Name Student ID

: Dezmin Noris Bin Radzi Raj : 20387903 MBA-UWN/P/09/01/0010

Module Title Module Number Module Tutor

: Managerial Problem-Solving : F105717UN : Dr. Alfred Chee

Due Date

: 15 May 2010

Assignment Title:

Assignment 1

Make a Review of your personal development as a managerial decision maker and critically evaluate the rational theory and real understanding of management decision making. To what extent can organisational decisions be rational? What are the alternatives? Use examples from your organisational experience to justify/support your argument.

TABLE OF CONTENTS Page 1. Introduction - How problem arises - Mentioning of model eg : Rational Decision Making Model 2. Rational Decision Making - Steps involved - Characteristics

3. Theories agree on rationality and theories not agree with rationality eg : garbage can

4. Deviation from rational model Eg : give example from hotel and hospitality 5. Criticism of Rational Decision Making - Limitation 6. Conclusion

7. References

Approximately 2410 words excluding tables, diagrams and appendices.

1. Introduction to managerial decision making - How problem arises - Mentioning of model eg : Rational Decision Making Model 2. -. Elaborate on Rational Decision Making Discuss own experiences in decision making with examples - try to choose examples that required different models or methods e.g. 1- 2 rational choice models 1-2 non-rational models. Start with short intro on your overview of own managerial decision making experience. <<follow with examples 2.1 - 2.2/3/4 based on actual experience or events where you made a decsion/s - can be in group but must highlight your role>> 2.1 e.g work in warehouse - constant decisions on re-order etc - discuss type of problem and decision making process. If rational decision making then - Steps involved - Characteristics / model used most similar to your process (rational choice or bounded Rational choice) - 3. Theories agree on rationality and theories not agree with rationality eg : garbage can (this can be in this example or another non-rational example)

2.2 - 2.4 (as required to max 2500 words) e.g. target sales growth into new areas - where and who to target - use non-rational decision making by intuition? - whatever you use ensure review by Dr. Chee incase he sees it differently. With his experience he may suggest changing chosen model. - 4. Deviation from rational model Eg : give example from hotel and hospitality - 5. Criticism of Rational Decision Making - Limitation << Dr. Chee would like us to critically evaluate models used in each example 2.1 - 2.4 with such criticism / limitations as far as

possible >> 3 - 6 Conclusion

Introduction This paper .............

Decision making is one of the most central processes in organizations and a basic task of management at all levels. On a daily basis a manager has to make many decisions. Some of these

decisions are routine and inconsequential, while others have drastic impacts on the operations of the firm for which he/she works. Some of these decisions could involve large sums of money being gained or lost, or could involve whether or not the firm accomplishes its mission and its goals. In our increasingly complex world, the tasks of decision-makers are becoming more challenging with each passing day. The decision-maker (i.e., the responsible manager) must respond quickly to events that seem to take place at an ever-increasing pace. In addition, a decision-maker must incorporate a sometimes-bewildering array of choices and consequences into his or her decision. Routine decisions are often made quickly, perhaps unconsciously without the need for a detailed process of consideration. However, for complex, critical or important managerial decisions it is necessary to take time to decide systematically. Being a manager means making critical decisions that cannot and must not be wrong or fail. One must trust one's judgement and accept responsibility. There is a tendency to look for scapegoats or to shift responsibility. Rational Theory The Merriam-Webster Dictionary defines rational as having reason or understanding; relating to, based on, or agreeable to reason reasonable. It goes on to define irrational as not rational; not endowed with reason or understanding; lacking usual or normal mental clarity or coherence; not governed by or according to reason (for example, irrational fears). Psychology teaches us that rational thinking thinking that is consistent with known facts is helpful to us over the long haul. Irrational thinking ultimately hinders us and has nothing to do with (or is unsupported by) known facts.

The task of rational decision making is to select the alternative that results in the more preferred set of all the possible consequences. This task can be divided into three required steps: (1) the identification and listing of all the alternatives; (2) the determination of all the consequences resulting from each of the alternatives; and (3) the comparison of the accuracy and efficiency of each of these sets of consequences. Herbert Simon (1957) also introduced the concept of bounded rationality, which suggests that managers make imperfect decisions due to a variety of factors including lack of information, inadequate time, and cognitive limitations. Simon's work suggests that managers could make better decisions, if only they could access the necessary resources.

Level
Strategic Tactical Operational

Performance Measure
Financial, Growth, and Innovations Cost, Quantity, and Customer's satisfaction Target setting, and Conformance with standard

"As Friedman and Savage pointed out, it is no more necessary for the decision maker to consciously maximise all relevant utilities and probabilities than it is for the expert billiard player to be aware of the mathematical equations which describe the choice of angles and speed on the billiard tables.

We learn best from our experience, but we never directly experience the consequences of many of our most important decisions, Peter Senge (1990: 23)

5. Limitations of the Rational Decision Making Model The rational decision model is based on the premise that there is sufficient information, both in terms of quality, quantity and accuracy available. The decision maker must have in depth knowledge of the cause and effect relationships relevant to the evaluation of the alternatives. In other words, it assumes that you have a thorough knowledge of all the alternatives and the consequences of the alternatives chosen. It further assumes that you can rank the alternatives and choose the best of it. In the real world,. Another limitation of the model is the time factor. a great deal of time.

The rational model is also difficult to apply as assumes rational, measurable criteria are available and agreed upon. It assumes accurate, stable and complete knowledge of all the alternatives, preferences, goals and consequences. The model also does not take into account the cognitive abilities of the person making the decision; how good is their memory? how good is their imagination? The criteria themselves, of xcz course, will be subjective and may be difficult to compare. This is because the model attempts to negate tahe role of emotions in decision making

The fourth part: The critic, analysis and evaluation (using your personal development i.e you move up the hierarchy from executive to middle manager and top management ) relate to manager try to use rational model to solve problem all the time .However because environment influences the complexity of problems that result in some decisions cant be rational and hence the non rational being used. The final part discuss the limitations of using rational model for problem solving/decision.

Conclusion : make a summary of your discussion to justify the assignment question.

Conclusion "We can't solve problems by using the same kind of thinking we used when we created them." Albert Einstein

When I first started working as a junior executive 15 years ago, my decision making was limited to extrapolating data for analysis and decision making by the senior managers. However I realised that as I climbed higher the corporate ladder, my decision making was more towards heuristics, based on my experience.

References Stacey, R., (1996). Complexity and Creativity in Organizations. San Francisco, Berrett Koehler. Friedmann, J. (1987). Planning in the Public Domain - From Knowledge to Action. Princeton: Princeton University Press. Gigerenzer, G., Todd, P. M., & the ABC Research Group. (1999). Simple heuristics that make us smart. New York: Oxford University Press. Jennings, D & Wattam, S (1998) Decision Making : An integrated Approach, London, Pitman Publishing Mintzberg, H. A. (1975). The manager's job: Folklore and fact. Harvard Business Review, 53(4), 4961.

Senge, P. M. (1990) The Fifth Discipline. The art and practice of the learning organization, London: Random House.

Simon, H. A. (1957). Models of man: Social and rational. New York: Wiley.

Simon, H.A. (1955). A Behavioral Model of Rational Choice. The Quarterly Journal of Economics, Vol. 69, No. 1. (Feb., 1955), pp. 99-118. Online accessed
http://links.jstor.org/sici?sici=0033-5533%28195502%2969%3A1%3C99%3AABMORC%3E2.0.CO%3B2-A

Cognitive styles Influence of Briggs Myers type According to behavioralist Isabel Briggs Myers, a person's decision making process depends to a significant degree on their cognitive style.[7] Myers developed a set of four bi-polar dimensions, called the Myers-Briggs Type Indicator (MBTI). The terminal points on these dimensions are: thinking and feeling; extroversion and introversion; judgment and perception; and sensing and intuition. She claimed that a person's decision making style correlates well with how they score on these four dimensions. For example, someone who scored near the thinking, extroversion, sensing, and judgment ends of the dimensions would tend to have a logical, analytical, objective, critical, and empirical decision making style. However, some psychologists say that the MBTI lacks reliability and validity and is poorly constructed. Other studies suggest that these national or cross-cultural differences exist across entire societies. For example, Maris Martinsons has found that American, Japanese and Chinese business leaders each exhibit a distinctive national style of decision making.[8]

Optimizing vs. satisficing Herbert Simon coined the phrase "bounded rationality" to express the idea that human decisionmaking is limited by available information, available time, and the information-processing ability of the mind. Simon also defined two cognitive styles: maximizers try to make an optimal decision, whereas satisficers simply try to find a solution that is "good enough". Maximizers tend to take longer making decisions due to the need to maximize performance across all variables and make tradeoffs carefully; they also tend to more often regret their decisions.[9] Combinatoral vs. positional Styles and methods of decision making were elaborated by the founder of Predispositioning Theory, Aron Katsenelinboigen. In his analysis on styles and methods Katsenelinboigen referred to the game of chess, saying that chess does disclose various methods of operation, notably the creation of predispositionmethods which may be applicable to other, more complex systems.[10] In his book Katsenelinboigen states that apart from the methods (reactive and selective) and submethods (randomization, predispositioning, programming), there are two major styles positional and combinational. Both styles are utilized in the game of chess. According to Katsenelinboigen, the two styles reflect two basic approaches to the uncertainty: deterministic (combinational style) and indeterministic (positional style). Katsenelinboigens definition of the two styles are the following. The lists in this article may contain items that are not notable, encyclopedic, or helpful. Please help out by removing such elements and incorporating appropriate items into the main body of the article. (February 2008) The combinational style is characterized by

a very narrow, clearly defined, primarily material goal, and a program that links the initial position with the final outcome.

In defining the combinational style in chess, Katsenelinboigen writes: The combinational style features a clearly formulated limited objective, namely the capture of material (the main constituent element of a chess position). The objective is implemented via a well defined and in some cases in a unique sequence of moves aimed at reaching the set goal. As a

rule, this sequence leaves no options for the opponent. Finding a combinational objective allows the player to focus all his energies on efficient execution, that is, the players analysis may be limited to the pieces directly partaking in the combination. This approach is the crux of the combination and the combinational style of play.[10] The positional style is distinguished by

a positional goal and a formation of semi-complete linkages between the initial step and final outcome.

Unlike the combinational player, the positional player is occupied, first and foremost, with the elaboration of the position that will allow him to develop in the unknown future. In playing the positional style, the player must evaluate relational and material parameters as independent variables. ( ) The positional style gives the player the opportunity to develop a position until it becomes pregnant with a combination. However, the combination is not the final goal of the positional playerit helps him to achieve the desirable, keeping in mind a predisposition for the future development. The Pyrrhic victory is the best example of ones inability to think positionally.[11] The positional style serves to a) create a predisposition to the future development of the position; b) induce the environment in a certain way; c) absorb an unexpected outcome in ones favor; d) avoid the negative aspects of unexpected outcomes. The positional style gives the player the opportunity to develop a position until it becomes pregnant with a combination. Katsenelinboigen writes: As the game progressed and defense became more sophisticated the combinational style of play declined. . . . The positional style of chess does not eliminate the combinational one with its attempt to see the entire program of action in advance. The positional style merely prepares the transformation to a combination when the latter becomes feasible.[12] Neuroscience perspective

The anterior cingulate cortex (ACC), orbitofrontal cortex (and the overlapping ventromedial prefrontal cortex) are brain regions involved in decision making processes. A recent neuroimaging study,[13] found distinctive patterns of neural activation in these regions depending on whether decisions were made on the basis of personal volition or following directions from someone else. Patients with damage to the ventromedial prefrontal cortex have difficulty making advantageous decisions[14]. A recent study[15] involving Rhesus monkeys found that neurons in the parietal cortex not only represent the formation of a decision but also signal the degree of certainty (or "confidence") associated with the decision. Another recent study[16] found that lesions to the ACC in the macaque resulted in impaired decision making in the long run of reinforcement guided tasks suggesting that the ACC may be involved in evaluating past reinforcement information and guiding future action. Emotion appears to aid the decision making process: Decision making often occurs in the face of uncertainty about whether one's choices will lead to benefit or harm (see also Risk). The somaticmarker hypothesis is a neurobiological theory of how decisions are made in the face of uncertain outcome. This theory holds that such decisions are aided by emotions, in the form of bodily states, that are elicited during the deliberation of future consequences and that mark different options for behavior as being advantageous or disadvantageous. This process involves an interplay between neural systems that elicit emotional/bodily states and neural systems that map these emotional/bodily states.[17]