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Management > Week 8 > Flashcards

Week 8 Flashcards

1
Q

Why is it hard to deliver bad news?

A
  • Anticipated unpleasantness
  • Emotions: fear, guilt, shame, anger
  • Defensive behavior
  • High levels of stress
  • Lack of communication skills
  • Demanding and stressful work conditions (leads to win-lose framing of issues)
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2
Q

Common mistakes when communicating in difficult situations

A
  • Refusing to change the frame during interaction.
  • Not listening and/or selective perception
  • Not paying attention to non-verbal cues
  • Framing the situation or decision in a way that is too narrow (not considering alternatives) and binary (win-lose).
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3
Q

What is the frame?

A
  • The frame is a decision maker’s image of a situation—the way he or she pictures the circumstances and elements surrounding the decision.
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4
Q

Why do we commit errors in framing?

A
  • Fundamental attribution error (leads to overly simplistic interpretations)
  • Subconscious mindsets that lead to binary framing
  • False consensus effect (assuming that others see a situation as we see it)
  • Stress
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5
Q

What is erasing in

A
  • The manager recognizes a situation/problem, crafts a solution, and then asks the employee a set of carefully crafted questions to help him/her reach the same conclusions.
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6
Q

Problem with erasing in

A
  • The manager might not get the answers he/she seeks.
  • The manager is only prepared for the ‘correct’ answers.
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7
Q

What are steps to crafting negative messages

A
  • Consider your purpose thoroughly.
  • Identify and gather information your audience requires in order to understand and accept the message.
  • Define your main ideas.
  • Be diplomatic and use language that conveys respect. Avoid an accusing tone.
  • Establish credibility.
  • Select the right medium
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8
Q

What are the steps to crafting negative messages?

What does it mean to define your mean ideas?

A

rather than saying no to a subordinate who asked for a raise, explain how he/she can improve performance

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9
Q

Crafting Negative Messages

What should you do immediately?

A
  • Immediately and sincerely express sympathy and offer help if appropriate, without admitting guilt; then seek the advice of your company’s lawyers before elaborating.
  • No matter how trivial or serious the situation, if you do apologize, make it a real apology.
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10
Q

Crafting negative messages

Describe features of the direct approach

A
  • Firmness is needed
  • Bad news comes as a shock
  • Situation is routine or minor
  • Audience prefers bad news first: bad news, reasons, positive close
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11
Q

Crafting negative messages

Describe the indirect approach

A
  • Audience will be displeased
  • Audience is emotionally involved: buffer, reasons, bad news and positive close
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12
Q

Crafting negative messages

List the type of buffers

A
  • Agreement
  • Appreciation
  • Cooperation
  • Fairness
  • Good news
  • Praise
  • Resale
  • Understanding
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13
Q

when crafting negative messages, what kind of statement should be made?

A

¨Make a clear statement of the bad news. Maintain a calm, professional tone that keeps the focus on the news and not on individual failures.

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14
Q

Type of Buffers

Agreement, Appreciation and Cooperation

Provide examples

A

Agreement: We both know how hard it is to make profit in the industry

Appreciation: show sincere thanks for receiving something e.g. Your check for $100 arrived yesterday, thank you

Cooperation: convey willingness to help in anyway you realistically can e.g. employment services is here to assist all associates on their health insurance and continuing needs

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15
Q

Buffer type

fairness

A

assure reader you have closely examined and carefully considered the problem or mention an appropriate action that has been taken

e.g. for the past week, we have had our bandwith monitoring tools running around the clock to track your actual upload and download speeds

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16
Q

Buffer type

Good news

Praise

A

Good news: start with the part of your message that is favourable e.g. we have credited your account in the amount of 14.95 to cover the cost of return shipping

Praise: find an attribute or achievement to contribute

e.g. The stanford group clearly has an impressive record of accomplishment in helping clients resolve financial reporting issues

17
Q

Buffer type

resale

A

Favourably discuss the product or company related to the subject matter

e.g. With the heavy-duty, full-suspension hardware, the desks and cabinets in our Montclair line have been popular with value-conscious customers

18
Q

Buffer type

understanding

A

demonstrate that you understand the reader’s needs and goals

e.g. so that you can find the printers with the features you need, we enclose a brochure that describes all the Epson printers currently available

19
Q

Closing on a positive note

A

¨Avoid a negative or uncertain conclusion

  • refrain from expressing any doubt that your reasons will be accepted (e.g., “I trust our decision is satisfactory.”)

¨Limit future correspondence

  • Encourage additional communication only if you’re willing to discuss your decision further.

¨Be optimistic about the future

  • If the situation might improve in the future, share that with your audience.

¨Be sincere

  • Steer clear of clichés that are insincere in view of the bad news.¨

¨

¨

¨

¨

¨

20
Q

Improving applicants’ reactions to rejection letters

involves

A

¨Reducing counterfactual thought patterns

21
Q

Improving applicants’ reactions to rejection letters

what is the The Would Reducing Explanation

A

i.e., explanations detailing qualifications of the individual who received the job

22
Q

when is delta of your portfolio positive?

why?

A

–if you are in the long position in a call option, the delta of your portfolio will be positive.

because N(d1) is the long position in a call optoin

23
Q

a delta neutral portfolio you must

A

combine your call option position with an asset that has a negative delta.

24
Q

if you are long in a call option

how do you create a delta neutral portfolio

A

if you are long in a call option, to have a delta neutral portfolio you must be short N(d1) in the underlying stock

the delta of a stock is +1.

Being short in the underlying stock will give you a delta which is negative

25
Q
A
26
Q

delta hedging short in a call

A

–We know that N(d1) is the delta of a long position in a call.

–If you are short in a call then the delta of your portfolio will be -N(d1) - delta of your portfolio is negative

–To have a delta neutral portfolio you must combine your call option position with an asset that has a positive delta.

–We know that the delta of a stock is +1.

–Therefore, if you are short in a call option, to have a delta neutral portfolio you must be long in the underlying stock.

–Being long in the underlying stock will give you a delta which is positive.

–Thus, if you are short in a call option, to have a delta neutral portfolio you must be long N(d1) in the underlying stock.

27
Q

Delta hedging

what is the delta

•Long in a put:

A

N(d1) – 1 is the delta of a LONG position in a put option

delta of portfolio will be negative

28
Q

how do you have a delta neutral portfolio

long put

A

to have a delta neutral portfolio you must be long N(d1) – 1 of the stock.

–Being long in the underlying stock will give you a delta which is positive because the delta of a stock is +1

29
Q

short put

delta hedging

what is your delta?

A

–We know that N(d1) – 1 is the delta of a LONG position in a put option.

–If you are short in a put, then the delta of your portfolio must be –( N(d1) – 1)

–Therefore, if you are short in a put, the delta of your portfolio must be positive.

30
Q

short put

delta hedging

how do you have a delta neutral portfolio?

A

–combine your put option position with an asset that has a negative delta.

–We know that the delta of a stock is +1.

–Being short in the underlying stock will give you a delta which is negative.

–Thus, if you are short in a put option, to have a delta neutral portfolio you must be short N(d1) -1 of the stock.

31
Q

delta hedging

To hedge a short position in a European call on an asset that pays a dividend at rate q

A

–we take a long position of e-qT N(d1) of that asset.

32
Q

delta hedging

To hedge a long position in a European call on an asset that pays a dividend at rate q

A

we take a short position of e-qT N(d1) of that asset.

33
Q

Issues Encountered in Delta Hedging

A
  • With large movements in the share price, the value of Delta will change.
  • To maintain a Delta neutral portfolio, traders must adjust their position to take into account changes in Delta.-

This process can be time consuming as the portfolio must be rebalanced every time Delta changes

  • expensive
34
Q

why is delta hedging expensive? give example

A

•If a trader is short in call options:

–When the spot price rises, they must buy more shares to maintain a Delta neutral portfolio.

–When the spot price falls they must sell shares to maintain a Delta neutral portfolio.

–This strategy is costly as the trader must buy high, and sell low.

Management (12 decks)

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