SUMMARY OF CHAPTER SIX!

When making a decision managers first identify the problem nd then the decision criteriai-e whatever is relevant in the decision making process. After doing this managers put the criteri in terms on priority. The next step is to develop, analyse and select different alternatives. The manager ultimately picks out one of the alternatives and then puts it into action. Last but not the least the manager evaluates the effectiveness of the decision he made.Decisions are made under the basis of the following three:1)RATIONLITY: This is used when the problem is clear and the decision maker must have a specific goal in his mind. He should know all the possible alternatives and the decision taken through rationality is consistent and value-maximising.2)BOUNDED RATIONALITY: Here the decisions are made rationally too but the decision makers have limited ability to process information. Decisions made under this have the tendency to be strongly influenced by factors such as organization's culture, internal politics etc.3)INTUITION: It involves making decisions on the basis of experience, feelings and accumulated judgement.Managers face a lot of different types of problems and decisons.Structured problems are straightforward, fimiliar and are easily defined. Programmed decisions re repetitive and can be handled using a routine approach. Structured problems can be resolved using a procedure. It is a series of interrelated sequential steps used by the managers to come up with the solution for structured problems. Another way can be rules. These are defined lines stating clearly that what the manager can or cabnnot do. Policies are the organization set principles through which all the employees ought to work. Structured problems are usually fced by lower level managers.unstructured problems are vague and involve nonprogrammed decisions. These problems are new and do not provide the complete information. Nonprogrammed decisions are unique and non-repetitive. These problems are handled by the top-level managers.Managers make decision under the following circumstances:1)CERTAINITY: All the alternatives are known to the manager and they take decision with a sense of confidence.2)RISK: Under thsi the managers can only estimate the results of the decision that they have already made.3)UNCERTAINITY: This makes it tough for the managers as they can't be sure of the results and any estimates are diificult to make.HOW WILL DECISION MAKING STYLE AFFECT THE MANAGER' DECISION MAKING:1) Directive style will enable the manger to be less tolerant and he will develop rational way of thinking.2)Analytic style will give high tolernce for ambiguity and rational way of thinking.30Conceptul style will stimulate high tolerance for ambiguity and an intuitive way of thinking.4)Behavioural stlye will give low tolerancefor ambiguity and an intuitive way of thinking.ERRORS AFFECTING DECISION MAKING:overconfidence, anchoring effect, confirmation, sunk costs, representation, self-serving, immediate gratification, selective perception, framing, availability, randomness and hindsight.For makingany decision managers need to know understand the cultural dfferences. They should know when it's time for diversification. their decision making process should be efective and they shoudld develop highly reliable organizations