Principles of Management

L e s s o n Wase 2004-05
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Decision Making

Lesson - 6
1

RATIONAL DECISION MAKING

Decision Making: Selection of a course of action from various
Alternatives -An important function of planning Rationality in Decision Making: Follows steps of Planning:
Premising, Alternatives, Evaluating, Selecting

Limited or Bounded Rationality:

Taking decisions: With limitations in Time, Information etc. May lead to a Play safe path.

Principle of Limiting Factor:

Critical road blocks in the path to achieve the goal,

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EVALUATION OF ALTERNATIVES
Quantitative Factors (Numerical) Qualitative Factors ( Intangible Factors ) Marginal Analysis

Cost Effective Analysis

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SELECTING AN ALTERNATIVE
Experience or Relying on Past Data
Monsoon, Stock Prices, Salary Hikes

Experimentation or No Data scenario

Launch of new product, New businesses

Research and Analysis

Designing an aircraft, Medical science

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DECISIONS
Programmed Decisions
Go by the rule book Lathe operator, Car mechanics, Telephone operators

Non-Programmed Decisions
Unstructured, novel and ill-defined situations new product, new design, new market segment

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DECISIONS IN AN ORGANIZATION
Unstructured Non-Programmed

Hierarchy
Structured Programmed

PROBLEMS
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DECISIONS 6

DECISIONS
Under CERTAINTITY, UNCERTAINTY, RISK

Certainty: Known outcome

Uncertainty: Lack of information, Result?

Risk: Incomplete Factual information available,
Most decision involve many variables Ex. New Business
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Creativity and Innovation

Difference Between Creativity & Innovation.
Creativity: Is the ability and power to develop new ideas

Innovation: Is using these ideas differently

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Creativity and Innovation

Four Phases of Creativity:
- Unconscious Scanning:

- Intuition:
- Insight:

Connecting the conscious to the unconscious Hard work , Flash Test, experiment, criticise

- Logical Formulation:

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Creativity and Innovation

Right
Creative, Spontaneous Unconscious Conscious

Left
Logical/Analytical/ Systematic

Intuition

Contradictory Concepts may Result

Problem
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10

Creativity
Process of Brainstorming Four Golden Rules of Brainstorming: - 1. No ideas are ever to be criticised - 2. The more radical the idea, the better - 3. The quantity of idea production is stressed - 4. The improvement of ideas is encouraged.
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End of Lesson - 6

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