BUSN Exam 2

The Classical Model Assumptions

1. Decision maker operates to accomplish goals that are known and agreed on, problems are precisely formulated and defined. 2. Decision maker strives for conditions of certainty, gathering complete information, all alternatives and the potential results of each are calculated. 3. Criteria for evaluating alternatives are known, decision maker selects the alternative that will maximize the economic return to the organization. 4. Decision maker is rational and uses logic to assign values, order preferences, evaluate alternatives, and make the decision that will maximize the attainment of organizational goals.

Factors that typically influence centralization versus decentralization

1. Greater change and uncertainty in the environment are usually associated with decentralization. 2. The amount of centralization or decentralization should fit the firm's strategy. 3. In times of crisis or risk of company failure, authority may be centralized at the top.

The Political Model Assumptions

1. Organizations are made up of groups with diverse interests, goals, and values. 2. Info is ambiguous and incomplete. The attempt to be rational is limited by the complexity of many problems. 3. Managers do not have time, resources, or mental capacity to identify all dimensions of the problem and process all relevant info. 4. Managers engage in the push and pull of debate to decide goals and discuss alternatives.

Decisions Making Steps

1. Recognition of Decision Requirement, 2. Diagnosis and Analysis of Causes, 3. Development of Alternatives, 4. Selection of Desired Alternative, 5. Implementation of Chosen Alternative, 6. Evaluation and Feedback.

Less supervision and larger span of control

1. Work performed by subordinates is stable and routine, 2. Subordinates perform similar work tasks, 3. Subordinates are concentrated in a single location, 4. Subordinates are highly trained and need little direction, 5. Rules and Procedures defining task activities are available, 6. Support systems and personnel are available for the manager, 7. Little time is required in non supervisory activities, 8. Managers personal preferences and styles favor a large span, 9. The average span of control in an organization determines whether the structure is tall or flat.

Top Management Support

80% of companies that are successful innovators have top executives, who frequently reinforce the importance of innovation both verbally and symbolically. Its especially important when a change involves multiple departments or when resources are being reallocated among departments

Do a Postmortem

After-action review: disciplined procedure whereby managers invest time in reviewing the results of decisions on a regular basis and learn from them.

Formulating Corporate-Level Strategy

BCG Matrix: Stars which has a large market share in a rapidly growing industry, Cash Cows which exists in a mature, slow-growth industry but is a dominate business in the industry, Questions Marks exists in a new, rapidly growing industry, but only has small market share, and Dogs is a poor performer, it has only a small share of a slow-growth market and provides little profit.

Why Do Managers Make Bad Decisions

Being influenced by initial impressions, Justifying past decisions, Seeing what you want to see, Perpetuating the status quo, Being influenced by emotions, Overconfidence.

Bounded Rationality and Satisficing

Bounded Rationality: means that people have limits, or boundaries, on how rational they can be. Satisficing means that decision makers choose the first solution alternative that satisfies minimal decision criteria.

Innovative Decision Making

Brainstorming, Hard Evidence, Rigorous debate, Group-think, Know when to bail, do a postmortem

Centralization and Decentralization

Centralization: means that decision authority is located near the top of the organization. Decentralization: means that decision authority is pushed downward to lower organization levels.

Organizing for Horizontal Coordination

Collaboration and Coordination, Re-engineering, project manager, relational coordination,

Formulating Business-Level Strategy

Competitive Environment: Strategic Business Unit(SBU). Most large companies have separate business lines and do an industry analysis for each line of business or SBU.

Matrix Disadvantages

Confusion and frustration caused by dual chain of command, time lost to meetings and discussions to resolve conflict between dual chain of command which takes time out of core work activities.

Service Technology

Consulting companies, law firms, brokerage houses, airlines, hotels, advertising companies, amusement parks, and educational organizations.

Contingency Planning

Contingency plans define company responses to be taken in the case of emergencies, setbacks, or unexpected conditions. Mangers identify important factors in the environment, possible economic downturns, declining markets, increases in cost of supplies, new technological developments, or safety accidents.

Production Technology: Continuous process production

Continuous process production, the entire work-flow is mechanized in a sophisticated and complex form of production technology, has no starting or stopping.

The Need for Coordination

Coordination: refers to the managerial task of adjusting and synchronizing the diverse activities among different individuals and departments. Coordination is used on complex environments with many departments. Collaboration: means a joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose and that are typically greater than what any of the individuals or departments could achieve working alone.

Core Competencies

Core Competence is something that the organization does especially well in comparison to its competitors.

Team Approach: How it works

Cross-functional teams, which consist of employees from various functional departments who are responsible to meet as a team and resolve mutual problems.

Types of decisions and problems

Decision Making is the process of identifying problems and opportunities and then resolving them. Decision making involves effort before and after the actual choice.

Evaluation and Feedback

Decision makes gather info that tells them how well the decision was implemented and whether it was effective in achieving its goals.

The Organizational Planning Process

Develop the Plan, Translate the Plan, Plan Operations, Execute the Plan, Monitor and Learn.

Engage in Rigorous Debate

Devil's Advocate: has the role of challenging the assumptions and assertions made by the group. Point-counterpoint: which breaks a decision-making group into two subgroups and assigns them different, often competing, responsibilities.

Diagnosis and Analysis of Causes

Diagnosis: the step in the decision-making process in which managers analyze underlying casual factors associated with the decision situation. Questions that may be asked: What is the state of disequilibrium affecting us? or When, where, how, to whom did it occur. What is the urgency of the problem, and what result came from which activity.

Porter's Competitive Strategies

Differentiation, Cost Leadership, Focus Differentiation, and Focus Cost Leadership.

Service technology: Direct contact with customers

Direct contact with customers. Employees and customers interact directly to provide and purchase the service. Production and consumption are simultaneous. No direct customer contact in a manufacturing firm.

Divisional Approach

Divisional structure: occurs when departments are grouped together based on similar organizational outputs. Also called M-form. How it works: in divisional structures, divisions are created as self-contained units, with separate functional departments for each division.

Team Disadvantages

Employees may experience conflicts and dual loyalties. A cross-functional team may make different work demands on members than do their department managers, and members who participate in more than one team must resolve these conflicts.

Lack of Understanding and Trust

Employees often distrust the intentions behind a change or do not understand the intended purpose of a change. If previous working relationships with a manager or promoter of an idea have been negative, resistance may occur.

External Coordination

Engineers and researchers stay aware if new technological developments. Successful companies often include customers, strategic partners, suppliers, and other outsiders directly in the product and service development process. Open Innovation

Know when to bail

Escalating Commitment: which is when a manager does not pull the plug on something he/she invested time and money into even when there is strong evidence that it will not work.

Use Hard Evidence

Evidence-based decision making means a commitment to make more informed and intelligent decisions based on the best available facts and evidence.

Virtual Advantages

Flexibility and competitiveness on a global scale. This flexibility lets them shift resources and respond quickly.

Limitations of planning

Goals and plans can create a false sense of certainty: give a false sense that they know what the future will be like, all planning based on assumptions. Goals and plans may cause rigidity in a turbulent environment: Flexibility is needed for changing organizations. Goals and plans can get in the way of intuition and creativity: Intuition and creativity can be hampered by too much routine planning.

Benefits of Planning

Goals and plans provide a source of motivation and commitment: planning can reduce uncertainty, some people don't understand what they're working toward. Goals and plans guide resource allocation: help managers decide where they need to allocate resources such as employees, money, equipment. Goals and plans are a guide to action: focuses attention. Goals and plans set a standard of performance: define desired outcomes.

Cooperation

Ideas for product and technology innovations typically originate at lower levels of the organization and need to flow horizontally across departments.

Service technology: Intangible output

Intangible output. The output of a service firm is intangible. Services are perishable, and, unlike physical products, cannot be stored in inventory. Service is either consumed immediately or lost forever.

Intuition and Quasirationality

Intuition represents a quick apprehension of a decision situation based on past experience but without conscious thought. Its no arbitrary or irrational because it is based on years of practice and hands-on experience. Quasirationality is combining intuitive and analytical thought.

Virtual Network Approach

It extends the idea of horizontal coordination and collaboration beyond the boundaries of the organization. This personal outsourcing approach allows people to shift only certain tedious and time-consuming tasks to be handled by an outsourcing partner while they focus on higher-value work.

Programmed Decsions

It involve situations that have occurred enough to enable decision rules to be developed and applied in the future, programmed decisions are made in response to recurring organizational problems

Virtual Disadvantages

Lack of hands-on control. The weak and ambiguous boundaries create higher uncertainty and greater demands on managers for defining shared goals, managing relationships, keeping people focused and motivated, and coordinating activities so that everything functions as intended.

Production Technology: Large-batch

Large-batch and mass production. Mass production technology is distinguished by standardized production runs. A large volume of products is produced, and all customers receive the same product. Large-batch can be used to produce tobacco products and textiles.

Execute the plan

MBO, performance dashboards, single-use plans, decentralized responsibility.

Operational Planning

MTR^3: are specific and Measurable, have a defined Time period, cover key Result areas, are challenging but Realistic, are linked to Rewards.

OD addresses 3 types of current problems.

Mergers/Acquisitions, Organizational decline/revitalization, Conflict management.

Levels of Goals and Plans

Mission Statement, Strategic Goals/Plans Senior Management, Tactical Goals/Plans Middle Management, Operational Goals/Plans Lower Management

Operational Goals/Plans

O. Goals: The results expected from departments, work groups, and individuals, they are precise and measurable.

Opportunities and Threats

Opportunities are characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals. Threats are characteristics of the external environment that may prevent the organization from achieving its strategic goals.

Organizing the Vertical structure

Organization chart: which is the visual representation of an organization's structure.

Innovation and the Changing Workplace

Organizational change is defined as as the adoption of a new idea or behavior by an organization. Innovation and change are spurred by forces outside the organization. Ex: Powerful customer demands annual price cuts, when a key supplier goes out of business, or when new government regulations go into effect.

Sucessfull Innovation Characteristics

People in research and marketing actively work with customers to understand their needs and develop solutions. Technical specialists are aware of recent developments and make effective use of new technology. Shared new-product development process that is advocated and supported by top management cuts across organizational functions and units. Members from key departments--research, manufacturing, marketing--cooperate in the development of the new product or service. Each project is guided by a core cross-functional team from beginning to end.

Self Interest

People typically resist a change they believe conflicts with their self-interest. A proposed change in job design, structure, or technology may increase employee's workload, for example, or cause a real or perceived loss of power, prestige, pay, or benefits.

Decision styles

Personal Decision styles refer to distinctions among people with respect to how they evaluate problems, generate alternatives, and make choices. Styles: Directive, Analytical, Conceptual, and Behavioral.

Team Approach

Probably the most widespread trend in departmentalization in recent years has been the implementation of team concepts. Managers can delegate authority , push responsibility to lower levels, and be more flexible in a competitive global environment.

Recognition of Decision Requirement

Problem: occurs when organizational accomplishment is less than established goals. Opportunity: exists when managers see potential accomplishment that exceeds specified current goals.

Virtual Network: How it works

Rather being housed under one roof, services such as accounting, design, manufacturing, and distribution are outsourced to separate organizations that are connected electronically to a central office.

Woodward's Manufacturing Technology

Research done by Joan Woodward, a British industrial sociologist. She found that manufacturing firms could be categorized according to three basic types of production technology.

Strategic Goals/Plans

S. Goals: broad statements describing where the organization wants to be in the future. S. Plans: action steps by which the company intends to attain strategic goals.

Why Do People Resist Change

Self Interest, Lack of Understanding and Trust, Uncertainty, Different Assessments and Goals

Production Technology: Small-batches

Small-batch and unit production. Small-batch production firms produce goods in batches of one or a few products designed to customer specification. The technology also is used to make large, one-of-a-kind products, such as computer-controlled machines.

Span of Management

Span of control: this characteristic of structure determines how closely a supervisor can monitor subordinates.

Purpose of Strategy

Strategy is y=the plan of action that describes resource allocation and activities for dealing with the environment, achieving a competitive advantage, and attaining the organization's goals.

Strengths and Weaknesses

Strengths are positive internal characteristics that the organization can exploit to achieve its strategic performance goals. Weaknesses are internal characteristics that might inhibit or restrict the organization's performance.

SWOT Analysis

Strengths, weaknesses, opportunities, and threats that affect the organizations performance.

Innovative Approaches to Planning: Stretch Goals

Stretch goals are reasonable yet highly ambitious goals that are so clear, compelling, and imaginative that they fire up employees and engender excellence. Managers and employees have to be innovative to reach these kinds of goals.

Structure Follows strategy

Studies demonstrate that business performance is strongly influenced by how well a company's structure is aligned with its strategic intent and the needs of the environment, so manager's strive to pick strategies and structures that are congruent. With differentiation strategy, the organization attempts to develop innovative products unique to the market. With cost leadership strategy, the organization strives for internal efficiency.

Tactical Goals/Plans

T. Goals: the results that major divisions and departments within the organization intend to achieve. T. Plans: designed to help execute the major strategic plans and to accomplish a specific part of the company's strategy.

Tall and flat structures

Tall: has an overall narrow span and more hierarchical levels. Flat: has a wide span, is horizontally dispersed, and has fewer hierarchical levels. A common structural problem in organizations is too many hierarchical levels and a narrow span, which basically means Tall structure is not used often. in organizations.

Task forces, Teams, and Project management

Task force: temporary team or committee designed to solve a problem involving several departments. Cross-functional team: furthers horizontal coordination. Project manager: person who is responsible for coordinating the activities of several departments for the completion of a specific project.

OD Activities

Team building, Survey feedback, large-group intervention.

Structure fits the Technology

Technology includes the knowledge, tools, techniques, and activities, used to transform organizational inputs into outputs. Technology includes employee skills, machinery, work procedures.

Selection of the Desired Alternative

The best alternative solution is the one that best fits the overall goals and values of the organization and achieves the desired results using the fewest resources. Risk Propensity: the willingness to undertake risk with the opportunity of gaining an increased payoff.

The Ideal, Rational Model

The classical model of decision making is based on rational economic assumptions and manager beliefs about what ideal decision making should be. The classical model of decision making is considered to be normative, which means that it defines how a decision maker should make decisions.

Vertical Functional Advantages

The info flows up and down the vertical hierarchy, and the chain of command converges at the top of the organization.

Training and Development

Training is one of the most frequently used approaches to changing people's mind-sets. A company might offer training programs to large blocks of employees on subjects such as teamwork, diversity, emotional intelligence, quality circles, communication skills, or participative management.

Matrix Approach: How it works

Two-boss employees, those who report to two supervisors simultaneously, must resolve conflicting demands from the matrix bosses. The matrix boss is the product or functional boss, who is responsible for one side of the matrix. The top leader oversees both the product and functional chains of command.

Factors Shaping structure

Without a vertical structure, people in a large, global firm wouldnt know what to do. structure follows strategy, structure fits the technology.

Product Change

a change in the organizations product or service outputs.

Technology change

a change in the organizations production process-how the organization does its work. Technology changes are designed to make the production of a product or service more efficient.

Idea Champion

a person who sees the need for and champions productive change within the organization

New-venture team

a unit separate from the rest of the organization that is responsible for developing and initiating a major innovation.

Skunkworks

a variation of a new-venture team. A small, separate, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for a business.

How managers actually make decsions

administrative model is considered to be descriptive, meaning that it describes how managers actually make decisions in complex situations rather than dictating how they should make decisions according to a theoretical ideal.

Geographic or customer-based divisions

an alternative for assigning divisional responsibility is to group company activities by geographic region or customer group.

Crowd-sourcing

an open innovation approach used by many companies, taps into ideas from around the world and lets thousands or hundreds of thousands of people participate in the innovation process.

Communication and Education

are used when solid information about the change is needed by users and others who may resist implementation. People are much more likely to change their behavior when they both understand the rational reasons for doing so and see a picture of change that influences their feelings.

Vertical Functional Disadvantages

because people are separated into distinct departments, communication and coordination across functions are often poor, causing a slow response to environmental changes.

Survey Feedback

begins with a questionnaire distributed to employees on values, climate, participation, leadership, and group cohesion within their organization.

Team Advantages

breaks down barriers across departments and improves coordinate and cooperation. Team members know one another's problems and compromise rather than blindly pursuing their own goals.

Large-group Intervention

brings together participants from all parts of the organization-often including key stakeholders from outside the organization as well-to discuss problems or opportunities and plan for change. 50-500 people and last several days.

Mission Statement

broadly stated definition of purpose that distinguishes the organization from others of a similar type.

Divisional Advantages

by dividing employees and resources along divisional lines, the organization will be flexible and responsive to change because each unit is small and tuned in to its environment.

Matrix Advantages

can be highly effective in a complex, rapidly changing environment in which the organization needs to be flexible, innovative, and adaptable. The conflict and frequent meetings generated by the matrix allow new issues to be raised and resolved.

The Matrix Approach

combines aspects of both functional and divisional structures simultaneously, in the same part of the organization. Has dual lines of authority.

Plan operations

define operational goals and plans, select measures and targets, set stretch goals.

Target Customers

defines the customers and which of their needs are to be served by the company.

Develop the plan

defining mission, vision. Set goals.

Translate the plan

defining tactical plans and objectives, develop strategy map, define contingency plans and scenarios, identify intelligence teams.

Divisional Disadvantages

duplication of resources and the high cost of running separate divisions, instead of a single research facility, each division might have their own research facility.

Team Building

enhances the cohesiveness and success of organizational groups and teams.

Management by means

focuses on the methods and processes used to achieve goals.

Development of Alternatives

generate possible alternative solutions that will respond to the needs of the situation and correct the underlying causes. Decision alternatives can be thought of as tools for reducing the difference between the organizations current and desired performance.

Apply Force-Field Analysis

grew from Kurt Lewin, who proposed that change was a result of the competition between driving and restraining forces. Driving forces are problems or opportunities that provide motivation for change within the organization. Restraining forces are the various barriers to change, such as lack of resources, resistance from middle managers, or inadequate employee skills. Just-in-time(JIT) inventory control.

Permanent teams

group of employees who are organized in way similar to formal department. Each team brings together employees from all functional areas focused on a specific task or project.

Monitor and Learn

hold planning reviews, hold operational reviews. learn from results and shift plans.

Building Scenarios

involves looking at current trends and discontinuities and visualizing future possibilities.

Participation

involves users and potential resisters in designing the change. This approach is time consuming, but it pays off because users understand and become committed to the change. Participation also helps managers determine potential problems and understand the differences in perceptions of change among employees.

Organizational Development(OD)

is a planned, systematic process of change that used behavioral science knowledge and techniques to improve an organization's health and effectiveness though its ability to adapt to the environment, improve internal relationships, and increase learning and problem-solving capabilities.

Ambiguity

is by far that most difficult decision situation. means that the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and info about outcomes is unavailable.

Staff Authority

is narrower and includes the right to advise, recommend, and counsel in the staff specialists' area of expertise.

Internal Coordination

keeping research and manufacturing close together helps companies be more innovative, for instance.

Uncertainty

lack of information about future events. Fear of the Unknown.

Non-programmed Decsions

made in response to situations that are unique, are poorly defined and largely unstructured, and have important consequences for the organization. Example: Boeing's decision to build the 707.

Unfreezing

makes people throughout the organization aware of problems and the need for change. This stage creates the motivation for people to change their attitudes and behaviors. The unfreezing stage is often associated with diagnosis, which uses an outside expert called a change agent. The change agent is an OD specialist who performs a systematic diagnosis or the organization and identifies work-related problems.

Management by objective

managers and employees define goals for every department, project, and person and use them to monitor subsequent performance.

Create a sense of urgency

many people are not willing to change unless they perceive a problem or crisis. A crisis or strong need for change lowers resistance. To effectively lead change, managers help people feel the need for change rather than just giving them facts and figures.

The Ambidextrous Approach

means incorporating structures and processes that are appropriate for both the creative impulse and for the systematic implementation of innovations. Ex: a loose, flexible structure and greater employee freedom are excellent for the creation and initiation of ideas; however, these same conditions often make it difficult to implement a change because employees are less likely to comply.

Risk

means that a decision has clear-cut goals and that good information is available, but the future outcomes associated with each alternative are subject to some chance of loss or failure.

Certainty

means that all the information the decision maker needs is fully available.

Uncertainty

means that managers know which goals they wish to achieve, but info about alternatives and future events is incomplete.

Coercion

means that managers use their formal power to force employees to change. Resisters are told to accept the change or lose rewards or even their jobs. In most cases, this approach should not be used because it makes the employees feel like victims.

Line Authority

means that people in management positions have the formal authority to direct and control immediate subordinates.

Accountability

means that people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command.

Virtual Network Structure

means that the firm subcontracts most of its major functions to separate companies and coordinates their activities from a small organization at headquarters.

Negotiation

more formal means of achieving cooperation. uses formal bargaining to win acceptance and approval of a desired change. The change may become part of the union contract, reflecting the agreement of both parties.

Refreezing

occurs when individuals acquire new attitudes or values and are rewarded for them by the organization. The impact of new behaviors is evaluated and reinforced.

Changing Stage

occurs when individuals experiment with new behavior and learn new skills to be used in the workplace. Process known as intervention, during which the change agent implements a specific plan for training managers and employees.

Different Assessments and Goals

people who will be affected by a change or innovation may assess the situation differently from managers or promoters of a new idea. Managers in each department pursue different goals, and an innovation may detract from performance and goal achievement for some departments.

The 5 Whys

questions asking method used to explore the root cause underlying a particular problem. The first why generally produces a superficial explanation for the problem, and each subsequent why probes deeper into the causes of the problem and potential solutions.

innovation by acquisition

recognizes that the cutting edge of innovation often happens with young, small, entrepreneurial companies rather than inside the walls of established firms.

Disruptive Innovation

refers to innovations in products or services that typically start small and end up completely replacing an existing product or service technology for producers and consumers. Companies that initiate a disruptive innovation typically win big; companies affected by disruptive technology may be put out of business.

Re-engineering

refers to the radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed.

Strategic Management

refers to the set of decisions and actions used to formulate and execute strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.

Competitive advantage

refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customer or client needs in the marketplace. Target Customers, Exploit Core Competencies, Achieve Synergy, Create Value.

Vertical Functional Approach

sometimes called U-form, activities are grouped together by common function from the bottom to the top of the organization. How it works: Accounting, HR, production, and marketing are all major departments.

Work Specialization

sometimes called division of labor, is the degree to which organizational tasks are subdivided into separate jobs.

Exploration

stage where ideas for new products and technologies are born. Creativity refers to the generation of novel ideas that might meet perceived needs or respond to opportunities for the organization.

Technical Complexity

the degree to which machinery is involved in the production to the exclusion of people. Employees are hardly needed except to monitor the machines.

Responsibility

the duty to perform the task or activity as assigned.

Team-based structure

the entire organization is made up of horizontal teams that coordinate their work and work directly with customers to accomplish the organization's goals.

Authority

the formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes. Authority is distinguished by 3 characteristics. 1. Authority is vested in organizational positions, not people. 2. Authority flows down the vertical hierarchy. 3. Authority is accepted by subordinates.

Create Value

the heart of the strategy. Value can be defined as the combination of the benefits received and costs paid.

Implementation of the Chosen Alternative

this stage involves the use of managerial, administrative, and persuasive abilities to ensure the chosen alternative is carried out.

Chain of Command

unbroken line of authority that links all employees in an organization and shows who reports to whom.

OD steps

unfreezing, changing, and refreezing.

The Political Model

useful for making non-programmed decisions when conditions are uncertain, info is limited, and there are manager conflicts about what goals to pursue or what course of action to take.

Brainstorming

uses face-to-face interactive group to spontaneously suggest as many ideas as possible for solving a problem.

Achieve Synergy

when organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone.

Departmentalization

which is the basis for grouping positions into departments and departments into the total organization.

New-venture fund

which provides resources from which individuals and groups can draw to develop new ideas, products, or businesses.

Relational Coordination

which refers to "frequent, timely, problem-solving communication carried out through employee relationships of shared goals, shared knowledge, and mutual respect.