Week 5

Question 1

What are the two types of information organisations use?

Answer 1

• Intelligence information - gathered from the external environment - used to deal with outside parties like competitors, gov agencies, shareholders, etc
• Public information - is provided TO the external environment - e.g. in the form of image building, product advertising, financial reporting for taxes

Question 2

What is a decision support system (DSS)?

Answer 2

Allows users to interact directly with a computer to organise and analyse data for solving complex and sometimes unstructured problems.

Question 3

What are expert systems?

Answer 3

Artificial intelligence (AI) - a field of study that is concerned with building computer systems with the capacity to reason the way people do, even to the point of dealing with ambiguities and difficult issues of judgement.

Question 4

What are intranets and corporate portals?

Answer 4

Allow employees, by password access, to share databases and communicate electronically, from anywhere in the world.

Question 5

What are extranets and enterprise portals?

Answer 5

Allow communication and data sharing between organisation and special elements in its external environment. They typically link organisations with strategic partners, vendors, outsources, suppliers and consultants.

Question 6

What is electronic data exchange (EDI)?

Answer 6

Uses controlled access to enterprise portals and supporting software to enable firms to transact business electronically from one another; for example by sharing purchase orders, bills, receipt confirmations and payments.

Question 7

What are management information systems (MIS)?

Answer 7

Designed to use info technology to meet the info needs of managers are they make a variety of decisions on a day-to-day basis.

Question 8

What is problem-solving?

Answer 8

The process of identifying a discrepancy between an actual and desired state of affairs and then taking action to resolve the deficiency or take advantage of the opportunity.

Question 9

What is a decision?

Answer 9

A choice between alternative courses of action.

Question 10

What is a programmed decision?

Answer 10

A solution that is already available from past experience to solve problems that are familiar, straight forward and clear with respect to info needs. These decisions apply best to problems that are routine.

Question 11

What are non-programmed decisions?

Answer 11

For unstructured problems - novel solutions that meet the demands of the unique situation at hand. Most problems faced by higher level managers are of this kind, with the problems often involving choice of strategies and objectives in situations of some uncertainty.

Question 12

People in organisations make decisions under 3 conditions: what are they?

Answer 12

• certain environment - alternative courses of action and their outcomes are known to decision maker
• risk environment - decision maker views alternatives and their outcomes in terms of probabilities
• uncertain environment - decision maker doesn’t know all alternatives and outcomes, even as probabilities

Question 13

What are the 3 types of managers in terms of decisions (and problems)?

Answer 13

• problem avoiders - ignore info that would otherwise signal the presence of an opportunity or performance deficiency.
• problem solvers - willing to make decisions and try to solve problems, but only when forced to by the situation. They are reactive.
• problem seekers - actively process info and constantly look for problems to solve or opportunities to explore. They’re proactive and forward thinking

Question 14

What is systemic thinking?

Answer 14

A person approaches problems in a rational, step-by-step and analytical fashion. This type of thinking involves breaking a complex problem into smaller components and then tackling them in a logical and integrated fashion.

Managers who are systematic can be expected to make a plan before taking action and then to search for info to facilitate problem solving in a step by step fashion.

Question 15

What is intuitive thinking?

Answer 15

Allows us to respond imaginatively to a problem based on a quick and broad evaluation of the situation and the possible alternative courses of action.

This approach tends to work best in situations of high uncertainty where facts are limited and few decision precedents exist.

Question 16

What is strategic opportunism?

Answer 16

The ability to remain focused on long-term objectives while being flexible enough to resolve short-term problems and opportunities in a timely manner.

Question 17

What is the classical decision model?

Answer 17

Views the manager as acting in a certain world where the problem is clearly defined and the manager knows all possible action alternatives as well as their consequences. As a result, they make an OPTIMISING DECISION that gives the absolute best solution to the problem. The classical approach is a very rational model that assumes perfect info is available for decision-making.

Question 18

What is the administrative or behavioural decision model?

Answer 18

Assumes that people act only in terms of what they perceive about a given situation. Because such perceptions are often imperfect, the decision maker has only partial knowledge about the available action alternatives and their consequences. So the first alternative that appears to give a satisfactory resolution of the problem is likely chosen.

Herbert Simon calls this the tendency towards SATISFICING DECISIONS - choosing the first satisfactory alternative that comes to your attention. This model seems especially accurate in describing how people make decisions about ambiguous problems in risky and uncertain conditions.

Question 19

What are heuristics?

Answer 19

Mental shortcuts that allow people to solve problems and make judgements quickly and efficiently.

Question 20

What is the availability heuristic?

Answer 20

Occurs when people use info that is ‘readily available’ from memory as a basis for assessing a current event or situation. An example is deciding not to invest in a new product based on your recollection of how well a similar new product performed in recent past.

Question 21

What is the representativeness heuristic?

Answer 21

Occurs when people assess the likelihood of something occurring based on its similarity to a stereotyped set of occurrences. e.g. deciding to employ someone simply because he or she graduated from the same school attended by your last and most successful new employee.

Question 22

What is the anchoring and adjustment heuristic?

Answer 22

Involves making decisions based on adjustments to a previously existing value or starting point. e.g. setting a new salary level for an employee by simply raising the previous year’s salary by a reasonable percentage.

Question 23

What is the decision making error of ESCALATING COMMITMENT?

Answer 23

A decision to increase effort and perhaps apply more resources to pursue a course of action that is not working. In such cases, managers let the momentum of the situation overwhelm them, and they end up ‘throwing good money after bad’. They are unable to decide to ‘call it quits’ even when experience indicates that this is the most appropriate thing to do.

Question 24

What is tacit knowledge?

Answer 24

Relates to individual experience, including aptitudes, perceptions, insights and know-how that are not held by others within the organisation.

Question 25

What is explicit knowledge?

Answer 25

Knowledge that is codified and shared with others through dialogue, demonstration or media.

Question 26

What is a learning organisation and the 5 core ingredients of it?

Answer 26

An organisation that ‘by virtue of people, values and systems is able to continuously change and improve its performance based upon the lessons of experience’.

1. Mental models - everyone sets aside old ways of thinking
2. Personal mastery - everyone becomes self-aware and open to others
3. Systems thinking - everyone learns how the organisation works
4. Share vision - everyone understands and agrees to a plan of action
5. Team learning - everyone works together to accomplish the plan