Maximizing Management Decisions with Information Systems

1. Management11e John Schermerhorn Chapter 7 Information and Decision Making

2. Planning Ahead — Chapter 7 Study Questions • What is the role of information in the management process? • How do managers use information to make decisions? • What are the steps in the decision-making process? • What are the current issues in managerial decision making? Management 11e Chapter 7

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 Management 11e Chapter 7

4. Study Question 1: What is the role of information in the management process? • What is useful information? • Data • Raw facts and observations • Information • Data made useful for decision making • Information drives management functions Management 11e Chapter 7

5. Study Question 1: What is the role of information in the management process? • Characteristics of useful information: • Timely • High quality • Complete • Relevant • Understandable Management 11e Chapter 7

6. Study Question 1: What is the role of information in the management process? • 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 Management 11e Chapter 7

7. Study Question 1: What is the role of information in the management process? Management 11e Chapter 7

8. Figure 7.1 Internal and external information needs of an organization Management 11e Chapter 7

9. 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 Management 11e Chapter 7

10. Figure 7.2 Information technology is breaking barriers and changing organizations Management 11e Chapter 7

11. 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 Management 11e Chapter 7

12. Study Question 2: How do managers use information to make decisions? • Managerial advantages of IT utilization (cont.): • 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 Management 11e Chapter 7

13. Figure 7.3 The manager as an information-processing nerve center Management 11e Chapter 7

14. 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 Management 11e Chapter 7

15. Study Question 2: How do managers use information to make decisions? • Problem-solving approaches or styles: Management 11e Chapter 7

16. Study Question 2: How do managers use information to make decisions? • Systematic versus intuitive thinking Management 11e Chapter 7

17. 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 Management 11e Chapter 7

18. Study Question 2: How do managers use information to make decisions? Managers use different cognitive styles Management 11e Chapter 7

19. 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 Management 11e Chapter 7

20. Study Question 2: How do managers use information to make decisions? • Types of 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 Management 11e Chapter 7

21. Study Question 2: How do managers use information to make decisions? • Crisis decision making • A crisis involves an unexpected problem that can lead to disaster if not resolved quickly and appropriately Management 11e Chapter 7

22. Study Question 2: How do managers use information to make decisions? Management 11e Chapter 7

23. Study Question 2: How do managers use information to make decisions? Managers make decisions with various amounts of information Management 11e Chapter 7

24. Figure 7.4 Three environments for managerial decision making and problem solving Management 11e Chapter 7

25. 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 Management 11e Chapter 7

26. Figure 7.5 Steps in managerial decision making and problem solving Management 11e Chapter 7

27. 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 Management 11e Chapter 7

28. Study Question 3: What are the steps in the decision-making process? • 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 • Cost-benefit analysis Management 11e Chapter 7

29. Study Question 3: What are the steps in the decision-making process? • Step 2 — generate and evaluate possible solutions (cont.) • Criteria for evaluating alternatives: • Benefits • Costs • Timeliness • Acceptability • Ethical soundness Management 11e Chapter 7

30. Study Question 3: What are the steps in the decision-making process? • Step 2 — generate and evaluate possible solutions (cont.) • 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 Management 11e Chapter 7

31. 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 Management 11e Chapter 7

32. Figure 7.6 Differences in the classical and behavioral decision-making models Management 11e Chapter 7

33. Study Question 3: What are the steps in the decision-making process? • 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 Management 11e Chapter 7

34. 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 Management 11e Chapter 7

35. Study Question 3: What are the steps in the decision-making process? Check ethical reasoning • Ask these spotlight questions Management 11e Chapter 7

36. Study Question 4: What are the current issues in managerial decision making? • Issues in decision making • How do decision errors happen? • Hueristics are strategies for simplifying decision making Management 11e Chapter 7

37. Study Question 4: What are the current issues in managerial decision making? Management 11e Chapter 7

38. 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 Management 11e Chapter 7

39. Study Question 4: What are the current issues in managerial decision making? • Personal creativity drivers Management 11e Chapter 7

40. Study Question 4: What are the current issues in managerial decision making? • Situational creativity drivers • Team creativity skills • Management support for creative ideas • Organizational culture Management 11e Chapter 7

41. Study Question 4: What are the current issues in managerial decision making? • Situational creativity drivers Management 11e Chapter 7

42. Chapter 7 Case • Amazon: One e-store rules them all

43. For activities and assessments, please visit… • www.wiley.com/college/schermerhorn