decision making
the process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action
Programmed Decision Making
routine, virtually automatic decision making that follows established rules or guidelines
Nonprogrammed Decision Making
Non-routine decision making that occurs in response to unusual, unpredictable opportunities and threats
Intuition
feelings, belief, and hutches that come readily to mind, require little effort and information gathering, and results in on-the-spot decisions
reasoned judgement
a decision that takes time and effort to make and results from careful information gathering, generation of alternatives, and evaluation of alternatives
classical model
a prescriptive approach to decision making based on the assumption that the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action
optimum decision
the most appropriate decision in light of what managers believe to be the most desirable future consequences for the organization
Administrative Model
An approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions
Bounded Rationality
Cognitive limitations that constrain one's ability to interpret, process, and act on information
Devils Advocacy
A Critical analysis of a preferred alternative, made in response to challenges raised by a group member who defends unpopular or opposing alternatives for the sake of argument
Groupthink
A pattern of faulty and biased decision making that occurs in groups whose members strive for agreement among themselves at the expense of accurately assessing information relevant to a decision
satisficing
searching for and choosing an acceptable, or satisfactory, response to problems and opportunities, rather than trying to make the best decision
Legality
Ethicalness
Economic Feasibility
Practicality
General criteria for evaluating possible courses of action when evaluating alternatives in decision making
Heuristics
Rules of thumb that simplify decision making
Systematic Errors
Errors that people make over and over and that result in poor decision making
Prior Hypothesis Bias
Representativesness
Illusion of Control
Escalating Commitment
Four sources of cognitive bias that can adversely affect the way managers make decisions.
Nominal Group Technique
A decision-making technique in which group members write down ideas and solutions, read their suggestions to the whole group, and discuss and then rank the alternatives
Delphi Technique
A decision-making technique in which group members do not meet face-to face but respond in writing to questions posed by the group leader
Mission Statement
A broad declaration of an organization's purpose that identifies the organization's products and customers and distinguishes the organiztion from its competitors
Corporate Level Plan
Top management's decisions pertaining to the organization's mission, overall strategy, and structure.
Business Level Plan
Type of plan details the long-term divisional goals that will allow the division to meet corporate goals
Functional Level Plan
Functional managers' decisions pertaining to the goals that they propose to pursue to help the division attain its business-level goals
Functional Level Strategy
A plan of action to improve the ability of each of an organization's functions to perform its task-specific activities in ways that add value to an organization's goods and services
Unity
Continuity
Accuracy
Flexibility
Four qualities every plan should have (Fayol)
Planning
Identifying and selecting appropriate goals and courses of action; one of the four principal functions of management
strategy
a cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals
SWOT Analysis
A planning exercise in which managers identify organizational strengths (S) and weaknesses (W) and environmental opportunities (O) and threats (T)
Low Cost Strategy
Driving the organization's cost down below the costs of its rivals
Differentiation Strategy
Distinguishing an organization's products from the products of competitors on dimensions such as product design, quality, or after-sales service.
Customer Relationship Management (CRM)
A technique that uses IT to develop an ongoing relationship with customers to maximize the value an organization can deliver to them over time
Just in Time Inventory (JIT)
A system in which parts or supplies arrive at an organization when they are needed, not before
Total Quality Management (TQM)
Management technique that focuses on improving the quality of an organization's products and service.
Value Chain Management
The development of a set of functional-level strategies that support a company's business-level strategy and strengthen its competitive advantage