Final Flashcards
Bounded rationality
- Williamson interview
- a set of boundaries or constraints that tend to complicate the rational decision-making process
- can’t choose the convenient assumption
- adhere closely to reality and behavior that intends to be rational
- not capable of maximizing in all situations
- limitation on ability to work towards the right answer
Transaction Cost
- Williamson interview
- cost associated with the time and effort needed to search out, negotiate, and consummate an exchange (cost of doing business)
- must economize
- have detailed knowledge of attributes of transactions
Cost of Uncertainty
- Williamson interview
- making agreements in the context of uncertainty
- chance that price of an asset will change
- hostage situation
- develop bilateral dependency (mutual advantages)
- introduces a kind of deterrence
- reduce uncertainty –> reduce cost
Satisficing
choosing a “good enough” alternative
Optimizing
achieving the best possible balance among several goals
Classical Management
- studies the way work is organized and the procedures used to complete a job in order to increase worker productivity
- careful selection and training of workers
- Frederick Taylor: Taylorism/ scientific method
- Max Weber - Bureaucracy
- Henri Fayol - administration of the firm
- Anthony’s management Hiearchy
- principle factor = industrial revolution
Scientific Management
- Frederick Taylor
- “Taylorism”
- management theory using efficiency experts to examine each work operation and find ways to minimize the time needed to complete it
- design jobs with standards leading to efficiency
- select workers to fit the job design
- train workers to follow the design
- support workers by planning their work
Bureaucracy
- Max Weber
- logic, order, and legitimate authority
- not based on social standing
- division of labor
- hierarchy of authority
- formal rules
- impersonality
- promotion of merit
Administration of the firm
- Henri Fayol
- administration of the firm leads to “A” in MBA and more recently to “management”
- planning
- organizing
- command
- coordination
- control
- unity of command (no one has more than one boss)
Anthony’s Management Hierarchy
(top)
- strategic planning (executives)
- management control (managers)
- operational control (supervisors)
- organizational members (workers)
(bottom)
Value Proposition
1) external value proposition link between what the customer gets in exchange for what the customer gives up
2) internal value proposition links between organizational STRATEGY and organizational OPERATIONS
Organizational Diagram
- external: buy side and sell side
- internal: people, culture, structures, tasks, and systems
Behavioral Management
- attempt to increase production by understanding people
- easier to change the organization than change the people
- Hawthorne experiment
- Abraham Maslow & Hierarchy of Needs
- Douglas McGregor: Theory X and Theory Y
- emergence of working class
- emergence of pop. centers
- “democratization” of education
- diversity of pop. between US and foreign born
Hawthorne Experiment
- Elton Mayo
- difference in working conditions based on scientific management perspective
- no difference in productivity
- started human relations movement and field of organizational behavior
- shift from just scientific approach to include human and social concerns to increase productivity
Maslow’s Hierarchy of Needs
(top)
- self actualization: self fufillment, growth
- esteem needs: respect, prestige, mastery
- social needs: love, affection, belongingness
- safety needs: shelter, protection, stability
- physiological needs: food, water, physical well being
(bottom)
- work to satisfy needs up to self actualization
Theory X
- Douglas McGregor
- assume people do not like to work and want to be led
- if held to one or the other approach –> can lead to self-fulfilling prophecy
- people will do what the boss wants them to do
Theory Y
- Douglas McGregor
- assume people are willing to work and can be creative
- if held to one or the other approach –> can lead to self-fulfilling prophecy
- people will do what the boss wants them to do
Management Science Approach to Management
- application of quantitative tools and applied mathematics
- introduction of technology
- learning organization: ability to learn from experiences and make changes with some estimates of future results
- contingency thinking: ability to respond to changes in supply and demand functions
- systems approach: ability to see the organization as integrated group of subsystems and coordinate their activities with some models
- total quality management: ability to estimate acceptable error rates
Macro Problems
important
Micro Problems
Urgent
Values
- beliefs we want to be true and may be true (shared with others)
- drive subsequent behavior
- more difficult to change
- value NOT EQUAL to beliefs
Beliefs
- descriptive thoughts about something that a person holds about something that has some factual basis (personal)
- believes NOT EQUAL to value
- generally come from facts and observed experiences so they can be changed
Behavior
changes in behavior come from facts
Norms
accepted behavior based on values, beliefs, and facts (primarily values)
Driving Forces for Change
1) globalization
2) rapid change in technology
3) changes on consumer demands
4) changes in supply of raw materials
5) shifts in asymmetric/symmetric information
6) competition
Consultant Styles
1) pathfinder
2) persuader
3) cheerleader
4) analytical
5) stabilizer
Types of Conflicts
1) substantive: outcomes
2) emotional/relationship: the way people work together
3) functional: something can be achieved to help task performance; focus on “how” and “when” outcome will be achieved NOT on outcome itself
4) Dysfunctional: hurts task performance; inability to resolve the conflict (not listening to each other)
Mechanisms for Conflict Resolution (NOT the resolution itself)
1) Negotiation: A – B
2) Arbitration: A – X – B (X makes decision)
3) Mediation: A – X – B (A & B make decision)
BATNA
- Best Alternative to a Negotiated Agreement
- sets the bargaining zone
- needs to be real and actionable
- is the best outcome of all the negotiation if all else failed
- not the “walk away” point or “reservation” point
- form of game theory
- positions vs interest
Sociotechnical System Approach
the design and performance of any organizational system can only be understood and improved if both “social” and “technical” aspects are brought together and treated as interdependent parts of a complex system
Power
1) coercive power
2) legitimate power
3) expert power
4) referent power
5) reward power
Coercive power
- the power to punish
- worse power
Legitimate power
- power granted by some authority
- ex: Alex was made boss of the plant
Expert power
- the power to have some specific skill or knowledge not found in others
- can be held by anyone
- ex: Ralph from the Goal
Referent power
- the power of admiration or respect
- best power to have
- ex: Lou from the Goal
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
Structured model/ programmed decision
- framework to analyze decision making
- ROTE habit forming
- uses less resources
- simple
- ex: cup of coffee every morning
Unstructured model/ unprogrammed decisions
- framework to analyze decision making
- not habit forming
- hard to do
- not simple
What are the 7 components of a decision environment?
1) Bounded rationality
2) Risk
3) Uncertainty
4) Information symmetry
5) Ambiguous information
6) Time constraints
7) Information costs
Stakeholder
Has an interest in the work but varying degrees of authority and responsibility
Trust
Trust is the willingness of a person or group to have confidence in the goodwill and competency of another person or organization even though the willingness puts them at risk
Reputation
- How others see managers and organizations as a result of their ethical behavior
- Reputation leads to trust.
Principle agent theory
- This dilemma exists in circumstances where agents are motivated to act in their own best interests, which are contrary to those of their principals, and is an example of moral hazard.
- Lawyer example
Decision rights
Decision Rights Tools help companies to organize their decision making and execution by setting clear roles and accountabilities and by giving all those involved a sense of ownership of decisions: when to provide input, who should follow through and what is beyond their scope
Line function
- directly advances an organization in its core work
- seen in value chain
Staff function
- supports what the organization does
- seen in value chain
Utilitarian rule
Greatest good for the greatest number of people
Moral rights rule
- Protects the fundamental right and privileges
- Rule to solve an ethical dilemma
Justice rule
- A fair and equable distribution of benefits and harms
- Rule to solve an ethical dilemma
Practical rule
A business model that says you should only make decisions that you are willing to disclose to the public
Component business model
Models and analyses enterprise maps business components or building blocks
What are the 3 tiers in the conceptual supply chain/ model?
Tier 1 - Partners that you directly conduct business with (ex: tomato sellers)
Tier 2 - Where Tier 1 suppliers get their materials (ex: tomato farmers)
Tier 3 - One step further removed from final product and typically work in raw materials (ex: fertilizer)
Physical supply chain
- A set of business processes that are managed on a timely basis
- Characterized by ownership, warehouses, transportation and production facilities, or contracted services
- ex: warehouse –> production site –> warehouse –> carrier –> consumer
Business Case
- The why and the what
- Captures the reasoning for initiating a project of task
Framework for strategic thinking
1) Strategic Intent - a disciplined approach to only do what matters
2) A system perspective - what are my resources?
3) Thinking in time - vision; where do we want to take systems?
4) Intelligent opportunism - how do you connect resources to vision?
5) Hypothesis-driven - contingency thinking; what happens when we get there
How do you affect change?
Phase method (ex: Duke and Deloitte cases)
1) unfreezing - preparing change
2) changes
3) refreeze - change is stabilized
Crossover approach
- common method
- smaller changes
- ex: IBM Lou in corporate jet
Creativity
Generates new and original ideas in the R in R&D and they are actionable in the D of development
Innovation
- apply new ideas to the organization
1) invent
2) develop
3) diffuse
4) integrate
5) monitor
Strategic analytical lense(s) that is/are firm view
- The Four P’s
- Swot Analysis
- Balanced Scorecard
- Boston Consulting Group Growth Share Matrix
Strategic analytical lense(s) that is/are industry view
Porter’s Five Forces Model
Four P’s (draw)
1) Product
2) Price
3) Promotion
4) Placement
5) Target markets
- firm view
BCG Growth-Share Matrix (draw)
- cash cows: low market growth rate but high relative market share
- stars: high market growth rate and high relative market share
- question marks: high market growth rate but low relative market share
- dogs: low market growth rate and low relative market share
- dynamic model
- firm view
SWOT Analysis (draw)
- Strengths
- Weakness
- Opportunity
- Threats
- Firm View
Balanced Scorecard (draw)
- Financial
- Customer
- Internal Business Process
- Learning and Growth
- Metrics
- Initiatives
- firm view
- ex: Duke Hospital
Porter’s Five Forces Model (draw)
- suppliers
- customers or buyers
- substitutes
- potential entrants
- industry members
- industry view
- has to do with competitive forces
- no quantitative measures only qualitative measures
Value chain
- measures efficiency and effectiveness of the supply chain
- 2 components: support/secondary activity and primary activity (any activity that physically touches the product)
- big picture model
- analytical tool
Framework for competitive advantage
1) Efficiency
2) Quality
3) Innovation
4) Responsiveness to customers
Theory of Leadership
1) Characteristics or trait theory: action and task oriented
2) Behavioral or psychological theory: need for power and accomplishments and low need for affiliation or friends
3) Situation and contingency (best): the times or conditions produce the leaders
4) Functional leadership theory: whatever is necessary for group-needs is taken care of. Thus, a leader can be said to have done their job well when they have contributed to group effectiveness and cohesion
Leadership
- A process inspiring others to work hard to accomplish a goal
- “You manage things, you lead people”
What are the characteristics of “Integrity Line”
Where leaders should be
- honest
- consistent
- humble
- selfless
Where leaders don’t want to be
- dishonest
- inconsistent
- conceited
- selfish
The five levels of leadership from John Maxwell
Level 1 - Position
Level 2 - Permission
Level 3 - Production
Level 4 - People Development
Level 5 - Pinnacle
The styles of leadership
1) Autocratic: command and control (ex: Doctor and Lou)
2) Human relations: people over task (ex: Duke Hospital)
3) Laissez-faire: do the best you can and don’t bother me (ex: when Peach drove away from the plant)
4) Democratic style: people and tasks together
Emotional Intelligence (EI)
1) self-awareness
2) self-regulation
3) motivation
4) empathy
5) social skills
Path-Reward Leadership Theory
1) Directive behavior
2) Supportive behavior
3) Participative behavior
4) Achievement behavior
Cooperation
a group of people working together, all doing essentially the same work, to accomplish a goal
Collaboration
a group of people working together to achieve a common goal via a process of feedback and iteration
PERT
- project evaluation and review technique
- a probabilistic model that allows for variation in the time estimates but not the activities
CPM
- critical path method
- deterministic model that allows for a best estimate of the time to complete an activity or a project
Gnatt chart
- more of a reporting tool than a management tool
- generally, has a high-level view
Feasibility Study
- some form of analysis as to the likelihood that a plan of action will achieve defined objectives
Context
1. Project or process
- projects have a defined endpoint
- processes have a defined output
2. Effectiveness-efficiency trade-off
- effectiveness - getting it done correctly
- efficiency - getting it done economically in terms of time and resources
