MGMT EXAM 2

-No, it’s a part of all functions
-Most closely associated w/ planning

-To accomplish goals efficiently

-P -- specific procedures developed 4 repetitive & routine problems; 1st-line; rule
or standard operating procedure used in making the decision; different; complex
-N -- specific to mgt problems that are novel (new) & unique [different & hard to
understand]; top managers; if you have to think about it

-Programmed makes us more efficient
-As you go up management pyramid, non programmed decision are increased

-Managers know all available alternatives & the outcomes associated w/ each; 100%
probability

-Lack of certainty regarding outcomes of various alternatives, but an awareness of
probabilities associated w/ their occurrence; alternatives are known, but outcomes are in
doubt

-Don’t know alternatives, their potential outcomes, or the probability of the outcomes
occurrence
-Worst case: know nothing
-Best case: Know alternatives but not outcomes

-Most common = risk...probabilities 0-100%
-Least common = certainty…100% probabilities
-Most difficult = uncertainty…no probabilities

-Accurately determining the probabilities associated w/ each alternative

-Programmed = certainty & risk
-Non-programmed = risk & uncertainty
** Every programmed decision was @ one point or another & non-programmed
decision!

-Decisions are made under conditions of certainty
(a) Managers seek to maximize benefits {or minimize costs}
(b) Managers are completely rational
-You always select the best alternative
-A prescriptive model b/c it’s what you should do!

-Certainty

-Decisions are made under “bounded rationality” AND satisficing rather than maximizing
-How decisions are actually made

-You try to be rational but You don’t know everything
-Mangers are unable to grasp the full complexity of managerial decisions b/c their rationality
is bounded by limited mental capacity (7+/- 2), emotional state, & unforseeability of future
events (probabilities are < 1, less than perfect)

-Managers select the 1st alternative that meets a minimally acceptable standard rather than
going through & evaluating all the alternatives & selecting the best one; can lead to a
maximizing situation, but must get lucky & you wouldn’t know if occurred
-Satisficing is a heuristic…pick the 1st shortcut…get a good decision w/o a lot of time &
effort
-Satisficing you consider a limited # of alternatives; Maximizing you consider ALL
alternatives

-A labor saving device, a short cut, a rule of thumb
-Advantages: (a) time savings & (b) they may produce more good decisions than
bad decisions (makes up efficient and effective)
-Disadvantages: We adopt heuristics often w/o being aware of them; they implicitly guide
our judgment which can be a major drawback if we over rely on them b/c they can lead to
errors, sometimes severe errors; Heuristics @ times can lead us to faulty conclusions.
-When heuristics lead to errors in judgment, they are called biases.

-Used when managers assess the frequency of an event by the degree to which those
instances of that event are easily recalled in memory; something easily recalled has to be
frequent, not easily recalled it’s infrequent
-If something is rare, but emotional you will remember it easier; rare, but recent more
easily remembered…overestimate frequency of an event(anything causes an event to be
remembered…easily imagined, vivid, emotional, specific)
- Underestimate frequency (can’t remember an event)..unemotional, bland, in the distant past,

difficult to imagine, vague

-Reflects the tendency of managers to assess the likelihood of an occurrence by matching it
w/ a preexisting category (i.e. stereotype); where managers use stereotypes (categories) in
making judgments
-Causes us to miss opportunities

-Most like risk, but also uncertainty

-The decision maker select a favorite early on in the evaluation of alternatives &
once this “implicit” favorite is chosen the rest of the alternatives are evaluated against it; the
decision maker distorts the information about the implicit favorite & the other alternatives so
that the positive features of the implicit favorite are highlighted
-This model assumes that the decision maker simply goes through the motions of generating
& evaluating more alternatives as a way to justify their initial choice (favorite)

-Uncertainty, decisions w/ little information {1st job; 1st car; 1st spouse}

-Designed to generate solutions to a problem, no criticism allowed;

(a) Criticism is prohibited
(b) “Freewheeling” is desired
(c) Quantity is wanted;
(d) Combine and improve on ideas

-No (e.g. especially when ideas are 1st expressed)
-It is very difficult to totally eliminate the evaluation of ideas when they are
generated…non-verbal communication & power differences!

-Fantasy & analogy

-Fantasy technique used to stimulate creativity
-To help individuals overcome internal inhibitions resulting from traditional ways
of perceiving & thinking
-If you think you’re like a superhero, it makes you more creative & you fantasize

-Facilitator = (helps generate solutions) structure the problem & helps lead the discussion
away from the traditional ways of thinking
-Technical support = (helps evaluate solutions) aid the group in the evaluation of the
feasibility of ideas

-As soon as you generate ideas, you gotta evaluate them!
-Evaluation is not separated from idea generation

-5 individuals working alone generate more ideas than the 5 individuals working as a team
-Group process decreases creativity

(a) It does not rely on free association of ideas
(b) It purposely restricts verbal interaction

-The negative aspect of the group process

(1) members are familiarized w/ a problem
***(2) Working silently & alone, members generate solutions
(3) members share their ideas one at a time, in a round-robin manner. {no one
dominates…improves quality & commitment}
(4) Members evaluate ideas in a round robin manner
***(5) Each group member votes privately by ranking the recorded ideas in order of
assessed importance. Vote twice
- 2 & 5 act as individuals rather than a group; vote privately rather than publicly

-1)Members never meet and 2)remain anonymous

-Delphi got his name from technological forecasting!!
-A structured approach to creating problem solving using a group of experts.
-Allows for no face-to-face interaction b/t members
-Experts are not brought together to discuss their ideas/views
-Experts remain anonymous to one another (members never meet either)
-Questionnaires are used to obtain:
a) the alternatives generated by the experts
b) the evaluation of the alternatives by the experts
c) the final vote on the alternatives

-Tries to eliminate the group processes in creative problem solving as much as
possible

-The design of the questionnaire can limit the results obtained
-It can be extremely time-consuming even more so than the other techniques

-Member interest & motivation may decline if too much time passes b/t steps

-Techniques useful as an aid in evaluating alternatives
-Require quantitative data
-They’re an aid for managerial decision-making; however, they cannot replace the
need for managers to think independently & to make judgments
-Only as good as the data they’re based on
-Most applicable to risk (1st-line)
-Not applicable to decisions made under uncertainty (top managers)

-When we make a decision, we look for a info that tells us we made a good decision
-Most ppl demonstrate the tendency to look for only confirming evidence rather
than disconfirming evidence after they have made a decision
-Stereotypes of groups persist b/c of this bias

-It is the mistaken belief that an event that has not occurred for some time is
likely to occur in the near future {after 10 bad hands of poker, the poker player
believes that he/she is due for a good hand}

-When ppl make decisions they often ignore statistical/relevant data & make
their judgments using qualitative, descriptive data (i.e. vivid case data or
personal experience data)

-The bigger the sample, the more accurate the data is
-The type of thinking when individuals tend to ignore the implications of sample
size & tend to attribute greater stability to results obtained from small samples
than is reasonable
-Ppl often ignore the judgment advice of others when choosing b/t 2 objects &
substitute their own initial impression as the sole basis for the choice b/c they
don’t recognize the important of large numbers

-Positively framed– What you can gain; risk-averse (avoidant)
-Negatively framed– What you can lose; risk-seeking
-Research has shown that positively framed negotiators were more frequent & had
more successful contract than negatively framed

-GDM = Individual Efforts/Contributions + Assembly Effect - Process Losses
-Individual Efforts/Assembly effect: Advantages
-Process Loss: Disadvantage

-Assembly Effect - the positive consequences of bringing a group together such as
synergy, more information, diverse viewpoints, checking errors
-Process Losses - the negative consequences of bringing a group together such as
interpersonal conflict, domination by a few, more time & expense

-5 or 7 people make the best decisions; odd-numbered

-More information available to help solve the problem; Evaluation is superior b/c
have wide range of viewpoints; Individuals who participate in decisions are more satisfied w/
the decision & are more likely to support it; Individuals get a better
understanding of the
decision that is made & it is easier for them to communicate
the decision to their
subordinates; Fulfills need for personal growth for some employees; Helps individuals learn new
skills; Perceived as being more fair than
decisions made by sole individuals; Participation in
decision making reduces
stress by lowering role ambiguity.

-Considered process losses of the negatives that come from GDM.
-Takes longer than individual decision making so costlier; indecisiveness
-Domination by a few powerful members or by a leader can negate the many
virtues of
group processes; Leveling effect may occur; Free-riders are a
problem in groups; With
corporate power & personal pride @ stake, disagreements over important matters that occur in
groups can often lead to bad feelings, ill-will, & destructive conflict b/c group members; Escalation
of
demands (ppl may want to participate in things that are inappropriate for them to participate
in); Social motives may prevail over hard-headed task orientation.

-The compromise that takes place in GDM that can lower the quality of the
Decision but increases the acceptance (It’s a process loss AND assembly effect)

-When time is limited/short

-When decision maker has all relevant knowledge & expertise to solve problem
-When subordinate acceptance of the decision is not an issue
-When subordinates that would make up the group do not get along well
-When subordinates do not share the organization’s goals

-Group’s decisions will tend to be more accurate; Better than the average individual in the
group; Seldom better than the performance of the best individual.
-Best member, group, average individual

-long term = group better
-short term = individual better