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.