Mgmt Ch. 4

  1. decision
    a choice from 2 or more alternatives
  2. decision-making process
    set of 8 steps includes identifying a problem, selecting an alternative, and evaluating the decisions effectiveness
  3. problem
    a discrepancy between an existing and a desired state of affairs
  4. decision criteria
    criteria that defines what is relevant in making a decision
  5. steps in decision making
    • 1. identify a problem
    • 2. identify decision criteria
    • 3. allocate weights to criteria
    • 4. develop alternatives
    • 5. analyze alternatives
    • 6. select an alternatives
    • 7. implement the alternative
    • 8. evaluate decision effectiveness
  6. rational decision making
    making decisions that are consistent and value-maximizing within specified constraints
  7. bounded rationality
    • limitations on a person's ability to interpret, process, and act on info
    • BOUNDED AWARENESS, people overlooking important info during the decision making process (music industry doesn't see danger of file sharing)
    • BOUNDED ETHICALITY, personal ethnical preferences may not be in sync with our actual behaviour (
    • BOUNDED RATIONALITY, shortcuts (heuristics) to help make sense of things (limited time leads to leads to decisions improper support)
    • BOUNDED WILLPOWER, we give too much focus to the present and not enough to the future (not saving enough for retirement)
    • BOUNDED SELF-INTEREST, attaching a priority to the outcomes of others rather than simply trying to maximize our own payoffs (being fair to competitors)
  8. satisfice
    • accept solutions that are "good enough"
    • one that meets acceptable levels of performance
  9. intuitive decision making
    • making decisions on basis of experience, feelings and accumulated judgement
    • gut feeling
  10. structured problems
    straight forward, familiar and easily defined problems
  11. programmed decision
    repetitive decisions that can be handled by a routine approach
  12. procedure
    series of interrelated sequential steps that a decision maker can use to respond to a structured problem
  13. rule
    explicit statement that tells a decision maker what he can or can't do
  14. policy
    guideline for making a decision
  15. unstructured problems
    • new or unusual problems
    • info is ambiguous or incomplete
  16. nonprogrammed decisions
    • decisions that are unique and nonrecurring and require custom made solutions
    • eg. office building floods accidentally
  17. decision making conditions
    • certainty
    • risk
    • uncertainty
  18. certainty
    • condition in which a decision maker can make accurate decisions because the outcome of every alternative is known
    • eg. investing money, you know exact rates
  19. risk
    • decision maker able to estimate the likelihood of certain outcomes
    • eg. using past data to make a decision
  20. uncertainty
    decision maker is not sure of the outcomes
  21. Directive style
    • decision making style characterized by a low tolerance for ambiguity and a rational way of thinking
    • minimal info, efficient
  22. analytic style
    • decision making style characterized by a high tolerance for ambiguity and a rational way of thinking
    • more info, consider alternatives
    • careful, better with unique decisions
  23. conceptual style
    • decision making style characterized by a high tolerance for ambiguity and a rational way of thinking
    • broad, consider alternatives, long run
    • find creative solutions
  24. behavioural style
    • low tolerance for ambiguity, intuitive way of thinking
    • sociable, friendly, supportive
    • work well with others, concerned for achievments of those around them
  25. Group decision making (adv.)
    • more complete knowledge and info - group brings diversity of experience
    • more diverse alternatives - more options
    • increased acceptance of a solution - groups tend not to fight a decision they developed
    • increased legitimacy - these decisions are perceived as more legitimate
  26. Group decision making (disadv.)
    • increased time to reach a solution
    • opportunity for minority domination - inequality of members makes for some members dominating
    • ambiguous responsibility - group members share responsibility, but individuals responsibility is diluted
    • pressures to conform - undermines critical thinking, harms final quality of decision
  27. groupthink
    • witholding by group members of different views in order to be in agreement
    • people conform because don't want to speak out
  28. individual vs group decision making
    • decision structure - programmed decisions require less employee involvement
    • source of decision knowledge - if participants may be against decision w/o their input, more involvement is needed
    • risk of conflict - conflicting employee and organizational goals, involvement is useful to minimize conflict
  29. heuristics
    • rules of thumb that managers use to simplify decision making
    • overconfidence bias
    • selective perception bias
    • confirmation bias
    • sunk-costs error
    • escalation of commitment error
    • self serving bias
    • hindsight bias
  30. overconfidence bias
    • decision makers think they know more than they do
    • hold themselves to highly
    • eg. salesperson brags about presentation, then loses sale
  31. selective perception bias
    • decision makers selectively organize and interpret events based on own biased view
    • eg. interview w/ a candidate who went to same alma mater
  32. confirmation bias
    • decision makers seek out info that confirms past choices were good and don't look at evidence that contradicts them
    • eg. giving business to friends even though they are late
  33. sunk costs error
    • decision makers forget that decisions now cannot change past
    • eg. because of investment in something, unwilling to change
  34. escalation of commitment error
    • increased commitment to a previous decision despite evidence that it might have been wrong
    • eg. columbia space shuttle accident, people didn't want to go back and fix a prior decision b/c they didn't want to admit they were wrong
  35. self serving bias
    decision makers take credit for successes and blame failure on others
  36. hindsight bias
    • decision makers falsely believe that they would have accurately predicted the outcome of the event, once the outcome has happened
    • eg. someone claiming they knew a contract would fail, after it fails
  37. ethics
    • rules and principles that define right and wrong
    • not always black and white
  38. 4 views of ethics
    • utilitarian view
    • rights view
    • theory of justice
    • integrative social contracts
  39. utilitarian view of ethics
    • based on soley outcomes and consequences
    • use quantitative method for making decisions by providing greatest good for greatest #
  40. rights view of ethics
    • respecting and protecting individual liberties and privileges
    • eg. protecting free speech
    • can hinder productivity
  41. justice view of ethics
    • Managers impose and enforce rules fairly and impartially
    • follows legal rules and regulations
    • protects interests of stakeholders
    • employees lose desire to take risks and be innovative
  42. integrative social contracts theory
    ethical decisions based on existing ethical norms in industries and communities to determine right and wrong
  43. code of ethics
    • formal statement of an orgs primary values
    • ethical rules it expects employees to follow
    • 60 percent of canada's largest corps have one
  44. corporate social responsibility
    business's obligation, beyond law and economics, to do the right things and act in good positive ways for society
  45. classical view
    mgmts only social responsibility is to maximize profits
  46. socio economic view
    • mgmts social responsibility goes beyond making profits
    • protect and improve society's welfare
  47. obstuctional approach
    • avoidance of corporate social responsibility
    • managers engage in unethical and illegal behaviour
    • try to hide behaviour from stakeholders
  48. defensive approach
    • managers rely on on legally established rules to take minimal position toward corporate social responsibility
    • employees behave legally
  49. accomodative approach
    managers make choices that try to balance interests of shareholders w/ those of other stakeholders
  50. proactive approach
    • managers actively promothe interests of stockholders and stakeholders using orgs resources
    • mgmt feels need to be socially responsible
Card Set
Mgmt Ch. 4
Prep for midterm