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Chapter 5

This document outlines the process of problem solving and decision making for managers. It discusses the differences between programmed and non-programmed decisions, with non-programmed decisions requiring more creativity and judgment. A six step process is then described for making non-programmed decisions: 1) identify and diagnose the problem, 2) develop alternative solutions, 3) evaluate alternatives, 4) choose a solution, 5) implement the decision, and 6) evaluate and control the outcome. Examples are provided to illustrate each step of the process.

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23 views3 pages

Chapter 5

This document outlines the process of problem solving and decision making for managers. It discusses the differences between programmed and non-programmed decisions, with non-programmed decisions requiring more creativity and judgment. A six step process is then described for making non-programmed decisions: 1) identify and diagnose the problem, 2) develop alternative solutions, 3) evaluate alternatives, 4) choose a solution, 5) implement the decision, and 6) evaluate and control the outcome. Examples are provided to illustrate each step of the process.

Uploaded by

vangiangnguyen2004
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

CHAPTER 5: PROBLEM SOLVING AND DECISION MAKING

1. Basic definition:
 Problem: A discrepancy between ideal and actual conditions
Example: Quyen expected a 10 for her Microeconomics Test – But it turned out to be a 3
 Decision: A choice among alternatives
Example: Having received the result, Quyen had to choose between two options: spend more time
studying vs go to sleep and give up
 Quyen chose to go to sleep
Key points: IMPORTANT SKILLS
All managerial tasks demand the ability to solve problems and make decisions. A distinguishing
characteristic of a manager’s job is the authority to make decisions.

2. Objective 1: Nonprogrammed vs Programmed Decision


Bases of Programmed Decisions Nonprogrammed Decisions
Difference
Nature/Frequency Routine New
Structured Unstructured
Uncomplicated Complex
Repetitive Nonrepetitive
Base of decision Specific procedure Managerial initiatives
i.e., policies/standards/rules i.e., judgement/intuition/creativity
Level of Middle/Lower-level Top-level
management
Example  Mr. Ha Son Tung’s class  McDonald’s decision to offer
rules healthier fast-food
 Simple & Habitual  Walt Disney listened to his wife and
decisions: which route to decided to name his cartoon mouse
take from home to Mickey instead of Mortimer
school  Frank McNamara, in 1950, found
himself in a
restaurant without money => He
came up with the idea of the Diners
Club Card. (the first credit card)

3. Objective 2: Steps in problem solving and decision making (Nonprogrammed Decisions)


Managers who make thoughtful decisions frequently follow the processes outlined here.
Step Details Example
1. Identify and  Be aware that a problem does exists You had an accident yesterday and
Diagnose the  Be attentive broke your arms
Problem  Diagnose the problem How do you travel to school today?
comprehensively
(The real problem may be different
from what is suggested by a first
look)
 Think critically and clarify its true
nature
2. Develop  Generate and explore all kinds of  Mom and Dad
Alternative possibilities  Grab
Solutions  Be creative  Boyfriend/Girlfriend
 Do not accept the first alternative  Not going to school
you think of
3. Evaluate the  Weigh up the pros and cons +  Mom and Dad: Parents have
Alternative Assess the viability of the to work
Solutions alternatives  Boyfriend/Girlfriend: You are
 Cost and savings analysis: Cost > single
Saving => Infeasible & Should be  Not going to school: Final
rejected Exams are coming and you
are too afraid to be absent
 Grab is more convenient
4. Choose One  Choose one of the alternatives =  Grab
Alternative Make a decision
Solution  A major factor influencing the
choice: the goal it should achieve
(The option chosen should be the
one that seems to be most likely to
succeed)
 Seek other perspectives

HOWEVER, remember:
 Uncertainty remains in most
decisions anyway

5. Implement  Execution/Putting plans into action,  Use ride-hailing app and


the Decision rather than focusing on formulating have the driver take you to
visions school
 Observe the process to evaluate the
merit of a decision

6. Evaluate  Investigate the effectiveness  Arrive safely


and Control  Ensure the outcomes are what  Attend classes on time
specified during the problem-
identification process

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