Page 114 - Fundamentals of Management Myths Debunked (2017)_Flat
P. 114
CHAPTER 4 • Foundations of Decision Making 113
How Do Managers Make Decisions?
How do businesses put new ideas into action? Through
4-1 Describe the lots of decisions, that’s how. When Bertucci’s, a decision-making process
A set of eight steps that includes identifying
decision-making shopping-mall restaurant chain in New England and the a problem, selecting a solution, and evaluating
the effectiveness of the solution
process. mid-Atlantic region, wanted to create a spin-off chain
with a more contemporary, “hipper” appeal, manag- problem
ers had lots of decisions to make over a nine-month A discrepancy between an existing and a desired
period from concept to opening. Managers hope, of course, that those decisions prove to be state of affairs
good ones. 1
Forty hours a week: how often companies expect people
to be strong decision makers. 2
Decision making is typically described as choosing among alternatives, but this view is
overly simplistic. Why? Because decision making is a process, not a simple act of choosing
among alternatives. Exhibit 4–1 illustrates the decision-making process as a set of eight steps
that begins with identifying a problem; it moves through selecting an alternative that can
alleviate the problem and concludes with evaluating the decision’s effectiveness. This process
is as applicable to your decision about what you’re going to do on spring break as it is to the
decisions UPS executives are making as they deal with issues that could affect the organiza-
tion’s future profitability (see Case Application #1 on p. 136). The process can also be used to
describe both individual and group decisions. Let’s take a closer look at the process in order
to understand what each step entails by using a simple example most of us can relate to—the
decision to buy a car.
What Defines a Decision Problem?
Step 1. The decision-making process begins with the identification of a problem or, more
3
specifically, a discrepancy between an existing and a desired state of affairs. Take the case of
a sales manager for Pfizer. The manager is on the road a lot and spent nearly $6,000 on auto
repairs over the past few years. Now her car has a blown engine and cost estimates indicate
it’s not economical to repair. Furthermore, convenient public transportation is unavailable.
So, we have a problem—a discrepancy between the manager’s need to have a car that works
and the fact that her current one doesn’t.
Identifying problems is IMPORTANT . . .
and CHALLENGING! 4
In our example, a blown engine is a clear signal to the manager that she needs a new car,
but few problems are that obvious. In the real world, most problems don’t come with neon
signs identifying them as such. And problem identification is subjective. A manager who mis-
takenly solves the wrong problem perfectly is just as likely to perform poorly as the manager
Exhibit 4–1 The Decision-Making Process
Identification Identification Allocation Development Analysis Selection Implementation
of a of Decision of Weights of of of an of the
Problem Criteria to Criteria Alternatives Alternatives Alternative Alternative
Evaluation
of
Decision
E ectiveness