MGMT 3820 - test #1

APPROACHES TO DECISION MAKING

Bounded Rationality. In spite of these limits to perfect rationality, managers are expected to be rational as they make decisions. Because the perfectly rational model of decision-making isn't realistic, managers tend to operate under assumptions of bounded rationality, which is decision-making behavior that is rational, but limited (bounded) by an individual's ability to process information. 1. Under bounded rationality, managers make satisficing decisions, in which they accept solutions that are "good enough." 2. Managers' decision-making may be strongly influenced by the organization's culture, internal politics, power considerations, and by a phenomenon called escalation of commitment—an increased commitment to a previous decision despite evidence that it may have been wrong.

WHAT'S YOUR GLOBAL PERSPECTIVE? - geocentric attitude

is a world-oriented view that focuses on using the best approaches and people from around the globe.

WHAT'S YOUR GLOBAL PERSPECTIVE? - ethnocentric attitude

is the parochialistic belief that the best work approaches and practices are those of the home country (the country in which the company's headquarters are located).

WHAT'S YOUR GLOBAL PERSPECTIVE? - polycentric attitude

is the view that the managers in the host country (the foreign country where the organization is doing business) know the best work approaches and practices for running their business.

WHAT'S YOUR GLOBAL PERSPECTIVE? - Parochialism

is viewing the world solely through your own perspectives, leading to an inability to recognize differences between people. Parochialism is an obstacle for many U.S. managers and stems from monolingualism.

Organizations share three common characteristics

(1) each has a distinct purpose (2) each is composed of people (3) each develops some deliberate structure so members can do their work.

First-line (or front-line) managers

(often called supervisors) are typically involved with producing the organization's products or servicing the organization's customers. These managers are located on the lowest level of management

The Omnipotent View.

. This maintains that managers are directly responsible for the success or failure of an organization. 1. This view of managers as being omnipotent is consistent with the stereotypical picture of the "take-charge" executive who can overcome any obstacle in carrying out the organization's objectives. 2. When organizations perform poorly, someone must be held accountable. According to the omnipotent view, that "someone" is the manager.

Decision-Making Conditions.

1. Certainty is a situation in which a manager can make accurate decisions because all outcomes are known. Few managerial decisions are made under the condition of certainty. 2. More common is the situation of risk, in which the decision-maker is able to estimate the likelihood of certain outcomes. Exhibit 2-8 shows an example of how a manager might make decisions using "expected value," considering the conditions of risk. 3. Uncertainty is a situation in which the decision-maker is not certain and cannot even make reasonable probability estimates concerning outcomes of alternatives. a. The choice of alternative is influenced by the limited amount of information available to the decision-maker. b. It's also influenced by the psychological orientation of the decision-maker. 1) An optimistic manager will follow a maximax choice, maximizing the maximum possible payoff. 2) A pessimistic manager will pursue a maximin choice, maximizing the minimum possible payoff. (see Exhibit 2-9) 3) The manager who desires to minimize the maximum "regret" will opt for a minimax choice.

WHAT DO MANAGERS DO?

1. Coordinating and overseeing the work of others is what distinguishes a managerial position from a non-managerial one. 2. Efficiency is getting the most output from the least amount of inputs in order to minimize resource costs. Efficiency is often referred to as "doing things right" (see Exhibit 1-3). 3. Effectiveness is completing activities so that organizational goals are attained and is often described as "doing the right things" (see Exhibit 1-3).

How Employees Learn Culture.

1. Culture is transmitted principally through stories, rituals, material symbols, and language. 2. Stories are one way that employees learn the culture. These stories typically involve a narrative of significant events or people. 3. Rituals are repetitive sequences of activities that express and reinforce the key values of the organization, which goals are most important, and which people are important or expendable. 4. The use of material symbols and artifacts is another way in which employees learn the culture, learn the degree of equality desired by top management, discover which employees are most important, and learn the kinds of behavior that are expected and appropriate. 5. Language is often used to identify members of a culture. Learning this language indicates members' willingness to accept and preserve the culture. This special lingo acts as a common denominator to unite members of a particular culture

external environment - The Demographic Environment.

1. Demographic conditions, including physical characteristics of a population (e.g., gender, age, level of education, geographic location, income, composition of family) can change, and managers must adapt to these changes. Common terms used to describe demographic groups include Baby Boomers, Gen Y, and PostMillennials 2. Baby Boomers. Born between 1946 and 1964, the sheer numbers of people in that cohort means they've significantly affected every aspect of the external environment 3. Gen Y (or the "Millennials"). Born between 1978 and 1994, this age group is also large in number and making its imprint on external environmental conditions from technology to clothing styles to work attitudes. 4. Post-Millennials. The youngest identified age group has also been called the iGeneration, primarily because they've grown up with technology that customizes everything to the individual.

CURRENT ISSUES IN ORGANIZATIONAL CULTURE - Creating a Sustainability Culture.

1. Many companies integrate corporate social responsibility into the organization's overall culture. 2. Rituals can be used to create and maintain sustainability cultures. Another way to develop a sustainability culture is through rewards.

Strong Culture

1. Strong cultures are found in organizations where key values are intensely held and widely shared. 2. Whether a company's culture is strong, weak, or somewhere in between depends on organizational factors such as size, age, employee turnover rate, and intensity of original culture. 3. A culture has increasing impact on what managers do as the culture becomes stronger. 4. Most organizations have moderate-to-strong cultures. In these organizations, high agreement exists about what is important and what defines "good" employee behavior, for example. 5. Studies of organizational culture have yielded various results. One study found that employees in firms with strong cultures were more committed to their firm than were employees in firms with weak cultures. Organizations with strong cultures also used their recruitment efforts and socialization practices to build employee commitment. An increasing body of research suggests that strong cultures are associated with high organizational performance.

MANAGING IN A GLOBAL ENVIRONMENT - Global Management in Today's World.

1. The Challenge of Openness. As companies compete in the international arena, the openness that is necessary to conduct business successfully in a global environment poses great challenges. a. The increased threat of terrorism, economic interdependence of trading countries, and significant cultural differences create a complicated environment in which to manage. b. Successful global managers need to have great sensitivity and understanding. c. Managers must adjust leadership styles and management approaches to accommodate culturally diverse views. 2. Challenges of Maintaining a Global Workforce. As more businesses go global, managers have a greater need to understand the global workforce. a. Cultural Intelligence encompasses three main areas: knowledge of the culture, mindfulness (the ability to pay attention to signals and reactions across cultural situations), and behavioral skills. b. A Global Mindset allows leaders to be effective in cross - cultural environments and includes three elements: intellectual capital, psychological capital, and social capital (see Exhibit 4-7).

Regional Trading Alliances.

1. The European Union (EU) is a union of 28 European nations created as a unified economic and trade entity (see Exhibit 4-1). Three more countries (will be gaining membership soon). a. The primary motivation for the creation of the EU in February 1992 was to allow member nations to reassert their position against the industrial strength of the United States and Japan. Currently its membership covers a base of more than half a billion people and 16% of the world's global exports and imports. b. In 2016, citizens of the United Kingdom voted to remove themselves from the EU and revert to being an independent entity. c. Eighteen of the 28 member states of the EU have agreed to adopt the common currency of the EU, the euro. Denmark, the United Kingdom, and Sweden have opted out of using the euro. d. The Lisbon Treaty, signed in December 2007, provides the EU with a common legal framework to meet current challenges facing European economies, such as climate change, security, and energy needs. e. The last few years have been difficult economically for the EU and its members, however the economic recovery that began in 2013 is expected to continue. EU nations have also benefitted from low oil prices, steady global growth, and a falling euro. 2. The North American Free Trade Agreement (NAFTA) is an agreement among the Mexican, Canadian, and U.S. governments in which barriers to trade have been eliminated. a. NAFTA went into effect on January 1, 1994 and today is the world's largest trading block in terms of GDP. Canada is currently the US's top trading partner with Mexico being number three (China is number two). It is the second largest trading block in terms of combined GDP of its members. b. Eliminating barriers to free trade (tariffs, import licensing requirements, customs user fees) has resulted in a strengthening of the economic power of all three countries. c. Colombia, Mexico, and Venezuela signed an economic pact eliminating import duties and tariffs in 1994. d. The Central American Free Trade Agreement (CAFTA) is an agreement between the United States and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Currently, only Costa Rica and El Salvador have signed onto this agreement. 3. The Association of Southeast Asian Nations (ASEAN) is a trading alliance of Southeast 10 Asian nations (see Exhibit 4-2). a. In the future, the Southeast Asian region promises to be one of the fastest-growing and increasingly influential economic regions of the world. b. The future economic impact of the Southeast Asian region could rival that of both NAFTA and the EU. 4. Other Trade Alliances. The 54-nation African Union (AU) came into existence in July 2002. AU members plan to achieve greater economic development and unity among Africa's nations. The South Asian Association for Regional Cooperation (SAARC) is composed of eight Asian member states that began eliminating tariffs in 2006. In 2015, the terms for a trade alliance known as the Trans-Pacific Partnership (TPP) was formed between United States, Canada, Mexico, Japan, Australia, and seven other countries around the Pacific region, excluding China. (see Exhibit 4-3.) If the agreement goes into effect, it will influence about two thirds of world economic input, making it among the largest trade alliances of all time

external environment - The Economic Environment.

1. The Global Economy and the Economic Context a. Context. The lingering global economic challenges— once described as the "Great Recession" by some analysts—began with turmoil in the home mortgage markets in the United States, as many homeowners found themselves unable to make their mortgage payments. b. The slow, fragile recovery of global economies has continued to be a constraint on organizational decisions and actions. c. The World Economic Forum identified two significant risks facing business leaders and policy makers over the next decade: "severe income disparity and chronic fiscal imbalances." 2. Economic Inequality and the Economic Context a. A Pew Research Center poll found that majorities in each of 44 countries surveyed believe that the gap between rich and poor is a "big problem," and in 28 of the nations, majorities believe that the gap is a "very big problem. b. In the United States, that gap between the rich and the rest has been much wider than in other developed nations. c. Business leaders need to recognize how societal attitudes in the economic context may also create constraints as they make decisions and manage their businesses.

Global Trade Mechanisms.

1. The World Trade Organization (WTO) Formed in 1995 and evolving from GATT, the WTO is the only global organization dealing with the rules of trade among nations. • Membership consists of 161 countries and 24 observer governments. • The WTO appears to play an important role even though critics are vocal and highly visible. 2. International Monetary Fund and World Bank Group a. The International Monetary Fund (IMF) is an organization of 188 countries that promotes international monetary cooperation and provides member countries with policy advice, temporary loans, and technical assistance to establish and maintain financial stability and to strengthen economies. b. The World Bank Group is a group of five closely associated institutions, all owned by its member countries, that provides vital financial and technical assistance to developing countries around the world. 3. Organization for Economic Cooperation and Development (OECD) The Organization for European Economic Cooperation, formed 1947, is a Paris-based international economic organization whose mission is to help its 34 member countries achieve sustainable economic growth and employment and raise the standard of living in member countries, while maintaining financial stability in order to contribute to the development of the world economy

Where Culture Comes From and How it Continues.

1. The original source of an organization's culture is usually a reflection of the vision or mission of the organization's founders. The culture is a result of the interaction between the founders' biases and assumptions and what the first employees subsequently learned from their own experiences. 2. An organization's culture continues when: a. A culture is in place, practices help to maintain it. b. Hiring practices reflect the culture in terms of "fit." c. Actions of top executives help to maintain the culture. d. New employees learn the organization's way of doing things through socialization—the process that helps employees adapt to the organization's culture.

EFFECTIVE DECISION-MAKING FOR TODAY'S WORLD

A. Guidelines for Effective Decision-Making. 1. Understand cultural differences. 2. Create standards for good decision-making. 3. Know when it is time to call it quits. 4. Use an effective decision-making process. Experts say an effective decision-making process has these six characteristics: a. It focuses on what's important. b. It's logical and consistent. c. It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking. d. It requires only as much information and analysis as is necessary to resolve a particular dilemma. e. It encourages and guides the gathering of relevant information and informed opinion. f. It's straightforward, reliable, easy to use, and flexible. 5. Develop your ability to think clearly so that you can make better choices at work and in your life.

WHY ARE MANAGERS IMPORTANT

A. Organizations need their managerial skills and abilities more than ever in these uncertain, complex, and chaotic times. B. Managers are critical to getting things done. C. Managers do matter to organizations! According to a Gallup poll of tens of thousands of managers and employees, the relationship of manager to their employees and supervisors is the single most important variable in employee productivity and loyalty.

DECISION-MAKING BIASES AND ERRORS Managers use different styles and "rules of thumb" (heuristics) to simplify their decision-making.

A. See Exhibit 2-11 for the common decision-making biases. 1. Overconfidence bias occurs when decision-makers tend to think that they know more than they do or hold unrealistically positive views of themselves and their performance. 2. Immediate gratification bias describes decision-makers who tend to want immediate rewards and avoid immediate costs. 3. The anchoring effect describes when decision-makers fixate on initial information as a starting point and then, once set, fail to adequately adjust for subsequent information. 4. Selective perception bias occurs when decision-makers selectively organize and interpret events based on their biased perceptions. 5. Confirmation bias occurs when decision-makers seek out information that reaffirms their past choices and discount information that contradicts their past judgments. 6. Framing bias occurs when decision-makers select and highlight certain aspects of a situation while excluding others. 7. Availability bias is seen when decision-makers tend to remember events that are the most recent and vivid in their memory. 8. Decision-makers who show representation bias assess the likelihood of an event based on how closely it resembles other events or sets of events. 9. Randomness bias describes the effect when decision-makers try to create meaning out of random events. 10. The sunk costs error is when a decision-maker forgets that current choices cannot correct the past. Instead of ignoring sunk costs, the decision-maker cannot forget them. In assessing choices, the individual fixates on past expenditures rather than on future consequences. 11. Self-serving bias is exhibited by decision-makers who are quick to take credit for their successes and blame failure on outside factors. 12. Hindsight bias is the tendency for decision-makers to falsely believe, once the outcome is known, that they would have accurately predicted the outcome.

DOING BUSINESS GLOBALLY - How Organizations Go International.

An organization that goes international typically progresses through three stages, which are illustrated in Exhibit 4-4. 1. Companies that go international may begin by using global sourcing (also called global outsourcing). In this stage of going international, companies purchase materials or labor from around the world, wherever the materials or labor are least expensive. Beyond the stage of global sourcing, each successive stage to become more international involves more investment and risk. 2. In the next stage, companies may go international by exporting (making products domestically and selling them abroad) or importing (acquiring products made abroad and selling the products domestically). Both exporting and importing require minimal investment and risk. 3. In the early stages of going international, managers may also use licensing (giving another organization the right to make or sell its products using its technology or product specifications) or franchising (giving another organization the right to use its name and operating methods). 4. After an organization has done international business for a period of time, managers may decide to make more of a direct investment in international markets by forming a strategic alliance, which is a partnership between an organization and a foreign company partner(s). In a strategic alliance, partners share resources and knowledge in developing new products or building production facilities. 5. A joint venture (a specific type of strategic alliance) may be undertaken to allow partners to form a separate, independent organization for some business purpose. 6. Managers may decide to make a direct investment in a foreign country by establishing a foreign subsidiary, in which a company sets up a separate and independent production facility or office. Establishing a foreign subsidiary involves the greatest commitment of resources and the greatest risk of all of the stages in going international.

How Culture Affects Managers.

An organization's culture is important because it establishes constraints on what managers can do. 1. The link between corporate values and managerial behavior is fairly straightforward. 2. The culture conveys to managers what is appropriate behavior. 3. An organization's culture, particularly a strong one, constrains a manager's decision

EFFECTIVE DECISION-MAKING FOR TODAY'S WORLD

B. Design Thinking and Decision-Making. Design thinking has been described as "approaching management problems as designers approach design problems." It can be useful when identifying problems and when identifying and evaluating alternatives. C. Big Data and Decision-Making. Big data is the vast amount of quantifiable information that can be analyzed by highly sophisticated data processing. One IT expert described big data with "3V's: high volume, high velocity, and/or high variety information assets". With this type of data at hand, decisionmakers have very powerful tools to help them make decisions. However, experts caution that collecting and analyzing data for data's sake is wasted effort. Goals are needed when collecting and using this type of information

DOING BUSINESS GLOBALLY - Different Types of International Organizations.

Business has been conducted internationally for many years (e.g., DuPont conducted business in China in 1863, H. J. Heinz manufacturing their brands in the United Kingdom since 1905, and Ford established its first overseas sales branch in France in 1908). Multinational corporations did not become popular until the mid-1960s. Global organizations can be classified in the following categories: • The term multinational corporation (MNC) is a broad term that refers to any and all types of international companies that maintain operations in multiple countries. • One type of MNC is a multidomestic corporation, which decentralizes management and other decisions to the local country. • Another type of MNC is a global company, which centralizes its management and other decisions in the home country. • A transnational corporation (TNC), sometimes called a borderless organization, is a type of international company in which artificial geographical barriers are eliminated.

MANAGING IN A GLOBAL ENVIRONMENT - The Cultural Environment.

Countries have different cultures, just as organizations do. National culture is the values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important. See Exhibit 4-5 for a synopsis of American national culture. An approach developed by Geert Hofstede serves as a valuable framework for understanding differences between national cultures. 1. Hofstede studied individualism versus collectivism. Individualism is the degree to which people in a country prefer to act as individuals rather than as members of groups. Collectivism is characterized by a social framework in which people prefer to act as members of groups and expect others in groups of which they are a part of (such as a family or an organization) to look after them and to protect them. 2. Another cultural dimension is power distance, which measures the extent to which a society accepts the fact that power in institutions and organizations is distributed unequally. 3. Uncertainty avoidance describes the degree to which people tolerate risk and prefer structure over unstructured situations. 4. Hofstede identified the dimension of achievement versus nurturing. Achievement is the degree to which values such as assertiveness, the acquisition of money and material goods, and competition prevail. Nurturing emphasizes sensitivity in relationships and concern for the welfare of others. 5. Long-term and short-term orientation. People in countries having long-term orientation cultures look to the future and value thrift and persistence. Short-term orientation values the past and present and emphasizes a respect for tradition and fulfilling social obligations. 6. Countries have different rankings on Hofstede's cultural dimensions, and managers should be aware of the cultural differences present in countries in which they do business (see Exhibit 4-6). 7. The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research program is an assessment that updates Hofstede's studies. a. GLOBE began in 1993 and identified nine dimensions on which national cultures differ: Assertiveness, future orientation, gender differentiation, uncertainty avoidance, power distance, individualism/collectivism, in-group collectivism, performance orientation, and humane orientation.

How the External Environment Affects Managers - Assessing Environmental Uncertainty

Environments differ in their amount of environmental uncertainty, which relates to (1) the degree of change in an organization's environment and (2) the degree of complexity in that environment (see Exhibit 3-3). a. Degree of change is characterized as being dynamic or stable. b. In a dynamic environment, components of the environment change frequently. If change is minimal, the environment is called a stable environment. c. The degree of environmental complexity is the number of components in an organization's environment and the extent of an organization's knowledge about those components. d. If the number of components and the need for sophisticated knowledge is minimal, the environment is classified as simple. If a number of dissimilar components and a high need for sophisticated knowledge exist, the environment is complex. e. Because uncertainty is a threat to organizational effectiveness, managers try to minimize environmental uncertainty.

APPROACHES TO DECISION MAKING

Evidence-Based Management. The premise behind evidence-based management (EBMgt) is that any decision-making process is likely to be enhanced through the use of relevant and reliable evidence. EBMgt promotes the use of the best available evidence to improve management practice. 1. The four essential elements of EBMgt are the decision-maker's expertise and judgment; external evidence that's been evaluated by the decision-maker; opinions, preferences, and values of those who have a stake in the decision; and relevant organizational (internal) factors such as context, circumstances, and organizational members. 2. The strength or influence of each of these elements on a decision will vary with each decision. 3. The key for managers is to recognize and understand the mindful, conscious choice as to which element(s) are most important and should be emphasized in making a decision.

APPROACHES TO DECISION MAKING

Intuition. Managers also regularly use their intuition. Intuitive decisionmaking is a subconscious process of making decisions on the basis of experience and accumulated judgment. Exhibit 2-6 describes the five different aspects of intuition. 1. Making decisions on the basis of gut feeling doesn't necessarily happen independently of rational analysis; the two complement each other. 2. Although intuitive decision-making will not replace the rational decision-making process, it does play an important role in managerial decision-making.

Types of Decisions.

Managers encounter different types of problems and use different types of decisions to resolve them. 1. Structured problems are straightforward, familiar, and easily defined. In dealing with structured problems, a manager may use a programmed decision, which is a repetitive decision that can be handled by a routine approach. Managers rely on three types of programmed decisions: a. A procedure is a series of interrelated sequential steps that can be used to respond to a structured problem. b. A rule is an explicit statement that tells managers what they can or cannot do. c. A policy is a guideline for making decisions.

How the External Environment Affects Managers - Jobs and Employment.

One of the most important organizational factors affected by changes in the external environment is jobs and employment. For example, economic downturns result in higher unemployment and place constraints on staffing and production quotas for managers. Not only does the external environment affect the number of jobs available, but it also impacts how jobs are managed and created. Changing conditions can create demands for more temporary work and alternative work arrangements.

What is Organizational Culture?

Organizational culture is the shared values, principles, traditions, and ways of doing things that influence the way organizational members act. This definition implies: 1. Individuals perceive organizational culture based on what they see, hear, or experience within the organization. 2. Organizational culture is shared by individuals within the organization. 3. Organizational culture is a descriptive term. It S, rather than evaluates. 4. Seven dimensions of an organization's culture have been proposed (see Exhibit 3-5): a. Innovation and risk taking (the degree to which employees are encouraged to be innovative and take risks) b. Attention to detail (the degree to which employees are expected to exhibit precision, analysis, and attention to detail) c. Outcome orientation (the degree to which managers focus on results or outcomes rather than on the techniques and processes used to achieve those outcomes) d. People orientation (the degree to which management decisions take into consideration the effect on people within the organization) e. Team orientation (the degree to which work activities are organized around teams rather than individuals) f. Aggressiveness (the degree to which employees are aggressive and competitive rather than cooperative) g. Stability (the degree to which organizational activities emphasize maintaining the status quo in contrast to growth) 5. Exhibit 3-6 describes how the cultural dimensions can be combined to create organizations that are significantly different.

APPROACHES TO DECISION MAKING

Rationality. Managerial decision-making is assumed to be rational—that is, making choices that are consistent and value-maximizing within specified constraints. If a manager could be perfectly rational, he or she would be completely logical and objective. 1. Rational decision-making assumes that the manager is making decisions in the best interests of the organization, not in his or her own interests. 2. The assumptions of rationality can be met if the manager is faced with a simple problem in which (1) goals are clear and alternatives limited, (2) time pressures are minimal and the cost of finding and evaluating alternatives is low, (3) the organizational culture supports innovation and risk taking, and (4) outcomes are concrete and measurable.

THE DECISION-MAKING PROCESS

Step 1: Identify a Problem. A problem is a discrepancy between an existing and a desired condition. In order to identify a problem, you, as a manager, should recognize and understand the three characteristics of problems: 1. You must be aware of the problem. Be sure to identify the actual problem rather than a symptom of the problem. 2. You must be under pressure to act. A true problem puts pressure on the manager to take action; a problem without pressure to act is a problem that can be postponed. 3. You must have the authority or resources to act. When managers recognize a problem and are under pressure to take action but do not have the necessary resources, they usually feel that unrealistic demands are being put upon them.

THE DECISION-MAKING PROCESS

Step 2: Identify Decision Criteria. Decision criteria are criteria that define what is relevant in a decision.

THE DECISION-MAKING PROCESS

Step 3: Allocate Weights to the Criteria. The criteria identified in Step 2 of the decision-making process do not have equal importance, so the decision-maker must assign a weight to each of the items in order to give each item accurate priority in the decision. Exhibit 2-2 lists the criteria and weights for Amanda's purchase decision for new computers.

THE DECISION-MAKING PROCESS

Step 4: Develop Alternatives. The decision-maker must now identify viable alternatives that could resolve the problem

THE DECISION-MAKING PROCESS

Step 5: Analyze Alternatives. Each of the alternatives must now be critically analyzed by evaluating it against the criteria established in Steps 2 and 3. Exhibit 2-3 shows the values that Amanda assigned to each of her alternatives for a new computer. Exhibit 2-4 reflects the weighting for each alternative, as illustrated in Exhibits 2-2 and 2-3.

THE DECISION-MAKING PROCESS

Step 6: Select an Alternative. This step to select the best alternative from among those identified and assessed is critical. If criteria weights have been used, the decision-maker simply selects the alternative that received the highest score in Step 5.

THE DECISION-MAKING PROCESS

Step 7: Implement the Alternative. The selected alternative must be implemented by effectively communicating the decision to the individuals who will be affected by it and winning their commitment to the decision.

THE DECISION-MAKING PROCESS

Step 8: Evaluate Decision Effectiveness. This last step in the decision making process assesses the result of the decision to determine whether or not the problem has been resolved.

MANAGING IN A GLOBAL ENVIRONMENT - The Economic Environment.

The economic environment also presents many challenges to foreign based managers, including fluctuations in currency exchange rates, inflation, and diverse tax policies. 1. In a free market economy, resources are primarily owned by the private sector. 2. In a planned economy, all economic decisions are planned by a central government.

MANAGING IN A GLOBAL ENVIRONMENT - The Legal-Political Environment.

The legal-political environment does not have to be unstable or revolutionary to be a challenge to managers. The fact that a country's political system differs from that of the United States is important to recognize.

How the External Environment Affects Managers - Managing Stakeholder Relationships.

The more obvious and secure an organization's relationships are with external stakeholders, the more influence managers have over organizational controls. a. Stakeholders are any constituencies in the organization's external environment that are affected by the organization's decisions and actions. (See Exhibit 3-4 for an identification of some of the most common stakeholders.) b. Stakeholder relationship management is important for two reasons: 1) It can lead to improved predictability of environmental changes, more successful innovation, greater degrees of trust among stakeholders, and greater organizational flexibility to reduce the impact of change. 2) It is the "right" thing to do because organizations are dependent on external stakeholders as sources of inputs and outlets for outputs and the interest of these stakeholders should be considered when making and implementing decisions.

The Symbolic View.

This view of management upholds the view that much of an organization's success or failure is due to external forces outside managers' control. 1. The influence that managers do have is seen mainly as a symbolic outcome. 2. Organizational results are influenced by factors outside of the control of managers, including the economy, customers, governmental policies, competitors' actions, the state of the particular industry, the control of proprietary technology, and decisions made by previous managers in the organization. 3. The manager's role is to create meaning out of randomness, confusion, and ambiguity. 4. According to the symbolic view, the actual part that management plays in the success or failure of an organization is minimal.

Types of Decisions.

Unstructured problems are problems that are new or unusual and for which information is ambiguous or incomplete. These problems are best handled by a non-programmed decision that is a unique decision that requires a custom-made solution.

CURRENT ISSUES IN ORGANIZATIONAL CULTURE - Creating a Customer-Responsive Culture.

What does a customer-responsive culture look like? Research shows the following six characteristics routinely present in a customer-responsive culture. (See Exhibit 3-10 for actions managers can take to make their cultures more customer responsive.) • Type of employee • Type of job environment • Widespread use of empowerment • Role clarity • Employees who are conscientious in desire to please customers

CURRENT ISSUES IN ORGANIZATIONAL CULTURE - Creating an Innovative Culture.

What does an innovative culture look like? Swedish researcher Goran Ekvall provides these characteristics: • Challenge and involvement • Freedom • Trust and openness • Idea time • Playfulness/humor • Conflict resolution • Debates • Risk taking

differences between programmed versus non-programmed decisions.

a. At higher levels in the organizational hierarchy, managers deal more often with difficult, unstructured problems and make nonprogrammed decisions in attempting to resolve these problems and challenges. b. Lower-level managers handle routine decisions themselves, using programmed decisions. They let upper-level managers handle unusual or difficult decisions.

Managerial roles

a. Interpersonal roles include figurehead, leadership, and liaison activities. b. Informational roles include monitor, disseminator, and spokesperson. c. Decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator.

Management Functions.

a. Planning involves defining goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities. b. Organizing involves arranging and structuring work to accomplish the organization's goals. c. Leading involves working with and through people to accomplish organizational goals. d. Controlling involves monitoring, comparing, and correcting work performance

Management Skills.

a. Technical skills are job-specific knowledge and techniques needed to proficiently perform specific tasks. b. Human skills involve the ability to work well with other people individually and in a group. c. Conceptual skills involve the ability to think and to conceptualize about abstract and complex situations. d. Other skills are listed in Exhibit 1-7. These skills will be highlighted in a feature at the end of each chapter.

external environment

consists of those factors and forces outside the organization that affect the organization's performance (see Exhibit 3-2). The external environment includes these broad external conditions that may affect the organization: economic, political/legal, sociocultural, demographic, technological, and global conditions.

Middle managers

include all levels of management between the first level and the top level of the organization. They may have titles such as regional manager, project leader, store manager, or division manager.

external environment - Global factors

include global competitors and global consumer markets.

Top managers

include managers at or near the top of the organization who are responsible for making organization-wide decisions and establishing plans and goals that affect the entire organization.

External Environment - Sociocultural conditions

include the changing expectations of society. Societal values, customs, and tastes can change, and managers must be aware of these changes.

external environment - Political/legal conditions

include the general political stability of countries in which an organization does business and the specific attitudes that elected officials have toward business. Federal, state, and local governments can influence what organizations can and cannot do.

external environment - Technological conditions

which have changed more rapidly than any other element of the general environment.