TITLE : MAKING MANAGEMENT DECISIONS. 2ND ED.

Part I Decisions and management
 
1 Decision making in management . . . 3
 
Introduction 3 Good and bad decisions 3
 
The process of decision making 4
Decision making or problem solving? 4;
Steps in the decisionmaking/problem-solving process 5;
Recycling in the decision-making process 8
 
The elements of a decision 10
Element 1: The decision body 11;
Element 2: The decision options 11;
Element 3: The uncontrollable factors 12;
Element 4: The consequences 13
 
Managers and decision making 15
What is a manager? 15
 
The range of managerial activity 16 Management level 18;
Managerial activity and discretion 19;
The place of decision making in management 20
 
 
Types of management decision 21
Strategic and operational decisions 21;
Unstructured and structured decisions 23;
Dependent and independent decisions 24;
Decision types and decision elements 25
 
 
The decision environment 26 'Environment' defined 28;
Complexity, change and perceived uncertainty 29;
The extent of information available 30;
The time available 31;
The decision stimulus 32;
Managerial discretion 32
Summary 34 Case
exercise: Rochem Limited 35 Bibliography 38 References 39
 
 
Part II The decision makers
 
2 Individual decision behaviour . . . 43
 
Introduction 43
Rational and non-rational behaviour 43:
Perception and the decision process 45;
Selective perception 45;
Closure mechanisms 47
 
 
Values and value systems 48
The construction of value systems 48;
Managerial values 50;
Values and the decision process 52
 
 
Decision behaviour under uncertainty 54
Assessment of probability 55;
Availability 56;
Acceptance of risk 57;
Propensity for risk 58
Practical prescriptions 59
Case exercise 60
Bibliography 61
References 61
 
3 The social context . . . 63
 
Introduction 63
Social needs as motivators 63;
Significant others 64;
Working within groups 64;
Work groups and decision making 65
 
 
Group influences on individual behaviour 66
Ambient stimuli 67;
Discretionary stimuli 68;
The importance of ambient and discretionary stimuli 70;
The dysfunctional consequences of group pressure 70;
The creation of norms of behaviour 71
 
 
Group processes and decision making 72
Group decision-making outcomes 72;
The move to group-acceptable decisions 74
 
Decisions made by groups 75
Group process and decision success 76
 
Group decisions and risk taking 77
 
Developing effective groups and teams 79
The flexible role structure 81;
Organizing for an effective team 81;
The characteristics of an effective team 84;
Recruiting for the decision-making group 85
 
Practical prescriptions 87
Case exercise 88
Bibliography 89
References 89
 
 
4 Decisions within the organization . . . 91
 
Introduction 91
The concept of climate 91
The dimensions of climate 92;
The interaction of dimensions 96;
Managing organizational climate 96
 
 
Organization structure and decision making 97
Information flow and structure 98;
Changing patterns of work attendance 100;
Status differences 100;
Communication networks 100;
Differences between networks 101;
Other findings related to decision making 103;
The development of open-channel networks 104
 
 
Organizational growth and specialization of function 104
Inter-group conflict 104;
The consequences of inter-group conflict 105
 
 
Organizing for decision 107
Deciding to decide 107;
The processes 108
 
 
The collection and use of information 108
Establishing sources of information 109;
Information needs in stable conditions 110;
Information needs in conditions of uncertainty 110;
Establishing the decision point 111
 
 
The development of effective management styles 113
Management style and decision effectiveness 114;
The choice of management style 115;
The need to be flexible 119 Practical prescriptions 120
Case exercise: Industrial Air Products Limited 121
Bibliography 123
References 123
 
Part III Decision modelling
 
5 Modelling decisions . . . 127
 
Introduction 127
Verbal descriptive models 127;
Analogue models 128;
Relationship models 129
 
 
The process of modelling 129
The variables in a decision model 130;
Cause-effect diagrams 132;
Mathematical models 134
 
The uses of modelling 135
Enhancing understanding 135;
Stimulating creativity 136;
Evaluating alternatives 136
 
 
Some common decision models 136
Linear programming models 137;
Queuing models 139;
Competitive models 140;
Heuristic models 140;
Simulation models 143
 
 
Classifying decision models 151
Using decision models 152
When can decision models help? 153;
What makes for successful modelling? 155
Practical prescriptions 158
Case exercise: Northern Home Stores Limited 159
Bibliography 161 References 161
 
6 Modelling uncertainty with decision trees . . . 163
 
Introduction 163
Certainty, uncertainty and risk 163;
Incorporating uncertainty 164
 
 
Quantifying uncertainty 164
Discrete and continuous probabilities 165;
Cumulative probability distributions 166;
Manipulating probabilities 168
 
 
The decision matrix 171
The optimistic decision rule 173;
The pessimistic decision rule 174;
The regret decision rule 174;
The expected value decision rule 176
 
 
Decision trees 177
The outcome balance 183;
Including extra information in decision trees 183;
The value of the information 190: The value of perfect information 191
 
Practical prescriptions 191
Case exercise 1: Orient Trading Company 193
Case exercise 2: DeFrey Limited 194
Bibliography 195
References 196
 
7 Modelling preference . . . 197
 
Modelling single attribute preference 197
The utility of money 197;
Drawing the utility function 199;
Some Utility functions 203;
Expected utility versus expected monetary value 203
 
Modelling multi-attribute preference 207
The three modelling conditions 208;
 Overall preference methods 208;
Modelling separate preference 213
 
Practical prescriptions 215
Case exercise: Jarlson Office Equipment Limited 216
Bibliography 218
References 219
 
Part IV Decision practice
 
8 Getting objectives straight . . . 223
 
Introduction 223
The hierarchy of objectives 223;
Contribution and competitiveness 224;
Linking objectives 225
 
 
Setting decision objectives 227
Objectives should be clear 227;
Objectives should be agreed 228;
Objectives should be related 229;
Objectives should balance the long and short term 231;
Objectives should include the intrinsic 232;
Objectives should be comprehensive 234
 
Practical prescriptions 234
 
Case exercise: Birmingham Amusement Machines 235
Bibliography 237
References 237
 
9 Understanding the problem . . . 238
 
Introduction 238
Sorting out the problem 238;
A two-stage process 239
Data collection techniques 239
Input-output analysis 239;
Flow charts 244;
Systematic fact finding 246
Analysis and interpretation techniques 247
Scatter diagrams 247;
Cause-effect diagrams 249;
 Pareto diagrams 252;
Why-Why analysis 254
Practical prescriptions 255
Bibliography 257
References 257
 
10 Generating the options . . . 258
 
Introduction 258
 
Creativity in decision making 258
Creativity as a widespread activity 259;
Creativity and decision making 259;
Blocks to creativity in organizational decision making 261
 
 
Individual and organizational creativity 263
The creative individual 263;
The creative organization 264;
The link between the individual and the organization 266;
Recruitment or development? 266
 
 
The creative management strategy 268
Control and reward systems 268;
A supportive personal style 270
 
 
Management as a creative activity 270
Techniques for creative problem solving 272
Basic rules for creativity techniques 272;
Conditions which aid creativity 273;
Analytical techniques 274;
Case exercise 1 275;
Techniques for aiding creative thinking 275;
Group techniques 276;
Case exercise 2 277;
Case exercise 3 278;
Reliance on techniques 279
Practical prescriptions 280
Bibliography 280
References 281
 
11 Evaluating the options . . . 282
Introduction 282
Which factors? 282
 
 
Evaluating feasibility 283
Assessing skills requirements 283;
Assessing capacity requirements 284;
Assessing financial requirements 285;
The degree of change in resource requirements 287;
Assessing 'degree of fit' 287
 
 
Evaluating acceptability 288
Assessing operational impact 288;
Assessing financial impact 289
 
 
Evaluating vulnerability 296
Downside risk 297;
The risk-return diagram 297;
Assessing future flexibility 299
Practical prescriptions 301
Case exercise: Buxton Transport Company 302
Bibliography 304
References 304
 
12 Making a choice . . . 305
Introduction 305
Evaluation and choice merge 305;
Decidophobia 305
Better than what? 306
 
Historical standards 307,
External standards 307;
Absolute standards 308;
The do-nothing standard 308;
Which standard? 309
 
How feasible? How acceptable? 310
Confidence and consensus 312
Confidence in the evaluation 312;
Consensus on objectives 313
 
 
The choice process 314
Choice by computation 314;
Choice by judgement 316;
Choice by negotiation 318;
Choice by creative 'inspiration' 318
Practical prescriptions 320
Bibliography 321
References 321
 
Appendix ... 322
 
Author Index . . . 323
Subject Index . . . 326