Mgt study exam 3 guide - last exam 3 PDF

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Chapter 22:: Decision Making Rational Versus Irrational Decision Making: most daily decisions made through irrational approach. Rationale is a deliberate, step by step process for making and implementing a decision. Gut feelings: irrational approach. Works well for them because it is based on EXPERIENC EXPERIENCE E 2-1: Overview of Managerial Decision Making Decision making action or process of thinking through possible options and selecting one Stakeholders: individuals or groups that are affected by an organization (customers, employees, shareholders Managers at lower level can have a smaller impact but sometimes make big impact on their own teams. Consequences: -reduce productivity, increase expenses, frustration Deciding when to decide: better to minimize a bad decision’s impact on org and stakeholders by recognizing it quickly and correcting it; sometimes managers have to make decision without all the information because waiting too long can make a negative impact Correct answer: managers must make decision knowing that someone might be upset Ethical answer: sometimes decision must be made beyond if it just upsetting someone; situations in which actual harm can be inflicted. Maxing shareholder wealth is often short sighted of a managerial decision. 2-2: How the brain processes information to make decisions Two systems of decision making in the brain: -Reflective system: logical, analytical, deliberate, methodical -Reaction system: quick, impulsive, intuitive, relaying on emotions on habits to provide cues for what to do next. *brain can only use one system at a time for processing information Reaction Decision Making: managers making quick decisions on their gut feeling based on past similar experiences; intuitive decision-making system Reflective Decision Making: big decisions should be made reflectively not impulsively; wait to address a volatile situation The role of emotions: Effective decision-making, then, relies on both logic and emotions.

Emotional Intelligence: ability to recognize, understand, pay attention to, and manage one’s own emotions and the emotions of others. It includes self-awareness, self-regulation, empathy, social skills

2-3: Using groups to improve decision making Programmed decisions: decisions repeated over time with existing set of rules and can be developed to guide the process -sometimes complex -heuristics: mental shortcu shortcuts ts to help with decision making. Example: retail store manager increases staff by 30 percent every time there is big sale Because it worked well in the past Nonprogrammed Decisions: novel; unstructured and generally based on criteria that are not well-defined. Aka nonroutine or high-involvement decisions because require greater involvement and thought. Example: manager thinking about adopting new tech. consider a lot of questions and effects Decision-Making Process: six steps of decision-making process 1. 2. 3. 4. 5. 6.

Recognize that a decision needs to be made. Generate multiple alternatives: engage in brainstorm with others Analyze the alternatives: conduct research in evidence-based decision making Select an alternative. Implement the selected alternative. Evaluate its effectiveness. *sometimes individuals often skip or spend too much time on some steps

2-4: Barriers to Effective Decision-Making Bounded rationality: for complex issues we cannot be fully rational because cannot fully grasp the other alternatives or the implications for them. Brans have limitations. Small number of choices I.e.: sometimes managers make decisions with incomplete information Escalation of Commitment: when someone still goes on with a choice because they committed to it with (time, money, thought) even if the choice was a reevaluated as a bad choice

I.e.: managers buy the big brand-named software package, even though the smaller one is more reliable for her company. But she does not change her decision because she already investment into it. Uncertainty: can make it difficult for some managers to make decisions because committing to one means foregoing other options Personal Biases: confirmation bias: pay more attention to information that confirms our existing beliefs and less attention to info that is different that our beliefs. When manager hires a favorable employee, they tend to overlook poor performance and give more weight to excellence; opposite is also true when you dislike someone Conflict: Process conflict: about best way to do something; can lead to improved performance. Relationship conflict: between individuals more personal and involves attacks on a person rather than idea 2-5: Improving the quality of Decision Making Summary of Techniques That Ma Mayy Improve Individual Decis Decision-Making ion-Making Type of D Decision ecision Programmed decisions

Nonprogrammed decisions

Technique

Benefit

Heuristics (mental shortcuts)

Saves time

Satisficing (choosing first acceptable solution)

Saves time

Systematically go through the six steps of the decision-making process.

Improves quality

Talk to other people.

Improves quality generates more options, reduces bias

Be creative.

Improves quality generates more options

Summary of Techniques That Ma Mayy Improve Individual Decis Decision-Making ion-Making Type of D Decision ecision

Technique

Benefit

Conduct research; engage in evidence-based decision-making.

Improves quality

Engage in critical thinking.

Improves quality

Think about the long-term implications.

Improves quality

Consider the ethical implications.

Improves quality

With experience comes heuristics to make better decisions Satisficing: selects the first acceptable solution without seeing what the best solution is I.e.: compare prices and figure out the price by weight( or volume) to ensure that every item you select is the cheapest option; but if in hurry, you just buy the generic products knowing that they’re cheap Techniques for better decision making: Step 1: recognizing that a decision needs to be made: effective managers will not shy away from making decisions that would obviously benefit their teams Step2: Generating Multiple alternatives: for nonprogrammed decision: do not rush process -talk to other people -be creative: generate new or original ideas; view problem through multiple perspectives Step 3: analyzing alternatives: -evidence based decision making rely on data and info rather than intuition -talk to other people talks to other people will generate options -Critically think about options: disciplined process of evaluating the quality of information, especially data collected from other sources

Common Logical Fallacies

Name

Descrip Description tion

Examples

Ways to C Combat ombat This Lo Logical gical Fallacy 

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Non sequitur (does not follow)

False cause

The conclusion that is presented is not a logical conclusion or is not the only logical conclusion based on the argument(s).

Assuming that because two things are related, one

Our biggest competitor is spending more on marketing than we are. They have a larger share of the market. Therefore, we should spend more on marketing. The unspoken assumption: They have a larger share of the market BECAUSE they spend more on marketing.

“Our employees get sick more when we close for holidays. So, we should stop



Examine all the arguments. Are they reasonable? Look for any assumptions that are being made in the argument sequence. Are they reasonable? Try to gather evidence that supports or refutes the arguments and/or assumptions.

In this example, you should ask: Are there any other reasons, besides their spending on marketing, why our competitor has a larger share of the market? This is like non sequitur; it assumes in the argument sequence.

Common Logical Fallacies

Name

Descrip Description tion

Examples

caused the other

closing for holidays.”

Ways to C Combat ombat This Lo Logical gical Fallacy 

Ask yourself whether the first thing really causes the second, or if something else may be the cause.

In this case, most holidays for which businesses close are in the late fall and winter (Thanksgiving, Christmas), and there are more illnesses at this time of year because of the weather, not because of the business being closed.

Ad hominem (attack the man)

Redirects from the argument itself to attack the person making the argument

“You aren’t really going to take John seriously, are you? I heard his biggest client just dropped him for another vendor because he’s all talk and no substance.”



The goal: if you stop trusting the



Does the second person have something to gain, a hidden agenda, in trying to make you distrust the first person? If the first person’s

Common Logical Fallacies

Name

Descrip Description tion

Examples

Ways to C Combat ombat This Lo Logical gical Fallacy

person, you will discount their argument.

Genetic fallacy

You cannot trust something because of its origins.

“This was made in China, so it must be low quality.” “He is a lawyer, so you can’t trust anything he says.”

argument came from someone else, would it be persuasive?

This fallacy is based on stereotypes. Stereotypes are generalizations; some are grossly inaccurate, and even those that are accurate in SOME cases are never accurate in ALL cases. Recognize this for what it is—an attempt to prey on existing biases. 

Appeal to tradition

If we have always done it one way, that must be the right or best way.

“We’ve always done it this way.” “We shouldn’t change this; it works fine the way it is.”



Consider whether the situation has changed, calling for a change in the way things are being done. Consider whether new information suggests that the traditional

Common Logical Fallacies

Name

Descrip Description tion

Examples

Ways to C Combat ombat This Lo Logical gical Fallacy viewpoint is incorrect. Remember, we used to think that the earth was flat.





Bandwagon approach

If most people are doing it, it must be good.

“Everybody does it.” “Our customers don’t want to be served by people like that.”



Remember that the majority is sometimes wrong, and what is popular is not always what is right. Ask yourself whether “following the pack” is going to get you where you want to be. Remember that organizations are usually successful by being better than their competitors at something . . . so following the crowd might

Common Logical Fallacies

Name

Descrip Description tion

Examples

Ways to C Combat ombat This Lo Logical gical Fallacy not be the best approach to success.



Appeal to emotion

Redirects the argument from logic to emotion

“We should do it for [recently deceased] Steve; it’s what he would have wanted.”

-Considered long-term implications -consider ethical implications: ethical decision three



Develop your awareness of your own emotions and recognize when someone is trying to use them. Ask yourself whether the argument stands on its own without the appeal to your emotions.

-James Rest’s Ethical decision-making model: 1. 2. 3. 4.

Moral sensitivity—recognizing that the issue has a moral component. Moral judgment—determining which actions are right vs. wrong. Moral motivation/intention—deciding to do the right thing; and Moral character/action—doing what is right.

Step 4: selecting an alternative: if there are time pressures, waiting may not be possible -recognizing that perfection is unattainable -talk to other people Step 5: Implementing the Selected Alternative -strive to make decisions that you feel good about, even in the face of pressures to do wrong Step 6: Evaluating the effectiveness of your design: managers sometimes skip this step; but still important 2-6: Group Decision Making Advantages of group decisions: -incorporate different perspectives and ideas with diverse group (different opinions and viewpoints) I.e.: hiring committee made up of male and women: diverse opinions; equal thought -everyone brings out unique form of knowledge -brainstorming: generating as many ideas as possible and options

-involvement=commitment Disadvantages of Group Decisions: -groupthink: occurs when group members chose not to voice their concerns or objections because they would rather keep the peace -occurs when no positive team spirit -suppression of dissent: one individual in group has more power and discourages other opinions How to form a quality group: -devil’s advocate: assigning members to reduce groupthink; will critic and challenge and point out flawed logic pushes group members to think more deeply -reducing conflict by having a common goal and working together rather than against one another Summary of Techniques That Ma Mayy Improve Group D Decision-Making ecision-Making Type of Decision

Group decisions

Technique

Benefit

Have diverse members in the group.

Improves quality generates more options, reduces bias

Assign a devil’s advocate.

Improves quality reduces groupthink

Encourage everyone to speak up and contribute.

Improves quality generates more options, prevents suppression of dissent

Help group members find common ground.

Improves quality reduces personality conflict

Chapter 55:: Ethics, Corporate Respons Responsibility, ibility, and Sustainability 5-2: Ethics: study of moral obligations or separating right from wrong Framework for classifying levels of ethical analysis:

Domain of ethics: no specific laws, but standards of conduct based on shared principles and values are there Factors that lead to ethical problems: greed, self-gain at expense of others, org atmosphere that condones unethical behavior, slippage, unrealistic goals set by top etc. Ethical dilemmas: situations in which there is not an optimal choice between two options which solves an issue or makes opportunity ethical; originate from unawareness of how to sort out through potential consequences of our actions or inaction

I.e.: train killing example; manager must choose between investors or employees Terminal values: desired goals, objectives, end states that individuals wish to pursue

I.e.: freedom, ssecurity, ecurity, pleasure. Instrumental values: preferred means of behavior used to obtain those goals.

I: helpful, honest, courageous Ethical responsible making: 5-3: Et hical principles and respon sible decision making Utilitarianism: a consequentialist, ends justifies means approach: -action is morally okay if it produces greatest good for greatest number of people

-usually used when resources are scarce, conflict in priorities, and there is no clear choice that meets everyone is needs Universalism: a duty-based approach -considers the welfare and risks of all parties when considering policy decisions and outcomes -takes human beings, values seriously -limitations: prove that not always realistic or practical to all situation because there often must be a sacrifice

Example: the Washington post C CEO EO contemplates if she should post the leaked info about the Vietnam war or protec protectt her newspaper—president forced to resign, and Vietnam war was los lost, t, and troops withdrawn -universalist ethical principles can also save lives, protect integrity of a nation, and stop meaningless destruction Rights: A moral and legal Entitlement-Based Approach: -legal rights: entitlements that are limited to a particular legal system and jurisdiction, i.e.: constitutional rights life liberty and happiness, speech -moral rights: universal and based on norms in every society. I.e.: the right not to be enslaved and the rright ight to work -limitations: used to disguise and manipulate selfies and unjust political interests; difficult to determine who deserves what when both parties are ‘right’; people can exaggerate certain rights at expense of others Justice: Procedures, Compensation, and Retribution -four major tenants: 1) individuals treated equally 2) justice is served when all persons have equal opportunities and advantages to society 3) fair and decision practices and agreements among parties should be practiced

4) punishment to someone who has inflicted harm on others and compensation to those for a past harm or injustice against them Questions to ask: fair? Right? Who gets hurt? Who must pay for consequences? Do we assume responsibility?

I.e.: updating machinery that failed in BP oil crisis and banks’ lending institutions too much; would have avoided if asked those questions -limitations: who decides who is right/wrong/who is harmed; who has moral authority to judge; all facts are not available. Virtue Ethics: Character-Based Virtues: based on traits such as truthfulness, wisdom, happiness, and well-being. -related to universalism -possessor has good character Limitations: some may disagree about who is virtuous in different situations so they would refuse to use that persons character as a principle; also who defines virtuous, when a complex act or incident is involve that requires facts and objective to criteria to fix. The common good: sum of those conditions of social life which allow social groups and their individual members relatively thorough and ready access to their own fulfillment. -decisions reactions extend to broader society and the common good of the many -HOW will decision affect broader physical, cultural, and social environment, in which my loved ones are? -limitation: who determines the common good is in situations where two or more parties differ over whose interests are violated. Individualistic/capitalistic: sometimes hard to give up interests in which it benefits them but not the greater good Ethical Relativism: A self-interest approach: -ethical relativism: people set their own moral standards for judging their actions.

India, ia, do as the Indians do’ -each culture differs: ‘when in Ind

-limitations: people have blind spots or interest that may interfere with facts and reality. -countries with dictatorships or absolute belief systems have true followers and have this model sometimes -is south Africa apartheid policy implementation of segregation; international firms were required to follow their policies when in SA too -individual level: offer source of stability and self-control while also affecting job satisfaction and performance; org level: org wide values implementation/ethical behavior standards 5-4: Leaders hip: Ethics at the Organizati onal Level Leadership: Organizational Leadership: ability to influence followers to achieve common goals Ethisphere: a private firm that evaluates firm’s ethical behavior and responsibilities Five criteria for EQ score: -company’s ethics and compliance program -whether or not and the extent to which ethics is embedded into a company’s culture -corporate citizenship and responsibility, elements in environmental impact -corporate governance: whether a firm’s CEO and board chairs are held by one or separate people -leadership, innovation, and reputation

-higher score the better Three levels of Personal Moral Development: Preconventional: fo...