Columbia Southern University Managerial Decision Making Presentation

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  reflect on everything you   have learned and discuss how you  will use it to improve your decision-making  in  the future. To complete this  assignment, prepare a PowerPoint presentation  that  summarizes the best practices  in rational decision-making and explains  how you  will use what you have learned  in each of the following areas to  improve your  managerial decision-making.

    Overcoming   bias

   Awareness   of boundaries

   Awareness   of framing

   Motivation   in decision-making

  1.    Emotions   in decision-making
  2.    Fairness   and ethics
  3.    Investments
  4.    Negotiations
  5.    The   six issues in negotiator cognition

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UNIT VIII STUDY GUIDE Improving Decision-Making Course Learning Outcomes for Unit VIII Upon completion of this unit, students should be able to: 1. Summarize the foundational theories of managerial decision-making. 2. Examine the rational decision-making process. 3. Explore the psychological aspects of decision-making. 4. Describe the role of fairness and ethics in managerial decision-making. 5. Explain how motivation and emotion impact managerial decision-making. 6. Outline the decision-analysis approach to negotiations. 7. Discuss the methods for improving managerial decision-making. 8. Summarize best practices for managerial decision-making. Course/Unit Learning Outcomes Learning Activity 1 2 3 4 5 Unit VIII PowerPoint Presentation Unit VIII PowerPoint Presentation Unit VIII PowerPoint Presentation Unit VIII PowerPoint Presentation Unit VIII PowerPoint Presentation 6 Unit VIII PowerPoint Presentation Unit Lesson Chapter 12 Unit VIII PowerPoint Presentation Unit Lesson Chapter 12 Reading: “8 Ways to…Improve the Decision-Making Process” Unit VIII PowerPoint Presentation 7 8 Reading Assignment Chapter 12: Improving Decision Making In order to access the following resource, click the link below. Bartram, P. (2014). 8 ways to…improve the decision-making process. Financial Management (UK), 44–45. Retrieved from http://link.galegroup.com.libraryresources.columbiasouthern.edu/apps/doc/A393953118/AONE?u=ora n95108&sid=AONE&xid=9acb8567 BBA 3826, Managerial Decision Making 1 Unit Lesson UNIT x STUDY GUIDE Title Improving Decision-Making In this course, we have reviewed the rational decision-making process and the steps that should be followed to make a high-quality decision. We have studied a great deal about judgment biases and learned much about how decisions are made. The discussion of cognitive bias covered approaches for minimizing the biases that can negatively influence the decision process. Several tactics for building consensus and avoiding groupthink were presented in Unit III on group decisions under bounded awareness. In this final lesson, we cover some additional areas of best practice that help people and organizations make effective decisions. Creativity Creativity is an integral part of decision-making. One of the benefits of group decision-making is the diversity of views, knowledge, and expertise that can be brought to bear on a problem, but it is not always easy to take advantage of a group’s potential to come up with new approaches or novel solutions. There are three techniques that can enhance a group’s creative capability to generate ideas and reach better decisions. These techniques are brainstorming, decision-support systems, and analytics. Brainstorming: Brainstorming encourages idea generation through noncritical discussion. Certain rules and practices apply that are intended to lower participants’ reluctance to share their thoughts for fear of disapproval. These include the belief that no idea is too silly or “out there;” even extreme ones are welcome. Another supportive practice is that each idea, once contributed, becomes the property of the group, so individuals can build on the ideas of others. Finally, the purpose of brainstorming is not to evaluate ideas but, rather, to come up with ideas, so no criticism is allowed. Decision support systems: Many organizations use information technology to Brainstorming is a great decision-making technique. improve the effectiveness of their decision(Ammentorp, 2017) making. Known as decision support systems (DSSs), these software products transform data into useful information such as statistical tables and comparative results reports (e.g., year-over-year performance). They allow for more objective decision-making, improved managerial control, a decreased need for training through automation, and facilitated communication. A DSS is comprised of a database, a model, and a user interface that provides analysis and answers that help managers make choices. The database consists of structured records such as sales and cost figures. The model links variables that represent an understanding of cause-and-effect relationships; for example, if wages are increased, the labor cost per unit rises. The user interface is how decision makers interact with the system (e.g., the fields where users enter queries or the series of steps they take to produce graphs, charts, and reports). DSSs are used in a wide variety of business functions and industries. For example, to make marketing and pricing decisions at the local level, the rental car company Hertz uses a DSS to bring together data about cities, holidays, business cycles, tourist activities, competitors’ actions, and customer behavior (Turban, McLean, & Wetherbe, 2004). Medical personnel use a DSS for diagnosis and treatment. For example, a doctor might input test results and symptoms to identify the alternative diagnoses and recommended treatment. Farmers use such systems to determine crop rotation and other ways of optimizing their use of land. Loan officers and credit card companies use them to determine applicant risk and the appropriate interest rate to charge. BBA 3826, Managerial Decision Making 2 An enterprise-level DSS is used for certain types of decisions. For example, executive information support UNIT x STUDY GUIDE systems serve the decision-making needs of top executives by providing access to information about critical Title success factors and key performance indicators. Executives can manipulate and refine data to be more meaningful and strategically significant to them. One use is for forecasting project trends; another use is getting real-time data on factors relevant to a decision (Turban et al., 2004). Analytics: Over the past decade, an increasing number of organizations have started to use DSSs to predict behavior and results. Predictive analytics enable managers to make decisions about how to allocate resources and take other steps that are most likely to lead to positive results. This approach uses historical data to identify predictive variables. For example, predictive analytics is used in higher education to flag students who are at risk of flunking based on the pattern of courses and grades that match those of students who have previously had trouble. Those students can then be targeted for support from advisors or tutors. Another example comes from Netflix, the movie rental company. One way Netflix uses analytics is to make recommendations to customers based on their viewing history. This provides additional value to customers and helps with customer retention. Another way the company uses analytics is to predict the number of customers who will want to view each film so it can determine what to pay movie studios for the distribution rights to DVDs (Davenport & Harris, 2007). Many stores use analytics for making various decisions about sales and promotions. (Rawpixelimages, 2015) Being good at analytics has become a sought-after competitive advantage; the better an organization becomes at making sense of enormous amounts of data, the better decisions it can make. Many companies have made investments in their analytics capability as a competency that can reduce costs, enhance operations, and increase revenue. Chain restaurants use it to determine the best places to locate new stores. Frequent shopper cards offered by many retailers help those companies identify and track the purchases of their most loyal and profitable customers and to target promotions to them. Analytics have even become common in professional sports. For example, baseball teams use a large set of metrics to determine the value of each player on their roster and, therefore, what they should pay him and use past performance data to determine how to pitch to a batter and how to position players in the field to best anticipate where he will hit the ball. One consequence of the widespread use of decision analytics has been the creation of well-paying jobs for those with specialized skills in statistics and mathematical modeling. Click here to test your knowledge about creative strategies that improve decision-making. Be sure you have reviewed Chapter 12 before taking this quiz. Other Strategies for Improving Decision-Making To fine-tune our managerial decision-making skills, we will look at seven more strategies to complement what we have learned about decision-making. The seven strategies are listed below. 1. 2. 3. 4. 5. 6. 7. “Use decision-analysis tools Acquire expertise Debias your judgment Reason analogically Take an outsider’s view Understand biases in others Nudge people toward wiser and more ethical decisions” (Bazerman & Moore, 2013, p. 208). BBA 3826, Managerial Decision Making 3 All of these strategies should be used together to make sure you are making the best decisionGUIDE possible. UNIT x STUDY Some decisions may not require all the tools we have outlined, but your job is Title to make sure you apply as many of them as necessary to make good decisions. Use decision-analysis tools: Decision analysis is the field of study that focuses on prescriptive decision advice (Bazerman & Moore, 2013). These tools can only function if someone puts in the required data, which is the preferences or options and the value of each of these preferences or options. These tools also require a person to be specific about the probabilities of future outcomes. A linear model can be used to guide complex decisions. These models use formulas with data input by people to make quantitative predictions. In almost all complex situations, linear models produce much better predictions than do experts in the field. A simple linear framework model produces almost as good of results as a more complex model so it is not necessary to have too many variables when developing the model. Humans are better at developing and inputting the data, and the models are better at integrating the data to produce predictions. Models are not affected by subjective interpretations, mood, environment, randomness, deadlines, or other human characteristics. They always have the same predictions from the same data, unlike people (Bazerman & Moore, 2013). Acquire expertise: We know from our studies in this course that we are influenced by biases. A useful tool for improving decisions and reducing bias is to look for experience and expertise in the area or field related to the upcoming decision. We hope we learn from past mistakes and improve our decision-making skills. However, we sometimes do not remember our own predictions or fail to remember our previous forecasts. This may cause us to underestimate the accuracy of our past predictions. When we do this, we have not really learned from our past experiences. We have anchored to the current state and failed to accurately recall our past judgments (Bazerman & Moore, 2013). By developing experience and/or acquiring expertise, we could eliminate or at least reduce biased decision-making outcomes. Experience comes from repeated feedback. Expertise comes from learning and applying rational decision-making processes including recognizing and limiting biases. Debias your judgment: A known strategy used to eliminate or reduce bias is referred to as a debiasing strategy. This strategy outlines a four-step process for making wiser decisions (Bazerman & Moore, 2013). The four steps are listed below. Warn about possibe bias. Describe the bias. Give feedback. Provide a training program with the aim of improving judgment. (Bazerman & Moore, 2013) Debiasing is not an easy task. It is a difficult process that takes time and should be monitored for progress in cognitive changes. Good strategies need to be context-specific and bias-specific to be effective. There should be training linked to testing over a short time period. Unfreezing your cognition for improved decision-making has to occur, but many times, it does not happen because of risk aversion, status quo, or preferences (Bazerman & Moore, 2013). There is also a mindset that many people have which makes them believe that BBA 3826, Managerial Decision Making 4 their past decisions have been good ones, which then makes them resistant toUNIT change a goodGUIDE pattern. Their x STUDY intuition and judgment have gotten them this far, so why change? Focused debias Titletraining can help overcome this mindset and help to unfreeze the biases to allow new thinking to occur. Change is not easy and gets harder as we age. We have to realize we all have judgmental deficiencies; these deficiencies have roots from our past, and it is OK to change them to be a better decision maker. By frequently applying what you have learned and reviewing your training, you can refreeze your newly acquired cognitive decision-making strategies. Reason analogically: The process of taking common lessons from two or more situations is referred to as analogical reasoning. This process is another way of debiasing decisions. When individuals are comparing multiple examples, they tend to focus on similarities of the examples rather than differences in the examples. However, understanding the differences across the examples can be useful in reasoning analogically and then in discussions as participants begin transferring knowledge among the decision makers. By examining both the similarities as well as the differences of the examples, it creates opportunities to create more alternatives, which could lead to an improved decision-making process (Bazerman & Moore, 2018). As we learn this principle of reasoning analogically, we need to share it by teaching people these decision-making strategies in general, broader terms. These general concepts will improve the ability to transfer learned principles from generation to generation and teach one to discriminate the appropriateness of when to apply these principles. Take an outsider’s view: When you are making a decision, there are two viewpoints that should be considered. The first view is the insider’s view and is predicated on each situation being unique and a decision maker who is unbiased. The second view is the outsider’s view, and the decision maker looks for and identifies similarities by generalizing the situation. The outsider can make better estimates, predictions, and decisions than the insider can because they incorporate relevant data from previous decisions. When we do not seek the outsider’s view in our decisions, it is generally because of our optimism or overconfidence. The point in this discussion is that we need to invite an outsider to provide thoughts and insight when we are making important decisions. Understand biases in others: We need to understand that there is a wide range of biases, and we, as individuals, need to make appropriate adjustments to those biases including knowing how others may be affected by biases. There is a simple phase judgment-improvement technique to help us debias decisions when working with others (Bazerman & Moore, 2013). The first phase is to understand and analyze the context around the decision. The second phase is to determine any potential biases that may exist within the group as well as how the potential biases relate to the decision. The third phase is to make any adjustments needed for the decision. This technique can be used in a variety of situations. If you are assigned a role in a group decision and are able to communicate this process and apply it, you will help the group make a better, less-biased decision. Nudge people toward wiser and more ethical decisions: There is a detailed description in the textbook of organ donor philosophy worldwide that outlines the idea of nudging people to make wiser and more ethical decisions. There is also another example that details concepts about savings plans. Both of these examples stress changing the current philosophy of opting in to a program versus opting out of a program. For the organ donor example, what if we were automatically organ donors when we died unless we had opted out of the program (on our driver’s license, as an example). Think of how many more lives could be saved. Would that be wiser and more ethical? What about the savings plan example where we had to opt out of the savings plan or we were automatically in the savings plan. When we received raises, we would automatically get increases in our savings percentage pursuant to the size of the raise percentage. Our disposable income would not decrease, so we could maintain our standard of living but have a substantially better percentage of savings over time. Would that not be wiser? This suggests that you can move people to make wiser and more ethical decisions by using little nudges rather than big shoves. Click here to test your knowledge of the decision-making strategies covered in this section. Be sure you have reviewed Chapter 12 before taking this quiz. Conclusion In this unit, we covered improving decision-making skills by using our creativity and applying various techniques and strategies like brainstorming, decision support systems, and analytics. We introduced other BBA 3826, Managerial Decision Making 5 strategies for decision-making such as using decision-analysis tools, acquiringUNIT expertise, debiasing x STUDY GUIDEour judgment, reasoning analogically, taking an outsider’s view, and nudging people toward wiser and more Title ethical decisions. Hopefully, you have enjoyed learning about managerial decision-making and will take what you have learned and apply to your life decisions, both at home and work. Remember, we all have biases, and we can learn to overcome those biases in our decision-making if we apply what we learned and practice it every day. References Ammentorp. (2017). Creative people doing a brainstorming meeting in office [Photograph]. Retrieved from www.dreamstime.com Bazerman, M. H., & Moore, D. A. (2013). Judgment in managerial decision making (8th ed.). Hoboken, NJ: Wiley. Davenport, T. H., & Harris, J. G. (2007). Competing on analytics: The new science of winning. Boston, MA: Harvard Business School Press. Rawpixelimages. (2015). Sales promotion discount shopaholics shopping concept [Photograph]. Retrieved from www.dreamstime.com Turban, E., McLean, E., & Wetherbe, J. (2004). Information technology for management (4th ed.). New York, NY: Wiley. BBA 3826, Managerial Decision Making 6
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DECISION MAKING
Name
Course
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Introduction
 In management, it is essential to make the right decision at the right time. The firm’s
operations are dependent on the logical decision made by the management.
 Managers need to critically analyze all business aspects before making a decision.
 Managerial decision making follows eight main steps. These are gathering information,
identifying the purpose, judging the alternatives, alternative evaluation, analyzing the choices,
brainstorming, identifying the best alternative, executing the decision and evaluating the
results (Graham, 2015).
 However this decision making steps is hinged on the main areas affecting decision making
which include: overcoming bias, awareness of boundaries and framing, motivation, emotions,
fairness and ethics, investments, negotiations and the six issues in negotiator cognition.
 This paper analyzes the best practices to be used in rational decision making in each one of
these areas and explains how I can use what I have learned to improve managerial decision
making

Overcoming bias
 Bias affects the decision making process by inclining one’s psychological thinking towards favoring
an alternative choice over others. The decisions are made in an illogical way and often lead to reduced
profits, communication and motivation in a business.
 Confirmation bias occurs in statistics based decisions and is the most harmful bias to a business.
 Overconfidence bias is made when a manager places too much faith in his/her own opinions and
knowledge usually leading to bad decisions.
 Anchoring bias is based on decisions made in the past. When a manager makes a good decision in the
past, they will likely make the same decision when faced with a similar circumstance. They tend to be
resistant to the new choices and options available (Bartram, 2014).

 Removing bias from the process is often hard because the bias is rooted in the cognitive function of
management which makes it difficult to change his/her belief regarding the choice
 The best practice for removing bias from the process is by using the debasing strategy.

Overcoming bias
 The strategy is a four step process that first warns about the
possible bias in the decision making process, identifies and
explains the bias, provides feedback and training programs
which improve judgmen...


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