Management 11e John Schermerhorn

1
Management 11e John Schermerhorn

• Chapter 7
• Information and
• Decision Making

2
Planning Ahead Chapter 7 Study Questions

1. What is the role of information in the management
   process?
2. How do managers use information to make
   decisions?
3. What are the steps in the decision-making
   process?
4. What are the current issues in managerial
   decision making?

3
Study Question 1 What is the role of information
in the management process?

• Information, technology and management
• Managers must have
• Computer competency
• Ability to understand computers and use them
  to their best advantage
• Information competency
• Ability to gather, analyze and use information
  for decision making and problem solving
• What is useful information?
• Data
• Raw facts and observations
• Information
• Data made useful for decision making
  Information drives management functions

4
Study Question 1 What is the role of information
in the management process?

• Characteristics of useful information
• Timely
• High quality
• Complete
• Relevant
• Understandable
• Information needs of organizations
• Information exchanges with the external
  environment
• Gather intelligence information
• Provide public information
• Information exchanges within the organization
• Facilitate decision making
• Facilitate problem solving

5
Study Question 1 What is the role of information
in the management process?
6
Figure 7.1 Internal and external information
needs of an organization
7
Study Question 1 What is the role of information
in the management process?

• Information systems
• Use IT to collect, organize and distribute data
  for use in decision making
• Management information systems
• Meet the information needs of managers in
  making daily decisions

8
Figure 7.2 Information technology is breaking
barriers and changing organizations
9
Study Question 2 How do managers use information
to make decisions?

• Managerial advantages of IT utilization
• Planning advantages
• Better and more timely access to useful
  information
• Involving more people in planning
• Organizing advantages
• More ongoing and informed communication among all
  parts of the organization
• Improved coordination and integration
• Leading advantages
• Improved communication with staff and
  stakeholders
• Keeping objectives clear
• Controlling advantages
• More immediate measures of performance results
• Allows real-time solutions to performance
  problems

10
Figure 7.3 The manager as an information-processin
g nerve center
11
Study Question 2 How do managers use information
to make decisions?

• Problem solving
• The process of identifying a discrepancy between
  actual and desired performance and taking action
  to resolve it

12
Study Question 2 How do managers use information
to make decisions?

• Problem-solving approaches or styles

13
Study Question 2 How do managers use information
to make decisions?

• Systematic versus intuitive thinking

14
Study Question 2 How do managers use information
to make decisions?

• Multidimensional thinking applies both intuitive
  and systematic thinking
• Effective multidimensional thinking requires
  skill at strategic opportunism

15
Study Question 2 How do managers use information
to make decisions?
Managers use different cognitive styles
16
Study Question 2 How do managers use information
to make decisions?

• Types of problems
• Structured problems are ones that are familiar,
  straightforward, and clear with respect to
  information needs
• Programmed decisions apply solutions that are
  readily available from past experiences to solve
  structured problems
• Unstructured problems are ones that are full of
  ambiguities and information deficiencies
• Nonprogrammed decisions apply a specific solution
  to meet the demands of a unique problem
• Commonly faced by higher-level management
• Crisis decision making
• A crisis involves an unexpected problem that can
  lead to disaster if not resolved quickly and
  appropriately

17
Study Question 2 How do managers use information
to make decisions?
18
Study Question 2 How do managers use information
to make decisions?

• Managers make decisions with various amounts of
  information

19
Figure 7.4 Three environments for managerial
decision making and problem solving
20
Study Question 3 What are the steps in the
decision-making process?

• Five-step decision-making process
• Identify and define the problem
• Generate and evaluate alternative solutions
• Make decision
• Implement the decision
• Evaluate results

21
Figure 7.5 Steps in managerial decision making
and problem solving
22
Study Question 3 What are the steps in the
decision-making process?

• Step 1 Find and define the problem
• Focuses on information gathering, information
  processing, and deliberation
• Decision objectives should be established
• Common mistakes in defining problems
• Defining the problem too broadly or too narrowly
• Focusing on symptoms instead of causes
• Choosing the wrong problem
• Step 2 generate and evaluate alternative
  courses of action
• Potential solutions are formulated and more
  information is gathered, data are analyzed , the
  advantages and disadvantages of alternative
  solutions are identified. Approaches for
  evaluating alternatives
• Stakeholder analysis

23
Study Question 3 What are the steps in the
decision-making process?

• Cost-benefit analysis
• Criteria for evaluating alternatives
• Benefits
• Costs
• Timeliness
• Acceptability
• Ethical soundness
• Common mistakes
• Selecting a particular solution too quickly
• Choosing a convenient alternative that may have
  damaging side effects or may not be as good as
  other alternatives

24
Study Question 3 What are the steps in the
decision-making process?

• Step 3 decide on a preferred course of action
• Two different approaches
• Behavioral model leads to satisficing decisions
• Classical model leads to optimizing decisions
• Step 4 implement the decision solution
• Involves taking action to make sure the solution
  decided upon becomes a reality
• Managers need to have willingness and ability to
  implement action plans . Lack-of-participation
  error should be avoided

25
Figure 7.6 Differences in the classical and
behavioral decision-making models
26
Study Question 3 What are the steps in the
decision-making process?

• Step 5 evaluate results
• Involves comparing actual and desired results
• Positive and negative consequences of chosen
  course of action should be examined
• If actual results fall short of desired results,
  the manager returns to earlier steps in the
  decision-making process

27
Study Question 3 What are the steps in the
decision-making process?

• Check ethical reasoning
• Ask these spotlight questions
• Issues in decision making
• How do decision errors happen?
• Hueristics are strategies for simplifying
  decision making

28
Study Question 4 What are the current issues in
managerial decision making?
29
Study Question 4 What are the current issues in
managerial decision making?

• Creative Decision making
• Creativity is the generation of a novel idea or
  unique approach that solves a problem or crafts
  an opportunity
• creativity is more likely when decision makers
  are highly task motivated
• Organizations should create an environment that
  supports and encourages creativity
• Situational creativity drivers
• Team creativity skills
• Management support for creative ideas
• Organizational culture

30
Study Question 4 What are the current issues in
managerial decision making?

• Personal creativity drivers

31
Study Question 4 What are the current issues in
managerial decision making?

• Situational creativity drivers

32
Chapter 7 Case

• Amazon One e-store rules them all