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This 8 page Study Guide was uploaded by Anna Notetaker on Tuesday March 29, 2016. The Study Guide belongs to 3890 at Middle Tennessee State University taught by Prof. Jean Wilson in Spring 2016. Since its upload, it has received 36 views.
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Date Created: 03/29/16
Managerial Decision Making Exam II Study Guide Four Forces: 1. Environment – Competition, Government, Public, etc. 2. Organizational – Interactions, Personality, Commitment, etc. 3. Task Demands – Functions, Responsibilities, etc. 4. Personal Needs – Individual’s Needs Decision Making is synonymous with managing and leading. We must look at our failures to actually improve our decision making. Decision must be made on a timely and costeffective basis. Three Key Components in Decision Making 1. The Decision Making Process 2. The Decision Maker 3. The Decision Decision making is the process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action. Decision making is the most significant activity engaged in by managers in all types of organizations and at any level at the heard of what managers do. Category I – Routine, Recurring, Certainty with Regard to the Outcome. It is Lower Management and is WellStructured. This is when it is Dull, Routine, etc. Category II – NonRoutine, Nonrecurring, Uncertainty with Regard to the Outcome. It is Upper Management and is IllStructured. This is Unexpected. Top Management makes Category II decisions, while Operating Management makes Category I decisions. Middle Management supervises the making of Category I decisions and supports the making of Category II decisions. Decision Theory is generally regarded as a Quantitative discipline. 50% of the time, managers are having to correct poor decisions. Planning, Leading, Organizing, and Control are used to make any management decision. General Environment: 1. Legal 2. Political 3. Economic 4. Technological 5. Socio/Cultural Specific Environment: 1. Competition 2. Customers 3. Public Pressure Group 4. Suppliers Programed Decisions is broken down into rule (explicit), policy (parameter), and procedures (stepbystep). Problems can be WellStructured or IllStructured. TIPC 1. Technical – First Level Management 2. Interpersonal – First, Middle, and Top Management 3. Political – First, Middle, and Top Management 4. Conceptual – Top Management Synergy is when a company puts people together for group work in hopes to result in work that will create a greater outcome and result. (2+2=5) Mr. IID 1. Informational 2. Interpersonal 3. Decisional Decision Making Process: 1. Formulation of the Problem 2. Alternative Solutions 3. Analysis of Alternatives 4. Selection of Alternatives 5. Action 6. Evaluation Decision Making is a process of defining the problem, identifying the alternatives, and choosing the best one. Objectives are the ends for the means of managerial decision making. Alternatives result from the search and are evaluated through judgement, bargaining, and analysis. Analysis is least used, while judgement is easiest to use. Bargaining is the best when there is controversy. Sometimes the choice is doing nothing. The decision to do nothing can be useful or at least better than the alternatives. Conditions that managers use to make decisions much more under risks and uncertainty. 1. Certainty – knowledge of consequences of each alternative 2. Uncertainty – lack of knowledge of consequences of each alternative 3. Risk – assumptions about alternatives Take the Corrective Actions as Necessary; 1. Reorder evaluations 2. Reschedule your workflow 3. Reassign your personnel 4. Renew the search/new alternatives 5. Revise objectives Decision Making is dynamic, covers a span of time, continuous, direct and control of nature, degree, and pace. Optimistic is Max the Max, Pessimistic is Max the Min, and Minimize the Max Regret is Min the Max. Omnipotent view is when the manager is stated as being directly responsible for success or failures of the company. Symbolic view is when the manager is stated as having limited effect on organizational outcomes because a number of the factors are out of their control. Implement Decision is the planning at quality of work with appropriate implementation is the key to success. (involvement) o Fast Forward – Input, Concurrent – Transmission, and Flash Back – Output Embodying Products Goods/Services Licensing is related to Manufacturing, Franchise is related to Services. Market development is when you introduce the same product into a new market. Product development is when you introduce a new product into the same market. Market penetration is when you introduce the same product into the same market. Diversification is when you introduce a new product into a new market. Retrenchment is an act of cutting down or reducing. Turnaround is an abrupt or unexpected change, especially one that results in a more favorable situation. SMART 1. Specific 2. Measurable 3. Attainable 4. Realistic 5. Time Bound Three C’s from IBM: 1. Conceit 2. Complacency 3. Conservatism Cannibalization is when there is a reduction in sales of one product as a result of introduction of a new product by the same producer. o Organizing is the process of creating the structure. Organizational Structure is the formal arrangement of jobs within the company. Organizational Design is the development or the changing of the Organization’s structure. If a business flattens out, it creates two positive outcomes – Faster speed (better communication) and saving money. Restructure: 1. Work Specialization: Divide task into Jobs 2. Departmentalization: Grouping Jobs 3. Chain of Command: Continuous line of Authority Authority Responsibility Unity of Command 4. Span of Control: Wider at the bottom and narrower at the top 5. Centralization/Decentralization: Centralization is Top Level Management. This happens when there is illstructure, nonprogrammed, or a crisis has occurred. Decentralization is dispersed. It is Lower Level Management. You often see huge companies or dispersed companies practiced a Decentralized Management. 6. Formalization: Standardization and Mutual Adjustment. If Lower Level Management is unwilling to make a decision, it is then taken to Top Level Management. o Mishandled Luggage, Late Flights, Customer Complaints Lower Level Management Category I Well Structured o Recession, 9/11, Top Level Management Category II IllStructured Stability: 1. Rapid Upheaval/ Great deal Uncertainty 2. Slow/No Growth Market 3. Big/Successful Enough Mechanistic – High Specialization, Rigid Departmentalization, Clear Chain of Command, Narrow Spans of Control, Centralization, High Formalization Organic: Cross Functional Teams, Cross Hierarchical Teams, Free Flow of Information, Wide Span of Control, Decentralization, Low Formalization Process Departmentalization: More Efficient Flow of Activities, but can only be used with certain types of products. Customer Departmentalization: Customers’ needs and problems can be met by specialists, but it had duplication of functions and limited view of organizational goals. Product Departmentalization: Allows specialization in particular products and services, managers can become experts in their industry, closer to customers, but it has duplication of functions and limited view of organizational goals. Functional Departmentalization: Efficiencies from putting together similar specialties and people with common skills, knowledge, etc, coordination with functional areas, indepth specialization, but it has poor communication across the functional areas and limited views of organizational goals. Geographical Departmentalization: more effective and efficient handling of specific regional issues that arise, serve needs of unique geographic markets better, but duplication of functions and can feel isolated from other areas. Multinational Corporations: o Global Ethnocentric Attitude Home Perspective o Multidomestic Polycentric Attitude Host Perspective o Transnational/Borderless Geocentric Attitude World Perspective Grand Corporate Level Strategy o Growth: Concentration o Market Development: Same product, new market o Product Development: new product, same market o Market Penetration: Same product, same market o Diversification: new product, new market Hofstede’s Dimensions: o Individualist or Collectivist o Power Distance o Uncertainty Avoidance o Quality (Femininity) or Quantity (Masculinity) o Short term or long term America is an Individualist that has created a small power distance, which is low on uncertainty avoidance and focuses on quantity. This creates a short term environment. Marketing: o Price o Product o Place o Promotion Promotion Mix: o Advertising o Personal Selling o Public/Public Relations (PR) o Sales Promotions Rebates Promotion Objectives: o Inform o Remind o Persuade o Build relations Breakeven – no loss or gain. Maintain cost Variability Feedforward – Preventatives – Most Desired Concurrent – MGMT by wandering around Feedback – Recall – Most Common Classical Socioeconomics Classic al Socio. Milton Freidman Law Protect and Improve (Minimal) (Above/Beyond) Product Life Cycle o Introduction: No profits – recoup and R&D costs o Growth: Profit is up and Peaks – competition begins o Maturity: Peak o Decline: Market Shrinks Pricing is figured in the product’s intro stage and informs the customer of the product. Brand Loyalty is encouraged in the Growth stage of the product. It might reduce pricing because of new competitors – they try to persuade and build relationships. Maturity is when their goal is to attract new customers – new features are added. It reminds them why you are here – profit margin narrows. Decline is decisions – trying to figure out if you should keep the product. Some type of turnaround will occur and the prices will decline. Derived Demand – Looking at final customer o 80% sales and 20% customers o Focuses on a whole and is market driven SWOT Analysis o Internal: S and W = Strength and Weakness o External: O and T = Opportunities and Threats Michael Porter: 1. Threat of New Entrants 2. Threat of Subs 3. Bargaining Powers of Buyers 4. Bargaining Powers of Suppliers 5. Current Rivals BS – Brand Competitors, Same Product Product Competitors – other options around the brand competitors. Powers: 1. Legitimate – authority of position 2. Reward – positive action 3. Coercive – negative action 4. Referent – admiration in others Push/Pull – something is pushed through the channel by manufacturers or something is pulled through the channel by customers/stores. Price Floor Pricing – Methods for calculating price, in which to maintain full plant operating capacity – a portion of a firm’s output that covers only marginal cost of production (limited). Conflict 1. Traditional – bad, avoid it. 2. Human Relations – natural, inevitable 3. Interactionalist – absolutely necessary Level Low/None Optimal High Type Dysfunctional Functional Dysfunction al Internal Apathetic Self- Disruptive Unresponsive to Critical Change Innovativ e Performanc Low High Low e Types of Conflict: 1. Task – What it is About, Over Goals 2. Relationship – Interpersonal 3. Process – How it is Done (AirBus/Boeing – Merging Attempt) Resolving Conflict: 1. Accommodate – You Win, I lose 2. Avoid – Lose/Lose 3. Compromise – Win/Win (Best for Interview) 4. Collaborate – Win/Win (Best for Interview) 5. Force – I Win, You Lose (This is Best Known as a Report Card) Adopter Categories (Price Skimming): Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Inelastic: More bought with Price decrease Elastic: demand with no changes regardless of price BCG Matrix HIGH MKT Growth STARS QUESTION MARKS LOW MKT Growth COWS DOGS HIGH Relative MKT Share LOW Relative MKT Share STARS – large share of market and high growth rate ($$$$) Great Deal of support needed. COWS – large share of market and low growth rate. Helps support the stars. QUESTION MARKS – small share of market and high growth rate. Problem Child: it is not working right. DOGS – Dying. Low share of market and slow growth.
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