MGMT 301 EXAM 2 Study Guide 2 PDF

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MGMT 301 EXAM 2 Study Guide 2 Professor Ronald Johnson...

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Richard Melli

Management Exam II Study Guide

Chapter 4: Computer Literacy, Information Competency & Interpersonal Skills (Chilean Mine) + 3 Roles:  Chilean Miners: o August 5th, 2010 – 33 miners were trapped 2,000 feet below the surface and were stuck there for 69 days with only rations for 2 days. o The president of Chile, Sebastian Pinera, asks, “What can we do?” and becomes the decision maker on the surface. o Luis Urzua was the foreman stuck below the surface. He became the decision maker below the surface and split everyone into teams to find possible ways out. He held the miners together physically and emotionally. o Centre Rock from PA helped with the drill to get them out.  Decision Making: o Problem solving and taking advantage of opportunities. o Problem solving is defined as the process of identifying a discrepancy between an actual and a desired state of affairs and then taking action to resolve it.  Computer Literacy (Also known as technology competency): o The ability to understand new technologies and use them to their best advantage. o Includes social media, Internet, and smart devices.  Information Competency: o The ability to locate, retrieve, organize, and display information of potential value to decision-making and problem solving. o This means locating credible and valuable information.  Analytical Competency: o The ability to evaluate and analyze information to make actual decisions and solve real problems. o This involves being able to digest and sort through information, even very large amounts of data, and then use it well to make good decisions that solve real problems.  3 Roles Of Information: o Decisional Roles:  Information used for entrepreneurship, resource allocation, disturbance handling, and negotiation. o Information Roles:  Information sought, received, transferred among insiders and outsiders. o Interpersonal Roles:  Information used for ceremonies, motivation, and networking.

Problem Avoider, Problem Solver, and Problem Seeker:  Problem Avoider: o These are managers that ignore information that would otherwise signal the presence of a performance threat or opportunity. o They are not active in gathering information and prefer not to make decisions or deal with problems.  Problem Solvers: o These managers make decisions and try to solve problems, but only when required. o They are reactive, gathering information and responding to problems when they occur, but not before. They deal reasonably well with performance threats, but they are likely to miss many performance opportunities.  Problem Seekers: o This is the highest skill level held by the highest managers. This is when a manager is working at their absolute best. o These managers are always looking for problems to solve or opportunities to explore. o They are proactive as information gatherers, and they are very forward thinking. They anticipate threats and opportunities, and they are eager to take action to gain the advantage in dealing with them.  Costa Concordia: o 400 people on this cruise ship were stranded off the coast of Italy and their captain, captain Shitino, abandoned the ship. Shitino would be considered a problem avoider as he refused to make decisions or be accountable. o On January 13th, 2012, the boat starts to sink and 33 people end up dying. o Problem solvers needed to worry about the environmental nightmare that this sinking ship created. Carnival, the makers of the ship, managers were proactive and are working on getting the ship moved.  There will be a question about this on the exam  PSU Ice Hockey Arena: o The Pegula Ice Area broke ground on February 12 th, 2012, only a few months after the Sandusky scandal. Joe Bautista was a problem seeker and called Pegula to make sure that this scandal would not be a problem and that Penn State could still expect a donation to build the new hockey arena.  There will be a question about this on the exam Performance Threat vs. Performance Opportunity (Coke/Honest Tea):  For Coke, a $47 billion company, the threat was that water and tea were becoming dominant, while soda intake was declining. The opportunity was their ability to get into tea.

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For Honest Tea, a $30 million organic tea company started in 2004, the threat was the fact that if Coke got into the tea business they could put Honest Tea out of business. The opportunity, however, was for Honest Tea to partner with Coke. That is what ended up happening and Honest Tea has been able to keep its own image. The major issue of a deal like this, however, is the blending of the two cultures of these companies. Honest Tea had to wonder if they were going to be absorbed or if they could influence Coke’s culture. Beatriz Perez is the Coke’s CSO and Seth Goldman is the founder of Honest Tea.  Question about this on the exam.

Cognitive Decision-Making Styles (Systematic vs. Intuitive):  This comes from Meyers Briggs.  Cognitive styles refer to the way individuals deal with information while making decisions.  Systematic (or sensation) thinking is when a person approaches problems in a rational, step-by-step, and analytical fashion. Systematic managers would be expected to make a plan before taking action and to search for information and proceed with problem solving in a fact-based and step-by-step fashion. These managers are interested in facts and the now.  Intuitive thinking is when a person is more flexible and spontaneous than the systematic thinkers, and they may be quite creative. Intuitive managers tend to deal with many aspects of a problem at once, jump quickly from one issue to another, and act on either hunches based on experience or on spontaneous ideas. These managers go beyond the facts to see relationships and focus on the future.  Now both of these types of thinking can be broken down further into either thinkers or feelers. Thinkers are very objective and focus on the problem first then the people. Feelers are very subjective and always think about people first.  Know the x and y axis of this table. It is a graph about information gathering (sensing and intuition) and information evaluating (thinking and feeling).  U.S. Airways Flight 1549 (Chesley Sullenberger): o January 15th, 2009 Sullenberger landed the plan in the Hudson River. o When the birds blew out both engines, he became a sensation thinker, trying to analyze the facts and his goals. However, the idea of going into the Hudson was a great intuitive decision. This whole situation happened in only three and a half minutes.  There will be a question on this Risk – Certain/Uncertain & Programmed/Non Programmed:  In this case, risk refers to the estimated probabilities of success. Risk environments are where information and facts are incomplete.

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Programmed decisions are very much certain and have very low risk associated with them. In this case, certain means that you have all the information you need to make a decision and you are 99% sure it will work. Programmed decisions apply to preplanned solutions based on the lessons of past experiences for problems that are relatively straightforward. An example of a programmed decision is the decision by human resources about holiday and vacation work schedules. Non-programmed decisions, on the other hand, are very risky and uncertain. Uncertainty here means you have no idea what to do because you have few facts to even assign probabilities and your decisions rely a lot on intuition. These decisions need to evaluate all the unique demands of each situation. Examples of non-programmed decisions are the decisions made by President Obama after the financial crisis hit.

Traditional Decision-Making Process:  Identify problem: o This is the stage of information gathering, information processing, and deliberation. This is also when specific goals are made. o Common problems with this step are defining problems too broadly or too narrowly, dealing with symptoms and not real causes, and focusing on the wrong problem to begin with.  Develop alternatives: o Managers must be clear during this step about what they know and what they need to know. Cost-benefit analysis should be done to evaluate all alternatives.  Decide on a decision: o Managers can use the classical decision models which views the managers as acting rationally and in a fully informed manner or they can use the behavioral decision model, which assumes people act in terms of their perceptions, which are frequently imperfect. Classical decision-making contains very programmed decisions and they try to optimize the deal, while behavioral decision-making is often done under uncertainty and the managers have to make satisficing decisions.  Implement a decision: o Until the manager implements the decision, nothing can or will happen to solve the problem. Some managers fall prey to lack-of-participation error when they do not include in the decision-making process those persons whose support is necessary for implementation.  Evaluate results: o Results need to be evaluated in order to decide if the desired outcome was obtained. Issues In Managerial Decision-Making:  Group Decision-Making: o Advantages:

More information, expertise, and viewpoints are available to help solve problems.  More alternatives are generated and considered during decisionmaking.  There is an increased understanding and a greater acceptance of the decision by group members.  There is an increased commitment of group members to work hard and support the decision. o Disadvantages:  Some members feel intimidated by others and give in to social pressures to conform.  A minority dominates; some members get railroaded by a small coalition of others.  More time is required to make decisions when many people try to work together. Heuristics: o Heuristics are simplified strategies we use when making decisions with limited information, time, and even energy. This is a decisional trap. o Availability heuristics occurs when people use information that is “readily available” from memory as a basis for assessing a current event or situation. This information, however, may be wrong or irrelevant. o Representativeness heuristics occurs when people assess the likelihood of something happening based on its similarity to a stereotyped set of past occurrences. This may mask the truly important factors relevant to the decision. o Anchoring and adjustment heuristic involves making decisions based on adjustments to a previously existing value or starting point. For example, a manager may set a new salary level for a current employee by simply raising the prior year’s salary by a percentage increment. The problem is that this increment is anchored in the existing salary level, one that may be much lower than the employee’s true market value. o Framing error is another potential decision trap. This occurs when managers evaluate and resolve a problem in the context in which they perceive it, so either positive or negative. This refers to the glass half full vs. glass half empty dilemma. o Confirmation error means that managers notice, accept, and even seek out only information that confirms or is consistent with a decision they just made. Critical information may be downplayed or denied, creating a “selective perception”. o Escalating commitment is a tendency to increase effort and perhaps apply more resources to pursue a course of action that signals indicate is not working. It is an inability or unwillingness to call it quits even when the facts suggest this is the best decision under the circumstances. Ego and desire play a huge role in this. 

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Super Soaker Story:  The developers name is Lonnie Johnson.  He found this product through intuition that his heat pump experiment could be used to make a cool squirt gun.  Using the traditional decision making process, Johnson identified an opportunity (chance to make a cool toy), developed alternatives (went to companies to sell the toy), implemented decisions he made (put super soakers on the market), and evaluated his results (renamed it and marketed it more). Amazon Case Study (DMAIC):  Amazon has gained the number one spot as the world’s largest Internet retailer, but never content to rest on past laurels, CEO Jeff Bezos keeps introducing and upgrading Amazon products and services.  Once Bezos saw that Amazon had outgrown its role as an immerse book retailer, he began to cell CDs and DVDs. Amazon is constantly diversifying its product offering, while also innovating to create new levels of service that complement existing products.  Amazon has been buying a lot of companies such as Audible.com and Zappos.com and a company called Kiva Systems that makes automated guided robots, which help Amazon’s efficiency in their distribution centers. They also spent hundreds of millions on expanding their Prime Instant Video Library.  Bezos did not stick with just analytical step-by-step process and really focused more on informed intuition. He uses creativity, flexibility, and spontaneity when making key decisions. He focuses a lot on customer service.  He made a strategic change to the logo adding an arrow from the A to the Z in the word Amazon in order to emphasize that you can get anything from A to Z there.  They decided a problem for them was same day delivery. They decided to analyze where their distribution centers were, how to get their product out more efficiently, and where are most of their products going. They improved by making more distribution and fulfillment centers, and then evaluated their decision. Cisco and DMAIC:  DMAIC: o Define o Measure o Analyze o Improve o Control  Cisco Example: o This was the video about the dysfunctional newscast that used DMAIC to get more organized and became a much better team. Chapter 5:

Planning:  This is the process of setting performance objectives and determining how to get them done. This occurs at every level of the business, like the candy section of Wal-Mart. Personal Planning (Two Styles):  You can either have a judging style meaning that you think very structured and have a formal planning approach or you could have a perceiving style meaning that you think in a very unstructured way and have an informal planning approach. Perceiving style focuses on flexibility above all else.  Judging styles do everything in a very linear way and they like to plan everything through steps, while perceiving styles is like a rotating wheel and they change up because of interests and values. No matter which route you take, all plan.  Know the benefits of these too Process of Planning (5 Steps):  Define Objectives  Compare Current to Objectives  Compare Future Alternatives  Analyze Alternatives/Make Plan  Implement & Evaluate  Stock Keeping Unit: Each individual unit that could be sold. Four Components of Good Planning (Undergraduate NetImpact Chapter):  Action Oriented: o Keeping a results-driven sense of direction  Priority Oriented: o Making sure the most important things get first attention  Advantage Oriented: o Ensuring that all resources are used to best advantage  Change Oriented: o Anticipating problems and opportunities so they can be best dealt with Priorities (Big Rocks):  In the big rocks example, if you don’t put the big rocks (big priorities) in first then the small rocks (small priorities/simple stuff) won’t fit in.  Priorities are key in planning and you must start with the most important stuff first. You need to have effective time management to do this and it is all about complacency avoidance. Amusement Park Planning Discussion:  This focuses on the question of what needs to be planned to make a Disney amusement park in Shanghai.

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Marketing: Has to plan advertising, channels of advertising, public relations, and market research. Finance: Has to plan the cost, investors, stock, and sponsorship. Accounting: Has to create balance sheets, budgets, payroll, taxes, and audits. Mgmt: Has to plan staffing, focus on project management, and manage resources. Supply Chain: Has to plan sourcing, procurement, logistics, queuing, manufacturing, supplier relations, and day-to-day operational items needed. Risk Mgmt: Has to worry about insurance/liability, providing legal and compliance rules, and real estate management.

Planning Hierarchy (5 Components):  Mission and Purpose: o Ex: You want to serve the world as the number one supplier of recyclable food containers.  Top Management Objective: o Refers to Firms. o Ex: You want to deliver error-free products meeting customer requirements 100% of the time.  Senior Management Objective: o Refers to Manufacturing Division. o Ex: You want 100% on-time production of error-free products.  Middle Management Objective: o Refers to Plants. o Ex: You want to increase error-free product acceptance rate by 16%.  Lower Management Objective: o Refers to Shift Leaders. o Ex: You want to assess machine operator skills and train for error-free production.  This is designed to create control and coordination.  We use the objective hierarchy to have alignment and follow through.  Benefits: Aligns individuals and organizational efforts and insure follow through. Long vs. Short Range:  Long range plans look ahead three or more years into the future. An example would be Disney planning to open Shanghai Disney.  Short-range plans cover three to twelve months. There is a lot of constant turnover in the short term. Strategic/Operational/Functional:  Strategic plans focus on the organization as a whole or a major component. These are longer-term plans that set broad and comprehensive directions for an organization.

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Operational plans (also called tactical plans) are developed to implement strategic plans. They are shorter-term and step-by-step means to putting the strategies into action. Functional plans indicate how different parts of the enterprise will contribute to the overall strategy. Examples include financial plans that deal with money required to support various operations or marketing plans that deal with the requirements of selling and distributing goods or services. Functional plans include financial, marketing, production, facilities, and human resources. In an example of planning for PSU students, the strategic plan for us would include deciding to go to college over working, while the operation and tactical plans include deciding what major you want to do and how do you get in it. Functional planning is you in every single class. Another example is Russ Rose and the women’s volleyball team. The strategic plan is what do you need to do to win a national championship. The operational plan is how do you recruit and create a great team. The functional plan is your game plan for every game.  Will be asked application questions on this like is this functional, operational, or strategic? Question will relate to Nordstrom!

Planning Policies and Procedures:  A policy communicates broad guidelines for making decisions and taking action in specific circumstances.  A procedure (or rule) describes exactly what actions to take in specific situations. They are often found in the employee handbooks or manuals as SOPs (standard operating procedures). They define specific actions that need to be taken. You also need to worry about how you can enforce it and communicate it.  Will be a question about policy and procedures of office romance. Budgeting:  A budget is a plan that commits resources to activities, programs, or projects. It allocates scarce resources between multiple and often competing uses.  This connects plans and resources.  A flexible budget allows resources to vary in proportion with various levels of activity, such as monies to hire temporary workers when workloads exceed certain levels.  Zero-based budget deals with the problem of resource allocations that are rolled over from one time period to the next without any real performance review by approaching each budget period as if it were brand new. No guarantee exists for renewing any past funding to eliminate waste. Planning Tools (The Big Six):  Forecasting: o The ...