Management Exam #2: Ch. 5-9

Coalition building - 5 key take aways

-alliance of people who support your goals -can influence others to accept ideas -focus work toward ideas & goals -helps achieve "buy in" -assists with barriers proactively

Mechanisms to help reduce bias-related decisions errors AKA INNOVATIVE DECISION MAKING:

-brainstorming -hard evidence -rigorous debate -avoid groupthink -know when to bail -do a postmortem

Planning's limitations

-can create false sense of certainty -may cause rigidity in a turbulent environ. -can get in way of intuition & creativity

Decisions differ according to the amount of (4):

-certainty -risk -uncertainty -ambiguity

Drawbacks of poor implementation

-challenges of execution -importance of alignment

1. Develop the plan

-define mission, vision -set goals

3. Plan operations

-define operational goals & plans -select measures & targets -set stretch goals -crisis planning

2. Translate the plan

-define tactical plans & objectives -develop a strategy map -define contingency plans & scenarios -identify intelligence teams

Normative

-defines "how" a decision maker SHOULD make a decision -provides guidelines on how to reach an ideal outcome -value in ability to help decision makers be more rational

3. Operational goals

-departments, work groups, individual efforts -precise, measurable -"operational" (definition)

3. Operational planning

-direct employees & resources -guide toward efficient & effective performance -includes planning approaches to execute

Fun facts of planning:

-everything else stems from planning -planning cannot read an uncertain future -plans should grow & change to meet conditions -without plans & goals organizations flounder

Administrative model assumptions:

-goals are often vague -rational procedures are not always used -managers' searches for alternatives are limited -most managers settle for satisficing -intuition

2. Tactical

-helps execute major strategic plans -focused on a specific part of the strategy -help focus on action steps (operations)

5. Monitor & Learn

-hold planning reviews -hold operational reviews

Political model is most useful for:

-non-programmed decisions -decisions when conditions are uncertain -decisions when info is ambiguous

Political model assumptions

-organizations are made up of groups with diverse interests, goals, & values -info is ambiguous & incomplete -lack of time, resources, or mental capacity to process all info regarding a problem -decisions are the result of bargaining & discussion among coalition members

Classical model is most valuable when applied to:

-programmed decisions -decisions characterized by certainty or risk

Planning's benefits

-provide motivation & commitment -guide resource allocation -channel to action -set a standard of performance

Characteristics of effective goals (5):

1. Are specific & measurable 2. Have a defined time period 3. Cover key result areas 4. Are challenging but realistic 5. Are linked to rewards

Decision making models (3):

1. Classical 2. Administrative 3. Political (C.A.P.)

Planning for the unknown

1. Contingency planning 2. Building scenarios 3. Crisis planning

The organizational planning process

1. Develop the plan 2. Translate the plan 3. Plan operations 4. Execute the plan 5. Monitor & learn

Porter's competitive strategies:

1. Differentiation 2. Cost leadership 3. Focused differentiation 4. Focused cost leadership

Levels of Goals & Plans

1. Mission statement 2. Strategic goals/plans 3. Tactical goals/plans 4. Operational goals/plans

Types of decisions:

1. Programmed 2. Non-programmed

Decision-making steps (6):

1. Recognition of decision requirements 2. Diagnosis & analysis of alternatives 3. Development of alternatives 4. Selection of desired alternatives 5. Implementation of chosen alternative 6. Evaluation & feedback

The 3 levels of goal setting in an organization

1. Strategic 2. Tactical 3. Operational (S.T.O.)

SWOT analysis

1. Strengths (internal) 2. Weaknesses (internal) 3. Opportunities (external) 4. Threats (external)

The 3 key steps to coalition building

1. TALK...customers & managers 2. ADDRESS...conflicts head on 3. PROMOTE...cooperation

Reasons behind bad decisions (6):

1. being influenced by initial impressions 2. justifying past decisions 3. seeing what you want to see 4. perpetuating the status quo 5. being influenced by emotions/problem facing 6. overconfidence

Selecting a decision making model:

1. manager's personal preference 2. decision programmed or non-programmed? 3. involves risk, uncertainty, or ambiguity?

The 2 major crisis planning stages

1. prevention (build relationships; detect signals from the environment) 2. preparation (designate crisis management team; create detailed crisis plan; set up effective communication system)

The 4 elements of competitive advantage:

1. target customers 2. achieve synergy 3. create value 4. exploit/show core competence

1. Classical model (ideal, rational-normative)

BASED ON ECONOMIC ASSUMPTIONS that managers should make logical decisions that are economically sensible & in the organization's best economic interest; how you should do it (ideal) -considered normative -relevant info is available -probabilities can be calculated -accomplish established goals, problem is defined -strives for info & certainty, alternatives evaluated -alternatives are unknown, select one with maximum benefit -which one is best time-wise (only so much time to make a decision)

1. Contingency planning (unexpected situations)

Identifies important factors in the environment & defines a range of alternative responses to be taken in the case of emergencies, setbacks, or unexpected conditions

2. Administrative model (descriptive)

Includes the concepts of bounded rationality & satisficing & describes how managers make decisions in situations that are characterized by uncertainty & ambiguity; how it's ACTUALLY done -recognize human & environmental limitations -bounded rationality (bounded limit) -satisficing

BCG matrix

MARKET SHARE, BUSINESS GROWTH RATE -stars (high, high) -question marks (low, high) -cash cows (high, low) -dogs (low, low)

Programmed decision characteristics

Made in response to a situation that has occurred often enough to enable managers to develop decision rules that can be applied in the future -recurring situations -rules can be developed -subordinates can follow

Non-programmed decision characteristics

Made in response to new situations with no experience -unique situations -poorly defined -largely unstructured -important consequences -uncertain/complex

2. Building scenarios

Managers look at trends & discontinuities & imagine possible alternative futures to build a framework within which unexpected future events can be managed; forecasting technique to look at current trends & discontinuities & visualize future possibilities

Goal setting in an organization

Mission: the reason for existence Strategic goals: broad statements about future Plans: define action steps

3. Political model

RESEMBLES THE REAL ENVIRONMENT WHERE DECISIONS ARE MADE; takes into consideration that many decisions require debate, discussion, and coalition building -decisions involve managers with diverse interests -managers must engage in coalition building -informal alliance to support specific goals -without coalition, powerful groups can derail the decision-making process

4. Execute the plan

Use: -management by objectives (MBO) -performance dashboards -single use plans -decentralized responsibility

Plan

a blueprint specifying resource allocations, schedules, tasks, & other actions necessary for attaining goals

Decision

a choice made from available alternatives

Ambiguity (& conflict)

a condition in which the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, & info about outcomes is unavailable -making a decision in difficult situations -the goals and problems are unclear

Risk

a decision has clear-cut goals & good info is available, but the future outcomes associated with each alternative are subject to CHANCE

Goal

a desired future circumstance or condition that the organization wants to realize

Engage in rigorous debate: Devil's advocate

a person who is assigned the role of challenging the assumptions & assertions by the group to prevent premature consensus

Certainty

a situation in which all the information the decision maker needs is fully AVAILABLE

Descriptive (administrative model)

an approach that describes how managers ACTUALLY make decisions, rather than how they should make decisions according to a theoretical model

Coalition

an informal alliance among managers who support a specific goal or solution

Intuition

aspect of administrative decision; quick comprehension of decision situation based on practice & past experience without conscious thought

Quasi-rationality

combines intuitive & analytical thought

Satisficing

decision makers choose the first alternative that satisfies minimal decision criteria, regardless of whether better solutions are presumed to exist

1. Strategic management

decisions & actions used to formulate & execute strategies that will provide competitively superior fit between the organization and its environment to achieve organizational goals

Organization structure

defined as the framework in which the organization defines how tasks are divided, resources are deployed, and departments coordinated

Decision styles (personal-4):

differences among people with respect to how they perceive problems & make choices 1. directive 2. analytical 3. conceptual 4. behavioral (DAC-B)

Synergy

exists when the organization's parts interact to produce a JOINT EFFECT that is greater than the sum of the parts acting alone

Use hard evidence: Evidence-based decision making

founded on a commitment to examining potential biases, seeking & examining evidence with rigor, & making informed & intelligent decisions base d on the best available facts & evidence

Engage in rigorous debate: Point-counterpoint

group decision making technique that breaks people into subgroups & assigns them to express competing points of view regarding the decision

Wicked decisions

involve CONFLICT over goals & have changing circumstances, fuzzy info, & unclear links: often there is "no right" answer

Operational goals/plans (bottom of pyramid)

lower management (departments, individuals) -specify the action step toward achieving operational goals & support tactical activities

2. Cost leadership strategy

managers aggressively seek efficient facilities, cut costs, & use tight cost controls to be more efficient than others in the industry

1. Differentiation strategy

managers seek to distinguish the organization's products & services from those of others in the industry

3. Focus strategy

managers use either a differentiation or a cost leadership approach, but they concentrate on a specific regional market or buyer group

Risk propensity (4-d.m. steps)

managers willingness to undertake risk with the opportunity of gaining an increased payoff

Decentralized planning

means that top executives or planning experts work with managers in major divisions or departments to develop their own goals & plans

Key performance indicators (KPIs)

measures that reflect how well lower-level goals are helping the organization progress toward attaining its strategic goal

Bargaining

meet in the middle on a decision so everyone is happy in some way; a resulted decision from the political model

Management by objectives (MBO)

method whereby managers & employees define goals for every department, project, & person & use them to monitor subsequent performance; MBO includes the steps of setting goals, developing action plans, reviewing progress, and appraising performance

Tactical plans (third)

middle management (major divisions, functions) -designed to help execute major strategic plans & to accomplish a specific part of the company's strategy

Tactical goals (third)

middle management (major divisions, functions) -outcomes that major divisions & departments must achieve for the organization to reach its overall goals

Planning (as function of management)

most fundamental and controversial function of management -the act of determining goals and defining the means to achieve them

Uncertainty

occurs when managers know which goals they want to achieve, but info about alternatives & future events is incomplete (DEPENDS on situation)

Bounded rationality or bounded limit

people have time & cognitive ability to process only a limited amount of info on which to base decisions; people's limits or boundaries on how rational they can be

Strategy

plan of action that describes resource allocation & activities for dealing with the environment, achieving a competitive advantage, and attaining goals

Certainty, Uncertainty, & Risk are differences in:

programmed & non-programmed decision

Management by means (MBM)

recent approach that focuses people on the methods & processes used to attain results, rather than on the results themselves

Know when to bail: Escalating commitment

refers to continuing to invest time & money in a decision despite evidence that is failing

Avoid groupthink: Groupthink

refers to the tendency of people in groups to suppress contrary opinions in a desire for harmony

Competitive advantage

refers to what sets the organization apart from others & provides it with a distinctive edge in the marketplace

Strategic goals (second)

senior management (organization as a whole) -broad statements of where the organization wants to be in the future & pertain to the organization as a whole

Strategic plans (second)

senior management (organization as a whole) -the actions steps by which an organization intends to attain strategic goals

Opportunity (1-d.m. steps)

situation in which managers see potential organizational accomplishments that exceed current goals

Problem (1-d.m. steps)

situation in which organizational accomplishments have failed to meet established goals

Core competence

something that the organization does particularly well in comparison to others

Strategy formulation

stage of strategic management that includes the planning and decision making that lead to the establishment of the organization's goals & a specific strategic plan

Strategy execution

stage of strategic management that involves the use of managerial & organizational tools to direct resources toward achieving strategic outcomes

Do a postmortem: After-action review

technique adopted from U.S. army that is a disciplined procedure whereby managers review the results of decisions to evaluate what worked, what didn't, and how to do things better next time

Start with: Brainstorming

technique that uses a face-to-face group to spontaneously suggest a broad range of alternatives for making a decision (there's also electronic brainstorming)

Organizing

the development of organizations resources to achieve strategic goals

Decision making

the process of identifying problems & opportunities & then resolving them

Diagnosis (2-d.m. steps)

this step in which managers analyze underlying causal factors associated with the decision situation

Implementation (5-d.m. steps)

this step involves using managerial, administrative, and persuasive, abilities to translate the chosen alternative into action

Mission statement

top of the pyramid -broadly stated definition of the organization's basic business scope & operations that distinguishes it from similar types of organizations

3. Crisis planning/prevention

unexpected events that are sudden & devastating -activities managers undertake to precent crises from occurring and to detect warning signs of potential crises

Mission

where planning starts with an organization's purpose or reason for existence

Highly ambiguous circumstances can create:

wicked decisions