Organization
decision making is formally defined as the process of identifying and solving
problems. The process contains two major stages. The problem identification
stage is where information about environmental and oganizational conditions is
monitored to determine if performance is satisfactory and to diagnose the cause
of shortcomings. The problem solution stage is where alternative courses of
action are considered and one alternative is selected and implemented. At
Quaker Oats, problem identification accourred when Bill Smithburg realized the
company’s small share of the pet food market was not adequate to keep up with larger competitors.
Implementation
accourred with the actual acquisition of Gaines and the follow-up decisions to
integrate the product lines.
Organizational
decisions vary in complexity and can be categorized as programmed or
nonprogrammed. Programmed decisions are repetitive and well defined, and
procedures exist for resolving the problem. They are well structured because
criteria of performance are normally clear, good information is available about
current performance, alternatives are easily specified, and there is relative
certainty that the chosen alternative will be successful. Examples of
programmed decisions include decision rules for when to replace an office copy
machine, when to reimburse managers for travel expenses, or whether an
applicant has sufficient qualifications for an assembly line job.
Nonprogrammed
decisions are novel and poorly defined, and no procedure exist for solving
them. They are used when an organization has not seen a problem before and may
not know how to respond, as happened when Quaker Oats needed larger market
share in the pet food business. Information about the problem is hard to
obtain. Clear-cut decision criteria do not exist. Alternatives are fuzzy.
Uncertainty exists about whether a proposed solution will solve the problem.
Asquiring Anderson Clayton to obtain Gaines was clearly a nonprogrammed
decision, so Bill Smithburg and Quaker executives studied the problem, trying
to analyze its complexities. Typically, very few alternatives can be developed
for a nonprogrammed decision, so a single decision is custom-tailored to the
problem, which was true of the Gaines acquisition.
