12/5/2023

Mansoura University
Faculty of commerce
Department of Business Administration

Principles of Management

Dr. Youmna Mohamed Abdelghany Youssef

Ph.D. in Business Administration,
Mansoura University ,Egypt and Georgia State University ,U.S.A

2023

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Making Decisions

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Be A Better Decision Maker

A key to success in management and in your

career is knowing how to be an effective
decision maker.

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What is a Decision?
Decision—a choice among two or more alternatives.

Managers at all levels and in all areas of organizations make decisions.

That is, they make choices.
Although decision making is typically described as choosing among
alternatives, this view is too simplistic.
Why?
Because decision making is (and should be) a process, not just a simple
act of choosing among alternatives.

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Example:
• Top level managers make decisions about :
Organizational goals ,where to locate manufacturing facilities, new
markets,…….
• Middle and lower-level managers make decisions about:
Production schedules, product quality problems ,pay rises and employee
discipline.

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Decision Making
•The Decision-Making Process
•Identifying a problem and decision criteria and
allocating weights to the criteria.
•Developing, analyzing, and selecting an
alternative that can resolve the problem.
•Implementing the selected alternative.
•Evaluating the decision’s effectiveness.

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The Situation
• Amanda is a sales manager whose reps need new laptops
because their old ones are outdated and inadequate for
doing their job.
• To make it simple, assume that it is not economical to add
memory to the old computers and it is the company’s
policy to purchase, not lease.

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Exhibit 2.1 Decision-Making Process

This example shows the process for Amanda’s decision about which laptop
to buy her sales reps.

Exhibit 2.1 shows the

eight steps in the
decision-making process.
This process is as
relevant to personal
decisions as it is to
corporate decisions. Youmna Youssef

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Step 1: Identifying the Problem

Problem
• An obstacle that makes it difficult to achieve a desired
goal or purpose.
• A discrepancy between an existing and desired state of
affairs.
Problem:
• A gap /disparity between sales reps’ current computers
(existing conditions) and their need to have more efficient
ones (Desired conditions)

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Decision-Making Process Step 1: Identify a

Problem
• Every decision starts with a problem, a
discrepancy between an existing and a
desired condition.
•Problem: an obstacle that makes it difficult to
achieve a desired goal or purpose.
•Example: Amanda is a sales manager whose
reps need new laptops. Amanda has a decision
to make.
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• A discrepancy without pressure to take action becomes a

problem that can be postponed.
• To initiate the decision process, then, the problem must
be such that it exerts some type of pressure on the
manager to act.
• Pressure might come from organizational policies,
deadlines, financial crises, competitor actions.

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Step 2: Identifying Decision

Criteria
•Decision criteria are factors that are
important (relevant) to resolving the
problem such as:
✓ memory & Storage
✓Battery life
✓Carrying weight
✓Warranty period
✓Display quality
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Decision-Making Process Step 2: Identify

the Decision Criteria
• Once a manager has identified a problem, he or she
must identify the decision criteria.
• Decision criteria are factors that are important to
resolving the problem.
• Example: Amanda decides that memory and storage
capabilities, display quality, battery life, warranty, and
carrying weight are the relevant criteria in her decision

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Step 3: Allocating Weights to the

Criteria
• Decision criteria are not of equal importance:
• Assigning a weight to each item places the
items in the correct priority order of their
importance in the decision-making process.
• The criteria identified in Step 2 aren't all
equally important, so the decision maker must
weight the items in order to give them the
correct priority in the decision.

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Decision-Making Process Step 3: Allocate

Weights to the Criteria
• If the relevant criteria aren’t equally important, the decision
maker must weight the items in order to give them the correct
priority in the decision.
• Example: The weighted criteria for Amanda’s computer purchase
are shown in Exhibit 2.2.
Exhibit 2.2 Important Decision Criteria
Criterion Weight
Memory and storage 10
Battery life 8
Carrying weight 6
Warranty 4
Display quality 3 Youmna Youssef

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Decision-Making Process Step 4:

Develop Alternatives
• List viable alternatives that could solve the problem.
• Example: Amanda identifies laptops as possible
choices (shown in Exhibit 2.3) the alternatives are only
listed not evaluated.
• Exhibit 2-3 contains a list of the seven possible
alternatives with scores for each criteria. Keep in mind
that this list is not exhaustive but simply one Amanda
created to narrow down the possible choices.
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Exhibit 2.3 Possible Alternatives

Laptop Memory and Battery Life Carrying Warranty Display
Storage Weight Quality

Acer Aspire E 10 3 10 8 5

Apple MacBook Pro 8 5 7 10 10

Dell XPS 13 8 7 7 8 7

Lenovo ThinkPad 7 8 7 8 7

Lenovo Yoga 8 3 6 10 8

Microsoft Surface 10 7 8 6 7
Book

Razer Blade Stealth 4 10 4 8 10

Copyright © 2021 Pearson Education Ltd.

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Decision-Making Process Step 5: Analyze Alternatives

Step 6: Select an Alternative
• STEP 5: Once you identify the alternatives you need
to analyze them using the criteria established in
Step 2.
• STEP 6: Choose the alternative that generates the
highest total in Step 5.in our example Amanda
would choose the Microsoft surface because it
scored higher than all other alternatives (249 total).

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Exhibit 2.4 Evaluation of Alternatives : shows the total score for

each alternative weighted by the previously assigned weights.

Laptop Memory Battery Carrying Warranty Display Total

and Storage Life Weight Quality

Acer Aspire E 10 X 10 100 3X8 24 60 10X 6 32 8X 4 15 5X 3 =231

Apple MacBook 80 40 42 40 30 232
Pro
Dell XPS 13 80 56 42 32 21 231
Lenovo ThinkPad 70 64 42 32 21 229

Lenovo Yoga 80 24 36 40 24 204

Microsoft Surface 100 56 48 24 21 249
Book
Razer Blade
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Copyright © 2021 Pearson Education Ltd.
Stealth
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Exhibit 2.4 Evaluation of Alternatives

Laptop Memory Battery Carrying Warranty Display Total
and Life Weight Quality
Storage
Acer Aspire E 100 24 60 32 15 231

Apple 80 40 42 40 30 232
MacBook Pro
Dell XPS 13 80 56 42 32 21 231
Lenovo 70 64 42 32 21 229
ThinkPad
Lenovo Yoga 80 24 36 40 24 204
Highest Value
Microsoft 100 56 48 24 21
249
Surface Book
Razer Blade 40 80 24 32 30 206
Copyright © 2021 Pearson Education Ltd.
Stealth Youmna Youssef

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Decision-Making Process Step 7: Implement the

Alternative
• Put the chosen alternative into action.
• Convey the decision to those affected and get
their commitment to it.
• Research evidence indicates that if people who
must implement a decision participate in the
process , they are more likely to support it than if
you just tell them what to do.

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Decision-Making Process Step 8: Evaluate

Decision Effectiveness
•The last step in the decision-making
process involves evaluating the result
or outcome of the decision to see if
the problem was resolved.
•If it wasn’t resolved, what went
wrong?

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• Although everyone in an organization makes decisions, decision

making is particularly important to managers.
• As Exhibit 2-5 shows, it’s part of all four managerial functions. In
fact, that’s why we say that decision making is the essence of
management. And that’s why managers—when they plan, organize,
lead, and control—are called decision makers.

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Exhibit 2.5 Decisions Managers May Make:

Planning and Organizing

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Exhibit 2.5 Decisions Managers May Make:

Leading and Controlling

Copyright © 2021 Pearson Education Ltd.

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Explain the five approaches

managers use when making
decisions.

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Rationality
•Rational Decision Making: choices that are logical
and consistent and maximize value.
• Assumptions of rationality:
– Rational decision maker is logical and objective
– Problem faced is clear and unambiguous
– Decision maker would have clear, specific goal and be aware of all
alternatives and consequences
– The alternative that maximizes achieving this goal will be selected
– Decisions are made in the best interest of the organization

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Bounded Rationality
• Bounded rationality: decision making that’s rational
but limited(bounded) by an individual’s ability to
process information.
• Because they can’t possibly analyze all information on
all alternatives, managers satisfice, rather than
maximize.
• Satisfice: accepting solutions that are “good enough”

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Intuition

•Intuitive Decision Making: making decisions

on the basis of experience, feelings, and
accumulated judgment,

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Evidence-Based Management
• “Any decision-making process is likely to be enhanced through the use of
relevant and reliable evidence.”
• Evidence-based management (EBMgt): the systematic use of the best
available evidence to improve management practice.
• EBMgt is quite relevant to managerial decision making. The four essential
elements of EBMgt are the decision maker’s expertise and judgment;
external evidence that’s been evaluated by the decision maker; opinions,
preferences, and values of those who have a stake in the decision; and
relevant organizational (internal) factors such as context, circumstances, and
organizational members.
• Example : reliance on data driven management decisions

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Crowdsourcing

•Crowdsourcing: a decision-making approach

where you solicit ideas and input from a network
of people outside of the traditional set of decision
makers.

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Types Of
Decisions

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Types of Problems and Decisions

•Structured Problems
• The decision maker goals are clear
• Are familiar (have occurred before)
• Are straightforward, familiar and easily defined
problems.
• Ex: customer return purchase or supplier lateness
•Programmed Decision
• A repetitive decision that can be handled by a routine
approach.
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•The manager relies on one of three types of

programmed decisions: procedure, rule, or policy.
•A procedure is a series of sequential steps a
manager uses to respond to a structured problem
•For instance, a purchasing manager receives a
request from a warehouse manager for 15 laptops
for the inventory clerks. The purchasing manager
knows how to make this decision by following the
established purchasing procedure.

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•A rule is an explicit statement that tells a

manager what can or cannot be done.
•For example, rules about lateness and
absenteeism permit supervisors to make
disciplinary decisions rapidly and fairly.

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•Policy, which is a guideline for making a decision.

• In contrast to a rule, a policy establishes general
parameters for the decision maker rather than
specifically stating what should or should not be
done.
•Policies typically contain an ambiguous term that
leaves interpretation up to the decision maker.

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•Policy, which is a guideline for making a decision.

•Policies typically contain an ambiguous term that
leaves interpretation up to the decision maker.
•Here are some sample policy statements:
• The customer always comes first and should
always be satisfied.
• We promote from within, whenever possible.
• Employee wages shall be competitive within
community standards.

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Types of Programmed Decisions

• Procedure: a series of sequential steps used to

respond to a well-structured problem
• Rule: an explicit statement that tells managers
what can or cannot be done
• Policy: a guideline for making decisions

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Problems and Decisions

•Unstructured Problems
•Problems that are new or unusual and for which
information is ambiguous or incomplete.
•Nonprogrammed Decisions
•Decisions that are unique and non- recurring.
That require a custom-made solutions.
•Decisions that generate unique responses.

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Exhibit 2.7 Programmed vs. Non-programmed

Decisions
Characteristic Programmed Decisions Nonprogrammed Decisions

Type of problem Structured Unstructured

Managerial level Lower levels Upper levels
Frequency Repetitive, routine New, unusual
Information Readily available Ambiguous or incomplete

Goals Clear, specific Vague

Time frame for solution Short Relatively long

Solution relies on… Procedures, rules, policies Judgment and creativity

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After nearly 30 years of growth, sales at lilly's company have begun to

decline. None of the
managers have been able to determine the cause. Some say the entire
economy is in recession;
others blame a change in suppliers; still others say the work ethic
among employees just isn't what
it used to be. This is an example of a(n) ________ problem.
A) structured
B) unstructured
C) programmed
D) non-programmed
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A problem can best be described as

________.
•A) a change from the past
• B) something bad that has happened
• C) a difference between current conditions and
some desired state
• D) a loss of something of value

Answer: C
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Which of the following statements is true

concerning problem identification?
•A) Problems are generally obvious.
•B) A symptom and a problem are one and the
same.
•C) Generally, what is a problem for one manager
is a problem for all other managers.
•D) Effectively identifying problems is not easy.
•Answer: D
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• Ahmed must select a new supplier for lighting fixtures

for his company's mobile homes. He has decided
quality is more important than price, but price is more
important than lead times. Ahmed will use these
priorities to ________.
A. analyze alternatives
B. set his decision criteria
C. allocate weights to the criteria
D. develop alternatives

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When making a decision for a routine situation,

which step in the decision-making process can
be skipped ?

A. Identify the problem

B. Evaluate decision effectiveness
C. Develop alternatives
D. Implement the alternative
•Answer: C
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Group project Template : Principles of Management

OUTLINE
1.0 General Description of the Organization
1.1 Identification of overall business within its industry
2.0 Analysis of the planning in the organization
2.1 Mission and Vision
2.2 Objectives and approaches to establishing goals
2.3 Types of Plans
2.4 Approaches to planning
2.5 Environmental Scanning
3.0 Identification of the Organizational structure ,design and change
3.1 Structure and chart
3.2 Design
3.3 Location of the change within the organization (if exist)
3.4 Role of leadership in change and Estimated improvements
4.0 Leading and Controlling
4.1 Leadership and Communication
4.2 Control ( performance standards , quality control , variances and corrective action)
Avoid plagiarism

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Thank you!
HAVE A GOOD DAY!!!

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