ecet518 midterm engineering management(2)

7/31/2019 ECET518 Midterm Engineering Management(2)

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Decision-Making:

The Essence of aManagers Job


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The Decision-Making Process

Decision

A choice made from two or more alternatives

Decision-making process

A set of eight steps that include identifying aproblem, selecting an alternative, and

evaluating the decisions effectiveness.


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The Decision-Making Process

Step 1: Identifying a Problem

Step 2: Identifying Decision CriteriaStep 3: Allocating Weights to the Criteria

Step 4: Developing Alternatives

Step 5: Analyzing AlternativesStep 6: Selecting an Alternative

Step 7: Implementing the Alternative

Step 8: Evaluating Decision Effectiveness


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Defining some terms

Problem

A discrepancy between an existing and adesired state of affairs

Characteristics of a Problem Awareness of discrepancy

Sufficient resources to do something

Pressure to act


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Well-Structured Problems andProgrammed Decisions

Well-Structured Problems Straightforward,

familiar, easily defined problemsProgrammed Decision - A repetitive decision

that can be handled by a routine approach

Procedure A series of interrelatedsequential steps that can be used to respondto a structured problem

Rule An explicit statement that tells

managers what they ought or ought not to do Policy A guide that establishes parameters

for making decisions


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Ill-Structured Problems andNonprogrammed Decisions

Ill-Structured Problems New problemsin which information is ambiguous orincomplete

Nonprogrammed Decision - A uniquedecision that requires a custom-madesolution


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Integration

Level

Well-Structured

ProgrammedDecisions

TopIll-Structured

Type

Lower

Nonprogrammed

Decisions


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Planning


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Definition of Planning

Planning

A process that involves defining the

organizations objectives or goals, establishing

an overall strategy for achieving those goals,

and developing a comprehensive hierarchy ofplans to integrate and coordinate activities


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Planning and Performance

According to studies

1. Formal planning is associated with higherprofits and positive financial results.

2. The quality of the planning process and

appropriate implementation contribute moreto higher performance than the extent ofplanning.

3. In those studies in which formal planningdidntlead to higher performance, theenvironment was the culprit.


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Objectives: The Foundation of

Planning

Objectives

Desired outcomes for individuals, groups, or

entire organizations

Multiplicity of objectives

Closer analysis reveals that all organizations

have multiple objectives


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Types of Plans

By breadth:

Strategic versus Operational

Strategic Plans

Plans that are organization-wide, establishoverall objectives, and position anorganization in terms of its environment

Operational Plans

Plans that specify details on how overallobjectives are to be achieved


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Types of Plans

By time frame:

Short-term versus Long-term

Short-term Plans

Plans that cover one year or less

Long-term Plans

Plans that extend beyond three years


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Types of Plans

By specificity:

Specific versus Directional

Specific Plans

Plans that are clearly defined and leave noroom for interpretation

Directional Plans

Flexible plans that set out general guidelines


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Types of PlansBy frequency of use:

Single-use versus StandingSingle-use Plans

A one-time plan that is specifically designed to meetthe needs of a unique situation and s created in

response to non-programmed decisions managersmake

Standing Plans

Ongoing plans that provide guidance for activitiesrepeatedly performed in the organization and that arecreated in response to programmed decisions thatmanagers make


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Techniques for Assessing the

Environment

Environmental Scanning - The screening of

large amounts of information to detectemerging trends and to create scenarios

Competitor Intelligence Environmental scanningactivity that seeks to identify who competitors are,

what they are doing, and how their actions willaffect the focus organization.

Forecasting - Predictions of outcomes

Benchmarking - The search for the bestpractices among competitors ornoncompetitors that lead to their superiorperformance.


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BudgetsA numerical plan for allocating

resources to specific activities

Fixed budget

a budget that assumes a fixed levelof sales or production

Variable budget

A budget that takes into account thecosts that vary with volume


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Operational Planning ToolsScheduling A list of necessary activities, their

order of accomplishment, who is to do each,and the time needed to complete them

Gantt chart a scheduling chart developed byHenry Gantt that shows actual and plannedoutput over a period of time

Load chart A modified Gantt chart thatschedules capacity by work stations

Program Evaluation and Review Technique(PERT) A technique for scheduling complicatedprojects comprising many activities, some ofwhich are interdependent


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Gantt Chart


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Load Chart


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PERT Network

Critical Path: A - B -C - D - G - H - J - K


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Organizing


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DefinitionsOrganizing

Determining what tasks are to be done, whois to do them, how the tasks are to begrouped, who reports to whom, and where

decisions are to be made

or

The process of creating an organizationalstructure


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DefinitionsOrganizational Structure

The organizations formal framework bywhich job tasks are divided, grouped, andcoordinated

Organizational Design

The developing or changing of an

organizations structure


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Six Key Elements

1. Work specialization

2. Departmentalization

3. Chain of command

4. Span of control5. Centralization and Decentralization

6. Formalization


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Work Specialization The degree to which tasks in an organization

are divided into separate jobs. Also knownas division of labor.

Most managers today see work specialization as

an important organizing mechanism but not as asource of endlessly increasing productivity.

Overspecialization can result in humandiseconomies from boredom, fatigue, stress, poorquality, increased absenteeism, and higherturnover.


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Departmentalization by Type Functional

Grouping jobs byfunctions performed

Product

Grouping jobs by

product line

Geographic

Grouping jobs on the

basis of territory orgeography

Process

Grouping jobs on thebasis of product orcustomer flow

Customer

Grouping jobs by typeof customer and needs


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Functional Departmentalization

Advantages

Efficiencies from putting together similar specialties and people

with common skills, knowledge, and orientations

Coordination within functional area

In-depth specialization

Disadvantages

Poor communication across functional areas

Limited view of organizational goals


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Geographical Departmentalization

Advantages

More effective and efficient handling of specific regional

issues that arise

Serve needs of unique geographic markets better

Disadvantages

Duplication of functions

Can feel isolated from other organizational areas


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Product Departmentalization

+ Allows specialization in particular products and services+ Managers can become experts in their industry

+ Closer to customers

Duplication of functions

Limited view of organizational goals


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Process Departmentalization

+ More efficient flow of work activities

Can only be used with certain types of products


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Customer Departmentalization

+ Customers needs and problems can be met by specialists

- Duplication of functions

- Limited view of organizational goals


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Chain of Command

The continuous line of authority that extends

from upper levels of an organization to thelowest levels of the organization and clarifieswho reports to who.


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Chain of Command Authority

The rights inherent in a managerial position totell people what to do and to expect them to doit.

Responsibility The obligation or expectation to perform.

Unity of Command

The concept that a person should have oneboss and should report only to that person.


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Span of ControlThe number of employees who can be effectively

and efficiently supervised by a manager. Width of span is affected by:

Skills and abilities of the manager

Employee characteristics Characteristics of the work being done

Similarity of tasks

Complexity of tasks

Physical proximity of subordinates

Standardization of tasks


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Centralization &

DecentralizationCentralization

The degree to which decision-making is concentrated in theupper levels of the organization

Decentralization The handing down of decision-

making authority to lower levels in

an organization


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Factors that Influence

Centralization and DecentralizationMore Centralization Environment is stable

Lower-level managers are notas capable or experienced atmaking decisions as upper-levelmanagers

Lower-level managers do notwant to have a say in decisions

Decisions are significant Organization is facing a crisis or

the risk of company failure

Company is large

Effective implementation ofstrategies depends onmanagers retaining say overwhat happens

More Decentralization Environment is complex,

uncertain Lower-level managers are

capable and experienced atmaking decisions

Lower-level managers want avoice in decisions

Decisions are relatively minor Company culture is open to

allowing managers to have asay in what happens

Company is geographicallydispersed

Effective implementation ofcompany strategies depends onmanagers having involvementand flexibility to make decisions


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FormalizationThe degree to which jobs within the

organization are standardized and the extentto which employee behavior is guided by rulesand procedures.

Highly formalized jobs offer little discretion overwhat is to be done.

Low formalization means fewer constraints onhow employees do their work.


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Mechanistic versus Organic

OrganizationMechanistic Organization

A rigid and tightly controlled

structure High specialization

Rigid departmentalization

Clear chain of command

Narrow spans of control Centralization

High formalization

Limited information network

(downward) Low decision participation

Highly flexible and adaptable

structure Cross-functional / Cross-

hierarchal teams

Open communication

network / Free flow ofinformation

Wide spans of control

Decentralization / Littledirect supervision

Low formalization

Non-standardized jobs

Empowered employees

ecet518 midterm engineering management(2)

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