The Decision Theory of management led by Herbart Simon looks management process as a decision making process. Decisions are made through rationale choice among different altenatives available. It is a choince making activity and choice determines our activity. Decision theories have expanded their area of theory building in the decision making process to the study of decisions, decision-maker, and the enviroment of decision-maker.
Whatever a manager does, he does through making decisions. Hence, decision making is central to managing. Simon developed the administrative model of decision making which describes how decisions are actually made. Managers are often faced with uncertainity and nonprogrammed decision making situation. Simon's decision model is based on two concepts (1) bounded rationality and (2) satisficing. The manager who seeks to take logical and rationale approach to decision can follow the following six steps:
1. Recognize and define the decision situation
2. Identify appropriate alternatives
3. Evaluate each alternative
4. Select the best alternative
5. Implement the alternative, and
6. Evaluate the results and follow up.
Thursday, March 18, 2010
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