Chapter 2

Step 1 – Identifying the problem according to 1.past performance 2.previously set

goals 3.performance of other unit withing organization or other organizations.
Steps 2,3,4,5 – don’t need explanation.
Step 6 - choose the best alternative based on analysis.
Step 7 – put this alternative into action.
Step 8 – see if the problem has been solved.
3 main approaches of decision making:
1. Rational model – making logical and consistent choices (kai erti)
2. Bounded rationality – No one can possibly analyze all info on all
alternatives, so in this model they ‘’satisfice’’, accept solutions that are
‘’good enough’’ rather than spend time and other resources to maximize.
3. Intuition and managerial decision making – intuition (wt actual f)

There are 2 types of problems:

Structured – when problem is straightforward, the goal is clear, information about
it is available. For example: supplier is late with a delivery, customer wants to
return purchased product…
For structured problems, use: 1.procedure 2.rules 3.policies

Unstructured – new or unusual problems, information is incomplete or ambigious.

For example: decision to enter new market, merge two companies…
There are 2 types of decisions:
Programmed – when company already has a solution. Decision is based on past
problems that are already ‘’programmed’’. It doesn’t need identifying and
weighing criteria or alternatives. (basically, solutions to structured problems)
Nonprogrammed – with unstrucured problems, managers must develop unique
solutions. Most of the problems for top-level managers are nonprogrammed.

3 conditions managers face when solving a problem:

1. Certainty – all outcomes are known and decision is easy to make.
2. Risk – manager can estimate the likelihood of an outcome
3. Uncertainty – when manager has no reasonable probability estimates.

How do groups make decisions?

Most organizations’ decisions are usually made in groups.
Advantages: more complete info, deiversity of experiences and perspectives,
more alternatives generated, increased acceptance of solution, increased
legitimacy.
Disadvantages: time-consuming, minority domination (people with higher rank
might have more power), ambigious responsibility (only one decision can be
finalized), pressures to confirm (groupthink).
Groupthink – when group members don’t express their unpopular views in order
to give the appearance of agreement.

How to improve group decision making?

1. Brainstorming
2. Nominal group technique – when members secretly write a list of general
problem areas and possible solutions, which avoids groupthink.
3. Electronic meeting – when members sit in the office and anonimly type on
their ideas on laptops. The message will flash on screen in the office.
 3 important issues that are connected to decision making:
1. National culture – different countries have different decision-making
processes. In India, power distance is high and only senior-position
managers make decisions. In Sweden, managers are not afraid to take risks,
they also pass decisions down to lower levels. In Egypt, time pressure is low
so they make decisions at lower rate.
2. Creativity and design thinking – Creativity thinking is important, to
understand problem fully, see the problems others can’t see and solve it.
3 requirements to unleash creativity:
1. Expertise – good knowledge, understanding of the field.
2. Creative-thinking skills – personality characteristics, talent.
3. Shinagani task motivation – desire to work on someting because it’s
interesting, involving, exciting is what turns creativity on.
Design thinking – ‘’approaching management problems as designers
approach design problems.
3. Big Data – data can help managers make decisions based on researches.

Decision tree:

Break-even analysis – determine how many units must be sold to break even
(neither loss nor profit). TFC – total fixed costs, P – price per unit, VC – variable
cost per unit.
 Chapter 3
Globalization

Global village – boundaryless world where goods and services are produced and
marketed worldwide, but managers do business differently, based on culture,
environment, systems…

3 ways for organizations to be global:

1. Marketplace globalization – when company sells its product worldwide.
2. Talent globalization – when company uses employee talents from other
countries (tech companies).
3. Financial globalization – when company uses financial sources and
resources outside its country.

How do organizations go global?

1. Global sourcing – purchasing materials or labot from other countries
wherever it’s cheapest.
2. Exporting and importing – axsna ar unda
3. Licensing or franchising – one organization gives another one the right to
use its brand name.
4. Global strategic alliance – partnership between different companies.
5. Foreign subsidiary – setting up a facility in a different country.
What do managers need to know about managing in global organization?
Parochialism – when managers see things only through their own perspectives
and don’t recognize that people from other countries have different ways of
doing things.

9 dimensions on which national cultures differ:

1. Assertiveness – The extent to which society encourages people to be tough,
confident, assertive.
2. Future orientation – The extent to which society encourages and rewards
future-oriented behavior (planning, investing in the future).
3. Gender differentiation – The extent to which society maximizes difference
between gender roles.
4. Uncertainty avoidance – idk
5. Power distance – idk
6. Individualism – idk
7. In-group collectivism
8. Performance orientation – The extent to which society rewards group
members for performance improvement.
9. Humane orientation – The extent to which society rewards individuals for
being fair, generous, caring.

What does society expect from organizations and managers?

Social responsibility – firm’s intention to do right things that are good to the
society (charity).
Social obligation - when firm does the minimum that law requires and only
pursues social goals when they contribute to economic goals (pollution control).
Social responsiveness – when firm engages in social actions in response to some
popular social need.
Ethics – set of rules that defines right and wrong.
Utilitarian view of ethics – says that ethical decisions are made only on the basis
of their outcomes.
Right view of ethics – individuals are concerned with respecting and protecting
individuals that can be affencted by their decision.
Theory of justice view of ethics – basing decision on skills rather than gender,
personal favorites…

Code of ethics – states organization’s primary values and rules it expects

managers and employees to follow.