1-1 Review ●What is SWOT? ●What are Porter’s Generic Strategies? ●What is the Miles and Snow...
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Transcript of 1-1 Review ●What is SWOT? ●What are Porter’s Generic Strategies? ●What is the Miles and Snow...
1-1
ReviewReview
● What is SWOT?● What are Porter’s Generic Strategies?● What is the Miles and Snow Typology?● What is the Product Life Cycle?● What types of diversification strategies are there?
– What are there strengths/weaknesses?● How does one evaluate opportunities?
– BCG Matrix– GE Business Screen
● What is the Prisoners’ Dilemma?
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Decision Making and Problem SolvingDecision Making and Problem Solving
● Choosing one alternative from among a set of alternatives.– Not simply multiple choice– You also have to identify the choices
● Types of decisions– Programmed
Structured and re-occurs– Nonprogrammed
Unstructured and infrequent● Examples?
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Decision Making ConditionsDecision Making Conditions
● Certainty– Know all alternatives– Know outcome for each alternative
● Risk– Know all alternatives– Each alternative has a probability
● Uncertainty– Do not even know all the alternatives
● Examples
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Classical Decision MakingClassical Decision Making
Theory●Obtain complete and perfect information on alternatives●Eliminate uncertainty●Evaluate alternatives
Practice●Good or bad approach?
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Rational Decision MakingRational Decision MakingTheory
1.Recognize and define the decision situation
- Sometimes hard to see the problem
2.Identify alternatives
3.Evaluate alternatives
4.Select best alternative
5.Implement choice
6.Evaluate results
Practice●Sometimes projects go on too long when should be killed●People get invested in a particular approach●Just because it is “rational” doesn’t mean it will produce good results. E.g. New Coke, Netflix, others?
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Administrative ModelAdministrative Model
Theory●Describes how decisions are made, not how they should be made●Characteristics
– Bounded Rationality Decision makers are limited by skills and
incomplete information– Satisficing
Search until find solution meeting min. req.●Does not necessarily lead to the “best” decisions●Examples
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Other Factors in Decision MakingOther Factors in Decision Making
Practice●Political forces
– Power of customers and suppliers McDonalds Styrofoam, animal testing, etc.
●Intuition– As opposed to “Paralysis by Analysis”
●Escalation of commitment– Sticking with a decision even when looks wrong– “Sunk costs are sunk”
●Risk propensity– Willingness to take and comfort with risk
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Group Decision MakingGroup Decision Making
Practice●Interactive groups (teams)●Delphi groups
– Ask group of experts for opinion, e.g. on date– Average the inputs and repeat until consensus
●Nominal groups– Group in name only– Bring experts together, get ideas, and vote
●Manager implications:– If you ask, be prepared for all responses– Do you retain the right to accept or reject?
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Group Decision MakingGroup Decision Making
● Advantages– More information– More alternatives– Greater acceptance– May get better comm.– Usually better decisions
● Disadvantages– Slower– Costlier– Compromises are not
necessarily better decisions
– One person may dominate
– “Groupthink” where desire for consensus overwhelms getting to correct decision
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Managing Group Decision MakingManaging Group Decision Making
Practice●Need to be careful that you don’t abdicate your responsibility●Need to be careful that you don’t empower group and then take it back●Set deadlines●Carefully select members●Make it clear that all decisions will be subject to testing and scrutiny
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ExerciseExercise
● Deal or No Deal– You have a 50/50 chance of getting either
$500,000 or $1. I offer you either those odds or $200,000 guaranteed. What do you take?
– You have a 50/50 chance of either losing $100 or losing $1. I offer you either those odds or a guaranteed loss of $45. What do you take?
● What affects your decision?– Expected value– Expected utility
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More Mental ExercisesMore Mental Exercises
• Exercise C1. Have a 3K sq. ft. home when everyone
else has 4K sq. ft. or2. Have a 2K sq. ft. home when everyone
else has a 1K sq. ft. home
• Exercise D1. Get 4 weeks vacation when everyone
else gets 6 weeks or2. Get 2 weeks vacation when everyone
else gets 1 week.
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VideosVideos
● DVD – McDonalds – One Owner● DVD – Google Ch. 5, Guess Where Google is Now