Summary of Chapter 6 by zain chaudhry

Decision Making: The essence of Manager's Job
How do managers make decisions?
Making decisions involves four steps.
Identifying A Problem: the decision maki8ng process begins with the existence of a problem or more specifically, a discrepancy between an existing and a desired state of affairs.
Allocating Weights To Those Criteria: Once the manager has identified a problem, the decision criteria important to resolving the problem must be identified. Managers must determine what's relevant in making a decision. Every decision maker has criteria that guide his or her decisions.
Developing, Analyzing and Selecting Alternative: the decision make makes a viable list of alternatives that could resolve the problem. In developing alternatives, the decision maker is required to be creative in coming up with possible alternatives. Once the alternatives have been identified, a decision maker must analyze each one. From this comparison, the strengths and weaknesses of each alternative become evident. When the alternatives are selected, thye next step is to choose the best alternative.
Implementing A Chosen Alternative And evaluating A decision's Effectivesness: After selecting the alternative the next step is to put the decision into action by conveying the decision to those affected by it and by getting their commitment to it. The last step involved in the decision making process is evaluating the outcome or result of the decision to see if the problem has been resolved.
How are decisions made?
Rational Decision Making: A decsion making behaviour where cohices are consistent and value maximizing by specific constraints.
Bonded Rationality: A decision making behaviour that is rational and limited by an indiviual's ability to process information. In bounded rationality the decisions are made rationally. Decision making may bhe strongly influenced by organzational culture, internal politics, power considerations and escalation of commitment.
Intuition: Makind decisions on the basis if experience, feelings and accumulated judgement.
What types of Problems And decisions Do Managers Face?
Structured Problems: Problems that are straight forward, familiar and easily defined.
Unstructured Problems: it invloves programmed decisions.
Programmed Decisions: A repetitive decsion that can be handled by a routine approach.
Unstructured Problems: Problems that are new or unusual and for which information is ambigous or not clear. It invloves non-programmed decisions.
Non-Programmed Decisions: A unique decision that requires a custom made solution.
Under what conditions do managers make decisions?
Certainty: A situation in which manager can make accurate decisions because all the possible outcomes are known.
Risk: A situation in which the decision maker is able to estimate the likelihood of certain outcomes.
Uncertainty: A situation in which a decision maker has no certainty.
How will decision-making style affect a manager's decision making?
Directive Style: Decision makers using the directive style have low tolerance for ambiguity and are rational in their way of thinking.
Analytic Style: Decision makers with an analytic style have much greater tolerance for ambiguity than do directive styles.
Conceptual Style: Individuals with a conceptual style tend to be very broad in their outlook and look at many alternatives.
Behavioral Style: Decision makers with a behavioral style work well with others. They are concerned with the achievements of those around them and receptive to suggestions from others.
What biases and errors affect decision making?
Overconfidence
Anchoring Effect
Confirmation
Presentation
Self Serving
Immediate Gratification
selective Perception
Framing
Availability
Randomness
Hindsight
What do managers need to know about making decisions in today's world?
Understand the cultural differences
Know when it is time to call it quits.
Use an effective decision making process.
Develop highly reliable organizations.