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DECISION-MAKING SKILLS Other Teaching Tools 4.3 Video Notes 4.4 Brief Chapter Outline and Learning Goals 4.5 Lecture Outline and Lecture Notes 4.7 Notes for End-of-Chapter Materials 4.32 REVIEW QUESTIONS 4.32 DISCUSSION EXERCISE 4.1 Avon: More Than Cosmetic Changes4.32 DISCUSSION EXERCISE 4.2 Mulally: Ford’s Most Important New 4.33 Model Career Management Notes 4.35 Study Skills Notes 4.29 Lecture Links 4.30 LECTURE LINK 4-1 Decision-Making Tips 4.40 LECTURE LINK 4-2 When Employees Make the Decisions 4.41 LECTURE LINK 4-3 Better Group Decision Making: Using 4.42 Premortems Critical Thinking Exercises 4.44 CRITICAL THINKING EXERCISE 4-1 Lost at Sea 4.44 CRITICAL THINKING EXERCISE 4-2 Evaluating Alternatives 4.46 Bonus Case 4.47 4.1 CHAPTER 4

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Page 1: WHAT IS MANAGEMENT - Novellanovella.mhhe.com/olc2/dl/582338/ghilyer1_im04_FINAL.doc  · Web viewHow one employee-owned firm uses participative management. See complete lecture link

DECISION-MAKING SKILLS

Other Teaching Tools 4.2

Video Notes 4.3

Brief Chapter Outline and Learning Goals 4.4

Lecture Outline and Lecture Notes 4.6

Notes for End-of-Chapter Materials 4.23

REVIEW QUESTIONS 4.23

DISCUSSION EXERCISE 4.1 Avon: More Than Cosmetic Changes 4.23

DISCUSSION EXERCISE 4.2 Mulally: Ford’s Most Important New 4.24Model

Career Management Notes 4.25

Study Skills Notes 4.29

Lecture Links 4.30

LECTURE LINK 4-1 Decision-Making Tips 4.28

LECTURE LINK 4-2 When Employees Make the Decisions 4.28

LECTURE LINK 4-3 Better Group Decision Making: Using 4.29Premortems

Critical Thinking Exercises 4.31

CRITICAL THINKING EXERCISE 4-1 Lost at Sea 4.31

CRITICAL THINKING EXERCISE 4-2 Evaluating Alternatives 4.33

Bonus Case 4.34

BONUS CASE 4-1 DefenseWeb Evaluates a Strategic Expansion 4.34

4.1

CH

APT

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4

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OTHER TEACHING TOOLS

For a description of each of these valuable teaching tools, please see the Preface in this manual.

Student Learning ToolsStudent Online Learning Center (OLC) (www.mhhe.com/ghillyermanagement)Student Study GuideSpanish Translation Glossary (OLC)Spanish Translation Quizzes (OLC)

Instructor Teaching ToolsInstructor Online Learning Center (www.mhhe.com/ghillyermanagement)Annotated Instructor’s Resource ManualIRCD (Instructor’s Resource Manual, Test Bank, PowerPoints, EZtest)Asset Map PageOutPowerPoint Presentations (on IRCD and OLC)Test Bank Management at the Movies (DVD)Management Videos on DVD Enhanced Cartridge optionSpanish Translation Glossary (OLC)

4.2 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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VIDEO NOTES

Two video series are available for use with MANAGEMENT: A REAL-WORLD APPROACH.

Management at the Movies This innovative video collection includes video clips from twenty of the best Hollywood films.

The Video Notes section of this Instructor’s Resource Manual (beginning on page V.1) provides In-structor’s Teaching Notes for each of the video segments, along with Student Materials keyed to chapter concepts.

MOVIE 6. “The Family Man” (3:05) This video clip shows a couple making a critical decision in their relationship: whether Jack

should go to London for a great internship opportunity.

Management Videos on DVDAlso included are twenty videos geared to individual chapter topics. The teaching notes for these

videos are also included in the Video Notes section of this Instructor’s Resource Manual, beginning on page V.50.

Video 4: “The Dale Gray Story” (8:52)This video talks about Dale Gray, the founder of a technology firm. He discusses his his-

tory and some of the decision-making necessary when creating a successful company.

CHAPTER 4: Decision-Making Skills 4.3

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BRIEF CHAPTER OUTLINE AND LEARNING GOALS

CHAPTER 4

Decision-Making Skills

I. MAKING DECISIONS

II. DECISION MAKING VERSUS PROBLEM SOLVINGLEARNING OBJECTIVE 1Explain the difference between decision making and problem solving.

III. THE INTUITIVE APPROACH TO DECISION MAKINGLEARNING OBJECTIVE 2Compare and contrast intuitive and rational ap-proaches to decision making.

IV. RATIONAL APPROACHES TO DECISION MAKINGA. The Optimizing ApproachB. Limitations of the Optimizing ApproachC. The Satisfying Approach

V. THE DECISION MAKER’S ENVIRONMENTLEARNING OBJECTIVE 3Explain the decision maker’s environment and the conditions for making a decision.

VI. CONDITIONS FOR MAKING DECISIONSA. CertaintyB. RiskC. Uncertainty

VII. TIMING THE DECISIONLEARNING OBJECTIVE 4Explain timing and participation as they relate to the decision-making process.

VIII. PARTICIPATION IN DECISION MAKING

4.4 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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A. Group or Team Decision Making

IX. BARRIERS TO EFFECTIVE DECISION MAKING

X. MAKING CREATIVE DECISIONSLEARNING OBJECTIVE 5Identify methods for creative decision making.

A. The Creative ProcessB. Establishing a Creative EnvironmentC. Tools to Foster CreativityD. A Model for Creative Decision Making

XI. MANAGEMENT INFORMATION SYSTEMSLEARNING OBJECTIVE 6Discuss management information systems.

CHAPTER 4: Decision-Making Skills 4.5

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LECTURE OUTLINE AND LECTURE NOTES

THE WORLD OF WORK

Tony Tries Another Approach (Text pages 80-81)

Tony, the new manager at Taco Barn, is now dealing with some staffing issues following his memo on schedules. (If the worker missed a shift, he or she was held responsible to either show up or find a replacement.) Still in high school, Matt has missed work because of a scheduling change for track prac-tice and is now on probation for the remainder of the week. His shift leader, Tanya, has explained to Tony that his new policy is not working and that employees are considering leaving. Tony explains his reasons for the change but has not made them known to his entire staff.

1. What assumptions did Tony make when introducing his new scheduling policy?

Tony assumed the employees would understand his reasoning: that he would be more available to his staff if he had less scheduling hassles. But Tony failed to realize that he operated in a vacuum and made incorrect assumptions to suit his quick decision. Tony failed to look at the cause and effect of his decision and how it might lead to other problems among his employees.

2. Which type of decision-making approach did Tony use here?

Tony’s memo represents an authoritative, heavy-handed approach to decision making. He did not solicit any employee input regarding the scheduling. And, once he suspended Matt for not reporting for his shift, his staff felt that he was taking an I-am-the-boss-what-I-say-goes approach to managing Taco Barn. Remember the theories of Douglas McGregor presented in Chapter 2. The American social psy-chologist presented a simple division of management styles that captured what were fundamentally differ-ent ways of managing people.

Theory X suggests there is a controlling/authoritative manager that believes that most employees don’t like to work and will only work at the required level of productivity if they are forced to do so usu-ally under some threat of punishment.

Theory Y suggests there is a more democratic/participatory style in which employees can be trusted to meet production targets without being threatened. They will often seek additional responsibili-ties because they enjoy the satisfaction of being creative and increasing their own skills.

Tony seems to be using more of a Theory X style, which has placed some stress in the store’s work environment.

3. How could Tony change his interpersonal skills to fix this communication breakdown?

Since managers spend most of their time with their subordinates, effective communication is crit-ical to their use of time. The purpose in doing so is to achieve the organizational objectives by managing employees effectively. However, for this to happen, the information transmitted by the message sender must be understood by the receiver. Unfortunately, many factors cause this process to fail, including con-flicting or inappropriate assumptions, different interpretations of the words, differences of perception, emotions either preceding or during communication, poor listening habits, inadequate communication skills, insufficient feedback, and differences in the interpretation of nonverbal communications. This highlights why the communication process is so important and the many ways it can be thrown off course. Tony is experiencing a miscommunication error and needs to get his thoughts and actions back on track, so that he can get his staff back on the same page regarding the objectives of his store.

4.6 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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4. What should Tony do now?

Tony needs to understand the importance of good communication and how easy it is for this process to fall off-center. Tony needs to look at his communication skills and examine how he can make improvements for the sake of his career as a manager. Tony might meet with his staff collectively to dis-cuss the scheduling strategy and other key store issues. He can then form a basic game plan going for-ward. From there, he might want to meet with employees individually to further evaluate their skills and see where he can best use their strengths and assets in the management of Taco Barn.

LECTURE OUTLINE LECTURE NOTES

I. MAKING DECISIONSA. The terms “manager” and “decision maker”

are not the same. 1. All managers must make decisions to

accomplish organizational goals. 2. Each of the basic management

functions requires different types of decisions.

B. According to Herbert Simon, the manager’s DECISION PROCESS involves three stages:

1. The intelligence stage involves searching the environment for condi-tions requiring a decision.

2. The design stage involves inventing, developing, and analyzing possible courses of action.

3. Choice, the final stage, refers to the actual selection of a course of action.

C. Management and Nonmanagement Decisions

1. Nonmanagement decisions are concentrated in the choice stage.

2. Management decisions involve the intelligence and design stages.

D. Managers spend most of their time making decisions.

POWERPOINT 4-1Chapter Title(Refers to text page 80)

POWERPOINT 4-2Learning Objectives(Refers to text page 81)

POWERPOINT 4-3Making Decisions(Refers to text page 82)

LECTURE LINK 4-1Decision-Making TipsThis lecture link gives some tips for enhancing decision-making. See complete lecture link on page 3.28 of this manual.

CHAPTER 4: Decision-Making Skills 4.7

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LECTURE OUTLINE LECTURE NOTES

II. DECISION MAKING VERSUS PROBLEM SOLVING

LEARNING OBJECTIVE 1Explain the difference between decision making and problem solving. (Text page 82)

A. DECISION MAKING is the process of choosing from among various alternatives.

1. A problem is any deviation from the standard.

B. PROBLEM SOLVING is the process ofdetermining the appropriate responses or actions necessary to alleviate a problem.

C. Although not all decisions involve prob-lems, almost all managerial decisions do.

POWERPOINT 4-4Decision Making Versus Problem Solving(Refers to text pages 82-83)

CRITICAL THINKING EXERCISE 4-1Lost at SeaAn adaptation of a classic group decision-making exer-cise. See complete exercise on page 4.31 of this manual.

4.8 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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LECTURE OUTLINE LECTURE NOTES

III. THE INTUITIVE APPROACH TO DECISION MAKING

LEARNING OBJECTIVE 2Compare and contrast intuitive and rational approaches to decision making. (Text pages 83-87)

A. The INTUITIVE APPROACH is the approach used when managers make decisions based largely on hunches and intuition.

1. Relying only on feelings can cause problems such as:

a. fastening onto unsubstantiated facts and sticking with them.

b. being attracted to scandalous issues and heightening their sig-nificance.

c. pressing every fact into a moral pattern.

d. overlooking EVERYTHING except what is immediately useful.

e. viewing all information as a romantic story

2. These attachments most affect managers who cannot modernize their thinking.

B. Two suggestions for overwhelmed man-agers:

1. Become aware of biases and allow for them.

2. Seek independent options.

POWERPOINT 4-5The Intuitive Approach to Decision Making(Refers to text pages 83-84)

IV. RATIONAL APPROACHES TO DECISION MAKINGA. RATIONAL APPROACHES try to evaluate

POWERPOINT 4-6Rational Approaches to De-cision Making(Refers to text page 84)

CHAPTER 4: Decision-Making Skills 4.9

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LECTURE OUTLINE LECTURE NOTESfactual information through deductive reasoning.

B. The OPTIMIZING APPROACH (some-times called the rational or scientific approach) to decision making includes the following steps.

1. Recognize the need for a decision 2. Establish, rank, and weigh the

decision criteria 3. Gather available information and data 4. Identify possible alternatives 5. Evaluate each alternative with respect

to all criteria 6. Select the best alternativeC. Limitations of the Optimizing Approach 1. The optimizing approach is based on

the concept of the “economic person.” 2. This assumes that people behave

rationally and that people have: a. clearly defined criteria, and that

the relative weights they assign to these criteria are stable

b. knowledge of all relevant alterna-tives

c. the ability to evaluate each alternative with respect to all the criteria and arrive at an overall rating for each alternative

d. the self-discipline to choose the al-ternative that rates the highest

3. Difficulties with this approach: a. Assumptions are often unrealistic. b. Many decisions are based on

POWERPOINT 4-7Limitations of the Optimiz-ing Approaching(Refers to text pages 84-87)

TEXT REFERENCECareer Management Box: Developing Habits for a

4.10 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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LECTURE OUTLINE LECTURE NOTESlimited knowledge of the possible alternatives.

c. It is tempting to manipulate the information gathered and choose a favored alternative.

D. The Satisficing Approach 1. Herbert Simon’s PRINCIPLE OF

BOUNDED RATIONALITY assumes people have the time and cognitive ability to process only a limited amount of information on which to base decisions.

2. The decision model of the “administra-tive person” makes the following assumptions:

a. A person’s knowledge of alterna-tives and criteria is limited.

b. People act on the basis of a simplified, ill-structured, mental concept of the real world.

c. People do not attempt to optimize but will satisfice, or take the first alternative that satisfies their cur-rent level of aspiration.

3. Because the decision maker’s knowl-edge of alternatives is incomplete, the individual cannot optimize, but can only “satisfice.”

a. OPTIMIZING means selecting the best possible alternative.

b. SATISFICING means selecting the first alternative that meets the decision maker’s minimum standard of satisfaction.

c. LEVEL OF ASPIRATION refers to

Successful Career Some habits that might help lead to personal and career success. (Box in text on page 85.) An additional exercise and discussion is available in this chapter on page 4.25.

POWERPOINT 4-8The Satisficing Approach (Refers to text pages 85-86)

CHAPTER 4: Decision-Making Skills 4.11

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LECTURE OUTLINE LECTURE NOTESthe level of performance a person expects to attain; determined by the person’s prior successes and failures.

4. The satisficing approach to decision making is illustrated in Text Figure 4.1.

5. In this model, the “administrative man” selects the first alternative and makes no attempt to optimize.

PROGRESS CHECK QUESTIONS (Text page 87)

1. Explain the difference between decision making and problem solving.

2. Explain the intuitive approach to decision making.3. What are the six steps in the optimizing approach to

decision making?4. Explain the satisficing approach to decision making.

TEXT FIGURE 4.1Model of the Satisficing Approach (Text page 86)

V. THE DECISION MAKER’S ENVIRONMENT

LEARNING OBJECTIVE 3Explain the decision maker’s environment and the con-ditions for making a decision. (Text pages 87-90)

A. The decision is affected by environmental factors:

1. freedom to make decisions (higher-level managers have more flexibility and freedom of choice)

2. the purpose and tradition of the organization

3. the organization’s formal and informal group structures

4. the decision maker’s superiors and

POWERPOINT 4-9The Decision Maker’s Environment(Refers to text pages 87-88)

TEXT FIGURE 4.2Environmental Factors In-fluencing Decision Making in an Organization (Text page 87)

4.12 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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LECTURE OUTLINE LECTURE NOTESsubordinates

B. Other factors – such as industry norms, the political climate, and competition – can modify a decision.

VI. CONDITIONS FOR MAKING DECISIONSA. Decisions are not always made with the

same amount of available information.B. Certainty 1. In a SITUATION OF CERTAINTY, the

decision maker:a. knows exactly what will happen.

b. can calculate the precise outcome for each alternative

2. This, however, is rarely possible.C. Risk 1. The costs of obtaining more informa-

tion may outweigh the information’s value.

2. A SITUATION OF RISK occurs when a decision maker is aware of the relative probabilities of occurrence associated with each alternative.

3. The expected value analysis technique can be used.

a. The expected payoff of each known alternative is mathemati-cally calculated based on its probability of occurrence.

b. This won’t help if the act occurs only once.

D. Uncertainty 1. A SITUATION OF UNCERTAINTY oc-

POWERPOINT 4-10Conditions for Making De-cisions(Refers to text pages 88-89)

TEXT FIGURE 4.3Umbrella Decision Alterna-tives and Outcomes (Text page 88)

TEXT FIGURE 4.4Possible Approaches to Making Decisions under Uncertainty (Text page 90)

CHAPTER 4: Decision-Making Skills 4.13

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LECTURE OUTLINE LECTURE NOTEScurs when a decision maker has very little or no reliable information on which to evaluate the different possible outcomes.

2. The MAXIMAX APPROACH (or opti-mistic or gambling approach) involves selecting the alternative whose best possible outcome is the best of all pos-sible outcomes for all alternatives.

3. The MAXIMIN APPROACH (pes-simistic approach) involves comparing the worst possible outcomes for each alternative and selecting the one that is least bad.

4. The RISK-AVERTING APPROACH, choosing the alternative with the least variation in possible outcomes, results in more effective planning.

POWERPOINT 4-11Conditions for Making De-cisions (continued)(Refers to text pages 89-90)

ETHICAL MANAGEMENT (Text page 89)

Dave, the newly appointed vice president of a manufacturing company, has just been informed that a team of internal auditors from the corporate head office will be arriving in two days. He prepares his staff as best he can. The day before the auditors arrive, one of his assistants discovers some disturb-ing news. It appears, he says, that Woody, a 30-year veteran of the plant, has been systematically alter-ing accounts for years. Month by month, Woody has been shipping products to customers without billing them – and then billing customers without shipping anything.

Dave is stunned. Seeking an explanation, he learns that the practice has nothing to do with fraud. Woody wasn't lining his own pocket. He was simply trying to be helpful. His goal was to smooth out the cyclical nature of the orders so that, month by month, the figures sent to the home office appear level and consistent, with no peaks and valleys. Dave discovers that no money has been lost or gained; it all balances out in the end. And while the amount is not immense, the funds affected amount to perhaps 5% of the plant's annual earnings.

In one sense, Woody's adjustments have benefited Dave, who has already been complimented by his boss for his wise forecasts and for meeting his targets so accurately. But Dave also knows that if these practices were to come to light, Woody would be fired instantly. Dave himself, though ignorant of the practice until now, might have some tough explaining to do. After all, Woody has been fudging records and misstating corporate revenues to management, shareholders, and the IRS.

What should Dave do?

4.14 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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LECTURE OUTLINE LECTURE NOTES

Based on the significance of the action, Dave has to report the activity of the shipping director and clear up the operating method he has been using. It is essential that he do this now. He is now aware of how Woody handled the accounts and must understand that he has a better chance of cleaning up the problems sooner than later. Dave has first hand knowledge of the situation. It is the job of the manager to work on or fix problems, particularly one involving falsification of reports to management, sharehold-ers, and the IRS.

Dave must first meet with Woody and get all the facts on his actions, including how long he has been providing inaccurate records. Dave should inform Woody of his intentions. Next Dave must meet with his immediate supervisor to discuss his findings and decide what the next steps should be. Woody has to understand the potential consequences of his actions: he made the decision to provide false report-ing on his own and failed to report his activities. Finally, Dave has to put the department back in order by calling all the accounts and explaining that new procedures will be put in place. He may also have to hire a new employee or promote a current employee to the director of shipping position.

VII. TIMING THE DECISIONLEARNING OBJECTIVE 4Explain timing and participation as they relate to the decision-making process. (Text pages 91-93)

A. It may not be easy to recognize that a decision is necessary.

1. Quick decisions may lead to bad decisions.

2. Some managers listen to problems, promising to act, but never do.

3. Other managers respond only after a lengthy delay.

B. Different decisions have different time frames; some need immediate results.

POWERPOINT 4-12Timing the Decision(Refers to text page 91)

VIII. PARTICIPATION IN DECISION MAKINGA. Managers must decide whether to involve

subordinates in decision making.B. Group or Team Decision Making 1. Group performance is often better than

average individual performance. a. Groups often develop innovative

TEXT FIGURE 4.5Positive and Negative Aspects of Group (Team) Decision Making (Text page 92)

POWERPOINT 4-13Participation in Decision Making

CHAPTER 4: Decision-Making Skills 4.15

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LECTURE OUTLINE LECTURE NOTESand creative solutions to prob-lems.

b. But groups often take longer to solve problems.

2. Group performance is superior because:

a. The sum total of the group’s knowledge is greater.

b. The group has a much wider range of decision alternatives.

3. However, unanimous group decisions are consistently riskier than individual decisions.

a. People feel less responsible for the outcome of a group decision.

b. Groups make decisions that are more polar, or more extreme, than individuals acting alone.

PROGRESS CHECK QUESTIONS (Text page 92)

5. List the different conditions under which managers make decisions.

6. Explain the difference between the maximax and maximin approaches to decision making.

7. What is the risk-averting approach to decision mak-ing?

8. Summarize the positive and negative aspects of group decision making.

(Refers to text pages 91-92)

LECTURE LINK 4-2When Employees Make the DecisionsHow one employee-owned firm uses participative man-agement. See complete lec-ture link on page 3.28 of this manual.

IX. BARRIERS TO EFFECTIVE DECISION MAKINGA. Four Barriers to Decision Making: 1. Complacency, not seeing danger

signals or ignoring data 2. Defensive avoidance, denying the im-

POWERPOINT 4-14Barriers to Effective Deci-sion Making(Refers to text pages 92-93)

4.16 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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LECTURE OUTLINE LECTURE NOTESportance of danger or the opportunity

3. Panic, which rarely produces good results

4. Deciding to decide, accepting the responsibility and challenge of deci-sion making

B. Recognizing these barriers is an important management skill.

CASE INCIDENT 4.1

Getting Out of the Army (Text page 94)

Jay Abbott has just completed ten years of service with the Army and is contemplating his next move. His next promotion to general staff college would come with a pay raise. This could prompt him to stay in the Army for ten more years, to age forty-two, at which point he could retire and receive half his pay and free medical and dental benefits. However, Jay also knows that his current skills and age would bring an immediate higher wage in the corporate world, should he decide to leave the military. This is especially true now that Congress is reducing military raises and possibly reducing benefits. Jay has to consider his options and make a decision that will set his course for the next several years.

1. What factors are prompting Jay to consider leaving the army?

Jay has valuable skills and experience from his military career. This has value in the civilian market. If Jay decides to leave the military, he is confident he could find a position making $10,000 to $15,000 more in pay. The advantages of civilian work are certainly attractive and could be worth pursu-ing, considering his age.

2. What factors are encouraging him to stay?

With ten more years of duty, Jay could retire at half his salary, including medical and dental coverage. At age forty-two he could consider a second career. Whatever decision Jay makes, there will be a tradeoff.

3. Which factors do you think are more important? Why?

The pay and benefits immediately in front of him have to be considered. These will certainly have a large influence on his decision. However, Jay must also look at lifestyle, his family, and the pos-sible location of where he will live, as each of these will also affect his decision. There may be particular requirements regarding the type of position he will hold or the level of responsibilities that will accom-pany each respective job.

4. What would you advise Jay to do?

Based on his age and the time left till he finishes his military career, Jay should probably take his next promotion with all the benefits the military will offer. Jay can benefit from extending his mili-tary career by ten years and can expect a great retirement package at age 42. Extending his military ser-

CHAPTER 4: Decision-Making Skills 4.17

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LECTURE OUTLINE LECTURE NOTESvice could lead to a nice teaching career or upper level management position. His knowledge and matu-rity would benefit many companies. Jay has an opportunity to complete one set of goals for himself, then begin a whole new career that offers new and exciting challenges. This path would let him achieve a new set of goals that would not be possible from his current limited military career.

One way to get the class to look at this decision is to ask each student how he or she reacts to the known and the unknown. Some students will recommend that Jay keep his current career in the military (the known) while others will suggest he leave it for the civilian opportunities (the unknown). As stu-dents make their suggestions about the case, also explore why choosing the known vs. the unknown at-tracts each student and what these decisions can lead to, especially after they’ve considered the career implications.

4.18 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual

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LECTURE OUTLINE LECTURE NOTES

X. MAKING CREATIVE DECISIONSLEARNING OBJECTIVE 5Identify methods for creative decision making. (Text pages 93-100)

A. Encouraging creative decisions and innovation in the organization improves de-cision making.

1. One study found that 45% of lucrative ideas came from employees.

2. The other half came from customers, suppliers, and competitors.

B. The Creative Process 1. Managers must establish an environ-

ment that encourages both creativity and innovation.

a. CREATIVITY is coming up with an idea or a concept that is new, orig-inal, useful, or satisfying to its cre-ator or to someone else.

b. INNOVATION is the process of applying a new and creative idea to a product, service, or method of operation.

2. A five-step process can be used to foster a creative decision making environment:

a. Preparation, making sure that all parts of the problem are fully understood

b. Concentration, committing to solve the problem in a timely manner

c. Incubation of ideas and informa-tion, recognizing that the accepted way of solving a problem is not al-ways the best way

d. Illumination, connecting a problem

POWERPOINT 4-15Making Creative Decisions(Refers to text pages 93-95)

LECTURE LINK 4-3Better Group Decision Making: Using Premortems“Premortems,” a form of mental simulation, let man-agers uncover problems and then fix them in real time as the project unfolds. See com-

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LECTURE OUTLINE LECTURE NOTESCASE INCIDENT 4.2

Going Abroad (Text page 100)

A supervisor of twelve engineers has to send four of his employees abroad for six to eight months. All employees are capable of the assignment; the supervisor decides who should go. The assign-ment overseas is undesirable, which does complicate the matter.

1. How would you select who should go abroad on extended loan?

A democratic style of management could help in this stressful situation. The supervisor could meet with employees to see who might be receptive to the overseas project. An open discussion could reveal who might want to take this assignment and why they might benefit from the experience. The manager can explain to the employees that he has to find four willing workers. Those with more senior-ity or special conditions will be last to be asked should the volunteer method become difficult. By using the democratic approach, the manager shows complementary praise and respect to his. He will have a better outcome if the situation can be worked out through open discussion and with input included from all employees.

2. What are some major factors that would influence your decision process?

Factors such as length of time on the job, special family considerations, special medical condi-tions, and past volunteering for other special projects could be factored into this decision.

3. How would you communicate the news to those engineers selected for the assignment?

If the democratic style of selection is used, then the supervisor-to-employee notification of as-signment might be less difficult. Probably the best approach would be to have an open discussion with the employees and determine the feelings of employees (including those that might volunteer). Once the decision is made, the supervisor should write a short memo to each employee selected explaining why they have been chosen and what that means to their careers in the short and long term. Finally, all em-ployees should be notified as to who was selected. The supervisor should stress his or her appreciation of the team approach that displayed in the final outcome.

4. What would you do if any of the engineers requested not to be sent overseas?

If one of the employees refuses to take the assignment, the manager should meet with the em-ployee and discuss why the employee was selected and why the employee does not want the assignment. If the employee’s decision remains the same, the manager faces a difficult decision. Does the rejection merit a reprimand? How will this affect the supervisor-to-employee relationship in the future? Then the supervisor should move on to his next choice based on his notes from the original meeting.

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LECTURE OUTLINE LECTURE NOTES

XI. MANAGEMENT INFORMATION SYSTEMS

LEARNING OBJECTIVE 6Discuss management information systems. (Text pages 100-101)

A. A MANAGEMENT INFORMATION SYSTEM (MIS), also called management reporting system, is an integrated ap-proach for providing interpreted and rele-vant data that can help managers make decisions.

1. MISs produce information needed for successful management.

2. Managers specify in advance what information they need.

B. The term MIS generally refers to use of computers to process data.

C. MIS is not the same as data processing. 1. DATA PROCESSING is the capture,

processing, and storage of data. 2. An MIS uses those data to produce

information for management. D. TRANSACTION-PROCESSING

SYSTEMS substitute computer processing for manual record-keeping procedures.

POWERPOINT 4-19Management Information Systems(Refers to text pages 100-101)

THE WORLD OF WORK

Tony Sees Things Differently (Text page 101)

Tony is now dealing with the misunderstanding about his memo on scheduling. His intentions were to spend less time on schedules so he could spend more time with his staff. However, this has not been successfully communicated to employees, and he has to figure a way to straighten this out. His other dilemma is that he does not want his immediate supervisor or the regional manager to see him as a pushover as the new store manager. Tony needs to carefully discuss this issue with his staff in a way that shows his good intentions without appearing as a weak manager with staff that has more power than him because of their affiliation with the previous store manager.

1. Should Tony change the scheduling policy back to the way things were? Why or why not?

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Tony needs to seriously evaluate his communication skills. As learned in chapter three, managers spend three-quarters of their time communicating and good managers develop good communication skills. These skills help managers absorb information, motivate employees, and deal effectively with co-workers. Manager and subordinates engage in give-and-take exchanges in order to master the interper-sonal communication that impacts their daily activities on the job. Tony is new to these roles and respon-sibilities as a former employee promoted to store manager. As he learns the functions of communication, managerial duties like scheduling should become easier.

2. How do you think this new awareness will change Tony’s management style?

Tony is learning on the job and this means trying various styles and approaches to accomplish the goals of the organization. If Tony can learn more about the skills of managing and mature in the process, he will be much more effective in his career over the long term.

3. Do you think he can rebuild his relationship with his staff? Why or why not?

Yes. Communication is the key to healthy relationships in jobs, relationships, and life. Tony is us-ing an autocratic approach, ignoring the input and ideas of the staff. Tony has to change this perception, and that begins with using and developing good communication avenues.

4. What should Tony do now?

Tony needs face time with his staff so that this obstacle can be dealt with effectively. Tony needs to share his thoughts about how he wants to manage his restaurant. To do this effectively he needs a cohe-sive, motivated staff. The next step should probably be a staff meeting, in which everyone can express opinions and share concerns. If the meeting is done correctly, it will be a first step in getting the new manager and his experienced staff back on the same page.

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NOTES FOR END-OF-CHAPTER MATERIAL

REVIEW QUESTIONS

1. What are the three stages in the decision-making process?

According to Herbert Simon, the manager’s decision-making process involves three stages: (1) intelligence, (2) design, and (3) choice.

2. What criticisms can be made concerning the optimizing approach to decision making?

The optimizing approach is based on the concept of the “economic person.” This assumes that people behave rationally. However, the assumptions inherent in the “economic person” concept are often unrealistic. Also, many decisions are based on limited knowledge of the possible alternative.

3. Describe the five-step process for creating an environment that fosters creative decision making.

The manager sets the environment for his or her area. To avoid hindering creativity, the manager must:

(1) Instill trust

(2) Develop effective internal and external communication

(3) Seek a mix of talent within the organization

(4) Reward useful ideas and solutions

(5) Allow for some flexibility in the organizational structure

4. Explain the role of a management information system.

Management information systems (MISs) support the day-to-day operational and tactical deci-sion-making needs of managers. They produce information needed for the successful management.

DISCUSSION EXERCISE 4.1

Avon: More Than Cosmetic Changes

Avon Products has enjoyed nearly six years of 10% growth and a tripling of sales. Now Andrea Jung faces slumping sales and dropping stock prices. The highly successful CEO has to fix this. This in-cludes trimming staff and implementing globalized manufacturing. Savings from this strategy have been plowed into advertising and research and development in an attempt restore earnings to previous levels.

1. Why did Andrea Jung feel unprepared to manage the turnaround of Avon?

Turning around a troubled company based on sagging sales and profits can be a real challenge. As was shown in the case, improving profits usually requires cutting staff and other troubled, unproduc-tive operations. This can be stressful. Directing a turnaround with so many problems occurring simultane-ously can be overwhelming.

2. How has Avon’s global management structure changed during this turn around process?

In the process of turning losses back into profits, the global management team has been reduced. Managers have to use rational decision-making processes rather than their intuition, which had been the

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method they were comfortable using. This has allowed Jung to control other variables, like the high ex-pense level of advertising.

3. What are the potential advantages of an organization that becomes more “data-centric”?

Jung has used professional analysts who have a better read of and pulse on the market. This strat-egy can be a strength for the company. Using more accurate data in decisions for domestic and global op-erations can help identify different sets of competitive variables.

4. Do you think that Andrea Jung has managed a successful turn around? Why or why not?

Absolutely. First, turning losses into profits is a real management coup. Second, companies flour-ish on market perception. Jung’s turn around has stock market prices soaring and profits rising, sure signs the company is heading in the right direction.

DISCUSSION EXERCISE 4.2

Mulally, Ford’s Most Important New Model

New Ford Motor Company CEO Alan Mulally has just begun his tenure at Ford. He faces a steep learning curve with regards to product names and identities that he must overcome.

1. What messages is Alan Mulally trying to communicate to both Ford employees and Ford cus-tomers?

Mulally does not come from the automotive culture. He has business experience, especially dur-ing his tenure at Boeing, in production processes and cost structures, lessons he can draw on to make Ford more profitable. Mulally has already seen enough waste in the duplication of design and manufacturing. This has led to poor decisions and loss of profitability, preventing the company from building its best products.

2. What challenges does he face in building his credibility as the new CEO of Ford Motor Com-pany?

Mulally must quickly come up to speed on the specifics of production methods, fuel economy standards, and the inter workings of labor groups. All of these factors affect how successful a car model can be in today’s global economy. However, his real challenge is undoing the poor production methods and territorial ownership that exists among the other executives involved in the decision-making process.

3. Give three examples of decisions that Mulally has made in his early days as the new CEO of Ford.

Mulally has changed production processes, considered joint production opportunities with other auto makers, and instituted weekly meetings with top executives instead of monthly gatherings.

4. Ford Motor Company is currently in dire financial straits, having lost $12.7 billion in 2006, forc-ing them to borrow $23.4 billion to cover further losses expected through 2009. How do you think this desperate situation will affect Mulally’s decision-making process?

Mulally is a realist. He understands why he was hired and the role he has in this currently unprof-itable company. By not being a lifelong auto executive, he brings a new approach to what others are fail-ing to see. This perspective is valuable. By not promoting an insider, Ford gains a new perspective that can foster the change needed to turn the company around.

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CAREER MANAGEMENT NOTES

Developing Habits for a Successful Career

Instructor’s Notes for Text Box Four: Objectives to consider and implement to increase students knowledge, usage and understanding of the concepts.

There are so many transactions that come across our lives. We must manage these transactions by outwardly doing and saying what is necessary to keep a positive momentum, knowing good decisions will keep us moving forward. However, it is impossible to make all the right decisions in every situation – there are variables that come into play that we can not always control. Understanding this, one way to in-crease your success rate is to develop GOOD HABITS that will create a good standing with those who we come into contact with on a regular basis.

How do GOOD HABITS help us with our career? Good habits can lead to greater, more mean-ingful success, whether it’s in your first basic job or while you invest in a career, working towards reap-ing greater returns in the future.

STUDENT EXERCISES:

1. Spend time discussing with students the list of habits that can lead to a successful personal and career outcome. Ask students to what they think might be expected outcomes if they exhibit the habits listed above. Use the list below as possible answers to use in this discussion:

What are GOOD HABITS and what is the positive outcome that we can almost always expect when we put these habits into play?

Habit Expected Outcome

• Being on time Good grades from knowing what is expectedSuccessful job & growthPersonal satisfaction from doing what is expected

• Doing my best Good gradesJob satisfaction and potential growthHealthy & positive relationships

• Listening Good gradesBeing on top of job dutiesHealthy & positive relationships

• Writing things down Above average gradesExcelling at job performanceBeing on top of relationship management

• Consistent effort Above average gradesGood job reviews & promotionsStable relationships

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Habit Expected Outcome

• Positive attitude Good school/class relationshipsFavorable job opportunitiesPositive relationships

• Completing all work Favorable gradesFavorable job reviewsExceeding expectations

• Volunteering Shows maturityGives a sense of prideMakes your community better

• Even temperament Keeps you from getting to highKeeps you from getting to lowKeeps you moving forward

• Avoiding gossip Keeps you focused on yourselfKeeps you focused on your goalsAvoids negative time spent

• Being trustworthy Gives you more opportunitiesPlaces you in leadership rolesGives a sense of doing what is right

• Working smart Keeps you more freshKeeps you more focusedAllows you to see better results

• Exhibiting leadership Lets people know what you’re capable ofPuts you in trusted positionsGives a sense of making a difference

• Passion Makes your want to do your bestGives you a sense of desireAllows others to see you as caring

• Character Establishes you as a person of integrityGives people a sense of what to expectDistinguishes you from others

What are the responsibilities of having and maintaining Good Habits? It begins with having a visible list and knowing what you want to achieve and working towards favorable outcomes that Good Habits can provide!

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STUDY SKILLS NOTES

The Need to Succeed

Instructor’s Notes for Text Box Four: Objectives to consider and implement to increase students knowledge, usage and understanding of the concepts.

Based on the list of study skills that lead to improved outcomes, what can you do to become a better learner? Are you organized and make good use of your time, but need better note-taking skills to feel prepared for a test? Are you a good listener and note taker, but get anxious when taking tests? Could you improve your time management skills so that you are prepared for the continuous papers and tests re-quired for your courses? Is your list so large and intimidating that you feel helpless and unsure of where to begin? Now is your chance! Begin with what you feel are the three most important items that would help you improve your study skills and grades. Once you have successfully done this, make a new list of your top three study skills. What does this list look like? Are you making progress or are you still strug-gling with the same issues? What helped you gain success or why do you still have the same problem ar-eas? Our next topic, Time Management, might help reveal why problems still exit in improving study skills and grades.

STUDENT EXERCISES:

1. Ask students to key in on their top three areas in need of improvement. Make a list on the board from the entire class. Find where the common “difficulties” are. Begin a discussion of these com-mon problem areas and the causes behind them. Follow this with a discussion about possible so-lutions to minimize or eliminate the difficulties.

2. Introduce students to the idea of using a journal. Ask students to purchase a small notebook or journal where they can list their top three areas they feel need to most attention to improve their study habits, preparation and execution. Have them then make notes on how they intend to make these improvements. Ask them to do this over a period of time, such as 2-3, months and then evaluate the results. Have the students also evaluate the results, both positive and negative.

Have the student make a new top three list. Remember, it is possible one or more of their items on their original list could be placed in the top-three list a second time. Evaluate how well they were able to accomplish the goals set with their first list. This exercise is perhaps the most impor-tant in helping students identify and actively work towards improving their own personal habits.

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LECTURE LINKS

LECTURE LINK 4-1

Decision-Making Tips

Just as people differ, so do their styles of decision making. Each person is a result of all of the de-cisions made in their life to date. Recognizing this, here are some tips to enhance your decision-making batting average.

When making a decision, remember that you are simply choosing from a set of alternatives. You are not making a choice between right and wrong.

Avoid snap decisions. Move fast on the reversible ones and slowly on the non-reversible. Do your decision-making on paper. Make notes and keep your ideas visible so you can con-

sider all the relevant information in making this decision. Be sure to choose based on what is right, not who is right. Write down the pros and cons of a line of action. It clarifies your thinking and helps you

make a better decision. Make decisions as you go along. Do not let them accumulate. A backlog of many little deci-

sions could be harder to deal with than one big and complex decision. Consider those affected by your decision. Whenever feasible, get them involved to increase

their commitment. Recognize that you cannot know with 100% certainty that your decision is correct, because

the actions to implement it will take place in the future. So make it, and don’t worry about it. Remember that not making a decision is a decision not to take action. Don’t waste your time making decisions that do not have to be made. As soon as you are aware that a decision will have to be made regarding a specific situation,

review the facts at hand then set it aside. Let them incubate in your subconscious mind until it is time to finally make the decision.

Once you have made the decision and have started to act on it, put aside the “what if’s” aside and commit to your decision.i

LECTURE LINK 4-2

When Employees Make the Decisions

W. L. Gore is the maker of the Gore-Tex waterproof fabric, found in all sorts of outdoor clothing merchants. Gore-Tex is a unique kind of textile basically made out of Teflon. Gore-Tex’s pores are too small to let water droplets through. Gore once worked for his father’s company, which made wires and wire coatings. He tried to make a plumber’s tape with a Teflon coating, but the sheet of Teflon material he used wasn’t flexible enough. He grew so frustrated that he jerked the tape with his hands. Gore found that when he stretched the tape, its structure changed and became porous. He realized that the material had commercial possibilities and soon built Gore-Tex around the invention.

i Source: “Decision Making Tips,” Managing a Small Business, www.liraz.com.

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W. L. Gore also has a unique organizational structure. There are no directors, line managers, op-eratives, or secretaries. All of the company’s employees are referred to as “associates” and share decision making authority. When a machine operator left W. L. Gore, the human resources department began look-ing for a replacement. However, before a want ad could even be posted, the man’s former team members met together and figured out how they could make do with one less body. They would have to work harder without more pay, but they wanted to do what was best for the enterprise.

The cooperative spirit of this company arises from a unique structure with no fixed hierarchy, few titles, and no formal job descriptions. “Associates” can speak directly to one another without going through a chain of command. Together the 6,000 associates own the company.

The theory behind employee-ownership programs is that workers will transform from clock punchers into partners who are motivated to better serve customers and to run operations more efficiently. At the most successful worker-owned firms, the theory is pretty close to reality.

On average, worker-owned companies survive longer, lose fewer workers, enjoy bigger profits, and are more productive than their non-employee-owned competitors. The key to the success of em-ployee-owned companies is openness of information and decision-making.

Each worker at Gore enjoys broad discretion to make minor decisions. Bigger decisions – hiring, firing, and setting compensation – are made by committees whose members constantly shift with the de-mands of the business. Anyone can start a new project by persuading enough people to go along with the idea. Even Bob Gore, chairman and son of the company founder, has his compensation set by a commit-tee.

Still, this arrangement has its costs. Workers are forced to devote a lot of time to building rela-tionships. Says process technology manager Michael Jones, “At a traditional company, you have one boss to please. Here, you have everyone to please.” Few companies go so far; most American firms in which workers own a majority of the stock are organized as conventional hierarchies. But growing evidence shows that the most successful firms are those that find some consistent way of empowering workers. ii

LECTURE LINK 4-3

Better Group Decision Making: Using Premortems

One tool used in rapid decision-making is mental simulation: the ability to evaluate a course of action by imagining how it may unfold and ultimately play out. At Klein Associates Inc., work groups use a form of mental simulation called a “premortem” to discover a new project’s hidden flaws.

A premortem works like this: After meeting to kick off a new project, team members pretend to gaze into a crystal ball. They look six months into the future, and the news is not good. Despite their hopes, the project has failed. Then team members take three minutes to run a mental simulation. They write down why they think their work derailed. All sorts of reasons emerge.

“People might say that I pushed the project in my own direction and created complications,” says Gary Klein, the company’s founder and its chief scientist. “Someone else will say that the project was too ambitious – that we should have streamlined it. I might say that the two people who led the project had other big responsibilities, and they blew the deadline.”

The group’s comments can be unusually candid. The reason, says Klein, is that the conversation’s context is radically different from a critique. The entire focus is on trying to understand why the project

ii Sources: Laird Harrison, “We’re All the Boss,” Time.com, April 3, 2002; Catroina Ritchie, “A Breath of Fresh Air; Gore-Tex Firm Is Named the UK’s Best Employer for Third Year in a Row,” The Daily Mail, March 6, 2006; and “Inventive Bunch Heads to Hall of Fame,” Morning Edition NPR, May 5, 2005.

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failed. By looking six months into the future, people feel secure enough to say what they really think. Then they snap back to the present. Each comment is recorded, so that all of the members know the po-tential speed bumps before they go forward.

The exercise helps people work smarter without becoming overconfident. And it seems to make sense. “With a postmortem, everything you learn is after the fact,” says Klein. “With a premortem, we give ourselves a chance to uncover problems and then fix them in real time, as the project unfolds.” iii

iii Source: “Premortems: Fix Problems Before They Happen.” Fast Company, September 2000, p. 290.

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CRITICAL THINKING EXERCISES

CRITICAL THINKING EXERCISE 4-1

Lost at Sea

You are adrift on a private yacht in the South Pacific. Due to a fire of unknown origin, the yacht and its contents have been destroyed. The yacht is now slowly sinking. Your location is unclear because critical navigational equipment was destroyed, and the crew is distracted as they try to bring the fire under control. Your best estimate is that you are approximately 1,000 miles south-southwest of the nearest land.

The following is a list of 15 items that are intact and undamaged after the fire. In addition to these articles, you have a serviceable rubber life raft with oars large enough to carry your self, the crew, and all the items listed. The total contents of all survivors’ pockets are a package of cigarettes, several books of matches, and five one-dollar bills.

Your task is to rank the following 15 items in terms of their importance to your survival. Place the number 1 by the most important item, the number 2 by the second most important, and so on through number 15, the least important.

______ Sextant

______ Shaving mirror

______ Five-gallon can of water

______ Mosquito netting

______ One case of U.S. Army C rations

______ Maps of the Pacific Ocean

______ Seat cushion (flotation device approved by the Coast Guard)

______ Two-gallon can of oil-gas mixture

______ Small transistor radio

______ Shark repellent

______ 20 square feet of opaque plastic

______ One quart of 160-proof Puerto Rican rum

______ 15 feet of nylon rope

______ Two boxes of chocolate bars

______ Fishing kit

After everyone has completed the above rankings, your instructor will divide the class into teams or groups. Your group is to then rank the same items, using a group consensus method. This means the ranking for each of the 15 survival items must be agreed on by each group member before it becomes part of the group decision. Consensus may be difficult to reach.

Therefore, not every ranking will meet with everyone’s complete approval. As a group, try to make each ranking one with which all group members can at least partly agree. Here are some guides to use in reaching consensus:

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1. Avoid arguing for your own individual judgments. Approach the task on the basis of logic.2. Avoid changing your mind for the sole purpose of reaching agreement and avoiding con-

flict. Support only solutions with which you agree at least somewhat.3. Avoid conflict-reducing techniques such as majority vote, averaging, or trading.

4. View differences of opinion as a help rather than a hindrance to decision making.iv

iv Source: Adapted from John E. Jones and J. William Pfeiffer, eds., The 1975 Annual Handbook for Group Facilita-tors (La Jolla, CA: University Associates, Inc., 1975).

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CRITICAL THINKING EXERCISE 4-2

Evaluating Alternatives

Monmouth Thermics, a subsidiary of General Standard, a large conglomerate, manufactures ther-mometers. Your primary customers are large companies who purchase the thermometers to use for spe-cialty advertising. Over the last several years, however, low-cost overseas competitors have pulled away many of the company’s long-time customers.

General Standard has become concerned about the loss of market share and declining profit. You, as Monmouth general manager, have been asked to put together a recovery plan to present to the General Standard board of directors. Your management team has pulled together the following options:

Cut costs by imposing an across-the-board pay cut for all personnel. This would save enough money to bring the company back to profitability.

Expand operations into specialty printing. Currently the thermometers are sold to other companies for printing. The additional printing cost would add 23¢ to the cost of each unit, but would also add 40¢ to the unit sale price.

Expand sales of the current thermometer line to retail outlets such as Wal-Mart and Tar-get.

Manufacture and market a new product. The R&D department has developed a combina-tion thermometer/barometer housed in an oak case. The product would be marketed through specialty stores. Two new production lines would have to be added for the barometer and for the wood case. The “Thermbarometer” could be manufactured for about $30 per unit and sold for $100.

Use the six-step optimizing approach to decision making described on text page 84 to decide which option management should present to the General Standard board of directors. Defend your choice.

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BONUS CASE

BONUS CASE 4-1

DefenseWeb Evaluates a Strategic Expansion

DefenseWeb Technologies was on a roll. Profit margins were strong and clients were happy. But founder Paul Cavanaugh was restless. Annual revenue had flattened at about $2 million, and he worried that his company was hitting a slump. The company’s key product is a Web-based software platform used by the U.S. armed forces. One such project is the MyArmyLifeToo web portal. MyArmyLifeToo is an online information clearinghouse to support Army soldiers and their families.

If the military was so impressed with DefenseWeb’s performance, Cavanaugh wondered, could the company target the much larger, and more lucrative, corporate market? The potential new private clients could spur revenue growth and increase the company’s value. On the other hand, the Pentagon never bounced a check.

The company had flirted with this expansion strategy for some time. Every time engineers up-dated the company’s flagship software, they were asked to make sure the new version had the potential to work for private sector clients, keeping the option open. Now Cavanaugh wanted to determine once and for all whether such a move made sense.

To handle the strategic analysis, Cavanaugh hired a new CEO, Doug Burke, a technology indus-try veteran. Together the two men began exploring DefenseWeb’s options. They decided to split the com-pany into two “zones.” Cavanaugh would run the government operations, and Burke would investigate a new private-sector strategy. Burke gave himself a six-month timetable. At the end of that time, he would take his findings – good or bad – to the company’s board to make the decision.

Burke assigned two full-time technicians to modify DefenseWeb’s application for commercial use. He contacted twenty potential clients in the technology sector about adopting the company’s soft-ware. Six signed on for the pilot program.

While the initial reviews were positive, Burke uncovered roadblocks. The initial six clients were very technology-oriented, but the software would have to be further modified for more mainstream cus-tomers. Also, a new marketing and sales force would have to be built to sell to the more cutthroat private sector.v

DISCUSSION QUESTIONS FOR BONUS CASE 4-1

1. Show how the six-step optimizing model for decision process could be used in this case. (See page 84 in the text.)

2. If DefenseWeb expands into the private sector, how would it affect the various stakeholders, such as employees, customers, community, investors, and suppliers?

3. What are the benefits and drawbacks of having a technical person as CEO?

v Sources: Rod Kurtz, “The Problem: DefenseWeb’s Technology Was a Big Hit with the U.S. Military. Was It Time to Target Corporate America?’’ Inc. magazine, October 2004, pp. 56-58; “Defense Web Awarded Follow-on Con-tract to Enhance MyArmyLifeToo Web Portal, Business Wire, December 14, 2005; and “DefenseWeb Celebrates 7th

Anniversary,” Federal Computer Market Report, February 14, 2005.

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ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 4-1

1. Show how the six-step optimizing model for decision process could be used in this case. (See page 84 in the text.)

(1) Recognition. Realizing that the software could be adapted to the civilian market.

(2) Establish, rank, and weigh the decision criteria. Carefully state the opportunity at hand. Find the most important criteria on which to base the decision.

(3) Gather available information and data. Collect information on potential revenue and ex-penses then analyze what resources would be needed.

(4) Identify possible alternatives. A six-company pilot program is used.(5) Solution finding. Identify the decision criteria and evaluate the potential ideas.

(6) Select the best alternative. Finally, a joint decision was made.

2. If DefenseWeb expands into the private sector, how would it affect the various stakeholders, such as employees, customers, community, investors, and suppliers?

Almost all the stakeholders would be affected positively. The stockholders would make more money and so would the employees. The only negative result may be from the government customers who might not get the total, undivided attention they once had.

3. What are the benefits and drawbacks of having a technical person as CEO?

A technical person might not spot the difficulties that customers might have using the product. In fact, that happened. Furthermore, a technical person might not have the people skills needed. But that is easily discovered from past management duties. There is no reason why a technical person couldn’t be a wonderful manager.

Update: The board decided against moving into the private sector. According to Cavanaugh, “It just didn’t add up.” The private-sector clients that were part of DefenseWeb’s pilot program were given the option of continuing to use the software, but most opted to let the trial end. Burke is now courting po-tential clients like the Army Reserve and scouting out subcontracting opportunities. Neither Burke nor Cavanaugh feel the six-month evaluation was wasted time. The company had been talking about going commercial for a long time. Now that the decision had been made, the company became more focused on its original mission.

CHAPTER 4: Decision-Making Skills 4.35

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ENDNOTES

4.36 MANAGEMENT: A REAL WORLD APPROACH: Instructors’ Resource Manual