Decision Making Process - Risk / Certainty / Uncertainty Decisions

Explain how risk, certainty, and uncertainty influence the decisions that managers make.

Ans:

Certainty, risk, and uncertainty represent the three decision environments within which managerial decision making and problem solving take place. Certain environments offer sufficient information about possible action alternatives and their outcomes. While this environment is ideal for decision making, very few managerial decisions actually occur in certain environments. Risk environments lack complete information about action alternatives and their consequences, but offer some estimates of probabilities associated with the potential outcomes of possible action alternatives. Uncertain environments occur when information is so poor that managers are unable even to assign probabilities to the likely outcomes of known alternatives. Risk environments and uncertain environments represent the vast majority of decision-making and problem-solving situations encountered by managers.

Source: Management, 11th Edition - John R. Schermerhorn

Decision Making Process - Ethical Decisions

How can managers ensure they are making ethical decisions?

Ans:

Any decision that managers make should be ethical. Any decision that managers make should meet the “spotlight questions” test of Step 3 of the decision-making process. The “spotlight questions” test should address two spotlight questions: “How would I feel if my family found out about this decision?” and “How would I feel if this decision were published in the local newspaper?” If a manager experiences any discomfort in answering these questions honestly, the decision probably has ethical shortcomings. In addition to the two spotlight questions, managers should ask and answer the following questions:

•       Does the decision satisfy all constituents or stakeholders?

•       Does the decision respect the rights and duties of everyone?

•       Is the decision consistent with the canons of justice?

•       Is the decision consistent with my responsibilities to care?

Source: Management, 11th Edition - John R. Schermerhorn

Decision Making Process - Impact on Increase Use of IT

What impact is the increasing use of information technology (IT) having on organizations?

Ans:

The increasing use of information technology (IT) is dramatically affecting how organizations operate and how they interface with their environments. In terms of internal organizational aspects, IT has had the following effects:

•       Individuals and teams can communicate more easily and can electronically share information.

•       The organization can operate with fewer middle managers.

•       Organizations can be flattened and operate with fewer levels of management.

•       The speed of decision making can be increased.

•       Coordination and control among decision makers can be increased.

        In terms of relationships with their external environments, IT has helped organizations manage more effectively in the following ways:

•       IT helps with customer relationship management by providing information regarding customer needs, preferences, and satisfactions.

•       IT helps organizations in all aspects of supply chain management.

•       IT helps organizations to monitor outsourcing and other business contracts.

Source: Management, 11th Edition - John R. Schermerhorn