SUMMARY ON TOPIC 5 DECISION MAKING

Undoubtedly decisions are crucial in our lives, every time that we have a
problem and more than one possible solution we need select the best
alternative, in other words, make a decision. This decision can be simple, as
picking a dish in a restaurant or can be complex as deciding where to open a
new establishment. Actually in Management Theory, decision-making is deeply
studied because in an organization context decisions must to be made on a
regular basis, influencing the profitability and survival of the business.
In the lecture and on the reading we discussed mainly the decision making
process, the ways that managers make decisions, the decision making styles and
finally some usual decision-making errors.
First of all, its worthy highlight the eight steps process in which we make
decisions. Therefore, we primarily need to identify the problem, sometimes the
problem is clear others we need to pay attention to distinguish the symptom of
the problem (reduction in sales) to the actual problem (low quality products).
Then we must list criteria that influence the decision, for instance financial,
moral, psychological matters and then evaluate whether they are equally
important or not. The next step, the development and analysis of alternatives, is
particularly important and involves a lot of research. Finally we need to select an
implement the alternative and then evaluate if the choice was a good one or it
its needed restart the decision making process.
As said before, decisions are really important in a manager life, in fact
everything a manager does involves making decisions: planning, leading,
organizing and controlling. We can state that managers try to make rational
decisions because they intend to maximize the likelihood of achieving the
organizations goal, however in some contexts they operate under assumptions
of bounded rationality. In this case managers achieve an option that is good
enough not necessary the best one. Also, intuition plays an important role in the
decision-making process as past experience, feelings, subconscious mind and so
on.
Although all managers make decisions, they face different types of
problems. Usually lower levels managers deal with structured problems, in other
words, repetitive and familiar issues that have programmed decisions, following
procedures, rules and policies. On the other hand, upper level managers cope
with unstructured problems, which are more challenging and require creativity
and judgment.
When we need to make a decision, research and gather information are
crucial, however sometimes the data is not available and then its needed to
perform a choice in uncertainly or risk context, evaluating probabilities and
scenarios.
Regardless of the amount of information available managers cope with
decisions in two different ways. The thinking style reflects two spheres; the first
is whether the source of information is external (data, facts) or internal (feelings,
intuition) the second one is how you process the information, at a rational and
logical way or intuitive and creative. Based on these criteria, if someone rely on
external information and process it in a rational way it said that this person has a
linear thinking style, analogously the non-linear thinking style is characterized by
a preference for internal source of information and processing it with intuition.
As in organization environment decisions are made quite often, sometimes
managers use rules of thumb to make the process easier, however these can

lead several biases and errors, for instance, overconfidence, anchoring effect and
seek immediate gratification.
Once all these were presented we can reinforce the fact that decision is
important in our society and it is made in several different ways depending on
each ones personality and information that are available. Finally, as we live in a
globalized world, we also need to acknowledge cultural differences that influence
how we make choices and understand that multiple perspectives on the decision
are very valuable.