marketing manager course - chapter 06

Learning ObjectivesAfter reading this chapter, you should be able to: z Know how to implement the six stages of management decision making.. z Apply the criteria of quality and acceptan

Chapter

Decision Making

Learning Objectives

After reading this chapter, you should be able to:

z Know how to implement the six stages of management

decision making.

z Apply the criteria of quality and acceptance to a decision.

z Recognize the characteristics of management decisions:

programmability, uncertainty, risk, conflict, and decision scope.

z Reap the advantages and avoid the disadvantages of

group decision making.

z Develop the skill of time management to allow adequate

z Making decisions under conditions of risk and

uncertainty is one of the most important activities

that managers engage in.

z Generally, there is a lack of information and a

limited amount of time available to make the

decision.

z Procrastinating and not making a decision

sometimes has greater risk than making it.

Decision Making

z The process of identifying

problems and opportunities and

resolving them.

z Management decisions can be

made by managers, teams, or

individual employees, depending

on:

¾ The scope of the decision, and

¾ The design and structure of the

Uncertainty

Characteristics of Management

Decision Making (Cont)

zRisk – occurs when the outcome of

management decision is uncertain

¾ Risk has both positive and negative aspects

¾ Decision environment for risk vary depending upon company culture and size

zConflict – occurs when there are opposing goals,

scares resources, or differences in priorities

zCrisis – a situation that involves small amounts of

time to make a decision that can impact the

survival of the organization

zDecision Scope – the effect and time horizon of a

decision

z Strategic Decisions – long term perspective of 2-5 years and

affect on the organization

z Tactical Decisions – short term perspective of 1 year or less and

focus on subunits

z Operational Decisions – shortest time perspective, generally

less than a year, often measured on a daily or weekly basis

Characteristics of Management

Decision Making (Cont)

Stages of Decision Making

Evaluating alternatives

Selecting the best alternative

Implementing the decision

Evaluating the decision

Typical problems that require decisions

z A high level of employee turnover.

z A reduction in firm profits.

z Unacceptable levels of “shrinkage” in a store.

z Lower than planned quality of finished goods.

z An unexpected increase in workplace injuries.

z The invention of a new technology that can

increase the productivity of the workforce.

Evaluating Alternatives

z Decision criteria should be related to the

performance goals of the organization and its

Evaluating Alternatives (continued)

z A practical way to apply decision criteria is to

consider:

¾ Decision quality – aspect of decision making based on such

facts as costs, revenues, and product design specifications.

¾ Decision acceptance – aspect of decision making based on

people’s feelings.

Approaches to selecting

the best alternative

z Optimizing – selecting the best

alternative from among

multiple criteria.

z Satisficing – selecting the first alternative

solution that meets a minimum

criterion.

Key factors for successful implementation

z Providing resources (staff, budgets, office space)

that will be needed for the activities that are required

for successful implementation

z Exercising leadership to persuade others to move the

implementation forward

z Developing communication and information

systems that enable management to know if the

decision alternative is meeting its planned objectives

Assumptions of the Rational Decision Making Process

z The problem is clear and unambiguous.

z There is a single, well-defined goal that all parties

agree to.

z Full information is available about criteria.

z All the alternatives and their consequences are

known.

Assumptions of the Rational Decision Making Process (continued)

z The decision preferences are clear.

z The decision preferences are constant and stable

Factors That Limit Rational

Nonrational Decision

Making Models

Satisficing Model

z Bounded rationality – the ability of a manager to be

perfectly rational is limited by factors such as cognitive capacity and time constraints

z Therefore, decision makers apply heuristics , or decision rules, that quickly eliminate alternatives

z By using the heuristic known as satisficing, a manager seeks out the first decision alternative that appears to be satisfactory

Nonrational Decision

Garbage Can Model

zThis model suggests that managers have a set of

preestablished solutions to problems located in

“garbage cans.”

zThe garbage can model is likely to be used when

decision makers are undisciplined and have no clear immediate goals

zThe decision making process lacks structure

zThis can lead to serious difficulties

Advantages and Disadvantages of

Group Decision Making

Managing Group Decision Making

Leadership Style

D evil’s A dvocate R ole

Stim ulating C reativity

Leader Decision Making Styles

z Decide and persuade

z Discover facts and decide

z Consult and decide

z Consult with group and decide

z Group decision

Decision Making Techniques to

Stimulate Group Creativity

B rainstorm ing Storyboarding

N om inal G roup Technique (N G T)

D elphi Technique

Skills for decision making process

z Time management skills

¾ To make good decisions, managers need time to understand the problem and develop creative solutions

z Delegation skills

¾ Managers who know how to delegate are able to accomplish more than those who feel the need to be involved

Effective Time Management Practices

z Plan a list of things that need to be done today.

z Plan weekly, monthly, and annual schedules of

activities.

z Schedule difficult and challenging activities when

you are at your highest level of energy and

alertness.

z Set deadlines.

Effective Time

z Answer phone messages and e-mail

in batches during a lull in your

work schedule.

z Have a place to work uninterrupted.

z Do something productive during non-productive

activities.

Effective Delegation

done.

„ Match the desired task with

the most appropriate employee.

assigning the task.

¾ Ask questions to make sure the

task is fully understood

Effective Delegation (continued)

„ Allow employees to do the task the way they

feel comfortable doing it.

„ Trust employees’ capabilities.

„ Check on the progress of the assignment.

„ Hold the employee responsible for the work.

„ Recognize what the employee has done, and

Applications of Management Perspectives—For the Manager

z Procrastination is a major barrier to effective

decision making.

z Managers need to establish clear priorities by:

¾ Determining which activities produce the greatest value.

¾ Setting dates for completion of these activities.

z Setting priorities forces managers to make

decisions and helps control procrastination.

Applications of Management Perspectives—For Managing Teams

z Overly relying on team meetings is a barrier to

making effective team decisions.

z A team should be able to manage its workflow if:

tasks.

Applications of Management

Perspectives—For Individuals

z When you feel fearful, angry, anxious, or

frustrated:

¾ You are not likely to think clearly and focus on the problem.

¾ It is not a good time to make a decision.

z It is better to postpone the decision until after you

have coped with the source of the stress and are in

a more comfortable emotional state.