Management is the practice of consciously and continually shaping formal organization and the art of decision making is central to doing that. Decision making – identifying and selecting a course of action to deal with a specific problem or take advantages of an opportunity is an important pat of every manager’s job. We all make decisions of course. What sets the practice of management apart is the systematic, specialized attention that managers give to decision making.
We will describe the traditional process of decision making, the factors that go into decision making and some of the difficulties that can arise in selecting a course of organizational action. We will conclude with an overview of two emerging approaches to decision making game theory and chaos theory.
Time and human relationships are crucial elements in the process of making decision. Decision making connects the organization’s present circumstances to actions that will take the organization into the future. Decision making also draws on the past; past experiences positive and negative play a big part in determining which choices managers see as feasible or desirable. Objectives of the future are thus based in part of past experiences. For instances declining sales of Nike products helped turn managers’ attention to basketball and Michael Jordan.
In some cultures, human relationships take on even more importance in deciding about business dealings than they do in the United States. For example, the Chinese believe that even the most comprehensive plan will always involve unforeseen problems. To solve these one must rely on a network of relationships. Therefore, the Chinese are more interested in a long standing and sincere commitment to working together than in apparently perfect contracts that appear to contain no loopholes. The Chinese believe that a signed contract marks the end of the first stage in business dealings, not a final agreement. With his or her signature, a signatory to any contract automatically establishes himself or herself as a friend with a responsibility to help maintain a win-win agreement if difficulties arise. It is considered not only a business necessity but also a matter of reputation and face.
A manager of course does not make decisions in isolation. While he or she is making decisions, other decision are being made by people both within the same organization and outside at other businesses, government offices, and social organization. When managers project possible consequences of their own decisions, they must be conscious that other people’s decisions may conflict or interact with their own. Decision making, in short, is a process that managers conduct in relationships with other decision makers. For instance, Knight and his colleagues at Nike were making their decisions at the same time that Michael Jordan (a businessperson in his own right) was making his own business decisions.
Decision making deals with a problem. A problem arises when an actual state of affairs differs from a desired state of affairs. In many cases, a problem may be an opportunity in disguise. The problem of customer complaints about slow delivery of orders could, for example also be seen as an opportunity to redesign production processes and customer service. Because managers face many problems and opportunities we will begin our discussion by looking at the factors that help effective managers recognize both problems ad opportunities. Then we will look at the circumstances that lead managers to act.
For 35 African American farmers, members of a Georgia small farm association, recognizing a problem was the first step to identifying an opportunity. With most of their soybeans sold as animal feed for a modest profit, the farmers were jut scraping by. Thinking globally, the farmers contacted 84 year old long time Atlanta resident Seiho Tajiri. He agreed that if they were to grow a better grade of soybean, there could be an opportunity for time in his native Japan, which produces only a small portion of the soybeans it needs. With Tajiri’s assistance, a group of the farmers traveled to Japan in 1993 and negotiated an order for 200 tons of soybeans from Takano Foods, the largest maker of natto, a fermented soybean dish that is a favorite of the Japanese. Now the farmers are looking towards increasing their global trade opportunities. They need the soybeans and farmers need the market.