What Types of Decisions and Decision-Making Conditions Do Managers Face?

  1. 4-3 Describe the types of decisions and decision-making conditions managers face.

Laura Ipsen is a senior vice president and general manager at Smart Grid, a business unit of Cisco Systems, which is working on helping utility companies find ways to build open, interconnected systems. She describes her job as “like having to put together a 1,000-piece puzzle, but with no box top with the picture of what it looks like and with some pieces missing.”24 Decision making in that type of environment is quite different from decision making done by a manager of a local Gap store.

The types of problems managers face in decision-making situations often determine how it’s handled. In this section, we describe a categorization scheme for problems and types of decisions and then show how the type of decision making a manager uses should reflect the characteristics of the problem.

How Do Problems Differ?

Some problems are straightforward. The goal of the decision maker is clear, the problem familiar, and information about the problem easily defined and complete. Examples might include a supplier who is late with an important delivery, a customer who wants to return an Internet purchase, a TV news team that has to respond to an unexpected and fast-breaking event, or a university that must help a student who is applying for financial aid. Such situations are called structured problems.

Many situations faced by managers, however, are unstructured problems. They are new or unusual. Information about such problems is ambiguous or incomplete. Examples of unstructured problems include the decision to enter a new market segment, hire an architect to design a new office park, or merge two organizations. So, too, is the decision to invest in a new, unproven technology. For instance, when Takeshi Idezawa founded his mobile messaging app LINE, he faced a situation best described as an unstructured problem.25

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