Type of problemStructuredUnstructured
Managerial levelLower levelUpper level
FrequencyRepetitive, routineNew, unusual
InformationReadily availableAmbiguous or incomplete
Time frame for solutionShortRelatively long
Solution relies onProcedures, rules, policiesJudgment and creativity
Decision – Making Conditions
They are three characteristic of decision that will faced by the managers 1.Certainty
Certainty means the situation when a manager can make accurate decision because the outcome of every alternative is known.
Risk means the situation when manager is able to estimate the likelihood of certain outcomes. The ability to assign probabilities may be the result of past personal experiences or secondary information.
Uncertainty means the situation when manager has neither certainty nor reasonable probability estimates available.
Decision – Making Styles
Decision making styles are differ along two dimensions. The first is an individual’s way of thinking. The other dimensions is describes an individual’s tolerance for ambiguity. When we diagram these two dimensions, we get four decision- making styles. They are directive, analytic, conceptual, and behavioral.
A decision- making style characterized by low tolerance for ambiguity and a rational way of thinking. This type is making fast decision and focus on short run because they are efficient and logical. 2.Analytic style
A decision- making style characterized by a high tolerance for ambiguity and a rational way of thinking. This type is the careful decision makers with the ability to adapt or cope with unique situations. Because of it they want more information before making decision and consider more alternative. 3.Conceptual style
A decision- making style characterized by a high tolerance for ambiguity and intuitive way of thinking. This type focus on the long run and are very good at finding creative solutions to problems. They also look at many alternatives. 4.Behavioral style
A decision- making style characterized by a low tolerance for ambiguity and intuitive way of thinking. This type is concerned about achievements of those around them. They avoid conflict. Acceptance by others is important to this decision- making style.
Decision- Making Biases and Errors
When manager make decision, they not only use their own particular style, but many also use “ rules of thumb” or heuristic. Heuristic means rules of thumb that managers use to simplify decision making.
When decision maker end to think they know more than they do or hold unrealistically positive views of themselves and their performance, they are exhibiting the overconfidence bias. The immediate gratification bias describes decision makers who ted to want immediate rewards and to avoid immediate costs. The anchoring effect describes when decision makers fixate on initial information as a starting point. And when decision makers selectively organize and interpret event based on their biases perceptions, they using the selectively perception bias. Decision makers who seek out information that reaffirms their past choices and discount information that contradicts past judgments exhibit the confirmation bias. The framing bias is when decision makers select and highlight certain aspects of a situation while excluding others. The availability bias is when decision makers tend to remember events that are the most recent and vivid in their memory....