Page 83 - DMGT402_MANAGEMENT_PRACTICES_AND_ORGANIZATIONAL_BEHAVIOUR

Management Practices and Organisational Behaviour

Notes We set out the tree initially by working from left to right, the decision fork is to invest, or go for
Mutual Fund A or B. There are then chance forks where probabilities are involved. When we
have set out the tree we can prune it back by cutting off the branches which yield the worst
results. This leaves us with the final expected value 17.20 cr which we put as our final decision.
Hence the most feasible decision is to make the investment in Mutual Fund B.

3.13 Individual and Group Decision-making

Till now whatever we have discussed pertains to individual decision making but the major
decisions in organizations are most often made by more than one person. Managers use groups
to make decisions for the following reasons.
1. Synergy: Synergy is a positive force in groups that occurs when group members stimulate
new solutions to problems through the process of mutual influence and encouragement in
the group.
2. Commitment: Another reason for using a group is to gain commitment to a decision.

3. Knowledge and Experience: Groups also bring more knowledge and experience to the
problem-solving situation.

Advantages of Group Decision-making

Compared with individual decision making, group decision making has several advantages.
They are:

1. More knowledge and information through the pooling of group member resources;
2. Increased acceptance of, and commitment to, the decision, because the members had a
voice in it;

3. Greater understanding of the decision, because members were involved in the various
stages of the decision process.
4. An increased number of alternatives can be developed.

5. Members develop knowledge and skills for future use.

Disadvantages of Group Decision-making

Despite its advantages, group decision making also has several disadvantages when contrasted
with individual decision making. They are:
1. Pressure within the group to conform and fit in;

2. Domination of the group by one forceful member or a dominant clique, who may 'ramrod'
the decision;
3. It is usually more time consuming, because a group is slower than an individual in making
a decision.
4. Disagreements may delay decisions and cause hard feelings.
5. Groupthink may cause members to overemphasize gaining agreement.

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