Chapters 7 and 8 principles of management

Rational decision making

decisions made based on a structured process with logical steps

Rational decision making Step 1

Identify

Rational decision making Step 2

Alternatives

Rational decision making Step 3

Evaluate

Rational decision making Step 4

Implement

Rational decision making assumes

uncertainty and risk

Satisficing

trying different options until objectives are satisfied. not necessarily optimized

Intuition

decision making without logical inference

Rational is prescriptive

focuses on how decisions ought to be made

Non-rational decision making

descriptive. focuses on how decisions are actually made in real life

Bounded rationality

the ability to make rational decisions is limited by constraints such as complexity. time. and money

Predictive analytics

techniques used to predict what will happen

Data analytics

analysis of data to extract useful information for decision making

Tolerance for ambiguity

a characteristic of entrepreneurs who are comfortable with uncertainty

Analytical Decision making style

consider many alternatives

Conceptual Decision making style

rely on intuition and long term perspective

Directive Decision making style

very systematic

Behavioral Decision making style

most people oriented

Halo

positive impression influences overall opinion

Framing

tendency of decision makers to be influenced by how a situation or problem is presented

Overconfidence

bias in which subjective confidence is greater than objective accuracy

Confirmation

seeking information that supports a point of view and discounting data that does not

Groupthink

members strive to agree to avoid conflict

Organizational culture

shared. taken-for-granted assumptions that determine how a group perceives. thinks. and reacts

Clan culture

feels like a family, flexibility > stability and control

Market culture

customer oriented, productivity > employee satisfaction

Adhocracy culture

external focus and values flexibility. encourages risk-taking and creativity

Hierarchy culture

internal focus and values stability and control. follows many rules

Authority

the right to perform or command

Delegation

assigning authority and responsibility

Chain of command

ranking of authority ensuring the right people do the right things at the right time

Span of control

number of subordinates a manager can efficiently and effectively manage

Departmentalization

grouping jobs together for management purposes

Organizational design

optimizing structure and responsibilities

Traditional design

simple. functional. divisional. or matrix organizational structures

Functional design

grouping people with similar occupational specialties together

Divisional design

grouping people by product. customer. or geographic region

Matrix design

functional and divisional, two bosses

Customer division

groups activities around common customers

Product division

groups activities around similar products or services

Geographic division

groups activities around similar regions

Modular structure

product chunks provided by outside contractors

Hollow structure

keep core functions, outsource other functions

Virtual structure

organization whose members are geographically apart but appears as a single unified organization