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27 Cards in this Set

  • Front
  • Back

Classical Model: Rational Decision Making

A decision making model based on the

assumption that managers should make logical decisions that will be in the organisation's best interest

Classical Model: Assumption 1

The decision maker operates to accomplish goals that are known and agreed upon

Classical Model: Assumption 2

The decision maker strives for conditions of

certainty, gathering complete information

Classical Model: Assumption 3

Criteria for evaluating alternatives are known

Classical Model: Assumption 4

The decision maker is rational and uses logic to assign values, order preferences, evaluate

alternatives and make the decision that will

maximize the attainment of organisational goals

Wha is normative? What model is considered normative?

An approach that defines how decision maker should make decisions & provides guidelines for reaching an ideal outcome for the organisation


Administrative Model

A decision making model that describes how managers actually make decisions in situations characterised by non-programmed decisions,

uncertainty and doubt

Recognises human & environmental limitations

What is descriptive? What model is


An approach that describes how managers

actually make decisions rather than how they



Concepts of the Administrative Model

1. Bounded Rationality

2. Satisficing

Bounded Rationality

The concept that people have the time and

cognitive ability to process only a limited amount of information on which to base decisions


To chose the first solution alternative that

statisfies minimal decision criteria regardless of whether better solutions are presumed to exist

Administrative Model also...

Uses incomplete & imperfect information

What is intuition? What model uses intuition?

Immediate understanding of decision situation based on the past experience but without a

conscious thought

Political Model

Useful for making non-programmed decisions when conditions are uncertain, information is limited and there is disagreement among

managers about course of action to take

What is coalition? What model uses coalition?

An informal alliance among managers who support a specific goal


Political Model: Assumption 1

Organisations are madde up of groups with

diverse interests, goals and values

Political Model: Assumption 2

Information is not clear and incomplete

Political Model: Assumption 3

Managers don't have the time, resources or mental capacity to identify all dimensions of the problem and process all relevant information

Political Model: Assumption 4

Managers engage in the push & pull of debate to decide goals and discuss alternatives

Decision-making: Step 1

Recognition of decision requirement

-Problem, where organisational

accomplishments have failed to meet

established goals

-Opportunity, where managers see potential

organisational accomplishments that exceed current goals

Decision-making: Step 2

Diagnosis and analysis of causes

Analyse causal factors associated with the

decision making

Decision-making: Step 3

Development of alternatives

Generate possible alternative solutions that will respond to the needs of the situation and

correct the underlying causes

Decision-making: Step 4

Selection of desired alternative

The best is the one in which the solution best fits the overall goals & values of the organisation & achieves the desired results using the fewest


What is risk propensity? What step uses it?

The willingness to undertake risk with the

opportunity of gaining an increased pay-off

Step 4

Decision-making: Step 5

Involves the use of managerial, administrative and persuasive abilities to ensure that the

chosen alternative is carried out

Decision-making: Step 6

Decision maker gather information that tells them how well the decision was implemented and if it was effective

Why do managers make bad decisions? (6)

-Influenced by initial impressions

-Justifying past decisions

-See what you want to see

-Continuing the status quo

-Being influenced by problem facing