6342 D1

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Chapter 1

Managing and Performing

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Learning Objectives

1-1 Summarize the major challenges of managing in the new competitive landscape.

1-2 Describe the sources of competitive advantage for a company.

1-3 Explain how the functions of management are evolving in today’s business environment.

1-4 Compare how the nature of management varies at different organizational levels.

1-5 Define the skills you need to be an effective manager.

1-6 Understand the principles that will help you manage your career.

Managing in a Competitive World

Four ongoing challenges that characterize the business landscape:

Globalization.

Technological Change.

Knowledge Management.

Collaboration

What defines the competitive landscape of today’s business? We will be discussing many relevant issues in the course, but we begin here by highlighting four ongoing challenges that characterize the business landscape: globalization, technological change, the importance of knowledge and ideas, and collaboration across organizational boundaries.

Globalization

Today’s enterprises are global, with offices and production facilities all over the world.

A company’s talent and competition can come from anywhere.

Globalization affects small and large companies.

Globalization has changed the face of the workforce.

Today’s enterprises are global, with offices and production facilities in countries all over the world. Corporations operate worldwide, transcending national borders. Companies that want to grow often need to tap international markets. Globalization also means that a company’s talent and competition can come from anywhere.

Technological Change

Technology and business:

Online customer engagement, artificial intelligence (A I), data protection, and privacy.

Challenges created by rapid changes.

The Internet creates opportunities but also introduces threats.

The McKinsey Global Institute predicts that the next generation of connectivity technologies and network upgrades will bring billions of new users online in developing economies and create trillions of dollars in advanced economies worldwide.

Technology both complicates things and creates new opportunities. The challenges come from the rapid rate at which communication, transportation, information, and other technologies change.

Knowledge Management

Knowledge workers: Workers whose primary contributions are ideas and problem-solving expertise.

Knowledge management: Finding, unlocking, sharing, and capitalizing on the most precious resources of an organization:

Expertise.

Skills.

Wisdom.

Relationships.

Knowledge management is the set of practices aimed at discovering and harnessing an organization’s intellectual resources—fully using the intellects of the organization’s people.

Collaboration

Collaboration requires productive communications among different departments, divisions, or subunits of the organization.

Coopetition: simultaneous competition and cooperation among companies with the intent of creating value.

Leveraging knowledge for maximum impact requires people in different departments, divisions, or subunits of the organization to collaborate and communicate effectively.

Perhaps there's no more vivid and useful example of these dynamics than the international efforts to combat pandemics. Well-coordinated global collaborations, including between the United States and China, defeated the H1N1 pandemic in 2009 and later prevented Ebola pandemics. But when COVID-19 hit, relations between those two countries were worse. This and other factors– political discord and intense competition for medial supplies– severely delayed and damaged the global response.

Managing for Competitive Advantage

A key to understanding the success of a company is how well it both creates and sustains competitive advantage.

Innovation.

Quality.

Service.

Speed.

Cost Competitiveness.

Sustainability.

The fundamental drivers of competitive advantage contributors to bottom-line organizational performance are innovation, quality, service, speed, cost competitiveness, and sustainability.

Managing for Competitive Advantage: Innovation

A firm must:

Adapt to changes in consumer demands and to new competitors.

Continually innovate—especially important in the global marketplace.

Innovation comes from people and must be a strategic goal.

Innovation is the introduction of new goods and services. Products don’t sell forever; in fact, they don’t sell for nearly as long as they used to because competitors are continuously introducing new products. Your firm must continually innovate, or it will die.

Managing for Competitive Advantage: Quality

Quality is the excellence of your product (goods or services).

Historically, quality referred to attractiveness, lack of defects, and dependability.

Today it is about preventing defects before they occur, achieving zero defects in manufacturing, and designing products for quality.

A philosophy of continuous improvement.

Most companies claim that they are committed to quality. Customers expect high-quality goods and services, and often they will accept nothing less. Quality can be measured in terms of product performance, customer service, reliability (avoidance of failure or breakdowns), conformance to standards, durability, and aesthetics.

Managing for Competitive Advantage: Service and Speed

Service:

Giving customers what they want or need, when they want it.

Continually meeting the needs of customers and establishing mutually beneficial long-term relationships.

Making it easy and enjoyable for the customer.

Speed:

Fast and timely execution, response, and delivery of products.

Important quality measures often pertain to the service customers receive. Service means giving customers what they want or need, when they want it. World-class service focuses on continually meeting the needs of customers and establishing mutually beneficial long-term relationships.

The speed requirement has increased exponentially. Everything, it seems, is on fast-forward. Speed is no longer just a goal of some companies; it is a strategic imperative.

Managing for Competitive Advantage: Cost and Sustainability

Cost competitiveness:

Keeping costs low to achieve profits and be able to offer prices that are attractive to consumers.

Companies must pay close attention to cost because consumers can compare prices from thousands of competitors.

Sustainability:

Minimizing the use and loss of resources, especially those that are polluting and nonrenewable.

Cost competitiveness: if you can offer a desirable product at a lower price, it is more likely to sell. Cutting energy waste can cut costs and help the bottom line while also helping the environment.

Although sustainability means different things to different people, in this text we emphasize a long-term perspective on sustaining the natural environment and building tomorrow’s business opportunities while effectively managing today’s business,

Exhibit 1.1 Staying ahead of the Competition

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Faced with these challenges, how can you make good decisions? The ideal decision-making process includes six phases.

The Functions of Management

Management

Working with people and resources to accomplish organizational goals efficiently and effectively.

Rosalind Brewer, former president and C E O of Sam’s Club, focused on building a dynamic organization. She recently was appointed C O O and group president of Starbucks.

Sarah Bentham/AP Images

To be effective is to achieve organizational goals. To be efficient is to achieve goals with minimal waste of resources—that is, to make the best possible use of money, time, materials, and people.

The Four Functions of Management

Planning: Delivering Strategic Value.

Systematically making decisions about goals and activities to be pursued.

Organizing: Building a Dynamic Organization.

Assembling and coordinating resources needed to achieve goals.

Leading: Mobilizing People.

Efforts to stimulate high performance by employees.

Controlling: Learning and Changing.

Monitoring performance and making needed changes.

Value is an important concept in the planning function. It refers to the monetary amount associated with how well a job, task, good, or service meets a user’s needs.

SPOTLIGHT ON . . . Business for the Better Ashoka’s Bill Drayton

In Drayton’s view, anyone can be a social entrepreneur. All it takes, he says, is the ability to see a problem, put others’ skepticism aside, and allow yourself the time to inch your way first toward a vision and then to a solution.

Should every manager have the responsibility to do good and do well? Why or why not?

Drayton argues that anyone can be a social entrepreneur. What sort of problems would you wish to solve?

Questions:

Discussion of the first question will vary and may focus on how to do “good,” and when and if such activities are appropriate. Students may debate between profit and social responsibility type actions.

For the second question, student answers will vary; however, government, nonprofit and church activities may be mentioned. Students may also discuss social media-based activities.

Performing All Four Management Functions

A typical day for a manager is not neatly divided into the four functions.

Interruptions, meetings, and firefighting prevent a manager from smoothly tending to these functions.

Good managers devote adequate attention and resources to all four management functions.

Some managers are particularly interested in, devoted to, or skilled in one or two of the four functions but not in the others. In order to be a good manager, you must realize the importance of all four functions.

Management Levels

Top-Level Managers

Middle-Level Managers

Frontline Managers

Top-level managers are the senior executives of an organization and are responsible for its overall management. Often referred to as strategic managers.

Middle-level managers are located in the organization’s hierarchy below top-level management and above the frontline managers. Sometimes called tactical managers, they are responsible for translating the general goals and plans developed by strategic managers into more specific objectives and activities.

Frontline managers, or operational managers, are lower-level managers who supervise the operations of the organization. These managers often have titles such as supervisor, team leader, or assistant manager.

Exhibit 1.2 Managerial Roles: What Managers Do

Decisional Roles	Informational Roles	Interpersonal Roles
Entrepreneur: search for new business, initiate new projects	Monitor: seek information, serve as the center of communication	Leader: staffing, developing, motivating people
Disturbance handler: take corrective action during crises	Disseminator: transmit information from source to source	Liaison: maintain network of outside contacts
Resource allocator: provide funding and other resources, make significant organizational decisions	Spokesperson: speak on behalf of organization	Figurehead: perform symbolic duties
Negotiator: negotiate with internal and external parties	n/a	n/a

Adapted from Mintzberg, H., The Nature of Managerial Work. New York: Harper & Row, 19 73, pp. 92–93.

A classic study of top executives found that they spend their time performing 10 key activities or roles, falling into three categories: interpersonal, informational, and decisional.

Exhibit 1.2 summarizes these roles. This slide shows an abbreviated version of Exhibit 1.2.

Must-Have Management Skills

Technical: ability to perform a specialized task involving a particular method or process

Conceptual and Decision: skills related to abilities that help identify and resolve problems

Interpersonal and Communication: people skills that represent the ability to lead, motivate, and communicate effectively with others

Performing management functions and roles, and achieving competitive advantage, are the cornerstones of a manager’s job. However, understanding this does not ensure success. Managers need a variety of skills to do these things well.

You and Your Career

Emotional intelligence:

The skills of understanding yourself, managing yourself, and dealing effectively with others.

Social capital:

Goodwill stemming from your social relationships.

Be both a specialist and a generalist.

Be self-reliant.

Connect with people.

Actively manage your relationship with your organization.

Survive and thrive.

Throughout your career, you’ll need to lead teams effectively as well as influence people over whom you have no authority; therefore, the human skills are especially important. Business people often talk about emotional intelligence, or EQ—the skills of understanding yourself (including strengths and limitations), managing yourself (dealing with emotions, making good decisions, seeking and using feedback, exercising self-control), and dealing effectively with others (listening, showing empathy, motivating, leading, and so on).

Exhibit 1.4 Two Relationships: Which Will You Choose?

We have noted the importance of taking responsibility for your own actions and your own career. Unless you are self-employed and your own boss, one way to do this is to think about the nature of the relationship between you and your employer. The exhibit shows two possible relationships—and you have some control over which relationship develops.

Exhibit 1.5 Managerial Action Is Your Opportunity to Contribute

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Common Practices of Successful Executives

They convey to others “Why we do what we do.”

They ask, “What needs to be done?” not just “What do I want to do?”

They write an action plan. They don’t just think, they do, based on a sound, ethical plan.

They take responsibility for decisions.

Today, managers must do more, better. Management scholar Peter Drucker, in considering what makes managers effective, noted that some are charismatic whereas some are not, and some are charismatic whereas some are not, and some are visionary whereas others are more numbers-oriented. But successful executives do share some common practices.

Management in Action In-N-Out’s Lynsi Snyder: Organizing for Efficiency

Good managers deliver strategic value for the present and the future.

In-N-Out Burger has stuck to its core principle of using never frozen ground beef and fresh baked buns.

In-N-Out Burger does not franchise and has grown more slowly than McDonald’s, but generates twice the revenue per store with a higher profit margin.

Questions:

In what ways do you think Snyder’s planning and control efforts affect its strategy and success?

Student answers will vary but should focus on control efforts around high quality food and service and the slower approach to growing sales and commitment to a limited, stable menu.

If you were a restaurant owner, would you be interested in applying for an In-N-Out Burger franchise? Why or why not?

Student answers will vary based on their preferences, they should note the higher revenue and profit margin as a reason if they express interest.

In Review

Summarize the major challenges of managing in the new competitive landscape.

Describe the sources of competitive advantage for a company.

Explain how the functions of management are evolving in today’s business environment.

Compare how the nature of management varies at different organizational levels.

Define the skills you need to be an effective manager.

Understand the principles that will help you manage your career.

This slide relists the chapter learning objectives and can be used to review the chapter highlights.

Chapter 2 will focus on the internal and external environments.

End of Main Content

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Exhibit 1.1 Staying Ahead of the Competition – Text Alternative

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The fundamental drivers of competitive advantage and bottom-line performance include innovation, quality, service, speed, cost effectiveness, and sustainability.

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Exhibit 1.5 Managerial Action Is Your Opportunity to Contribute – Text Alternative

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The graphic suggests that the interaction between employee and organization leads to the following managerial actions: delivering strategic value, building a dynamic organization, mobilizing people, and learning and changing.

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Chapter 2

The External and Internal Environments

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Learning Objectives

2-1 Describe how environmental forces influence organizations and how organizations can influence their environments.

2-2 Distinguish between the macroenvironment and the competitive environment.

2-3 Identify elements of the competitive environment.

2-4 Summarize how organizations respond to environmental uncertainty.

2-5 Define elements of an organization’s culture.

2-6 Discuss how an organization’s culture and climate affect its response to its external environment.

Open Systems

Organizations are affected by, and affect, their environment.

Inputs:

Goods and services organizations take in and transform them into products.

Outputs:

The products and services organizations create.

In this chapter, we discuss in detail factors outside the organizations create the context in which managers and their companies operate – and affect their success and failure.

Organizations are open systems—that is, they are affected by and in turn affect their external environment. For example, from their environment they take in inputs such as human resources and investment capital and transform them into products that are outputs to their environment.

Exhibit 2.1 Organization as an Open System

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Organizations take inputs from the external environment and return outputs, as shown in Exhibit 2.1. But when we use the term external environment here, we mean more than an organization’s clients or customers; the external environment includes all relevant forces outside the organization’s boundaries.

External Environment

External environment:

All relevant forces outside a firm’s boundaries, such as competitors, customers, the government, and the economy.

Competitive environment.

Includes the firm and its rivals, suppliers, buyers, new entrants, and substitute or complementary products.

Macroenvironment.

Affects all organizations and includes economic, technological, legal and political, demographic, social, and natural environment factors.

The organization exists in its competitive environment, which is composed of the firm and its rivals, suppliers, buyers (customers), new entrants, and substitute or complementary products. More generally, the macroenvironment affects all organizations and includes economic, technological, legal and political, demographic, social, and natural environment factors.

Exhibit 2.2 The External and Internal Environments of Organizations

Macro Environment

Economy

Technology

Legal and regulations

Demographics

Social issues

Natural environment

Competitive Environment

Rivals

Suppliers

Buyers

New entrants

Substitutes and complements

Internal Environment

Culture

Values

Climate

Exhibit 2.2 shows the external and internal environments of a business organization. The organization exists in its competitive environment, which is composed of the firm and its rivals, suppliers, customers (buyers), new entrants, and substitute or complementary products. At the most general level is the macroenvironment, which includes legal, political, economic, technological, demographic, and social and natural factors that generally affect all organizations.

The Economy

The economic environment affects managers’ ability to function effectively and influences their strategic choices.

The economic environment affects managers’ ability to function effectively and influences their strategic choices. Interest and inflation rates affect the availability and cost of capital, growth opportunities, prices, costs, and consumer demand for products.

Managers and the Economy

Role of managers:

In publicly-held companies, managers may feel required to meet Wall Street’s earnings expectations.

Managers may focus on short-term results at the expense of long-term success.

Some managers may be tempted to engage in unethical or unlawful behavior that misleads investors.

Keep in mind that economic conditions change over time and are difficult to predict.

Stock markets are a vital influence. In publicly held companies, managers throughout the organization feel required to meet Wall Street’s earnings expectations. Such external pressures usually have a positive effect—they help make many firms more efficient and profitable. But failure to meet those expectations can cause a company’s stock price to drop, making it more difficult for the firm to raise additional capital for investment.

Technology

Technological advances create new products and services, advanced production techniques, and better ways of managing and communicating.

As technology evolves, new industries, markets, and competitive niches develop.

The 3D printing process has revolutionized design.

Today a company cannot succeed without incorporating into its strategy the astonishing technologies that continually evolve. Technological advances create new products, advanced production techniques, and better ways of managing and communicating. In addition, as technology evolves, new industries, markets, and competitive niches develop.

Laws and Regulations

Regulators include agencies such as:

Securities and Exchange Commission (S E C).

Occupational Safety and Health Administration (O S H A).

Equal Employment Opportunity Commission (E E O C).

National Labor Relations Board (N L R B).

Office of Federal Contract Compliance Programs (O F C C P).

Government policies impose strategic constraints on organizations but may also provide opportunities through tax laws, economic policies, and international trade rulings.

Demographics

Demographics:

Measures of various characteristics of the people who make up groups or other social units.

Demographic trends:

Aging of the workforce.

Increasing education and skill levels.

Immigration factors.

Increasingly diverse workforce.

Proactive managers consider workforce demographics in formulating their human resource strategies. Population changes influence the size and composition of the labor force. For example, the numbers of young workers will decline while the fastest-growing age group will be workers who are 55 and older, who are expected to represent over one-fourth of the labor force in 2026.

Sustainability and the Natural Environment

Organizations depend on the natural environment to provide them with resources.

Operations impact quality and quantity of resources.

Impacts on local citizens.

Striking the right balance between using natural resources in a constructive rather than destructive way is an ongoing challenge for all organizations.

SPOTLIGHT ON . . . Combating Climate Change

Combating climate change will require efforts from individuals, governments, nonprofits, and businesses alike.

The impact of any one person, just as with one company, will be minimal. Collectively, however, positive change is possible.

What do you think the role of business should be in relation to the environment?

Do you patronize businesses, or might you choose an employer, based on their sustainability efforts? Why or why not?

Some who worry about climate change think it’s up to politicians to enact solutions. But many businesses are taking initiative to combat this growing challenge. Conventional wisdom is shifting from seeing green initiatives as job killers to job creators. Firms are reexamining everything from their traditional supply chains to the types of energy they consume to their materials they use to make products.

Students’ responses to these questions will vary, and provide an interesting discussion.

Exhibit 2.4 The Competitive Environment

As shown in Exhibit 2.4, the competitive environment includes rivalries among current competitors and the impact of new entrants, substitute and complementary products, suppliers, and customers. This model originally was developed by Michael Porter, a Harvard professor and a noted authority on strategic management. In making strategic decisions, Porter’s model is an excellent method to help managers analyze the competitive environment and adapt to or influence the nature of their competition.

Competitors

Competition is most intense when:

There are many direct competitors.

Industry growth is slow.

Product/service is not easily differentiated.

Competitors within an industry must consider one another when making strategic decisions. When organizations compete for the same customers and try to win market share at the others’ expense, all must react to and anticipate their competitors’ actions.

New Entrants

Barriers to Entry:

Conditions that prevent new companies from entering an industry.

Government policy, capital requirements, brand identification, cost disadvantages, and distribution channels.

Barriers sometimes prevent new companies from entering an industry. Major barriers to entry are government policy, capital requirements, brand identification, cost disadvantages, and well-established distribution channels.

Substitutes and Complements

Substitutes:

Alternative products or services.

Potential threat.

Complements:

Products or services that increase purchases of other products.

Potential opportunity.

Besides products that compete directly, other products can affect a company’s performance by being substitutes for or complements of the company’s offerings. A substitute is a treat because customers can use it as an alternative, buying less of one kind of product but more of another. A complement is a potential opportunity because customers buy more of a given product if they also demand more of the complementary product.

Exhibit 2.5 Potential Substitutes and Complements

If the Product Is . . .	The Substitute Might Be . . .
Chipotle Burrito Bowl	Chick-fil-A meal
Apple Watch	Samsung Galaxy Watch
Ford F-150 truck	Chevy Silverado truck
Evernote	Dropbox
If the Product Is . . .	The Complement Might Be . . .
H T C Vive virtual reality headset	Eagle Flight game
Amazon streaming video	Strawberry Twizzlers
Health club membership	Workout clothes
Apartment rental	IKEA furniture

Exhibit 2.5 lists products and their potential substitutes and complements.

Suppliers

Supply chain management:

Managing the acquisition of materials, their transformation into products, and the distribution of products to customers.

Switching costs:

Provide resources or inputs needed for production.

Fixed costs buyers face if they change suppliers.

Organizations are at a disadvantage if they become overly dependent on a single powerful supplier. A supplier is powerful if the buyer has few other sources of supply or if the supplier has many other buyers. Dependence also results from high switching costs—the fixed costs buyers face if they change suppliers. For example, once a buyer learns how to operate a supplier’s equipment, such as a data analytics application, the buyer faces both economic and psychological costs in changing to a new supplier.

Supply chain management is a vital contributor to a company’s competitiveness and profitability. By supply chain management, also known as the extended enterprise, we mean the managing of the entire network of facilities and people that obtain raw materials from outside the organization, transform them into products, and distribute them to customers. Supply chains should be not only cost-efficient but also flexible, so that the organization can quickly respond to changes in demand.

Customers

Without customers to purchase its goods or services, a company won’t survive.

Final consumer (end users).

Intermediate consumer (wholesalers and retailers).

Like suppliers, customers are important to organizations for reasons other than the money they pay for goods and services.

Intermediate customers make more purchases than final consumers do.

Exhibit 2.6 Actions and Attitudes Affect Customer Service

Adapted from P. Kotler, Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. (Englewood Cliffs, NJ: Prentice Hall, 19 90).

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Like suppliers, customers are important to organizations for reasons other than the money they pay for goods and services. Customers can demand lower prices, higher quality, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price.

Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Environmental Analysis

Environmental uncertainty:

Lack of information needed to understand or predict the future.

Environmental complexity:

The number of issues that must be attended to as well as the interconnectedness of these issues.

Environmental dynamism:

The degree of discontinuous change that occurs within an industry.

Information about the environment is not always readily available. In other words, managers often operate under conditions of uncertainty. Environmental uncertainty means that managers do not have enough information about the environment to understand it or predict the future. Uncertainty arises from two related factors: complexity and dynamism. Environmental complexity refers to the number of issues to which a manager must attend as well as their interconnectedness. For example, industries that have many firms that compete in vastly different ways tend to be more complex—and uncertain—than industries with only a few key competitors.

Environmental dynamism refers to the degree of discontinuous change that occurs within the industry. High-growth industries with products and technologies that change rapidly tend to be more uncertain than stable industries where changes are less dramatic and more predictable.

Environmental Scanning

Environmental scanning:

Searching for useful information, unavailable to most, sorting that information and interpreting what is important.

Competitive intelligence:

Information that helps managers determine how to compete better.

Perhaps the first step in coping with uncertainty in the environment is identifying what might be important. Frequently, organizations and individuals act out of ignorance, only to regret those actions in the future.

Environmental scanning means both searching for useful information and interpreting what is important and what is not. Porter’s competitive analysis, discussed earlier, can guide environmental scanning and help managers evaluate the potential of different environments.

Exhibit 2.7 Attractive and Unattractive Environments

Environmental Factor	Unattractive	Attractive
Competitors	Many; low industry growth; equal size; commodity	Few; high industry growth; unequal size; differentiated
Threat of entry	High threat; few entry barriers	Low threat; many entry barriers
Substitutes	Many	Few
Suppliers	Few; high bargaining power	Many; low bargaining power
Customers	Few; high bargaining power	Many; low bargaining power

Exhibit 2.7 compares the five environmental factors with columns for attractive and unattractive attributes of each.

Scenario Development and Forecasting

Scenario:

A narrative that describes a set of future conditions.

Best-case, worst-case.

Forecasting:

Method for predicting how variables will change the future.

As managers attempt to determine the effect of environmental forces on their organizations, they frequently develop scenarios of the future. Scenarios combine different factors into alternative combinations that offer pictures of future environments and the firm itself. Whereas environmental scanning is used to identify important factors, and scenario development is used to develop alternative pictures of the future, forecasting is used to predict exactly how variables will change in the future. For example, in making capital investments, firms may try to forecast how interest rates will change.

Benchmarking

The process of comparing an organization’s practices and technologies with those of other companies.

Identifying the best-in-class performance by one or more companies in a given area and comparing your processes to their processes.

Benchmarking means identifying the best-in-class performance by one or more companies in a given area, say, product development or customer service, and then comparing your processes to theirs. To accomplish this, a benchmarking team would collect information on its own company’s operations and those of others to determine differences. These gaps serve as a point of entry to learn the underlying causes of performance differences.

Selecting Your Environment 1

Strategic maneuvering:

An organization’s maneuver around potential threats and capitalize on arising opportunities.

Domain selection:

Entrance to a new market or industry with an existing expertise.

Diversification:

Occurs when a firm invests in a different types of businesses or products.

It is essential to manage the external environment effectively. Organizations need not be stuck within some given environment; they have options for defining where they operate. We refer to this as strategic maneuvering. Firms can maneuver around potential threats and capitalize on arising opportunities. Managers can use several strategic maneuvers, including domain selection, diversification, merger and acquisition, and divestiture.

Selecting Your Environment 2

Mergers:

Two or more companies combine with another.

Acquisitions:

One firm buys another to form single a company.

Divestitures:

A firm sells one or more businesses.

A merger or acquisition takes place when two or more firms combine, or one firm buys another, to form a single company. Combining operations can create cost efficiencies and give companies relatively quick access to an entirely different industry or a specific new customer base, product, or technology. Divestiture occurs when a company sells one or more businesses.

Selecting Your Environment 3

Prospectors:

Continuously change the boundaries of their competitive environment by seeking new products and markets, diversifying and merging, or acquiring new enterprises.

Defenders:

Stay within a stable product domain as a strategic maneuver.

Some companies, called defenders, stay within a limited, stable product domain. In contrast, prospectors, are more likely to engage in strategic maneuvering. Aggressive companies continuously change the boundaries of their competitive environments by seeking new products and markets, diversifying, and merging or acquiring new enterprises. In these and other ways, corporations put their competitors on the defensive and force them to react.

Influencing Your Environment

Independent strategies:

Strategies that an organization acting on its own uses to change some aspect of its current environment.

Cooperative strategies:

Strategies used by two or more organizations working together to manage the external environment.

In addition to selecting a new environment, managers can act to change certain features of their current environment. Two general types of proactive responses are independent action and cooperative action.

A company uses independent strategies when it acts on its own to change some aspect of its current environment. Exhibit 2.8 (summarized on the next slide) shows the definitions and uses of these strategies.

In some situations, two or more organizations work together using cooperative strategies to influence the environment. Exhibit 2.9 (summarized in a subsequent slide) shows several examples of cooperative strategies.

Exhibit 2.8 Independent Action

Strategy	Definition
Competitive aggression	Exploiting a distinctive competence or improving internal efficiency for competitive advantage.
Competitive pacification	Taking independent action to improve relations with competitors.
Public relations	Establishing and maintaining favorable images in people’s minds.
Voluntary action	Making voluntary commitments to various interest groups, causes, and social challenges.
Legal action	Engaging a company in a private legal battle.
Political action	Making efforts to influence elected representatives to create a more favorable business environment or limit competition.

This table recreates part of Exhibit 2.8. with definitions of six independent actions: competitive aggression, competitive pacification, public relations, voluntary action, legal action and political action.

Exhibit 2.9 Cooperative Action

Strategy	Definition	Strategy
Contraction	Negotiating an agreement between the organization and another group to exchange goods, services, information, patents, and so on.	Starbucks and Keurig Green Mountain enter into a contract to offer more Starbucks K-Cup pack offerings.
Cooptation	Absorbing new elements into the organization’s leadership structure to avert threats to its stability or existence.	Consumer and labor representatives are added to a large retailer’s board of directors.
Coalition	Two or more groups coalescing and acting jointly with respect to some set of issues for some period of time.	The Business Roundtable and the U.S. Chamber of Commerce lobby Congress on behalf of businesses.

This table recreates Exhibit 2.9. with the definition of and examples of cooperative action: contraction, cooption and coalition.

Adapting to the Environment: Changing the Organization

To cope with environmental uncertainty and change, organizations can adjust structures and work processes.

Buffering.

Smoothing.

Flexible processes.

Buffering creates supplies of excess resources to meet unpredictable needs. Organizations also may try smoothing, or leveling fluctuations occurring at the environmental boundaries. Buffering and smoothing manage uncertainties at system boundaries, firms also can establish flexible processes that allow for adaptation in their technical core.

Choosing an Approach

Considerations in managing external environment:

Aim at elements of environment that

Cause the company problems.

Provide it with opportunities.

Allow the company to change successfully.

Choose responses that fit the environmental component of interest.

Choose actions that offer most benefit at lowest cost.

This slides lists three considerations in managing the external environment.

Organization Culture 1

The set of important assumptions about the organization and its goals and practices that its members share.

Strong Cultures:

Majority of people within the organization agree on organizational goals.

Weak Cultures:

Different people hold different values and there is confusion about corporate goals.

An organization's culture is like an individual's personality. Organization culture is a system of shared values about what is important and beliefs about how the world works. A company’s culture provides a framework that guides people’s behavior on the job. For example, the way people dress and behave, the way they interact with each other and with customers, and the work habits that managers value are usually quite different at a bank than they are at a music company, and different again at a law firm or an advertising agency.

Exhibit 2.10 Culture Ground Rules at Warby Parker

Ground Rules at Warby Parker

Treat customers the way we’d like to be treated.

Create an environment where employees can think big, have fun, and do good.

Get out there.

Green is good.

Source: Company website, “We Have a Couple of Ground Rules at Warby Parker,” Warby Parker, www.warbyparker.com.

Organization Culture 2

Diagnosing culture: useful clues about culture

Corporate mission statements and official goals.

Important business practices.

Symbols, rites, and ceremonies.

The stories people tell.

Cultural assessments.

Let’s say you want to understand a company’s culture. Perhaps you are thinking about working somewhere and you want a good fit, or maybe you are working now and want to deepen your understanding of how your employer operates and what it expects of you. How would you go about making the diagnosis? A variety of things will give you useful insights, such as mission statements, goals, symbols, ceremonies and stories.

Organization Culture 3

Managing Culture:

Manage culture actively.

Communicate with employees regularly and set the right examples.

Celebrate and reward those who exemplify desired culture.

Some say culture eats strategy for breakfast. Make sure to manage your culture actively by communicating regularly and celebrated those who exemplify the culture.

Management in Action The Internal Culture at Amazon

In Amazon’s 2017 annual report, Bezos wrote, “Building a culture of high standards is well worth the effort, and there are many benefits. Naturally and most obviously you’re going to build better products and services for customers”

Is it possible for a company to be as successful as Amazon without having a culture of “high standards”? Why or why not?

To what degree do and can employees “self-select” their work environments? How does Bezos’s belief inform Amazon’s reported treatment of its employees?

In Amazon’s 2017 annual report, Bezos wrote, “Building a culture of high standards is-well worth the effort, and there are many benefits. Naturally and most obviously you’re going to build better products and services for customers.” However, there is a fine line between being competitive-inside the company or with competing organizations-and being cut-throat.

Questions:

Is it possible for a company to be as successful as Amazon without having a culture of “high standards”? Why or why not?

Student answers will vary. Some may note how different approaches are better in the short-term versus the long-term.

To what degree do and can employees “self-select” their work environments? How does Bezos’s belief inform Amazon’s reported treatment of its employees?

Student answers will again vary but should note elements from the text and their research.

In Review

Describe how environmental forces influence organizations and how organizations can influence their environments.

Distinguish between the macroenvironment and the competitive environment.

Identify elements of the competitive environment.

Summarize how organizations respond to environmental uncertainty.

Define elements of an organization’s culture.

Discuss how an organization’s culture and climate affects its response to its external environment.

This slide relists the chapter learning objectives and can be used to review the chapter highlights.

Chapter 3 will focus on managerial decision making.

End of Main Content

Because learning changes everything.®

www.mheducation.com

Accessibility Content: Text Alternatives for Images

Exhibit 2.1 Open-System Perspective of an Organization – Text Alternative

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External environment providing input to the organization lists: raw materials, human resources, energy, financial resources, information, and equipment. Organization is a place of transformation process where inputs are converted into goods and services that ideally meet markets’ needs. The output to external environment from Organization does the following: Customers and others react to organization’s goods and services and provide feedback for next cycle of the system.

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Exhibit 2.6 Actions and Attitudes Affect Customer Service – Text Alternative

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These actions and attitudes contribute to excellent customer service:

Speed of filling and delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good condition.

Service charges whether free or priced separately.

Availability of installation and repair services and parts.

Readiness to take back defective goods and resupply quickly.

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Chapter 3

Managerial Decision Making

Because learning changes everything.®

Learning Objectives

3-1 Describe the kinds of decisions you will face as a manager.

3-2 Summarize the steps in making “rational” decisions.

3-3 Recognize the pitfalls you should avoid when making decisions.

3-4 Evaluate the pros and cons of using a group to make decisions.

3-5 Identify procedures to use in leading a decision-making group.

3-6 Explain how to encourage creative decisions.

3-7 Discuss the processes by which decisions are made in organizations.

3-8 Describe how to make decisions in a crisis.

This is the last of three chapters in Part One of the text. The previous chapters discussed managing and performance, and the internal and external environments.

Exhibit 3.1 Characteristics of Managerial Decisions

It is important to understand why decision making can be so challenging. Exhibit 3.1 illustrates several characteristics of managerial decisions that contribute to their difficulty and pressure.

Lack of Structure

Programmed decisions:

Decisions encountered and made before, having objectively correct answers, and solvable by using simple rules, policies, or numerical computations.

Nonprogrammed decisions:

New, novel, complex decisions having no proven answers.

If you face a programmed decision, a clear procedure or structure exists for arriving at the right decision. With a nonprogrammed decision, the decision maker must create and use a method for making the decision; there is no predetermined structure on which to rely.

Exhibit 3.2 Comparing Programmed versus Nonprogrammed Decisions

Examples	Programmed Decisions	Nonprogrammed Decisions
Company	Policies to follow when posting an open position on job boards	Changing from proprietary server to cloud storage
University	Income formulas to determine amount of student financial aid	Create a design for a new engineering building
Health care	Procedure for discharging patients	Purchase of advance imaging equipment
Government	Merit system for promoting federal employees	Response to an unexpected state budget shortfall

This is an abbreviated version of Exhibit 3.2.

Uncertainty

Certainty:

The state that exists when decision makers have accurate and comprehensive information.

Uncertainty:

The state that exists when decision makers have insufficient information.

People usually prefer certainty even if their “certainty” is mistaken or misleading. Businesspeople do not like uncertainty; it can prevent them from taking action.

Risk

Risk:

The state that exists when the probability of success is less than 100 percent and losses may occur.

While some risk takers are admired and entrepreneurs and investors thrive on taking risks, the reality is that good decision makers prefer to manage risk.

Conflict

Conflict:

Opposing pressures from different sources, occurring on the level of psychological conflict or of conflict between individuals or groups.

Levels of Conflict:

Individual decision makers.

Conflict between people.

Important decisions are even more difficult because of the conflicts managers face. Conflict, which exists when a manager must consider opposing pressures from different sources, occurs at two levels.

First, individual decision makers experience psychological conflict when several options are attractive or when none of the options is attractive.

Second, conflict arises between people.

Take Charge of Your Career Strategically Manage Your Job Search

Strategic planning can be applied to the decision involved in managing your career plan.

Focus on YOUR values, interests, and career goals.

Create a plan to organize around your vision.

Use tools to assist in information organization and planning.

Recall networking is vitally important.

Finally, stay positive.

Exhibit 3.3 The Phases of Decision Making

Access the text alternative for slide images.

Faced with these challenges, how can you make good decisions? The ideal decision-making process includes six phases.

Identifying and Diagnosing the Problem

First Phase:

Recognize there is a gap between the current and desired state.

Is there an opportunity that can be exploited?

Diagnose the reason for the performance gap.

The first phase in the decision-making process is to recognize that a problem exists and must be solved. The problem may be an opportunity that needs to be exploited: a gap between what the organization is doing now and what it should do to create a more positive future. Recognizing that a problem or opportunity exists is only the beginning of this phase. The decision maker must dig in deeper and attempt to diagnose the problem.

Exhibit 3.4 lists some useful questions (listed below) to ask and answer in this phase.

How can you best describe the difference between what is actually happening and what should be happening?

What is/are the cause(s) of the deviation?

What short- and long-term goals need to be met?

Which goals are absolutely critical to the success of the decision?

Generating Alternative Solutions

Second Phase:

Ready-made solutions:

Ideas that have been seen or tried before.

Custom-made solutions:

New, creative solutions designed specifically for the problem.

The second phase of decision making links problem diagnosis to the development of alternative courses of action aimed at solving the problem. Managers generate at least some alternative solutions based on past experiences.

Solutions range from ready-made to custom-made. Decision makers who search for ready-made solutions use ideas they have tried before or follow the advice of others who have faced similar problems. Custom-made solutions, by contrast, must be designed for specific problems. This technique often combines ideas into new, creative solutions.

Evaluating Alternatives

Third Phase

Evaluating alternatives:

Which solution will be the best?

What consequences will occur?

How will you measure success?

Contingency plans

Alternative courses of action that can be implemented based on how the future unfolds.

The third phase of decision making involves determining the value or adequacy of the alternatives that were generated. Which solution will be the best?

Exhibit 3.5 lists some useful questions (listed below) to ask and answer in this phase

Which goals does each alternative meet and fail to meet?

Which alternatives are most acceptable to you and to other important stakeholders?

If several alternatives might solve the problem, which can be implemented at the lowest cost or greatest profit?

If no alternative achieves all your goals, can two or more of the best ones be combined?

Is our information about alternatives complete and current? If not, can we get more and better information?

Of course, results cannot be forecast with perfect accuracy. But sometimes decision makers can build in safeguards by considering the potential consequences of several scenarios. Then they generate contingency plans-alternative courses of action that can be implemented depending on how the future unfolds.

Making the Choice

Maximizing:

A decision realizing the best possible outcome.

Satisficing:

Choosing an option that is acceptable, although not necessarily the best or perfect.

Optimizing:

Achieving the best possible balance among several goals.

As you make your decision, important concepts include maximizing, satisficing, and optimizing.

The maximizing decision realizes the greatest positive consequences and the fewest negative consequences.

When you satisfice, you compare your choice against your goal, not against other options.

When optimizing, instead of buying the cheapest piece of equipment that works, you buy the one with the best combination of attributes.

Implementing the Decision

Adequate planning requires several steps:

Determine how things will look when the decision is fully operational.

Chronologically order, perhaps with a flow diagram, the steps necessary to achieve a fully operational decision.

List the resources and activities required to implement each step.

Estimate the time needed for each step.

Assign responsibility for each step to specific individuals.

Exhibit 3.6 lists several useful questions that should be asked in the implementation stage of decision making.

What problems could this action cause?

What can we do to prevent the problems?

What unintended benefits or opportunities could arise?

How can we make sure they happen?

How can we be ready to act when the opportunities come?

Evaluating the Decision

Positive feedback:

Suggests the decision is working.

Implies that the decision should be continued and applied elsewhere.

Negative feedback:

Implementation will require more time, resources, effort, or thought.

Solution wasn’t good enough.

Evaluating the decision begins with collecting information on how well the decision is working.

If the decision appears inadequate, it’s time to adjust. The process cycles back to the first phase: (re)defining the problem. The decision-making process begins anew, preferably with more information, new suggestions, and an approach that attempts to eliminate the mistakes made the first time around.

The Best Decision

Two types of decision-making processes:

Reflexive: done quickly and without careful thought.

Reflective: analytic, slow and deliberate.

Vigilance:

A process in which a decision maker carefully executes all stages of decision making.

People use two types of decision-making processes, what Nobel laureate Daniel Kahneman calls System 1 and System 2 information processing.

Vigilance occurs when the decision makers carefully and conscientiously execute the phases of the decision-making process. Even if managers reflect on their decision-making activities and conclude that they executed each step conscientiously, they still will not know whether the decision will work; after all, nothing guarantees a good outcome.

Barriers to Effective Decision Making 1

Psychological Biases:

Motivated reasoning: seeing what one wants to see, and making decisions based more on desire than evidence.

Confirmation bias: accepting incoming information that fits what one already believes and rejecting what doesn’t confirm what one thinks.

Illusion of control: belief that one can influence events even when one has no control over what will happen.

Framing effects: how problems or decision alternatives are phrased or presented and how these subjective influences can override objective facts.

Discounting the future: a bias weighing short-term costs and benefits more heavily than longer-term costs and benefits.

These biases affect personal decisions, team decision, decisions in business and other sectors, and even foreign policy.

Think of how many people have strong and entrenched attitudes, and how often you have (not) seen people persuade others to change their minds about something they care about.

Barriers to Effective Decision Making 2

Time Pressures:

The most conscientiously-made business decisions can become irrelevant and even disastrous if managers take too long to make them.

Social Realities:

Many decisions are the result of intensive social interactions, bargaining, and politicking.

SPOTLIGHT ON . . . Predictive Analytics: Helping Businesses Make Decisions

Large volumes of potentially relevant data may complicate the decision-making process.

Predictive analytics:

Uses A I.

Managers can make decisions about today and tomorrow.

1. What do you think of universities using predictive analytics to help recruit, retain, and teach students.

2. In what industries have you seen creative uses of predictive analytics being most useful? What pros and cons do you see?

Student responses will vary.

Exhibit 3.7 Pros and Cons of Using Groups to Make Decisions

Potential Advantages	Potential Disadvantages
Larger pool of information	One person dominates
More perspectives and approaches	Satisficing
Intellectual stimulation	Groupthink
People understand the decision	Goal displacement
People are committed to the decision	Social loafing

Sometimes managers convene groups of people in order to make important decisions. Some advise that in today’s complex business environment, significant problems should always be tackled by groups.

If enough time is available, groups usually make higher-quality decisions than most individuals acting alone. However, groups often are inferior to the best individual. How well the group performs depends on how effectively it capitalizes on the potential advantages and minimizes the potential problems of using a group.

Decision Making in Groups

Groupthink:

Occurs when people choose not to disagree or raise objections because they don’t want to break up a positive team spirit.

Goal displacement:

A condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges.

Pressure to avoid disagreement can lead to groupthink. This occurs in when people choose not to disagree or raise objections. This can stifle creativity and vigilant decision making. Goal displacement often occurs in groups. The goal of group members should be to come up with the best possible solution to the problem. But when goal displacement occurs, new goals emerge to replace the original ones. It is common for two or more group members to have different opinions and present their conflicting cases. Attempts at rational persuasion become heated disagreement. Winning the argument becomes the new goal. Saving face and defeating the other person’s idea become more important than solving the problem.

Exhibit 3.8 Managing Group Decision Making

Access the text alternative for slide images.

s Exhibit 3.8 illustrates, effectively managing group decision making has three requirements: (1) an appropriate leadership style, (2) the constructive use of disagreement and conflict, and (3) the enhancement of creativity.

Leadership Style

Leader must:

Attempt to minimize process-related problems.

Avoid dominating discussions or allowing others to.

Encourage less vocal group members to speak up.

Not allow group to pressure people into conforming.

These suggestions have two implications. First, don’t lose sight of the problem and goals. Second, make a decision!

Slow-moving organizations whose members can’t come to an agreement will be standing still while their competitors move ahead.

Constructive Disagreement

Cognitive conflict:

Issue-based differences in perspectives or judgments.

Affective conflict:

Emotional disagreement directed toward other people.

Devil’s advocate:

A person who has the job of criticizing ideas to ensure that their downsides are fully explored.

Dialectic:

A structured debate comparing two conflicting courses of action.

Affective conflict is more destructive because it can lead to anger, bitterness, goal displacement, and lower-quality decisions. Cognitive conflict, in contrast, can air legitimate differences of opinion and develop better ideas and problem solutions. Conflict, then, should be task-related rather than personal. But even task-related conflict is good only when managed properly.

A devil’s advocate has the job of criticizing ideas. The group leader can formally assign people to play this role. An alternative to devil’s advocacy is the dialectic. The philosophy of the dialectic stems from Plato and Aristotle, who advocated synthesizing the conflicting views of a thesis and an antithesis.

Encouraging Creativity

How do you become more creative?

Read widely and try new experiences.

Exchange ideas and give feedback.

How do you encourage creativity in others?

Give creative efforts credit.

Don’t punish creative failures.

Avoid extreme time pressure.

Stimulate and challenge people intellectually.

Exhibit 3.9 Creative Actions

Access the text alternative for slide images.

Exhibit 3.9 describes three ways to be creative along with some ideas of college student entrepreneurs who turned their creativity into businesses.

Creation: Bring a new thing into being

Synthesis: Join two previously unrelated things

Modification: Improve something or give it a new application

Brainstorming

Brainstorming is a process in which group members generate as many ideas about a problem as they can; criticism is withheld until all ideas have been proposed.

A common technique used to elicit creative ideas is brainstorming. In brainstorming, group members generate as many ideas about a problem as they can. Ideas are posted publicly so everyone can see them and use them as building blocks. The group is encouraged to say anything that comes to mind, with one exception: no criticism of other people or their ideas is allowed.

In the proper brainstorming environment—free of criticism—people are less inhibited and more likely to voice their ideas, even wild ones. Only after the group generates a good list of alternatives. Only then does the group turn to the evaluation stage. At that point, many ideas can be considered, modified, or combined into a creative, custom-made solution to the problem.

Exhibit 3.10 Improving Brainstorming Effectiveness

EXHIBIT 3.10 Improving Brainstorming Effectiveness

Choose participants based on their expertise and knowledge of the challenge.

Use well-thought-out questions as a platform to spark new ideas.

Break up large groups into subgroups of 3 to 5 people.

Ask subgroups to think deeply to generate 2 to 3 solutions for each key question explored.

Do not have the full group evaluate the winning ideas, but rather ask subgroups to identify their top 2 or 3 ideas. Describe next steps (for example, top management team will evaluate ideas).

Act quickly on key ideas and provide feedback to all participants.

Organizational Decision Processes 1

Bounded rationality:

A less-than-perfect form of rationality in which decision makers cannot be perfectly rational because decisions are complex and complete information is unavailable or cannot be fully processed.

Incremental model:

Model of organizational decision making in which major solutions arise through a series of smaller decisions.

Herbert Simon challenged the rational model and proposed an important alternative. Due to bounded rationality, decision makers cannot be truly rational because (1) they have imperfect, incomplete information about alternatives and consequences; (2) the problems they face are so complex; (3) human beings simply cannot process all the information to which they are exposed; (4) there is not enough time to process all relevant information fully; and (5) people, including managers within the same firm, have conflicting goals.

When these conditions hold—and they do for most consequential managerial decisions—perfect rationality will give way to more biased, subjective, messier decision processes. For example, the incremental model of decision making occurs when decision makers make small decisions, take baby steps, move cautiously toward a bigger solution.

Organizational Decision Processes 2

Coalition model:

Model of decision making in which groups with differing preferences use power and negotiation to influence decisions.

Garbage can model:

Model of organizational decision making depicting a chaotic process and seemingly random decisions.

The coalitional model of decision making arises when people disagree on goals or compete with one another for resources. The decision process becomes political as groups of individuals band together and try collectively to influence the decision. Two or more coalitions form, each representing a different preference, and each tries to use power and negotiations to sway the decision.

The garbage can model of decision making occurs when people aren’t sure of their goals, or disagree about the goals, and likewise are unsure of or in disagreement about what to do. This situation occurs because some problems are so complex that they are not well understood and because decision makers move in and out of the decision process because they have so many other things to attend to as well. This model implies that some decisions are chaotic and almost random. You can see that this is a dramatic departure from rationality in decision making.

Decision Making in a Crisis

What kinds of crises could your company face?

Can your company detect a crisis in its early stages?

How will it manage a crisis if one occurs?

What team inside the company would lead the response effort?

What can it learn from a crisis to improve its response next time?

Superstorm Sandy hit the East Coast with fierce devastation. Managers had to make critical decisions to keep people safe.

ORLANDO BARRIA/EPA-EFE/Shutterstock

Crisis management includes identifying causes of serious disruption, preventing or preparing for potential damage, and bringing a damaged organization (or team, person, or society) back to normal functioning.

Information technology is a crucial arena highly vulnerable to crises. Businesses, homes, government agencies, hospitals, and other organizations continually send critical information through public and private networks. Any technical failure – sometimes accidental, sometimes maliciously intentional – could be magnified by the speed and reach of information technology.

Exhibit 3.11 Elements in an Effective Crisis Plan

Strategic actions such as integrating crisis management (CM) into strategic planning and official policies

Evaluation and diagnostic actions such as conducting audits of threats and establishing tracking systems for early warning signals

Technical and structural actions such as creating a CM team and dedicating a budget to CM

Communication actions such as providing training for dealing with the media, local communities, and police and government officials

Psychological and cultural actions such as providing training and psychological support services regarding the human and emotional impacts of crises

SOURCES: Meyers, G. with Holusha, J., When It Hits the Fan: Managing the Nine Crises of Business. Boston: Houghton Mifflin, 19 86; Bacharach, S. and Bamberger, P., “9/11 and New York City Firefighters’ Post Hoc Unit Support and Control Climates: A Context Theory of the Consequences of Involvement in Traumatic Work-Related Events,” Academy of Management Journal 50 (2007), pp. 849–68.

Management in Action: Making Decisions During the Covid-19 Pandemic?

One airline expanded its operations.

Southwest expanded in the major hubs of Houston and Chicago.

Some retailers reduced the number of products.

Coach cut the number of handbag styles in half.

Bed, Bath and Beyond and Kohl’s reduced the number of houseware products.

Some organizations had to rethink their business models.

Bow and Arrow switched from in store sales to shipping cans of its beer.

In Review

Describe the kinds of decisions you will face as a manager.

Summarize the steps in making “rational” decisions.

Recognize the pitfalls you should avoid when making decisions.

Evaluate the pros and cons of using a group to make decisions.

Identify procedures to use in leading a decision-making group.

Explain how to encourage creative decisions.

Discuss the processes by which decisions are made in organizations.

Describe how to make decisions in a crisis.

This slide may be used to summarize the chapter and to solicit questions.

The next chapter starts part two of the text, “Planning and Strategic Management.”

End of Main Content

Because learning changes everything.®

www.mheducation.com

Accessibility Content: Text Alternatives for Images

Exhibit 3.3 The Phases of Decision Making – Text Alternative

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Phase one: identify and diagnose the problem.

Phase two: generate alternative solutions.

Phase three: evaluate alternatives.

Phase four: make the choice.

Phase five: implement the decision.

Phase six: evaluate the decision.

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Exhibit 3.8 Managing Group Decision Making – Text Alternative

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Leadership, creativity, and constructive conflict all feed into effective group decision making.

Leadership: avoid domination, encourage input, avoid groupthink and satisficing, remember the goals.

Creativity: brainstorm, avoid criticizing, exhaust ideas, combine ideas.

Constructive conflict: discuss legitimate differences, stay on task, be impersonal, play devil’s advocate.

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Exhibit 3.9 Creative Actions – Text Alternative

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Creation: How? Bring a new thing into being. Example: Develop a new energy drink from a family recipe.

Synthesis: How? Join two previously unrelated things. Example: Personalize multimedia online assignments to teach Mandarin to college students.

Modification: How? Improve something or give it a new application. Example: Refurbish cell phones and sell them on eBay.

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