up with solutions because they are not informed on the problem itself. Uncertainty may be caused by ambiguous or  highly unusual problem.

LO3- Describe the characteristics of routine, adaptive and innovative decisions

• Routine decisions= These are standard choices made in response to relatively well-defined and common problems with alternative solutions. Standard operating procedures or rules are established to assist with how to deal with the problem. The routine decisions are usually made by a computer software for example university registration and calculation of APS score.
• Adaptive decisions= Choices made in response to a combination of moderately unusual and fairly uncommon problems with alternative solutions. These involve the improvement and modification of past routine decisions and practices. Continuous improvement is a key to total quality management. This improvement requires a commitment to constant diagnosis of the technology, organization as well as the managerial process. Decisions  based on continuous improvement are made based on the drive to provide better quality improving efficiency and being responsive to customers.
• Innovative decisions= Based on the discovery, identification and diagnosis of unusual and ambiguous problems and the development of unique or creative alternative solutions.

 LO4- Explain how goals affect decision making

Goals are crucial in giving employees and managers a source of order, direction and meaning. Goals are results to be attained thus indicate the directions in which decisions and actions should be aimed.

1. goals aid the planning process.
2. Goals motivate people to perform better.

Crucial goals provide broad direction for decision making in qualitive terms. Operational goals state what is to be achieved in quantitive terms, for whom within the period.

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

1. Rational model describes the number of steps that individual and teams must follow. It consists of a series of steps, starting with problem identification and ending with the implementation of the solutions.
2. Bounded rationality is concept proposed by Herbert Simon which emphasizes limitations of rationality. Bounded rationality explains why different people make different decisions even though they have the exact same information. Human beings tend to always choose less than the best goal and this is known as satisficing which is the basis of the concept of bounded rationality.
3. Political models grasp these hypothesis that portray basic leadership as a bargaining procedure. Investigation centers around the distribution of intensity and impact in associations and on the bargaining and negotiations between interest groups.

Group Name: DREAMVILLE

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TOPIC: Learning outcomes: chapter 14

Learning outcome 1: define decision-making and explain the role of decision-making for managers and employees.

What is decision making ?

• This can be defined as the process of having to make important decisions/choices.

Role of decision making for

Managers & Employees:

• The decision making process plays a very important role for managers. This is mainly because for a manager to be effective they have to use all six managerial competencies and decision-making processes are basic to managerial processes. Managers have to communicate with their employees, plan & administrate by organising management teams that will implement their plans and therefore teamwork is crucial for this. Managers and employees also need to strategise every action they plan to make this also demonstrates self management competency.
• This shows us just how big of a role the process plays in managerial & employee positions.

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

1. Certainty

It is the condition under which individuals are fully informed about a problem, alternative solutions are obvious, and the likely results of each solution are clear. The future is highly predictable under conditions of certainty and such conditions exist in case of routine and repetitive decisions concerning day-to-day operations of a business. This condition means that both the problem and alternative solutions are well known and defined.

2. Risk

This 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. This condition means that the problem and alternative solutions are either relatively common and known or they are unusual and ambiguous. Under the conditions of risk, the decision maker has incomplete information about alternatives but has a good idea of the probability of outcomes of each alternative.

3. Uncertainty

Conditions of uncertainty exist when the future environment is unpredictable and everything is in a state of flux. This is the condition under which an individual does not have the necessary information to assign probabilities to the outcomes of alternative solutions, the individual may not even be able to define the problem, identify alternative solutions and the possible outcomes. In this state, the decision maker must depend upon his/her judgement and experience to make decisions. There are techniques/ approaches to decision making under uncertainty namely; risk analysis, decision trees and preference theory.

Learning outcome 3: describe the characteristics of routine, adaptive, and innovative decisions

1. Routine decisions

• Routine decisions are standard choices made in response to relatively well-defined and common problems and alternative solutions.
• The way in which to make routine decisions is often covered by established rules pr standard operating procedures.
• These routine decisions are made by computer software.

2. Adaptive decisions

• adaptive decisions are choices made in response to a combination of moderately unusual and fairly uncommon problems with alternative decisions.
• It involves streams of adaptive organisational decisions made over time that result in a large number of small, incremental improvements year after year.

3. Innovative decisions

• Innovative decisions are choices based on the discovery, identification and diagnosis of unusual and arguable problems and/or the development of unique or creative alternative solutions.
• Because innovative decisions usually represent a sharp break with the past, they normally do not happen in a logical, orderly sequence.

Learning outcome 4: Explain how goals affect decision making

• The business’s goals and objectives will affect how the business operates and the decision that are made.
• Goals give the business a sense of direction and meaning, and necessary decisions must be made in order to reach those goals.
• Decision-making in organisations under the conditions of risk and uncertainty is coupled directly with goals in one of two ways:

1)The decision-making process is triggered by a search for better way to achieve established goals.

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

• When goals are clear to the business, making decisions becomes easier.
• Businesses should use their goals as guidelines to making decisions.

Learning outcome 5: differentiate between the rational, bounded rationally, and political models of decision-making.

GROUP NAME: EL IMPERIO

Members that participated in the activity:

Fundamentals of decision-making

Members that participated in the activity:

Learning Outcome 1: Definition of decision-making and an explanation of the role of decision-making for managers and employees

For managers: An effective manager relies on all six managerial competencies to make a decision. (Example: The manager of Toyota has the ability to envision transforming the company into the world’s largest car manufacturer . This illustrates his strategic action competency.

For employees: It gives each employee the opportunity to voice their opinions and share their knowledge with others.

In a nutshell, managers and employees base various types of decisions on the nature of the problem to be solved, possible solutions available and the degree of risk involved.

Learning Outcome 2: The conditions of uncertainty and risk under which decisions are made

Certainty

Certainty refers to a condition whereby individuals are fully informed about a problem, alternative solutions are obvious and there’s clarity concerning results of each solution. Both the problem and alternative solutions and well-explained and understood. Alternative solutions and their expected outcomes are identified, then the best solution Is chosen. Sometimes a problem has many possible solutions and it’s extremely expensive and time-consuming to calculate the expected results for all of them.

Middle managers, executives and different professionals are not involved in decision-making under this condition. However, first-line managers make decisions on a daily basis under conditions certainty or near certainty.

Risk

Risk refers to a condition whereby individuals define a problem, specify the probability of certain events, identify alternative solutions and state the probability of each solution leading to the desires result. Risk, as a rule, means that the problem and the alternative solution are between extremes, are relatively common and understandable, unusual and ambiguous.

Probability is the percentage of times that a specific outcome would occur if an individual were to make a particular decision menu times. The type, amount and reliability of information affects the level of risk and whether decision makers can use objective or subjective probabilities in evaluating results.

Objective probability

Objective probability refers to the possibility that a specific result will occur,  based on hard facts and numbers. Historical data is used to estimate future outcomes of a decision .

Subjective probability

The possibility that a specific result will occur, based on personal judgement and beliefs is known as subjective probability. These judgements are never the same due to individual's different intuition, past experiences, expertise and personal traits such as preference for risk taking. Changes in decision making can change expectations and practice. These changes change the basis for assessing the probability of an outcome from objective to subjective probability, even uncertainty.

Learning Outcome 3: The characteristics of routine, adaptive and innovative decisions

Routine decisions:

• People usually make a lot of decisions each day. Rather than thinking a lot for each decision, people instead rely on routines.
• These are decisions that need an introduction and identification then it becomes your regular activity.
• The nature of decision is taken regularly, therefore the answer requires no or very little consideration of an alternative.
• These decisions are usually sufficient, but they do fail, occasionally.
• The most basic of the different types of decisions but carries crucial importance
• A business may use routine decisions to purchase operating supplies, diversifying products and selecting distribution channels.

Adaptive Decisions:

• Made in response to a combination of moderately unusual problems and alternative solutions
• Adaptive decisions can only occur if there was a routine decision
• May not always be precise but can produce satisfactory solutions
• Convergence—a business shift in which two connections with the customer that were previously viewed as competing or separate come to be seen as complementary
• Continuous improvement—a management philosophy that approaches the challenge of product and process enhancements as an ongoing effort to increase the levels of quality and excellence
• An example of adaptive decision making can be a sports car manufacturer change from using steal or aluminium to using carbon fibre in order to make their cars much lighter, making the cars faster.

Innovative Decisions

• Based on the discovery, identification, and diagnosis of unusual and ambiguous problems and/or the development of unique or creative alternative solutions
• May take years to develop and requires inputs from professional specialists and teams
• Three forms of innovation for economic progress:
• Institutional innovation: includes the legal and institutional framework for business, such as deregulation
• Technological innovation: creates the possibility of new products, services, and production methods
• Management innovation: major changes in the way organizations are structured and how managers perform their functions
• The technological industry is probably the most innovative industry in the world because of its rapid growth and constant technological advancements. Advancements such as virtual reality and biotechnology

Learning Outcome 4: Explanation of how goals affect decision-making

How goals affect decision making

A goal is an observable and measurable end result having one or more objectives to be achieved within or more or less fixed time frame. Goals affect decision making both negatively and positively, setting goals too high may affect the entity negatively as they may not reach their goals.

Decision making is a process whereby you provide solutions to challenges in life.

The nature of goals

Goals are results to be attained and thus indicate the direction in which decisions and actions to be aimed.

There are two types of goals

1. Short term goals: something that you want to achieve soon, could be today, this week, next month or in a year
2. Long term goals: something that you want to achieve in future, such goals are important for a successful future

Why people set goals 

A lot of benefits can result from setting goals, goals focus on both individual and organisational decisions and efforts

It is most important that people set smart goals

Specific-the goal must be clear:

• What?
• When?
• How?

Measurable-You identify exactly what it is that you will see

Attainable- Investigating whether the goal is acceptable to you

Relevant- Is reaching the goal relevant to you, do you really want to run a multimillionaire entity

Timely- Set deadlines and ensure that everybody in the entity knows when the goals must be reached

General and operational goals

• General goals provide a direction for decision making in qualitative terms
• Operational goals state what is to achieved in quantitative terms- short term goals that bring an organisation closer to its goals

Role of stakeholders

Have important roles in making decisions, they have a high impact in the organisation and its employees.

Stakeholders are the customers, shareholders, suppliers that work with or within the organisation

Learning Outcome 5: The difference between the rational, bounded rationality and political methods of decision making

Rational Model:

This model lays down a sequence of steps that an individual or teams should follow in order to increase the likelihood that their decisions will be logical and sound.

The Rational model prescribes a series of steps that individuals should follow to ensure their decisions are sound and logical. It addresses how best to achieve the required goals such as the steps towards there and not the end goal itself.

The rational decision making is a process that consists of 7 steps:

1. Define and diagnose the problem
2. Set goals
3. Search for alternative solutions
4. Compare and evaluate alternative solutions
5. Choose from among alternative solutions
6. Implement the solution selected
7. Follow up and control

The steps include:

1. Defining and diagnosing the problem: Managers have to possess planning and administration competency that include identifying and monitoring numerous external and internal environmental forces and deciding which ones are contributing to the problem(s). Noticing - assessing the forces noticed and determining which are the causes of the real problem(s). Interpreting - relating those interpretations to the current or desired goals of the organization (Incorporating).
2. Setting goals: The team/individuals must set goals in place directed towards solving the problems. An example would be identifying that grades of a particular module that have fallen down, the real problem being lack of knowledge/information about the module from students and the goals set would be ensuring that lecturers deliver adequate and accurate information and allocating SI sessions.
3. Searching for alternative solutions: The team/individuals must look for alternative solutions through seeking additional information,creative thinking,consulting experts and doing some research.
4. Compare and evaluate alternative solutions: Determining the relative cost of each alternative solution.
5. Choosing from among alternative solutions: Involves making the final choice which may be difficult depending on the complexity of the problem and high degree of risk or uncertainty thereof.
6. Implementing solution chosen: The correct decision has to be accepted and supported  by those responsible for implementing it and it has to be acted on effectively.If not,another solution should be implemented.
7. Follow-up and control: Teams/individuals must control implementation activities and follow up by evaluating results.

Bounded rationality model

The idea that we make decisions that are rational but within the limits of the information that is available to us and our mental capabilities

Refers to an individual’s tendencies to:

5. Select less than the best goal or alternative solution(satisficing)
5. Engage in a limited search for alternative solutions
5. Have inadequate information and control over external and internal environmental forces influencing the outcomes of decision

Firstly, information is imperfect and individuals make decisions based on that information. Secondly, not all possible alternatives are evaluated by the individual before a decision is made.

The Model refers to an individual’s tendencies to do the following:

• Satisficing decision:

1. Limited Search
2. Inadequate information
3. Information processing bias

Political methods

Decision-making as political process highlights the goals, interests and values of external and internal stakeholders that are powerful. Powerful in the sense that they have the ability to influence or control individual, departmental, team or organisational decisions and goals. It describes the decision-making process in terms of a particular interest and goals of powerful external and internal stakeholders. This model mainly uses Power, as it is the ability to influence or control individuals, departments and teams making situations.

Having power is the ability to control these factors:

1. The definition of the problem
2. The choice of goal
3. The consideration of alternative solutions
4. The selection of alternative to be implemented
5. The actions and success of the organisation

The factors are interrelated as follows:

• Political decision making

1. Stakeholders
2. Choice of goals
3. Alternative solutions

• Stakeholders are people affect or be affected by the organization's actions, objectives and policies. Examples are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources.
• Choice of goals are the goals that people try to attain during a product selection and the attainment which determines the satisfaction with the decision-making process
• Alternative solutions is all or part of a goal design that demonstrates compliance with the goal code, but differs completely or partially from the acceptance or verification methods.

The factors affecting the political decision making include:

• Problem definition
• Divergence in goals
• Divergence in solutions

Members that participated in the activity:

L01 - Define decision-making and explain the role of decision-making for managers and employees.

Decision Making
Decision making is the process of making choices by firstly defining the problem,
followed by identifying a decision, gathering information, and assessing alternative
resolutions. Usually there are decision-making steps to follow to help make
deliberate and considerate decisions.

Role of decision making for managers
Decision-making is regarded as one of the important functions of management.
Decision making process is continuous and indispensable component of managing
any organisation or business activities. An effective manager relies on all six
managerial competencies to make decisions, theses competencies are
communication, teamwork, planning and administration, strategic action, Global
awareness and lastly emotional intelligence and self-management.

Role of decision-making for employees
Involving employees when making decisions about the company's future helps
strengthen your relationship with each employee. Participation in the decision-
making process gives each employee the opportunity to voice their opinions,
and to share their knowledge with others. While this improves the relationship
between manager and employee, it also encourages a strong sense of teamwork
among workers.

L02 - Discuss the conditions of certainty, risk and uncertainty under which decisions are made.

Uncertainty

Under the condition of uncertainty mangers do not know what is going to happen after a particular decision has been taken. Managers have very little information at their disposal and they are uncertain about the reliability of the information. Therefore, they are not well informed possible alternatives and their outcomes. Uncertainty arises from complex and ambiguous problems and alternative solutions. Under uncertainty managers make use of intuition, judgement and experience to make decisions. This means that there is more possibility of incorrect decisions or assumptions. Examples of situations in which uncertainty may arise is when a business introduces a new product in their product range, also when a business adopts new technology.

Risk

Risk is the condition under which managers have factual, but inadequate information. Managers have the knowledge of an alternative course of action, but without complete information they cannot accurately determine the outcome. Decision making under risk condition is accompanied by moderate ambiguity and complexity. Managers may use subjective probability which is based on their personal judgement and experience. They may also use objective probability which is based on hard facts and numbers. A good example of risky condition would be when making decisions about restaurant locations, Wimpy can analyse potential customer demographics, traffic patterns, supply logistics and the local completion and come up with good forecasts of how successful a restaurant would be in each possible location.

Certainty

Under the condition of certainty managers have perfect knowledge of the information needed to make a decision. Managers know what the outcome of a particular decision will be. This condition is ideal for problem solving – outcomes are known and their consequences are certain. Under the condition of certainty there is low ambiguity and complexity. A good example of the condition of certainty would be when a company invests money at a bank, it is certain that it will yield interests on the amount of money invested.

L03 - Discuss the characteristics of routine, adaptive and innovative decisions.

Routine decisions

These are standardised decisions made on a daily basis. Without much thought involved. These are standardised choices which are clearly identified and well defined on how to deal with specific problems. The establishment of these decisions are created and governed by set rules, which dictate the manner in which a problem should be solved. The way problems are solved or decisions are made, is in a standardised manner and are sometimes a skills needed for certain jobs. Routine decision making basically entails doing things in a certain manner, without breaking the norm.

An example of routine decision making: A business restocking office materials when supplies are low.

Adaptive decisions

These are decisions that are made in uncommon circumstances. These decisions involve having to improve in order to ensure sustainability of a business. Adaptive decision making is basically continuous improvement to the environment or changes in the environment. This requires a constant strive to improve, by identifying the technical, organisational and managerial processes in search of improvement. This type of decision making entails the need to be better.

Example: Providing better products in comparison to competitors in order to survive and thrive in the market.

Innovative decisions

These are solutions that result from unique and “out of the box “thinking .These solutions are new and result from creative thinking in order to solve existing problems. Innovative ideas take a long time to generate and might even take years. These decisions are generated by groups of specialised professionals. Innovative ideas entail them being the most cost efficient and use up less factors of production.

Example: Technological inventions such as wind turbines, concentrated solar power or geothermal energy.

L04 - Explain how goals affect decision-making.

Decision-making in organisations under the conditions of risk and uncertainty is coupled
directly with goals in one of two ways:

 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 organisations a sense of order,
direction, and meaning.

Some examples of decision making based on goals are:

 Use a decision journal and capture the issue, the expectations, the assumptions, and
the time-frame for evaluating results based on your goals, this will help people get
more innovated and get better at their given tasks.

 Take the time to reflect on previous decision-making processes and jot down how one
can improve the process the next time one faces a similar decision, thus making an
improvement on the stuff by also providing feedback.

Decision Making: Improve and master this core skill with these and more:

 Generate and evaluate alternatives together. Generating and evaluating any
alternatives is easy when based on knowledge, experience, and creativity.

 Get an informed opinion. getting a personal opinion will improve your decision-
making skills giving you self-confidence and reassurance that what you are doing is
right.

L05 - Differentiate between the rational, bounded rationality and political models of decision-making.

BMAN121 SU5 – Chapter 14 Efundi Blogs (20 marks)                                            

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 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

Members that participated in the activity:

LO1.

Decision making Definition:

Decision making is a course of action taken from a set of alternatives to reach achievements set by the organisation and mangers these are the goals and objectives. Decision making is an ongoing process of making choices by identifying a decision, gathering information and looking at alternative solutions. Effective managers and employees can systematically base various types of decisions on the nature of the problem to be solved. Managers rely on all six managerial competencies to make a decision, which include communication, planning, administration, teamwork, strategic action, global awareness, emotional intelligence and self management. Conversely, decision making process is basic to all managerial competencies.

LO2.

Decision Making Conditions 

1.Certainty: 

The condition where thorough research has been done about a problem under which individuals know all the necessary information about how the problem should be solved, and are certain about all the outcomes of all the solutions they have made to solve the problem.

 Example : The need to meet customers, contract or regulatory requirements. 

2.Risk 

Risk is the condition where the individuals can identify and define problems, create alternatives solutions on how to solve the problem and stating the probability of each solution leading to achieving the desired results even though there's no guarantee if each solution will work to attain the desired results.

 For example :Spur can analyze potential customer demographics, supply logistics and the local competition and come up with reasonable forecasts of how a successful restaurant would be in each possible location.

Probability : 

The percentage of time that a specific outcome would occur if an individual were to make a particular decision a large number of times Objective Probability : When more accurate information is used to determine the probability of a given outcome. For example, using past data and statistics. Subjective probability : 

The kind of probability which is influenced by an individual's personal judgment and opinion or their own experience about whether or not a specific outcome is likely to occur. 

3.Uncertainty Uncertainty is the condition under which an individual does not have the necessary information to assign probabilities to outcomes of alternative solutions. It sometimes suggest that the problem and the alternative solution are highly unusual. Uncertainty is present even when organizations do considerable research and planning before committing resources to projects.

LO3.

Designing jobs

- Involves the establishment of the employee’s job-related responsibilities.

- The first step to designing jobs is Job specialisation.

- Job specialisation is how responsibilities or duties are divided into smaller and manageable parts.

- This improves productivity and is a more efficient way.

- Job rotation involves systematically moving employees from one job to another.

- Employees gain skills from job rotation and they can also be flexible

- Job enlargement increase total number of tasks of an employee.

- Job enrichment increase number of tasks and associated responsibility.

Establishing reporting relationships

Also known as chain command. First a reporting line has to be determined to know who in charge of

certain activities. Secondly, the span of management must be established. This is to know how many

people report to one manager. For this to work, various factors have to be taken into account .

Co-ordinating activities

This last building blocks is also related to specialisation but more complex. It’s done to take advantage of

specialisation in order to achieve the goals and objectives of a business such as effective productivity.

When tasks are divided, this results in groups being interdependent on each other. Eventually the

working as different groups results in one product.

Co-ordinating Activities

Activities carried out in each function of a business makes other functions vulnerable to one

another, hence introduction of small sub-divided parts of works that focuses its influence on

skills one has to specialise on. Tasks are carried out timeously just so not to hinder other

functions as well. Tasks have a followed structure that one can’t skill to simply speed up the

process. Resources used to carry out tasks are also used by other functions to meet their

proceeds.

For example, drivers to one specified company only transport they do not pack. It is required

of them to bring up stock timeously so that packers can make product available before the

opening of store or sale date on the shelves.

Establishing authority relationships

In a business there is authority from the above that gives responsibility to give authority to

the subordinates- end cycle. It influences, that even appointing persons to

goals/responsibilities has to come up on that very same chain of command.

For example, I cannot authorize any work to any member of a group for I do not have the

authority to give responsibility. We as a group cannot decide when to submit the work

assigned to a specified due date, we only meet the deadline and that is our responsibility.

Establishing reporting relationship

There must be lines of reporting as power of authority has limits unless you are an owner of

the business and you actually have no one to report to. You have to report to one that has

specific power to assist you in everything you need. You don’t just report to any manager and

managers job analyses differ hence unbalanced power.

For example, should I not be able to submit on time I have to alert first my nearest partner, if

I cannot give a report to my partner, I can report directly to the leader so that they pass my

message all over to the owner.

LO4. How does goals affect decision making

 Goals give the employees as well as managers a sense of direction and order.

 Goals indicate the direction in which activities should move and how resources should be used

Which will ultimately make decision making easier?

 Goals guide people behaviour which could in turn motivate individuals to speed up the decision

Making process so that goals can be achieved as soon as possible

 Goals also provide a broad direction for decision making in qualitative terms

Once, goals are set, decisions can be made in terms of which departments will carry out which

Task and how task will be carried out

LO5. Differentiate between the rational, bounded rationality, and political models of

Decision making

• Rational model

The rational model prescribes a series of steps that individuals or teams should follow to increase the likelihood that their decisions will be logical and sound. A rational decision permits the maximum achievement of goals within the limitations of the situation. The definition addresses means- how best to achieve goals not ends(the goals themselves)

Seven step process

1. Define and diagnose the problem.

2. Set goals

3. Search for alternative solutions

4. Compare and evaluate alternative solutions

5. Choose from among alternative solutions

6. Implement the solution selected

7. Follow-up and control

• Bounded rationality model

Herbert Simon, a management scholar, introduced this model in the mid-1950s. It contributed significantly to the decision of the Swedish Academy of Sciences to award him the 1978 Nobel Prize for economics for his ‘pioneering research into the decision-making process within economic organisations’. The bounded rationality is particularly useful because it emphasises the limitations of. The selection of alternative solutions to be implemented

• The actions and success of the organisation

Political process is likely to occur when decisions involve powerful stakeholders, disagreement over choice of goals and people who are not searching for alternative solutions, These factors are highly interrelated from alternative solutions to stakeholders and choice of goals-which also depicts political decision making. Rationality and thus provides a better picture of day-to-day decision making processes used by most people. This model partially explains why different individuals make different decisions when they have exactly the same information.

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

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

• Engage in a limited search for alternative solutions

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

• Political model

The political model describes the decision making process in terms of the particular interest and goals of powerful external and internal stakeholders. Before considering this model, however, we need to define power. Power is the ability to influence or control of the following factors:

• The definition of the problem

• The choice of the goal

• The consideration of alternative solutions

STUDY UNIT 5: CHAPTER 14

06-Sep-2019 13:49

Group Name: The Dynamic Cooperatives

Members that participated in the activity:

The Fundamentals of Decision Making

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

A process of making important decisions in a business which includes, defining problems, gather information, generating alternatives and choosing a course of action.

• The role of decision making for managers and employees
  • Determining the degree of risk involved 
  • Establish possible solutions available 
  • Determine the nature of the problem
  • An effective manager relies on all six managerial competencies to make a decision.
• The following are part of the managerial competencies:
  • Communication
  • Planning and administration
  • Teamwork 
  • Strategic action 
  • Global awareness
  • Emotional intelligence
  • Self-management

The ability of Roger Eaton, CEO of KFC, to be leading integrated food services group in ASEAN region delivering consistent quality products and excellent customer focuses. He has to rely on planning and administration competency to form a management team that would choose and implement a strategy through which to achieve this vision.

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

• Certainty
  • Certainty is the condition under which individuals are fully informed about a problem, alternative solutions are obvious and the likely results of each solution are clear.
  • Once an individual identifies alternative solutions and their expected results, making the decision is relatively easy: the decision-maker simply chooses the solution with the best potential outcome.
    • Example:
    • Spar buys Easter eggs during the Easter month because the business is certain that there is going to be a demand for Easter eggs. Spar can consider looking through the previous year's Easter month sales to have an idea how much is the demand going to be. 
• Risk
  • 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.
  • Risks generally means that the problem and alternative solutions fall somewhere between the extremes of being relatively common and well defined. 
    • Example:
    • Burger King cannot just randomly choose a location where to build its empire. The company must look at the risk of the location before considering to buy the property. For example, the property must be in a urban area for for customers to know the location. 
• Probability- Is the percentage of times that a spesific outcome would occur if an individual were to make a particular decision a large number of times.  
  • Example:
  • Rolling a dice can give you 1 out of 6 chances for getting a certain number. 
• Objective probability- The likelihood that a specific outcome will occur, based on hard facts and numbers. 
  • Example:
  • Private security firms will use statistics such as a crime rate statistics and police reports to deduce how many recources are needed for what areas dependent on the level of crime in the area. 
• Subjective probability- The likelihood that a specific outcome will occur, based on personal judgment and beliefs. 
  • Example:
  • Farmers will use knowledge based on experience and what they were taught when deciding how to run their farms. This knowledge is usually handed down from generation to generation of farmers. 
• Uncertainty
  • Uncertainty is the condition under which an individual does not have the necessary information to assign probabilities to the outcomes of alternative solutions. 
  • Uncertainty often suggests that the problem and the alternative solutions are both ambiguous and highly unusual. 
    • Example:
      • The business owner may be uncertain to expand the franchise to other countries because the customers may not always be familiar with the business and what the business is selling. For example, South-Africa is known for "Boerewors rolls" where other countries may not be familiar with it. Therefore they will not be inclined to try it.

Describe the characteristics of routine, adaptive, and innovative decisions

• Routine decisions
  • is based on well-defined problems with alternative solutions 
  • covered by established rules or standard procedures
  • Increasingly, these routine decisions are made by computer software
    • Examples:
    • One of tasks requiring routine decisions is dealing with customer complaints. The customer service department have to routinely deal with incoming complaints and therefore they have a standard procedure of dealing with them. The complaints are read, evaluated and addressed, as a part of this procedure. 
• Adaptive decisions
  • is based on fairly unusual and uncommon problems with alternative solutions
  • is about modifying and improving upon past routine decisions and practises
  • it is necessary for continuous improvement
    • Examples:
    • A business may find that they have to change and improve their past way of dealing with the packing and shipping customers’ orders. They have realised that their current methods do not allow for dealing with it efficiently and timely. Therefore, to address the issue, they have decided to expand their warehousing unit and to hire more staff.

• Innovative decisions
  • is based on unusual and ambiguous problems and the development of unique and creative solutions.
  • the solutions also involve a series of small interrelated decisions made over a period of months or even years.
  • leading edge innovations may take years to develop and involve numerous professional specialists and teams.
  • innovative decisions usually represent a sharp break with the past, they do not usually happen in a logical, orderly sequence.
  • they are not always based on incomplete and rapidly changing information and can be made before problems are fully defined and understood.
  • to be effective, decision makers therefore must be especially careful to define right problem and recognise that earlier actions can significantly affect later decisions.
    • Examples:
      • One of the successful innovative enterprises is PaperJet.
      • This start-up company is disrupting the online document signing industry in Africa. You can complete any form in your browser with the Drag & Drop feature within seconds. The user-friendly field detection facility makes it easy to complete, sign and submit any e-signing form.

Explain how goals affect decision making

• Rational model
  • It is a model that tells how the decision should be made when making routine decisions in situations involving conditions of near certainty or low risk. 
  • It prescribes a series of steps that individuals or teams should follow to increase he likelihood that their decision will be logical and sound.

These are the 7 steps:

Step 1: Define and diagnose the problem

• three skills that are part of a manager’s planning and administration competency: noticing, interpreting and incorporating
• noticing: involves identifying and monitoring numerous external and internal environmental forces
• interpreting: involves assessing the forces noticed and determining which are causes, not merely symptoms
• incorporating: involves relating those interpretations to the current or desired goals of the department or organisation

Step 2: Set goals

• after individuals 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 organisation, from the division manager to the operator, to solve the seeming problem and then set a hierarchy of goals to correct it

Step 3: Search for alternative solutions

• individuals or teams must look for alternative ways to achieve a goal
• when there seems to be no feasible solution for reaching a goal, there may be a need to modify the goal

Step 4: Compare and evaluate alternative solutions

• after the individuals or teams 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 from among alternative solutions

• decision making is commonly associated with having made a final choice

Step 6: Implement the solutions selected

• if the selected solution cannot be implemented for some reason, another one should be considered

Step 7: Follow-up and control

• individuals or teams must control implementation activities and follow up by evaluating results

Example of a Rational model:
A chicken fast food restaurant comes across the same problem multiple times, in this case overstocking of their perishable products, such as chicken and vegetables. Each time they had followed the same series of steps and realised that there is a trend in the way the customers purchase their products – there are more customers at the beginning of the month, however that number decreases as the month goes on. The solution to the problem, which is ordering more stock at the beginning of the month and then less throughout the month, may be written as a standard operating procedure.

• Bounded rationality model
  • It is a model that emphasises the limitations of rationality and explains why different individuals make different decisions when given the same information.
  • It refers to an individual tendencies to do the following:
    • satisficing
    • limited search
    • inadequate information
    • information-processing biases
• Satisficing
  • selection of an acceptable goal/alternative solution
  • three factors influence a satisfying decision: limited search, inadequate information and information-processing bias
• Limited search
  • individuals usually make only a limited search for possible goals or alternative solutions to a problem
  • considering options until they find one that seems adequate
• Inadequate information
  • recognises that individuals frequently have inadequate information about problems and that events that they cannot control will influence results of their decisions
• Information-processing biases
  • Five of the biases
  • availability bias
  • selective perception bias
  • concrete information bias
  • law of small numbers bias
  • gambler’s fallacy bias

Example of a Bound rationality model for Satisficing:
When a business chooses its supplier, it must consider the prices of the products, the quality, and overall try to get the best products, in order to be able to make a profit and at the same time to be able to keep their prices low for the customers (in particular, lower than the competitor).

Example of a Bound rationality model for Inadequate or misinterpreted information:
A business owner may decide to make a decision on how to save money on cost of their product by lowering the overall quality or quantity of said product. Coca-cola decided to reduce the size of their cans, thereby reducing the quantity of their product while keeping the price the same. That way customers will not complain about the price increase, but the company still gets to save money on the product.

• Political model
  • It is a model that describes the decision making process in terms of the particular interest and goals of powerful external and internal stakeholders
  • Power is the ability to influence or control individual, department, team or organisational decisions or goals.
  • Three factors influence political decision-making
    • stakeholders
    • choice of goals
    • alternative solutions
• Problem definition
  • external and internal stakeholders try to define problems for their own advantage
• Divergence in goals
  • this model recognises 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 means used to achieve them must be perceived as a win-lose situation
  • in such a situation, stakeholders often distort and withhold information selectively to further their own interests

Example of a Political model for Divergence in goals:
Cadbury and Oreo have combined their products in order to get Cadbury Oreo flavoured chocolate as well as Cadbury-coated Oreos. That wat they are able to popularise their brands between both of their customer bases and that leads to an increase in profit.

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

Affection leverages a crucial decision-making process.

Goals that are set within an organisation is also seen as striving objectives that need to be achieved through deciding on definite and discreet objectives (goal).

These decisions go under circumstance of assimilating between risk and uncertainty. The circumstance that now associates with the goals can affect the organisation in one of two ways.

1. The decision-making operation is provoked by a quest for better ways to attain estimated set goals.

2. The decision-making operation is provoked by endeavouring the discovering new goals, altering current set goals or with drawing outdated goals.

In conclusion towards these goals that need to be decided on. They can progressively give employees, manager and organisation a sense of perception, directive guidance and expressive meaning within the organisation.

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Members that participated in the activity:

Out come 1

Define decision making and the role of decision making for managers and employees

Decision making is a process of choosing a solution to an identified problem with the information gathered. Managers of firms face a lot of problems and use decision making in everyday life to run there company, employees also use decision making skills to finish a task set by the manager.

To have decision making skills you must be able to follow simple steps called the decision-making process. As a manager or an employee of a firm you must consider the fundamental components of the decision-making process, such as types of problems, types of decisions, managerial competencies, decision making conditions, goals and decision making and decision making models. There are three types of decision making models namely: Rational model, bounded rationality model and the Political model.

Outcome 2

Difference between Certainty, Uncertainty, probability and risk in decision-making:

1)Certainty is where every person are fully aware of the all the problems and also the

solution to those problems. When all the individuals are informed decision-making is easier.

When decisions are made of certainty it is managed by middel managers, top managers and

professionals.

2)Risk is when all individuals are informed about a decision. Risk that was taken can give

them an indication of what to decide in the future.

3)Probability is if a decision will be made or not. There is a 50/50 chance

-Objective probability

Where an outcome can be made by facts or numbers. Where they can prove it.

-Subjective probability

Where an outcome can be made by jugdement. It can be judged by past experience or by

beliefs

4)Uncertainty is where the individuals are not aware or informed. When they do not know

what the problem is they cannot decide on solutions. When you are uncertain it will affect

your future decision-making.

Outcome 3

There are different types of decisions

Decisions may be classified as routine, adaptive or innovative, these categories reflect the types of problems faced and types of solutions considered.

Routine decisions

•  Routine decisions are standard choices made in response to relatively well-defined and common problems with alternative solutions  
• Established rules or standard operating procedures covers the way in making various routine decisions

Adaptive decisions

• This is choices made in response to a combination of moderately unusual and fairly uncommon problems with alternative solutions.
• Adaptive decisions involves modifying and improving past routine decisions and practices.
• Adaptive decisions are necessary for continuous improvement

Innovative decisions

• These decisions are choices based on the discovery, the identification and the diagnosis of unusual and ambiguous problems.
• The development of unique or creative alternative solutions.
• These solutions involve a series of small,Interrelated decisions made over a period of months or even years.

Out come 4

How do goals affect decision making

Decision making in organizations under the conditions of risk and uncertainty is coupled directly with goals in one of two ways:

• 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.

Setting goals is especially important in adaptive and innovative decision making. Goals are crucial in giving employees, managers and organizations a sense of order, direction and meaning.

Outcome 5

The Rational Model

This is based on the study of human behavior. It includes steps that individuals need to follow to increase the likelihood that their decisions will be logical and sound. A rational decision permits the maximum achievement of goals within limits of the situation. The heart of successful administration is efficiency, which is making good decisions with rationality. The rational model is all about the rationality in individuals’ decisions.

The rational decision-making process has 7 steps.

 Namely,

1. Defining and diagnosing the problem,
2. Setting goals,
3. Searching for alternative solutions,
4. Comparing and evaluating alternative solutions,
5. Choosing from among alternative solutions,
6. Implementing the selected solution and lastly,
7. Following up and controlling.

Step 1:

Define and diagnose the problem.

Managers and employees need to be aware of the true problems and the possible the causes of the problems for effective decision making to occur.

Defining the problem includes 3 skills, namely,

Noticing, Interpreting and Incorporating.

By noticing, the person can identify and monitor external and internal factors contributing to the problems.

Interpreting involves finding out which factors are causes and which are merely just symptoms of the problem.

Incorporating involves relating the interpretations to the desired goal.

An example of this could be having a stomach ache. You need to find out if this is merely a symptom of something bigger or it is the problem itself.  By finding this out, you can form solutions.

Numerous questions must be asked to find the problem and define it.

Step 2:

Set goals

After the problem is defined, goals need to be set to eliminate the problem. A hierarchy of goals can be created to solve the problem or identify the real problem and set the goals in hierarchy to solve it. The goals must include the desired results for example, what needs to be achieved and what is the deadline. Thereafter resources can be allocated. Setting goals can be difficult and time consuming but it vital in success as it can help you what path is the correct one to take.

For example, trying to find out what university to attend after being accepted by both.

To arrive at the correct answer, you must weigh out all the alternative paths to achieve your goal, sometimes without even having all the information.

Step 3:

Search for alternative solutions

Alternative ways need to be considered when wanting to achieve a goal. 

This can be done by researching, thinking out of the box and attaining additional information. If you cannot find feasible solutions, then you might need to consider changing your goal. For example: when someone sets an impossible goal, they end up working extra hard and taking on a lot od stress which could lead to mental health problems. Thus, achievable goals are important so that extra time isn’t wasted.

Step 4:

Compare and evaluate alternative solutions

Comparing and evaluating needs to be done with the alternative solutions in order to narrow it down to the best solution. This can be done by weighing out the pros and cons of a solution.

Step 5:

Choose from among alternative solutions

Most people might think that this is a final step in decision-making however, it when dealing with complex problems, the solution is never just straightforward. It involves a lot of risk and uncertainty; thus, it is but one of the decision-making steps.

Step 6:

Implement the solution selected

Sometimes the solution might not always be successful.  However, if it is then it must be implemented. If it cannot be implemented, a new solution must be considered.

Step 7:

Follow up and control

Implementing the solution might not always achieve the goal. The solution implemented must be controlled and follow ups must be done to make sure that is it is working. This is like an evaluation process.

The rational model sounds ideal however it is determined by the human mind and a humans decision making ability.

Bounded rationality model

Emphasises the limitations of rationality and describe why various individuals make different decisions or choices when they have exactly the same information.

The bounded rationality model refers to an individuals propensity to do the following:

• Select less than the best goal or alternative solution (satisficing)
• Engaged in a limited search for alternative solutions
• Have inadequate information and control over external and internal environment forces influencing the outcomes of the decision

     Satisficing:

• selecting an acceptable goal/alternative solution
• Acceptable goal might be easier to identify and achieve, less controversial and safer than the best available goal.

     3 Factors influence a satisficing decision

• Limited search
• Inadequate information

• Information-processing bias

      The political model

• The political model explains the decision making process in terms of the specific interest and goals of powerful external and internal stakeholders.
• Power: the ability to influence or control individual, department, team or organisational decisions or goals.

3 Factors influencing political decision-making:

• Stakeholders
• Choice of goals

Alternative solutions

Members that participated in the activity:

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

Definition of decision making – Collecting information, generating alternatives and deciding a course

of action.

The role of decision making for managers and employees - It is possible to demonstrate how managers and employees can systematically base various types of decisions on the nature of the problem to be solved, the possible solutions available and the degree of risk involved. A good manager depends on the 6 managerial competencies to make decisions. Conversely, decision making processes are basic to all managerial competencies. The ability of Elon Musk to envision humans landing on Mars shows his strategic action competency. He then had to rely on his planning and administration competency to form a management team that would choose and implement a strategy through which to achieve his vision.

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

 Certainty

-The condition under which individuals are fully informed about a problem, alternative solutions are obvious and the likely results of each solution are clear. This makes both the problem and alternative solutions and it’s expected results, making the decision is relatively easy. This is the perfect condition for the middle managers, top managers and various professionals, however, first-line managers make most day-day decisions under conditions of certainty or near certainty.

 Risk

-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. This means the problem and alternative solutions fall somewhere between the extremes of being relatively common and well defined and being unusual and ambiguous.

-Probability is the percentage of time that a specific outcome would occur if an individual were to make a particular decision a large number of times. A good example is the tossing of a coin.

-There are two types of probability. The first is the objective probability which is the likelihood that a specific outcome will occur based on hard facts and numbers. Sometimes an individual can determine the likely outcome of a decision by examining past records.

-The second is the subjective probability which is the likelihood that a specific outcome will occur, based on personal judgement and beliefs. Such judgement vary among individuals, depending on their intuition, previous experience with similar situations, expertise and personality trait. A change in the conditions under which decisions are made can alter expectations and practices. Such a change may shift the basis for judging the likelihood of an outcome from objective to subjective probability or even to uncertainty.

Uncertainty

-The condition under which an individual doesn’t have the necessary information to assign probabilities to the outcome of alternative solutions. An individual may not even be able to define the problem much less identify alternative solutions and possible outcomes. Factors that may affect a decision such as price, production costs, volume or future interest rates are difficult to analyze and predict. Managers may have to make assumptions from which to forge the decision even though it’ll be wrong if the assumptions are incorrect. Managers rely on creativity, judgement, intuition and

experience to craft a response.

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

Routine Decisions

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

Choices made in response to a combination of fairly unusual and uncommon problems with alternative solutions. Often involve modifying or improving upon past routine decisions and practises. Necessary for continuous improvement.

Innovative Decisions

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

4. Explain how goals affect decision-making

Definition:

Decision-making: For a business to identify the most superlative way to reach a certain set out goal it is essential that goals and decision-making are amalgamated in such a way that it decision- making is a prerequisite for newly created goals, as looking for better ways to achieve goals and/or to improve already established goals is the catalyst for decision-making.

Goals

As for goals is a fundamental part of guiding employees in the right direction and giving

some meaning to the vision at hand, and in actual fact the absence of such would cause the inefficiency of the managerial competencies. And like stated above the incorporation of the two will help innovative decision-making with the aid of goal setting.

Nature of the goal:

The natural of the goals is also a important part of goals, as goals are things that want to reached or a direction one wants to go, and the nature of the goal can determine the quality and the quantity of the anticipated result.

Why people set goals:

People usually set goals to center people’s attention, decisions and efforts, and in terms of the organization it demonstrations what is expected so that everyone can understand what to do and how to do it, and work to achieve such.

General and operational goals:

This goals widens direction of decision-making in such a way that the ideology of quality

over quantity is applied.

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

Rational decision-making model

The rational model consists of a process of seven steps to be followed by people or teams to ensure the maximum achievement of the goals among the present limitations. It’s a traditional, logical approach to decision making and it is a process which is followed step by step. Firstly, the problem is diagnosed and then goals and objectives are set. During this model alternatives by which goals can be achieved must be identified and understood. The actors must be able to evaluate alternatives, while keeping the goal in mind. After evaluating, the best possible alternative must be chosen then implemented so that the goal can be reached. Alternatives and outcomes must first be weighted before making the final decision. Lastly, the solution should be controlled and feedback on the outcome should be obtained. An example when this model is used is where customers want to purchase a product that is the most useful at the cheapest price.

Bounded rationality decision-making model

This model highlights the limitations of the rational model and showcases the day-to-day decisions made by people. The reason why different decisions are made by different people is also explained. The bounded rationality model is a practical process used and it is also more realistic, because human and environmental realities are considered. There are a lot of limitations when it comes to the bounded rationality model, such as the difficulty to recognize alternatives that can be followed, because of human cognitive constraints, and decisions must always be made for the future and the future involves a lot of uncertainties. It refers to the human tendency to satisfice, conduct limited searches for alternatives and having misinterpreted or inadequate information regarding external and internal environmental forces. Individuals often experience availability bias, selective perception bias, concrete information bias, law of small numbers bias and gambler’s fallacy bias. An example may involve a consumer only visiting 10 shoe shops near him/her to find a pair of shoes instead of all of them in the country, stopping the search once an acceptable pair has been found.

Political decision-making model

This model entails decisions made in terms of goals or interests of internal or external

stakeholders with power. It takes into account what the rational and bounded rationality

models have left out. This model assumes that people bring preconceived notions and

biases into the decision-making situation. Factors that affect this model are powerful

stakeholders, disagreement over choice of goals and no search for alternative solutions. Individuals with power influence the definition of the problem at hand, activities of the firm, consideration of the goal and choice of alternatives with the implementation thereof. This model relays the self-interests of individuals and their pursuit of short-term goals, often leading to unethical behavior. Along with divergence in goals and solutions, co- optation is a common political strategy in this model, whereby, for example, a banker is elected as a member on a firm’s board of directors when it needs to borrow money.

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. 

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 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

                      THE NEW CREATIONS

1. Decision –making is the process of making important decisions and making choices by identifying a decision, gathering information, and assessing alternative resolutions.

The role of decision-making for employees and managers

• It enhances creativity among employees
• Improves team work and working relations between workers and employees
• Decision making helps allocate tasks to employees
• It is effective for teaching goals and efficiently in time
• Final decisions of a manager affect all employees

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

A. Certainty. Conditions in which both the problem and alternatives solutions are known and well defined.

B. Risk. The conditions where the problem is clear but the solution is not, therefore different solutions will be available and every solution will have different outcome and the solution with the closest result that is desired will be chosen.

C. Uncertainty. The conditions where the problem is not clearly defined, and no information is found for the solution and as a result the outcome is not known.

          3. Characteristics of routine, adaptive and innovation decisions.

3.1. Routine decisions

• These are standard choices made in response to relatively well defined and common The way in which various routine decisions are made often and covered by established rules or standard operating procedures.
• Increasingly, these routine decisions are made by computer software.

3.2. Adaptive decisions

• Choice made in response to a combination of moderately casual and fairly uncommon problems with alternative solutions.
• Often involve identifying and improving upon past routine decisions and approaches.
• Continues improvement as it is the way to total quality management.
• 3.3. Innovative decisions
• Choices based on the discovery, identification and diagnosis of unusual and problems or the development of unique or creative alternative decisions.
• The solutions frequently involve a series of small, interrelated decisions made over a period of months or even years.

                4. How goals affect decision- making

• They affect the decision making process by triggering it in a search for better ways to achieve established goals.
• They also affect the decision making process by triggering it through an effort to discover new goals, revise current goals, a drop outdated goals.

6. Difference between the rational, bounded rationality and political models of decision making

Members that participated in the activity:

1.Define decision making and explain the roles of decision making for managers and
employees.
Decision making is a process of making choices by defining problems, gathering information,
generating alternatives and choosing a course of action. Using a step-by-step decision making
process can help you make more deliberate, thoughtful decisions by organising relevant
information and defining alternatives.
Roles;
1. Identification and structuring of a problem or opportunity- one needs information to
identify a problem and put it in a structured manner. Without information about a problem
or opportunity, the decision making process does not even start.
2. Gathering information- without information about the context in which the problem has
occurred, one cannot take any decision on it. In a way, the information about the context
defines the problem.
3. Generation of alternatives- information is a key ingredient in the generation of alternatives
for decision making. One has to have information about possible solutions to generate
alternatives.
4. Choosing the course of action- based on the information about the suitability of the
alternatives, a choice is made to select the best alternative.

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

 Certainty defined:
 Refers to the conditions under which individual are fully informed about a problem,
alternative solutions are obvious and the likely result of each solution are clear.
 Decision-making under the condition of certainty is the exception for most middle managers,
top managers and various professionals.
 However first-line managers make most day to day decisions under conditions of certainty
or near certainty.
Risk defined:
 Refers to 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 results.
 The amount and quality of information available to an individual about the relevant
decision-making condition can vary widely, as can the individuals estimates of risk.
Uncertainty defined:
 Refers to the condition under which an individual does not have the necessary information
to assign probabilities to the outcomes of alternative solutions.
 Managers face uncertainty every day.
 Many problems have no clear-cut solution, but managers rely on creativity, judgement,
intuition and experience to craft a response.

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

Routine Decisions
Routine decisions are choices that made in response to relatively well-defined
and common problems with alternative solutions. These are decisions which
need an introduction and identification then it becomes your regular activity.
Routine decisions are the decisions made when problems are relatively well
defined and common and when established rules, policies and procedures can be
used to solve them. Examples of tasks requiring routine decisions include the
skills required in filling certain jobs, processing payroll vouchers, packing and
shipping customers orders. Routine decisions are related to the general
functioning of the organisation. They do not require much evaluation and
analysis and can be taken quickly. Routine decisions are a series of steps that
individuals or teams should follow to increase the likelihood that their decisions
will be logical and well founded. It permits maximum achievement of goals
within limitations of the situation.
-Standard choices made in response to relatively well-defined and common
problems and alternative solutions
-Typically made under certainty and objective probability
-Standards often used to set the framework for making routine decisions
Adaptive Decisions
Adaptive decisions are choices made in response to a combination of unusual
and uncommon problems with alternative solutions. They include modifying
and improving upon past routine decisions and practices, e.g change working
time pattern or methods of assignment.
Convergence—a business shift in which two connections with the customer that
were previously viewed as competing or separate (e.g., brick-and-mortar
bookstores and Internet bookstores) come to be seen as complementary
Continuous improvement—a management philosophy that approaches the
challenge of product and process enhancements as an ongoing effort to increase
the levels of quality and excellence
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. It is the decision made when problems are
unclear and unusual and creative solutions are necessary, for example, increase
the inflation rate to 50% among surgical patients. Three forms of innovation for
economic progress:
-Institutional innovation: includes the legal and institutional framework for
business, such as deregulation
-Technological innovation: creates the possibility of new products, services, and
production methods
-Management innovation: major changes in the way organizations are structured
and how managers perform their functions.

4.Explain how goals affect decision-making

Goals trigger the decision making process, this is because goals are results that an organisation hopes to achieve and managers have to make decisions on how to attain the specified goal. Whenever a goal is changed or an individual deliberately chooses to modify it, that individual often engages in a conscious, full-blown decision making process. Goals indicate the direction in which decisions should be aimed since managers have to brainstorm ideas on how to achieve that goal, root out undesirable ways so that the best alternative can be chosen and also have a back up plan in case the chosen alternative does not work. Goals basically affect decision making by giving them a platform to exist.

.

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

Rational model  
Prescribes a series of steps
that individuals of team should
follow to increase the
likelihood that their decisions
will be logical and sound.
Rational decision permits the
maximum achievement of
goals within the limitations of
the situation.

Bounded rationality model

Refers to an individual’s
tendencies to do the
following:
 Select less than the
best goal or
alternative solution.
 Engage in a limited
search for alternative
solutions.
 Have inadequate
information and
control over external
and internal
environmental forces
influencing the
outcomes of decisions.

Political model

Describes the decision-making
process in terms of the
particular interest and goals of
powerful external and internal
stakeholders.
To have power is to be able to
influence or control the
following factors:
 The choice of the goal
 The definition of the
problem.

Decision Making - the action or process of making important decisions.

The Role of Decision-Making

- includes defining problems and gathering of information that will result in greater outcomes for the company's objectives. Both managers & employees take part in such important decision making for more possible solutions to be found. An effective manager relies on all six managerial competencies to make decisions. Decision making processes are basic to all managerial competencies.

DECISION MAKING CONDITIONS

• The condition under which individuals in an organization make decisions reflect the environmental forces of which the individuals can not control but which in the future many influence the decision outcome
• Affected by forces ranging from new technologies or entrances of new competitors into market to new laws or political turmoil
• Manager should estimate their potential impact if not measuring the magnitude of these factors
• Impact of decision making is only seen in the future but if they take a long time to happen managers find it hard to identify the impact
• Amount of information contributed to the decision making and its accuracy are crucial to sound decision making

Conditions used in decision making:

Certainty

Risk

Uncertainty

• Certainty

*Conditions under which individuals are fully informed about a problem.

*Where alternative solutions are obvious and each solution result is clear.

*Problem and solutions are known and defined well.

*Decision maker only choose solution that beat suit and have better outcomes .

*Decision making is an exception for middle, top and various professionals mostly.

Risk is the condition in 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

in general risk means that the problem and alternative solutions fall in between the extremes of being relatively common and well defined, not being usual and ambiguous. E.g, the banking industry's credit policy is used in more strictly manner than in the past. Before,banks used to issue more hoe loans at high interest rates but that made more transactions to end up in bad debts. Because of high risks and ambiguous conditions now banks are more cautious irrespective of the interest rates. The measure of risk captures the possibility that future events will render the alternative unsuccessful. Probability is the percentage of times that specific events would occur if an individual were to make a decision more times.

• Objective Probability - The likelihood that a specific outcome will occur, based on hard facts and numbers.
• Subjective Probability - The likelihood that a specific outcome will occur, based on personal judgement and beliefs.

Uncertainty is the condition in which an individual does not have the necessary information to allocate probabilities of the outcomes of alternative solutions. For that matter an individual may even not be able to:

• Define the problem.
• Much less identity alternative solutions.
• and also possible outcomes,

Often uncertainty suggests that both the problem and the alternative solutions are ambiguous and highly unusual. Managers face uncertainty in day to day basis as factors that may affect a decision like price, production cost, volume or future interest rates are difficult to predict and analyse.

Routine Decisions -  These are standard choices for common problems with alternative solutions and is achieved through routine rules or standard operating made up of computer software,

Adaptive Decisions - Are choices made for unusual and unknown problems with alternative solutions. Mostly includes changing or improvement on past routine decisions and is important for continuous improvement which is driven by goals of providing good quality, improving efficiency and having contact with consumers.

Innovative Decisions -  Choices made on the discovery, identification and diagnosis of unusual and unclear problems as well as development of innovative solutions which involves a series of bits of interrelated decisions made over a period of time.

How goals affect decision-making

● Goals are crucial in giving employees, managers and organisations a sense of order, direction and meaning. Setting goals is especially important in adaptive and innovative decision making.

● Goals are results to be attained, and thus indicate the direction in which decisions and actions should be aimed. The goals you set now either short, medium or long term will always affect the decision you make today or tomorrow. For example If a business decides to employ more people it will cause productivity to increase hence causing profits to also increase.

Comparing and contrasting the rational, bounded rationality and political models of decision making.

Rational model of decision-making.

● Prescribes a series of steps that individuals or teams should follow to increase the likelihood that their decisions will be logical and sound.

● It is a seven-step process

● Individuals are bound to use this procedure in circumstances including states of close to assurance or low risk, the is, the point at which they can appoint target probabilities to result.

-Bounded rationality model.

● The bounded rationality model is particularly helpful on the grounds that it emphasizes the restrictions of rationality and in this way gives a superior image of the everyday decision-making process utilized by a great number of people.

● It explains why different individuals make different decisions when they have exactly the same information.

-Political model

● Describes the decision-making process in terms of the particular interest and goals of powerful external and internal stakeholders.

● Political processes are the most likely to occur when decisions include incredible stakeholders, contradiction over selection of objectives and individuals who are not looking for alternative solutions.

Duvandre McPherson 31931669  ( Outcome 1)

RG Makwala 32028156 & Boipelo Basenare 30727448 ( Outcome 2)

Peggy Rampone 32184298 & Onkokame ( Outcome 3)

Talifahni Mulaudzi 31874649 ( Outcome 4 )

Runa Mnisi 32173024 (Outcome 5)

 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.

Members that participated in the activity:

Learning outcomes 1:

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

• Decision-making is the process of defining problems, gathering information, generating alternatives and choosing a course of action. In essence decision-making is the action or process of making important decisions.
• An effective manager relies on all six managerial competencies to make a decision.
• Decision-making processes are basic to all managerial competencies.
• Managers need to make a decision that will evidently be in the best interest of the business, for example choosing an advertising method that will have the most striking effect on society.
• These decisions should have the lowest possible risk factor for the business.
• Employees constantly need to make decisions in certain situations that will not negatively impact the business as a whole.

Learning outcomes 2:

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

• Certainty:

• The condition under which individuals are fully informed about a problem, alternative solutions are obvious and the likely results of each solution are clear.
• The condition of certainty at least allows anticipation (if not control) of events and their outcomes.
• Once an individual identifies alternative solutions and their expected results, making the decision is relatively easy.

• Risk:

• 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 being unusual and ambiguous.
• Probability is the percentage of times that a specific outcome would occur if an individual were to make a particular decision a large number of times.
• Objective probability is the likelihood that a specific outcome will occur based on hard facts and numbers.
• Subjective probability is the likelihood that a specific outcome will occur, based on personal judgment and believes.

• Uncertainty:

• The condition under which an individual does not have the necessary information to assign probabilities to the outcomes of alternative solutions.
• The individual may not even be able to define the problem, much less identify alternative solutions and possible outcomes.
• This often suggests that a problem and the alternative solutions are both ambiguous and highly unusual.
• The managers face uncertainty every day they enter the business.

Learning outcomes 3:

Describe the characteristics of routine, adaptive and innovative decisions:

• Routine decisions:

• Routine decisions are standard choices made in a response to a relatively well defined and common problem with alternative solutions.
• The way in which to make various decisions is often covered by established rules or standard operating procedures.

• Adaptive decisions:

• Adaptive decisions are choices made in response to combination of moderately unusual and fairly common problems with alternative solutions.
• Adaptive decisions often involve modifying and improving upon past routine decisions and practices.

• Innovative decisions:

• Innovative decisions are choices based on the discovery, identification and diagnoses of unusual and ambiguous problems and/or the development of unique or creative alternative solutions.

Learning outcomes 4:

Explain how goals affect decision-making:

• The decision-making process is triggered by a search for better ways to achieve established goals.
• The decision-making process is further also triggered by an effort to discover new goals, revise current goals or drop outdated goals.
• Goals are crucial in giving employees, managers and organisations a sense of order, direction and meaning.
• Setting goals is especially important in adaptive and innovative decision-making.
• 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.
• Many goals guide people’s behavior without the people giving the goals much thought.
• When individuals deliberately choose to modify or change goals, they often engage in a conscious, full-blown decision making process.
• Goals specify results and outcomes that someone believes to be desirable and worth achieving.
• The six managerial competencies would be ineffective if they were not directed at achieving goals.

Learning outcomes 5:

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

• Rational model:

• The rational model prescribes a series of steps that individuals or teams should follow to increase the likelihood that their decisions will be logical and sound.
• A rational decision permits the maximum achievement of goals within the limitations of the situation.
• External and internal environmental forces:

• Define and diagnose the problem.
• Set goals.
• Search for alternative solutions.
• Compare and evaluate alternative solutions.
• Choose from the alternative solutions.
• Implement the solution selected.
• Follow-up and control.

• Bounded rationality model:

• This model partially explains why different individuals make different decisions when they have exactly the same information.
• The bounded rationality model refers to individual’s tendencies to do the following:

• Select less than the best goal or alternative solution (known as satisficing)
• Engage in a limited search for alternative solutions.
• Have inadequate information and control over external and internal environmental forces influencing the outcomes of decisions.

• Political model:

• Describes the decision making process in terms of the particular interests and goals of powerful external and internal stakeholders.
• Power is the ability to influence or control individuals, departmental, team or organizational decisions and goals.
• To have power is the ability to influence or control the following factors:

• The definition of the problem.
• The choice of the goal.
• The consideration of alternative solutions.
• The selection of alternative solutions.
• The selection of an alternative to be implemented.
• The action and success of the organization.

• Political processes are more likely to occur when decisions involve powerful stakeholders, disagreement over choice of goals and people who are searching for alternative solutions.

Leeruitkomste 1: I.K Forbes

Definieer besluitneming en verduidelik die rol vir bestuurders en werknemers:

Ons neem almal daagliks besluite, alhoewel ons nou nie elke dag besluite neem rakend besighede nie, neem ons tog persoonlike besluite. Dit doen jy wanneer jy besluit watter t-hemp, broek en skoene jy vandag gaan aantrek of selfs wat jy vir ontbyt sal eet. 

Besluitneming: Verwys egter na die aksie of proses wat ons volg wanneer ons belangrike besluite moet neem. 

Besluitneming bestaan dus uit vier stappe: 

1. Definieer die probleem wat jy ervaar

2. Jy moet die nodige inligting versamel

3. Jy moet alternatiewe idees genereer

4. Jy moet die verkoop van 'n aksie verkies

Die rol van besluitneming vir bestuurders en werknemers is as volg:

Beide die bestuurder en werknemer baseer verskillende soorte besluite op die aard van die probleem wat hulle moet op los, moontlike oplossings en die graad van die risiko betrokke. 

Leeruitkomste 2: K. Pofadder 

Bespreek die kondisies/toestande van sekerheid, risiko en onsekerheid waaronder besluite geneem word:

Problem solving decisions are made under three different conditions such as certainty, risk and uncertainty. All companies make decisions under each of these conditions, but risk and uncertainty are common to the more complex and unstructured problems faced by top managers. 

Certainty:

When managers have perfect knowledge of all the information they need, to make a decision, then decisions are made under the condition of certainty. This condition is ideal for problem solving. The challenge is to study the alternatives and choose the best solution. 

When problems arise on a regular basis, a manager may address them through standard or prepared responses, which are named, programmed decisions. The solutions are already available from past experiences and they are appropriate for the problem at hand. A good example is the decision to reorder inventory automatically when stock falls below a determined level. Today, a lot of programmed decisions are being assisted or handled by computers using decision-support software. 

Structured problems are familiar, straightforward and clear with respect to the information needed to resolve them. Managers can often anticipate these problems and plan to prevent or solve them. For example, personnel problems are common in regard to pay raises, promotions, vacation requests and committee assignments, as examples. Managers can plan processes for handling these complaints effectively before they even occur. 

Risk: 

The manager lacks complete information in a risk environment. This condition is more difficult. The problem and alternatives may be understood, but the manager has no guarantee how each solution will work. Risk is a fairly common decision condition for managers.

When new and unfamiliar problems come up, non- programmed decisions are specifically customized to the situations at hand. The information needs for defining and resolving nonroutine problems are typically high. Even though computer support may assist in information processing, the decisions will most likely involve human judgement. Most problems that high-level managers face, demand non-programmed decisions. This fact explains why the demands on a manager's conceptual skills increase as he or she moves into higher levels of managerial responsibility.

A crisis problem is an unexpected problem that can lead to disaster if it is not resolved quickly and appropriately. Crises can not be avoided by organizations and the public is well aware of the immensity of corporate crises in the modern world. The Chernobyl nuclear plant explosion in tge former Soviet Union and the Exxon Valdez spill of years past are a couple of sensational examples. Managers in more progressive organizations do anticipate that crisis, unfortunately, will occur. These managers have started installing early-warning crisis information systems and have also developed crisis management plans to deal with these situations in the best ways possible.

 Uncertainty:
In a uncertain environment, information is so poor that managers can not even assign probabilities to the likely outcomes of alternatives. This is the most difficult condition for managers. Decision making under conditions of uncertainty is like being a pioneer in a explored territory. Uncertainty pressurize managers to rely heavily on creativity in solving problems. It requires unique and often totally innovative alternatives to existing processes. Groups are frequently used for problem solving in such situations. In all cases, the responses to uncertainty depend greatly on intuition, educated guesses and hunches-all of which leave considerable room for error.

These unorganized problems involve ambiguities and information deficiencies and often occur as new or unexpected situations. These problems are most often unexpected and are addressed reactively as the occur. Unexpected problems require novel solutions. Proactive managers are sometimes able to get a jump on unexpected problems by realizing that a situation is vulnerable to problems and then making contingency plans. For example, at the Vanguard Group, executives are tireless in their preparations for a variety of events that could disrupt their mutual fund business. Their biggest fear is an investor panic that overloads their customer service system during a major plunge in the bond or stock markets. In anticipation of this occurrence, the firm has trained accountants, lawyers and fund managers to staff the telephones if needed.

Leeruitkomste 3: J. Nawrattel

Beskryf die eienskappe van die tipes besluite: Roetine, aanpasbare en innoverende besluite:

Roetine besluite:  

Die standaard keuses wat gemaak word in 'n reaksie op relatief goed gedefinieerde en algemene probleme met alternatiewe oplossings. Bv, Jy kies om 'n recording van jou presentation te maak. Die probleem wat jy ondervind wanneer jy hierdie recording te maak, is dat jou kamera weg is. Jy het nie tyd om die kamera te soek nie, en dit is te duur om te vervang met 'n nuwe een. Die oplossing vir hierdie probleem is om die gehoor van die presentation in kennis te stel dat jy 'n skype meeting gaan hê, dmv jou rekenaar en sodoende jou presentation gaan lewer. 

Roetine besluite kan gemaak word onder gevestigde reëls of standaard prosedures. Bv, wanneer iemand 'n recording kan maak en daar is nie 'n kamera of 'n toestel beskikbaar om dit te doen nie, is daar n prosedure wat jy kan gebruik om hierdie probleem op te los. Die standaard oplossing kan dan wees dat jy net 'n presentation lewer met die gehoor wat daar sit. 

  Aanpasbare besluite: 

Keuses gemaak in reaksie op 'n kombinasie van redelike ongewone en onbekende probleme met alternatiewe oplossings. Bv, Die bemarkings maatskappy se kantoor vloed, hulle ervaar dan 'n ongewone krisis en moet hulle vinnig reageer om hierdie probleem op te los. 

Behels dikwels die aanpassing of verbetering van vorige roetine besluite en gebruike. Bv, die maatskappy gaan voorsorg tref dat so situasie nie weer opduik nie, en wanneer dit doen, weet al die mense wat om te doen en wie hulle kan bel. 

Aanpasbare besluite is vir die verbetering van die maatskappy. 

Innoverende besluite: 

Keuses gebaseer op die ontdekking, identifisering en diagnosering van ongewone en onduidelike probleme en die ontwikkeling van unieke of kreatiewe alternatiewe oplossings. 

Oplossings behels 'n reeks klein, interafhanklike besluite wat oor maande of selfs jare strek 

Leeruitkomste 4: T. Moloi

Explain how goals affect decision-making:

The decision making process is triggered by two things: A search for better ways to establish goals and an effort to discover new goals, revise current goals or drop old goals. This affects which decision you are going to choose and that means, your goals affect which decision you are going to make. 

For example, you are a CEO of Standard Bank and your goal is to make a profit of R1 million in 2019. How are you going to reach your goal? Firstly you have to be realistic, in order to make a profit R1 million, which means that you have to make a profit of about R840 000 per month. In the first month you have to make R500 000. This feedback should serve as a powerful incentive to asses your efforts so far and determine how to avoid the same results in the next month. In order to reach your goal, you will have to search for better ways to achieve your goals and make a decision. Which one will be easier for you? The result will also motivate you and make you plan better and make better decisions. 

When you want to make a decision that means you have other alternatives, how will you make a decision? For example, you want to be an entrepreneur who decorates muffins, you are unsure whether you should sell them at the university or at the mall. You have to choose one of the locations that will be better. To formulate your answer you have to consider the alternative path to achieve your general goal, which will be making a profit. University students don't have a lot of money, because they are unemployed. People who visit the mall oftenly will most probably have money and they will be able to afford your product. If you want to reach your goal, which is profit, you will rather sell your muffins at the mall.

Leeruitkomste 5: I. Thompson

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

Rational model
The rational model consists of steps that individuals,teams and groups should follow to increase the likelihood that their decisions will be logical.The rational model make use of facts and information,analysis and step-by-step procedure to come to a decision. The rational model is used to maximize your outcome it consist of seven steps and starts with defining and diagnosing the problem then it moves through steps to follow and controlling

Bounded rationality model
The bounded rationality is the idea that we make decisions that are rational,but within the limits of the information available to us and our mental capabilities. It explains why individuals make different decisions  even when they have the exact same information. It emphasizes the limitations of rationality and provides a better picture of our day-to-day decisions made by most people

Political model
The decision making process is described by the political model in terms of particular interests and goals of powerful external and internal stakeholders. The political model views decisions making as a process of conflict revolutions and consensus building and deciding as products of compromise. The political process mostly occur when decisions involve powerful stakeholders,disagreement over choice of goals and people who aren't searching for alternative solutions.

1) Decision making is the process of selecting from a set of alternatives. All decision making processes produce consequence that may be an action, recommendation, or opinion. Decision making consists of four parts namely; Defining the problem, gathering information, generating alternatives or options, choosing a direction or course of action.

The manager is responsible as a leader in decision making depending on the different types of decision according to the certain character of the problem encountered. Employees involvement in decision making grants an opportunity for employee to share their opinion and knowledge which gives them a less role to play as they only provide their perspective.both parties managers and employees consider a means of solving a problem and the level of danger involved when making a decision.

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

Certainty

it is the true conditions under which the individuals involved have complete information about the problem and other possible solutions are known, and they are likely to achieve the same outcome from each solution clearly. Example is the decision to reorder inventory automatically when stock falls below determined level.

Risk

Exist when the individual has some information regarding the outcome of the decisions but they do not know everything when it comes too making decisions under conditions of risks, managers may find it helpful to use probability.

Probability is a percentage of times that a specific outcome occurs, if someone was to make a certain decision many times

Objective probability- it is the possibility that certain solutions will happen based on proven facts and numbers.

Subjective probability- is the certainty that a specific outcome will happen based on personal judgements and beliefs of people.

Uncertainty

Exist when probability of various results are not known, the manager feels unable to assign estimates to any of the alternatives. While the situation may seem hopeless mathematical technologies have been created to help the decision makers. An example is when there are heavy quantitative in nature and are outside the scope of our present consideration.

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

Routine decisions

Standard choices are made in response, to regularly taken and answers are obvious to you and also require no or little consideration of an alternative. An example   from the world of business would be to restock on office material when components are low  another example is when you can determine to wear garments when you go backyard of your house.

Adaptive decisions

Improving upon previous persuits choices and practices. Options are made in response to a mixture of pretty unusual and uncommon issues with alternative solutions, e.g. sheltered investors unfold dangers with a balanced portfolio of stocks, bonds and cash. If an instant decision is not integral and there is time to advance choices.

Innovative decisions

Choices are based on the discovery, identification and analysis of unusual and ambiguous troubles and the improvement of special innovative solutions. Solutions involves a series of small interrelated  selections made over a duration of months or even years. An example, is when a subscription song carrier approves paying users to stream  unlimited music on their computer systems and phones. Launched at a time when piracy used to be at a high level, and  human beings have been reluctant to pay above the odds to download music, the provider addressed a clear market, and supplied humans an affordable and revolutionary way to enjoy high quantities of music, without having to resort to illegal downloads. 

4. How goals affect decision making.

-Goals are results in giving employees managers and organisations a sense of order directions and managing.

Nature of goals

-Goals are results to be obtained, they indicate the  direction in which decisions and actions should be aimed. Clear and unambiguous goals specify the quantity of the desire results.

Aim of setting goals 

-Goals provide one or an organisation visions and help allocate time for individuals to make it to their goal.

-Goals help with guidance and directions.

-Organisations control performance if they have goals set to attain.

-Goals also help to focus individually and organisational decision and efforts.

-Goals help in the planning process

General and Operational Goals

-General goals provide a wider direction for decision making in qualitative terms.

-Operational goals states the achievement results in quantitative terms , for example, an organisation's goal an be increase the sales turnover by the end of 2019.

Role of Stakeholders 

-Stakeholders are customers, shareholders, suppliers etc. They have an impact  on an organisation and its employees.

-Stakeholders role is to make demands. Demands are the desires expressed by powerful stakeholders that an organisation make certain decisions and achieve particular goals.

Constraints-limits the type of goals set, the decision made and actions taken. Two crucial constraints are laws and ethics.

Choices-are goals and back-up plans that organisations and individuals are free to select but do not have to select.

Balanced scorecard - keep tabs on the key elements on the organisations implementation by considering both internal and external stakeholders  points of views. It does this by looking at the organisational from strategic approach from four perspectives:

-The financial perspective, financial goals that we have and will they impact our organisation.

-The customer perspective, what is important to our customers which will in return impact the organisations finances.

-The internal process perspective, what goals do we need in order to meet our customers goals that will impact our financial standing.

-The learning and growth perspective, skills and culture and capabilities needed to execute the process to please our customers and impact finances.

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

Rational model

- This model of decision making is a 7 step prescriptive model that tells how the decisiom should be made when making routine decisions in situations involving conditions of near certainty or low risk.

7- steps

1. Identifying a problem or opportunity

2. Gathering information

3. Analyzing the situation

4. Developing options

5. Evaluating options

6. Selecting a preferred alternatives\

7. Acting on the decision

- It is also assumes that  people will make choices that maximize benefits and minimize any costs.

2) Bounded rationality model 

It is useful because it emphasises the limitations of rationality and thus provides a better picture of the day to day decision making processes used must people

Satisfining:

- When selecting an acceptable goal/alternative solution 

- Acceptable goal might be easier to identify and achieve

>Examples;

Game strategy 

Management science

Administration

Chess is a board game that involves strategy building and analyzing the opponents next move in order to take the decision of your next move. 

The political model

the political approach to decision making takes what the rational and practical models left out and posts that any organizational activity is a political and ideological activity, in other words, the political  approach to decision making extends our vision in terms of  understanding agency and social factors.

*Power -the ability to influence or control.

 *Scapegoating -casting blame for problems on innocent. 

*Co-optation -means of averting threats.

Factors influencing political decision making.

*Stakeholders

*Choice of goals

*Alternative solutions

(1) Define decision-making

Decision-making is the process of deciding on the course of action after gathering information on

different alternatives and carefully examining each possible solution/alternative that could be

employed in attempt to solve a problem. It is a process that is generally applied when important

decisions ought to be made

The role of decision-making for management and employees

• Decision-making helps with the selection of the best alternative/course of action.

              It is a problem-solving approach whereby a specific course of action is chosen from various

              alternatives. It helps decide on the final course of action after applying some criteria to

               examine alternatives.

• Decision-making enables proper utilization of resources.

               When properly evaluated decisions are made, wastage of resources such as money is

               minimized.

• Decision-making promotes the achievement of goals and objectives.

               The decision-making process includes identifying the best alternative and then employing

               resources effectively, which in turn enable the organisation to reach goals and objectives as

                desired.

• Decision-making promotes employee motivation

(2) The conditions of certainty, risk and uncertainty

CERTAINTY

Certainty is the condition under which individuals are fully informed about the problem, alternative solutions are obvious and they like likely results of each solution are clear.

This condition means that both the problem and alternative solution are known and well defined. Decision making under the certainty is the exception for most middle managers, top managers and various professionals.

RISK

Risk is the condition under which individuals can define events, identify alternative solutions and state the probability of solution leading to the desired results. Risk exists when the individual has some information regarding the outcomes of the decision but does not know everything when making decision. Under the condition of risk, the manage may find it helpful to use probabilities.

UNCERTAINTY

Uncertainty is the condition under which an individual does not have the necessary information to assign probabilities the outcomes of alternating solutions. Infect the individual may not even be able to define the problem much less identify alternative solution.

(3) describe the characteristics of routine, adaptive and innovative decisions

Adaptive

• Continuous improvement which requires commitment to constant diagnosis of technical,

                organisational and managerial processes in search of improvement. Decisions about

                continuous improvement is driven by goals of providing better quality, improving

                efficiency and responding to customers.

• Adaptive decisions often involve modifying and improving upon an old decision or practice.
• It consists of streams of adaptive organisational decisions made over time

Routine

•  Various routine decisions are covered by already existing rules or standard operating
• procedures

Innovative decisions

•  Leading edge innovations take years to develop as it involves numerous professional
• specialists and teams.
• Innovative decisions don’t normally happen in a logical and orderly sequence.
• They are often based on incomplete and rapidly changing information

(4) HOW the goals affect the business

• Organisational goal is the starting point of planning process. In the

               mission statement it is where goals flow directly but specific.

• A business has different goals and which are set in different

                department of the organization such as finance, sales, revenue of

                the business and more.

The impact of goals in a business

• goals provide the business with guidance and agreement on how

the business is directed

• employees are encouraged and motivated, inspired by goals, so

that they can improve their performance within the organization

and achieve those goals and they receive the rewards.

• Effective evaluation of employee and the business performance,

and the control of business resource can be done through setting

effective goal.

(5) compare and contrast the rational, bounded rationality and political models of decision-making

RATIONAL MODEL

Prescribes a series of steps that individual/team should follow to increase the likelihood that their decision will be logical.

BOUNDED RATIONALITY

The bounded rationality is the idea that rationally is limited when individuals make decision, the human mind has only limited capacity to evaluate and process the information that is available. Therefor the individual making bounded decisions are bound to make satisficing choices in complex situations.

POLITICAL MODEL

The political model. In contrast to the rational, individuals in political model do not focus in a single issue but in many organisational problems that reflect their personal gaols. In contrast to the bounded rationality model, the political mode does not assume that decisions result from applying existing standard operating procedures, programs and routines.

• Group name:

  Members that participated in the activity:

  Initial & Surname	Student number	Contribution
  JT TWALA	32759002	Learning outcome 1
  NS KUMALO	31872166	Learning outcome 3
  PK MODIBEDI	29294215	Learning outcome 4:1
  L MAKUME	31899498	Learning outcome 2
  MM SELLO	33206805	Learning outcome 4:2
  TB KUNENE	31648150	Learning outcome 5
  NL MBA	32660200	Learning outcome 5

  Learning outcome 1

• Decision making is the process that one take in order to solve a problem faced in daily operations
  • The process consists of these steps: You define the problem, come up with appropriate solutions to the problem and finally chose the best solution to solve the problem.
• The role of decision making
  • An effective manager is well aware of what is happening in the local and international sphere. He/she values teamwork and they value their employees input, continues communicating with his team.
    • Example: When there is a crisis in the company, the manager will tell her employees of such problem and let them pitch in the possible solutions.
  • A good manager has high emotional intelligence
    • The manager will not make decisions based on some gut feeling
  • An employee will also be able to take the responsibility to make routine decisions around the company.
    • If it happens that the is faulty service rendered to a client, employee might try alternative ways to keep the client without involving the management

• Study outcome 2: Conditions of certainty, risk and uncertainty under which decisions are made

  CERTAINTY

  The condition in which individuals are well informed about the problem, the possible or alternative solutions are obvious and are the results of each are very clear. The condition specifies that both the problem and the possible solutions are well defined and known.

• It allows anticipation of events and their outcomes.

• RISK

  The condition in which individuals can define a problem, specify the probability of certain events, identify alternative solutions leading to the desired results. It generally entails that the problem and alternative solutions fall somewhere between the extreme of being relatively common and well defined, or being unusual and ambiguous.

• EXAMPLE: Entrepreneurs take risks to later be successful, they manage the risk in their businesses by accepting control and being involved in the basis aspects of the business. They control their businesses by getting access to information.

• UNCERTAINTY

  The condition under which the individual does not have enough necessary or required information to assign probabilities to the outcomes of the alternative solutions. The individual may not even be able to define a problem, identify the alternative solutions and possible outcomes. Uncertainty means that the problem and the alternative solutions are both highly unusual. Many problems have no clear-cut solutions, but they rely on creativity judgement and experience.

    DESCRIBE THE CHARACTERISTICS OF ROUTINE, ADAPTIVE AND INNOVATIVE DECISIONS

  ROUTINE DECISIONS:

  -Are decisions that are made on a daily basis or daily functioning of the organization.

  -These decisions do not involve much thought.

  -It is also referred as standard choices made in response to well-defined and common problems with alternative solutions.

  -The characteristics of routine decisions:

• They do not require a lot of evaluation.
• Top management level assign those decisions to lower management label.

• -Examples of routine decisions made on a business:

• The time all workers need to arrive and start performing their duties at work.
• The time for lunch or tea break.
• Employees need to sign a register daily to show that they are present.

• -Examples of tasks requiring routine decisions:

• The skills required in filling certain jobs.
• Processing payroll vouchers.
• Packing and shipping customers’ orders.
• Reorder point for manufacturing inventory.

• ADAPTIVE DECISIONS:

  -Are choices made in response to a combination of moderately unusual and fairly uncommon problems with alternative solutions.

  -When utilising the adaptive decisions they should have improvements that will occur often or countless times.

  -The characteristics of adaptive decisions:

• Produce satisfactory solutions.
• Improves the previous decisions along with practices.
• Exploration.
• Reducing waste, error and defects.
• Visioning.
• The improvement will assist on getting the product of a business better, more reliable and cheaper.

• -These improvements are influenced by the contribution of strategies towards the business and goals set by the manager mostly.

  INNOVATIVE DECISIONS:

  -Are choices based on the discovery, identification and diagnosis pf unusual and ambiguous and/or the development.

  -The characteristics of innovative decisions:

• Risk acceptance.
• Involve numerous professional specialists and teams.
• They do not happen in a logical, orderly sequence.
• These decisions are made before the problem is fully understood.
• Based on incomplete and changing information.
• Identify, evaluate and select the decision.

• -Examples of innovative decisions on a business:

• Employer takes a decision that will change the daily job performance or pattern of employees.

• Proposing a business plan/proposal which will benefit the business as a whole by bringing growth in it.

  Study outcome 4: Explain how goals affect decision-making

• Decision making is a very important element in an organisation. Decision-making in organisations under different circumstances is coupled directly

• with goals in one of two ways.

• Goals affect decision –making by the process caused by a search for better ways to achieve established goals.
• Goals also affect decision-making by an effort to discover new goals, revise current goals or drop outdated goals.

•  Goals and decision –making Why is it important???

  Goals are important in giving employees, managers and organisations a sense of order and direction.  Goals are results to be attained, and thus indicate the direction in which decision and actions should be aimed. Goals are guidelines for any business its gives the business meaning.

  Nature of Goals

  Goals should be clear enough in order to specify the quality and quantity of the desired results. There is a lot of definitions for goals which include them being objectives, deadlines. Whichever name given to describe goals is acceptable as long as it outcomes or results are results are achievable in a certain time phase. Goals can be either short or long term goals

  Examples: Long-term goal: Profitability of the organisation.

                     Short term goal; Daily goals which needs close supervision of middle      management

  Why do we set Goals???

  Goals serve to focus individual and organisational decisions and efforts. Setting goals has benefits which does not only benefit managers or Top management level and employees in organisation the ones who set these goals but everyone benefits from evaluating process action that is needed.

• Goals serve to focus individual and organisational decisions and efforts and guide on   whether to take action or not. Decision maker’s goal can serve as reference point that influence risk references depending on the goal, a risky option depend on the goals. For example, a riskier option is relevant to the goal of maintaining safety when the decision maker is in danger and only riskier options offers a chance to restore safety.

• Rational model

   

• Prescribes a series of steps that individuals or team should follow to increase the likelihood that their decisions will be logical and sound

• Example: Ezweni as a company is not well marketed as the employees do not full information as to how to market because of that the business is not making profit as it is the business goal to make profit and letting the customers know about the business. As solutions to this problem the marketing team chooses the best option that they will market with an and that bring more customers to the business. Also they should research information about which advertising / marketing techniques that customers are most likely to get information on. The implemented solution was found to do research and marketing team was able to follow and control it.

   

  Bounded rationality model

   

• It emphasises the limitations of rationality and this provide a better picture of day-to-day decision making processes used by most people, it also explains why different individuals make different decisions when they have the exactly the same information.

•  

  Political model

   

• It describes the decision making process in terms of the particular interest and goals of powerful external and internal stakeholders.