MS 01 Question 3

Describe different types and models of decision-making process. Discuss how decision-making is followed in your organization or an organization you are familiar with. Suggest how it could be improved. Briefly describe the organization you are referring to.

Models of Decision Making
1.
• The Rational Model
– Consists of a structured four-step sequence:
• identifying the problem
• generating alternative solutions
• selecting a solution
• implementing and evaluating the solution

2.
Simon’s Normative Model
- Based on premise that decision making is not
rational
- Decision making is characterized by
* limited information processing
* use of rules of thumb or shortcuts
* satisficing
3.
Assets of Group Decision
Making
• Groups can accumulate more knowledge and facts
• Groups have a broader perspective and consider more
alternative solutions
• Individuals who participate in decisions are more satisfied
with the decision and are more likely to support it.
• Group decision making processes serve an important
communication function as well as a useful political
function.

4.
Liabilities of Group Decision
Making
• Groups often work more slowly than individuals.
• Groups decisions involve considerable compromise that
may lead to less than optimal decisions.
• Groups are often dominated by one individual or a small
clique, thereby negating many of the virtues of group
processes.
• Overreliance on group decision making can inhibit
management’s ability to act quickly and decisively when
necessary.


Individual vs. Group Decision
Making
• In establishing objectives, groups are probably superior to
individuals because of the greater amount of knowledge
available to groups.
• In identifying alternatives, the individual efforts of group
members encourage a broad search in various functional
areas of the organization.
• In evaluating alternatives, the collective judgement of the
group, with its wider range of viewpoints, seems superior
to that of the individual decision maker.
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THE COMPANY USING THE RATIONAL APPROACH.
Basic Guidelines Decision Making
1. Define the problem
This is often where people struggle. They react to what they think the problem is. Instead, seek to understand more about why you think there's a problem.
Defining the problem: (with input from yourself and others)
Ask yourself and others, the following questions:
a. What can you see that causes you to think there's a problem?
b. Where is it happening?
c. How is it happening?
d. When is it happening?
e. With whom is it happening? (HINT: Don't jump to "Who is causing the problem?" When we're stressed, blaming is often one of our first reactions. To be an effective manager, you need to address issues more than people.)
f. Why is it happening?
g. Write down a five-sentence description of the problem in terms of "The following should be happening, but isn't ..." or "The following is happening and should be: ..." As much as possible, be specific in your description, including what is happening, where, how, with whom and why. (It may be helpful at this point to use a variety of research methods. Also see http://www.managementhelp.org/research/research.htm.
Defining complex problems:
a. If the problem still seems overwhelming, break it down by repeating steps a-f until you have descriptions of several related problems.
Verifying your understanding of the problems:
a. It helps a great deal to verify your problem analysis for conferring with a peer or someone else.
Prioritize the problems:
a. If you discover that you are looking at several related problems, then prioritize which ones you should address first.
b. Note the difference between "important" and "urgent" problems. Often, what we consider to be important problems to consider are really just urgent problems. Important problems deserve more attention. For example, if you're continually answering "urgent" phone calls, then you've probably got a more "important" problem and that's to design a system that screens and prioritizes your phone calls.
Understand your role in the problem:
a. Your role in the problem can greatly influence how you perceive the role of others. For example, if you're very stressed out, it'll probably look like others are, too, or, you may resort too quickly to blaming and reprimanding others. Or, you are feel very guilty about your role in the problem, you may ignore the accountabilities of others.
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2. Look at potential causes for the problem
a. It's amazing how much you don't know about what you don't know. Therefore, in this phase, it's critical to get input from other people who notice the problem and who are effected by it.
b. It's often useful to collect input from other individuals one at a time (at least at first). Otherwise, people tend to be inhibited about offering their impressions of the real causes of problems.
c. Write down what your opinions and what you've heard from others.
d. Regarding what you think might be performance problems associated with an employee, it's often useful to seek advice from a peer or your supervisor in order to verify your impression of the problem.
e.Write down a description of the cause of the problem and in terms of what is happening, where, when, how, with whom and why.
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3.Define the Goal or Objective

In a sense, every problem is a situation that prevents us from achieving previously determined goals. If a personal goal is to lead a pleasant and meaningful life, then any situation that would prevent it is viewed as a problem. Similarly, in a business situation, if a company objective is to operate profitably, then problems are those occurrences which prevent the company from achieving its previously defined profit objective. But an objective need not be a grand, overall goal of a business or an individual. It may be quite narrow and specific. "I want to pay off the loan on my car by May," or "The plant must produce 300 golf carts in the next two weeks," are more limited objectives. Thus, defining the objective is the act of exactly describing the task or goal.
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4. Identify alternatives for approaches to resolve the problem
a. At this point, it's useful to keep others involved (unless you're facing a personal and/or employee performance problem). Brainstorm for solutions to the problem. Very simply put, brainstorming is collecting as many ideas as possible, then screening them to find the best idea. It's critical when collecting the ideas to not pass any judgment on the ideas -- just write them down as you hear them.
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5. Select an approach to resolve the problem
When selecting the best approach, consider:
a. Which approach is the most likely to solve the problem for the long term?
b. Which approach is the most realistic to accomplish for now? Do you have the resources? Are they affordable? Do you have enough time to implement the approach?
c. What is the extent of risk associated with each alternative?
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6. Plan the implementation of the best alternative (this is your action plan)
a. Carefully consider "What will the situation look like when the problem is solved?"
b. What steps should be taken to implement the best alternative to solving the problem? What systems or processes should be changed in your organization, for example, a new policy or procedure? Don't resort to solutions where someone is "just going to try harder".
c. How will you know if the steps are being followed or not? (these are your indicators of the success of your plan)
d. What resources will you need in terms of people, money and facilities?
e. How much time will you need to implement the solution? Write a schedule that includes the start and stop times, and when you expect to see certain indicators of success.
f. Who will primarily be responsible for ensuring implementation of the plan?
g. Write down the answers to the above questions and consider this as your action plan.
h. Communicate the plan to those who will involved in implementing it and, at least, to your immediate supervisor.
(An important aspect of this step in the problem-solving process is continually observation and feedback.)
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7. Monitor implementation of the plan
Monitor the indicators of success:
a. Are you seeing what you would expect from the indicators?
b. Will the plan be done according to schedule?
c. If the plan is not being followed as expected, then consider: Was the plan realistic? Are there sufficient resources to accomplish the plan on schedule? Should more priority be placed on various aspects of the plan? Should the plan be changed?
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8. Verify if the problem has been resolved or not
One of the best ways to verify if a problem has been solved or not is to resume normal operations in the organization. Still, you should consider:
a. What changes should be made to avoid this type of problem in the future? Consider changes to policies and procedures, training, etc.
b. Lastly, consider "What did you learn from this problem solving?" Consider new knowledge, understanding and/or skills.
c. Consider writing a brief memo that highlights the success of the problem solving effort, and what you learned as a result. Share it with your supervisor, peers and subordinates
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THE ORGANIZATION I AM ASSOCIATED WITH

The organization, I am familiar with is a
-a large manufacturer/ marketer of safety products
-the products are used as [personal protection safety] [ industrial safety]
-the products are distributed through the distributors as well as sold directly
-the products are sold to various industries like mining/fireservices/defence/
as well as to various manufacturing companies.
-the company employs about 235 people.
-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
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THE COMPANY ANALYSES THE FOLLOWING DATABASE
AND APPLYS THE PROBELM SOLVING/ DECISION
MAKING APPROACH / FINALIZES THE PLAN.


1. External Assessment

Areas for opportunities and threats

* Markets [ what is the market situation, which is forcing the change requirements
*Customers [ how can service the customer -internal / external -better .
* Industry [ is the industry trend ]
* Competition [ is it the competitive situation
*Factors of business [ causing the change]
* Technology [ is it technology change ]

2. Internal Assessment

Areas for strengths, weaknesses, and barriers to success

ORGANIZATION DIMENSIONS
*Culture [ is the working culture change ]
* Organization [ is the organization demanding change ]
* Systems [ is it the systems change ]
* Management practices [ change in managemement process]


OTHER KEY DIMENSIONS

*Cost‑efficiency[ is it for cost efficiency ]
* Financial performance [ is it for financial performance improvement ]
* Quality [ is it for quality performance improvement
*Service [ is it for service performance improvement
*Technology[ is it for technology performance improvement
* Market segments [ is it for sales performance improvement
* Innovation[ is it for performance improvement
*new products[ is it for new product performance improvement
*Asset condition[ is it for financial performance improvement
*productivity[ is it for financial performance improvement

3. Source Strategic objectives and programs

The critical issues that must be addressed if the organization
Is to succeed



Strengths
Weaknesses
Opportunities
Threat

PRIORITY ISSUES

FROM THE ABOVE , DETERMINE THE CORE ISSUES
WHICH NEEDS TO SOLVED WITH YOUR INVESTMENT.

STRATEGIC PROGRAMS

FROM THE ABOVE CORE ISSUES , DETERMINE YOUR
STRATEGIC PROGRAMS.

Mission STATEMENT

VISION STATEMENT

Your CORE PURPOSE

Your CORE OBJECTIVES
Your Core markets;
Your CORE strategic thrusts.

BUSINESS DEFINITION:

The arena of products, services, customers, technologies, distribution methods, and geography in which you'll compete to get results.

VALUES:
Desired attitudes and behavior toward internal and external stakeholders that
will yield the culture and business results you want and that you will execute and turn into
action through

-policy,
-programs,
-processes,
-procedures,
-personnel selection.

­

levels and tiers of strategies

OVERALL FINANCIAL POSTURE
Grow; hold; milk; get out

PRIORITIES AND POSTURES
(Grow; hold; milk)
Market; business unit; product/services


Internal development
Divest
Restructure

COMPETITIVE ADVANTAGE
Cost /Value/ differentiation


EXTERNAL STRATEGIES

Product Convenience
Service Image
Target customer Geography
Distribution Product design
Delivery Quality
Value Reliability
Pricing Advertising/promotion

INTERNAL STRATEGIES

People/skills / Facilities
Organizational / Product
structure / development
Management style /Incentives/rewards
Training Spending
Equipment Sourcing/
manufacturing
technology / Systems
R&D / Service
FINANCING / Quality




Strategy Statement Content

v Priorities and Posture
Business unit
Market
Product
Strategic thrust/competitive advantage
External strategies
Internal strategic thrust
Internal strategies
Strategic fixes

8. Strategic
Program Content

LEADERSHIP: who

OBJECTIVES

KEY STEPS: who, what, when

FINANCIAL AND STRATEGIC
GAIN AND COST

PEOPLE: numbers and skills

COORDINATION REQUIREMENTS:

People and organizational units outside your control who must contribute

LEVERAGE: the high leverage individuals and units who must contribute at lower levels

Strategic
‑Accountability~/Reviews

QUARTERLY: Programs and strategic numbers' progress

INDIVIDUAL OBJECTIVES:
Performance appraisal

REWARDS AND CONSEQUENCES: Based on strategic performance of teams and individuals

MONITORING SYSTEM
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THE COMPANY ARRIVES AT THE FOLLOWING
DECISIONS AT THE END OF THE SESSIONS:

1.REVENUE BUDGET.
2.GROSS PROFIT BUDGET.
3.NET PROFIT BUDGET.

4.SALES TOTAL FORECAST.
5.SALES BY PRODUCTS.

6.OPERATIONAL EXPENSES BUDGET.
7.FIXED EXPENSES BUDGET.

8.PRODUCTIVITY IMPROVEMENT %
9.PROFITABILITY INCREMENT %
10. RETURN ON INVESTMENT.
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THE ONLY CHANGE I WOULD MAKE

-seek more time for this workshop exercise,
as we often work in tight time frame.