Summary on chp 6 by Iman

Chapter:6 Decision Making
Summary
Decision: a choice from two or more alternatives.
Decision making process:the set of eight steps
Identifying a problem
Identifying decision criteria
Allocating weights
Developing alternatives
Analyzing alternatives
Selecting an alternatives
Implementing alternative
Evaluating decision effectiveness
How are decisions made?
Rationality: consistent, value-maximizing choices where the problem is clear and unambiguous, the decision maker’s goal is clear and specific and decision maker must knows all possible alternatives.

Bounded rationality: decisions are made rationally but decision maker is bounded by limited ability to process information ,decision making strongly influenced by organization’s culture, internal politics and power consideration. Intuition: making decision on the basis of experiences, feelings and judgments.
Types of problems and decisions:

Structured problem: straightforward, familiar and easily defined problems
Programmed decision: a repetitive decision that can be handled by a routine approach.
Unstructured problem: problems that are new or unusual and for which information is incomplete.
NonProgrammed decision:a decision that requires a custom made solution.
· Decision making conditions:

three conditions managers may face while decision making.

Certainty: a situation in which a manager can make accurate decisions because all outcomes are known.
Risk: a situation in which the decision maker is able to estimate the likelihood certain outcomes.

Uncertainty: a situation in which a decision maker has neither certainty nor reasonable probability estimates available.
Decision making styles: differ along two dimension, first is individual way of thinking and second is tolerance for ambiguity. Four styles are:
Directive style: a decision-making style characterized by low tolerance for ambiguity and a rational way of thinking.

Analytic style: a decision-making style characterized by a high tolerance for ambiguity and an intuitive way of thinking.

Conceptual style: a decision-making style that is characterized by a high tolerance for ambiguity and intuitive way of thinking.

Behavioral style: a decision-making style characterized by a low tolerance for ambiguity and an intuitive way of thinking.
How do managers need to know about making decisions in today’s world?

Understand cultural difference.

Know when it’s time to call it quit.

Use an effective decision-making process.

Develop highly reliable organizations.


Multiple choice question:
Decision making is a set of ___ steps
(a) four
(b) eight
(c) ten
Rules of thumb in decision-making is known as
(a) heuristics
(b) policy
(c) rule
________ is a situation in which decision maker is able to estimate the likelihood of certain outcomes.
(a) risk
(b) certainty
(c) uncertainty
a decision making style with high tolerance for ambiguity and intuitive way of thinking is
(a) conceptual style
(b) analytic style
(c) directive style

Summary of chapter 7

Chapter 7 Foundation of Planing
Summary:
Planning:
Defining organization's goals,establishing overall strategy and making plans.Planning is often called the primary management function.
Types of planning:
Formal Planning:
Goals are defined,written and shared with organizational members
· Informal Planning:
Nothing is written down and no sharing of goals
Importance of Formal Planning:
provides direction, reduces uncertainty, minimizes waste and redundancy and
establishes the goals or standard used in controlling
Important elements of planning:
· Goals:
Desired outcomes for individuals, groups or entire organization
· Plans:
Documents that outline how goals are going to be met.
Types of Goals:
· Strategic or financial:
Financial goals are related to the financial performance of the organization and strategic goals are related to other areas of an organizations performance.
· Stated Goals:
Official statement of what an organization says and what its want.
· Real Goals:
Goals that an organization actually pursues.
Types of Plans:
· Strategic plans:
Plans that apply to the entire organization and establish overall goals.
· Operational Plans:
Plans that tells the details of how goals are to be achieved.
· Long-term Plans:
Plans with a time frame beyond 3 years.
· Short-term Plans:
Plans covering 1 year or less.
· Directional Plans:
Plans that are flexible and set general guideline.
· Specific Plans:
Plans that are clearly defined.
· Single-use Plan:
A one time plan designed to meet the need of unique situation. For instance when
Wal- Mart decided to expand the number of its stores in China, top level executives formulated a single-use plan as a guide.
· Standing Plan:
Plans that are on going and provide guidance for activities performed.
Establishing Goals:
Goals can be set through a process of traditional goal setting or management by objective.
In Traditional goal setting, goals are set at the top of the organization and then broken into sub goals for each organizational level.For example the president of a manufacturing business tell the vice president of production what he expects manufacturing cost to be and tells the marketing vice president what level he expects sales.
Management by objectives(MBO) is a process of setting mutually agreed upon goals.MBO programs have shown that it can increase employee performance but may not be effective in times of dynamic environmental change.
Well-Designed Goals:
Written in terms of outcomes rather than action
Measurable
Clear as to a time frame
Challenging yet attainable
Written down
Communicated to all members
Developing Plans:
Three contingency factors affect planning
Level in the organization
Degree of environment uncertainty
Length of future commitments
Approaches:
· Formal planning department:
A group of planning specialists whose sole responsibility is helping to write organizational plans
· Second way to approach planning is to involve more organizational members in the process.

MCQs Question
1. ________ is called the primary function.
(a) planning
(b) goals
(c) task
2. Plans that specify the details of how goals are to be achieved called_______.
(a) specific plans
(b) standing plans
(c) operational plans
3. How many contingency factors affect planning
(a) 3
(b) 4
(c) 5
4. Formalized organizational planning became popular in
(a) 1950s
(b) 1960s
(c) 1970s
5. MBO
(a) management by objectives
(b) managers business organization
(c) management business organization
6. _________should be written in terms of outcomes.
(a) plans
(b) goals
(c) mission