Management Chapter 9: Decision Making
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Questions and Answers

What aspect of decision-making process is closely related to data gathering and processing?

  • Selection process (correct)
  • Problem identification
  • Rational decision-making process
  • Developing alternatives

    • Decision-making in organizations may involve well-structured and poorly structured problems.

    True

    What is a 'procedure' in the context of decision-making for well-structured problems?

    a series of mutually coherent and successive steps for responding to a problem

    Rational decision-making process starts with defining the ________ and ends with choosing a solution.

    <p>problem</p> Signup and view all the answers

    Match the decision-making tool/technique with its description:

    <p>Balanced scorecard = Refers to financial and non-financial indicators translating strategic objectives into measurements Decision matrix = Method for comparing solutions using scored criteria</p> Signup and view all the answers

    What defines tasks, competencies, and responsibilities, and establishes the patterns of relationships between positions in an organization?

    <p>Organizational structure</p> Signup and view all the answers

    What is the purpose of task division?

    <p>To split up activities into separate tasks for assignment to individuals or units like departments.</p> Signup and view all the answers

    In an organic organizational structure, decision-making is primarily centralized at the top levels of the organization.

    <p>False</p> Signup and view all the answers

    Horizontal task division initially groups related tasks based on an individual's __________.

    <p>position</p> Signup and view all the answers

    Match the following characteristics to the corresponding organizational systems: 1. Hierarchical structure, standardized operating methods 2. Flat organizational structure, decentralized decision-making

    <p>Mechanistic organizational system = 1 Organic organizational system = 2</p> Signup and view all the answers

    What are some benefits of network organizations compared to traditional forms?

    <p>All of the above</p> Signup and view all the answers

    Cluster organizations are not expected to become more prevalent according to Peter Drucker.

    <p>False</p> Signup and view all the answers

    Virtual organizations allow for global collaboration without a central ______ location.

    <p>physical</p> Signup and view all the answers

    Match the evolution of virtual work with the corresponding phase:

    <p>Virtual freelancers = First wave Virtual entrepreneurial colleagues = Second wave Virtual network colleagues = Third wave</p> Signup and view all the answers

    What is a decision tree?

    <p>A graphic illustration of the alternatives and consequences associated with a particular problem</p> Signup and view all the answers

    What are the primary activities in the value chain according to Michael Porter?

    <p>Service</p> Signup and view all the answers

    An organization's business processes involve acquiring raw materials and resources as input, and transforming these into products and/or services as ____________.

    <p>output</p> Signup and view all the answers

    The Dutch Structure Law mandates that companies with issued capital and reserves of at least 16 million must establish a Board of Commissioners.

    <p>True</p> Signup and view all the answers

    Match the following tasks with the methods they belong to: A. Strategy selection B. Planning C. Structuring D. Process control

    <p>Management by Objectives (MBO) = D</p> Signup and view all the answers

    What is a key characteristic of a matrix organization?

    <p>Joint authority</p> Signup and view all the answers

    In a divisional organization, the head of a division is known as the divisional director.

    <p>True</p> Signup and view all the answers

    What are the advantages of a divisional organization?

    <p>Assets of small and big units can be combined, better anticipation of customer wants, utilization of group support units, ability to bid for resources within the group, profitability measurement within a division.</p> Signup and view all the answers

    What is the process known as when 'integrating organizational characteristics'?

    <p>the configuration approach</p> Signup and view all the answers

    Match the organizational structure trend with its description:

    <p>Network organizations = Involve collaboration between autonomous entities to achieve shared goals Virtual organizations = Characterized by remote collaboration through information technology Modular organizations = Each participant is responsible for a part of the product</p> Signup and view all the answers

    Study Notes

    Decision Making

    • Decision making is a crucial task for management, involving problem-solving and uncertainty
    • Decision making involves multiple criteria, interdisciplinary input, joint decision making, and consideration of long-term consequences and value judgments
    • Decisions can be categorized as routine problems (requiring pre-programmed decisions) or specific problems (requiring less structured solutions)

    Types of Decision Making Processes

    • Rational decision making: involves defining the problem, developing alternatives, evaluating alternatives, selecting an alternative, and implementing the decision
    • Non-rational decision making processes:
      • Neo-rational decision making: informal, centralized, and directed by one person
      • Bureaucratic decision making: formal, centralized, and based on rules
      • Partial decision making: formal, decentralized, and involves negotiating and interactions between groups
      • Open-ended decision making: informal, decentralized, and characterized by lack of clear starting and finishing points

    Aspects of Decision Making

    • Creativity: essential for organizational competitiveness, can be encouraged through brainstorming and off-site sessions
    • Participation: essential for motivating employees, can be achieved through indirect (workers' council) or direct (staff representatives) means
    • Meeting skills: effective meetings involve structuring, being informed together, working together, and implementing together
    • Negotiation: involves finding a compromise that is acceptable to all parties, based on principles

    Decision Making Styles

    • Directive style: rational, structured, and has a low tolerance for ambiguity
    • Behavioral style: works well with others, has a high tolerance for ambiguity
    • Analytical style: rational, has a high tolerance for ambiguity
    • Conceptual style: combines intuitive thinking with a high degree of tolerance for ambiguity

    Decision Making Tools and Techniques

    • Balanced scorecard: a management approach that considers financial and non-financial indicators
    • Decision matrix: a method for comparing solutions using weighted criteria
    • Decision tree: a graphic illustration of alternatives and consequences
    • Decision supporting systems: computer-based systems that help decision-makers solve problems
    • Expert systems: automated systems that solve problems using stored specialized knowledge
    • Simulation models: software models that simulate the economic simulation of a particular sector or enterprise### Structure Partnerships
    • In the Netherlands, partnerships with more than 100 employees are required to establish a Board of Commissioners (Raad van Commissarissen)
    • The Board of Commissioners has three main tasks:
      • Monitoring management's policy and general organizational affairs
      • Appointing or dismissing directors
      • Approving crucial decisions, such as mergers and major investments
    • The Board of Commissioners is headed by a president-commissioner

    Two-Tier System

    • The Dutch Structure Law operates on a two-tier system, separating management and supervision
    • Also known as the Rhineland model, which weighs the interests of various stakeholders
    • In contrast, the Anglo-Saxon model is a one-tier system, where management and supervision are not separated

    One-Tier Board

    • Introduced in 2013, allowing companies to choose between one-tier and two-tier boards
    • In a one-tier board, supervisors are part of management, and executive managers can be appointed, supervised, and rewarded by non-executive managers

    Organization-Directed Methods

    • Unit management: semi-independent units that behave like independent enterprises
    • Advantages:
      • Shared sales teams, common grounds, and exchange of experiences
    • Disadvantages:
      • Diminished efficiency, less coherence, and prevailing short-term interests

    Organizational Structure

    • The process of creating an organizational structure involves:
      • Dividing tasks into separate functions
      • Allocating tasks to departments and individuals
      • Defining authority and responsibilities
    • The purpose of task division is to:
      • Increase productivity
      • Identify tasks of the same level
      • Seek coherence between tasks

    Task Division

    • Vertical task division: dividing tasks into levels to be performed
    • Factors influencing task division:
      • Cost factors
      • Managerial factors
      • Individual factors
      • Societal motives
    • Work structuring involves considering technical, economic, and social aspects of working in an organization

    Horizontal Task Division

    • Functional division: dividing an organization into smaller groups based on specialized functions
    • Internal specialization: grouping activities based on the result
    • Forms of horizontal task division:
      • Internal differentiation
      • Internal specialization

    Span of Control

    • The number of subordinates a manager can effectively oversee
    • Influences efficiency, communication, and overall effectiveness of management
    • Factors determining span of control:
      • Manager's qualities
      • Employee qualities
      • Nature of the organization
      • Nature of the work

    Organizational Systems

    • Mechanistic organizational system:
      • Hierarchical structure
      • Technical and financial efficiency
      • Primarily effective in stable environments
    • Organic organizational system:
      • Flexible and adaptable to change
      • Flat organizational structure
      • Decentralized decision-making
      • Appropriate in dynamic environments

    Functional and Line Staff Organization

    • Line and staff organization: a combination of functional and line structure
    • Functional staff division:
      • Assigning functional responsibility to individuals and departments
      • Involving functional staff in decision-making
    • Advantages:
      • Greater input of expertise
      • Uniform and consistent policies
    • Disadvantages:
      • Confusion due to dual management
      • Difficulty in retaining control

    Matrix Organization

    • A temporary project-based organization
    • Characteristics:
      • Joint authority
      • Project managers and department heads
      • Cross-departmental tasks
    • Advantages:
      • Cross-departmental task management
      • Maintaining line organizational structure
    • Disadvantages:
      • Tensions and conflicts between project managers and department heads
      • Potential negative effects on departmental awareness

    Divisional Organization

    • Grouping activities around related products or markets
    • Headed by a divisional director or manager
    • Advantages:
      • Anticipating customer needs
      • Combining small and large unit assets
      • Using group support units
    • Disadvantages:
      • Short-term interests taking precedence
      • Extra management and overhead costs
      • Independence may result in underutilization of knowledge and experience

    Organizational Properties

    • Mintzberg's configuration approach:
      • Integrating organizational properties to create cohesion
      • Focusing on the mutual adjustment of the organization's properties### Organizational Structure
    • An organization needs at least one manager who supervises all processes and manages the organization, located in the strategic apex.
    • As an organization grows in size, it needs more managers, including those who direct other managers, creating an intermediate or middle line.
    • The organization also needs a technical staff area that analyzes and supports primary processes, making plans and managing work.

    Coordination Mechanisms

    • Organizations divide work amongst employees (task division) and coordinate activities using:
      • Mutual adjustment: formal and informal communication between employees.
      • Direct supervision: managers issue assignments and instructions to staff.
      • Standardization of work process: tasks are specified and standardized.
      • Standardization of outputs: results are specified.
      • Standardization of skills: activities are coordinated based on training and experience.
      • Standardization of norms: staff share a similar set of opinions.

    Design Parameters

    • Design parameters determine how tasks are divided in an organization, including:
      • Specialization of tasks: number of tasks per function and assignment of responsibilities and authorities.
      • Size of departments or groups: connected to the number of employees per unit or group.
      • Centralization or decentralization: degree to which decision-making authorities are assigned to staff lower down the hierarchy.
      • Formalization of behavior: extent to which rules, procedures, and job descriptions standardize employee duties.

    Contingency Factors (Situational Factors)

    • Situational factors affect the success of an organization's strategy, including:
      • Technical system: level of automation used by the operational core.
      • Environmental characteristics: dynamic, complex, or stable environment.
      • Age and size of the organization: formalization increases with age and size.

    Organizational Forms (Mintzberg's 7 Organizations)

    • Mintzberg identified 7 different organizational configurations:
      • The Entrepreneurial Organisation: flat structure, charismatic and autocratic leadership, flexible, and market-oriented.
      • The Machine Bureaucracy: formal communication and decision-making channels, strategic planning, and rational.
      • The Professional Organisation: highly skilled staff, standardization of knowledge and skills, autonomous, and democratic.
      • The Diversified Organisation: semi-independent units or divisions connected by central management.
      • The Innovative Organisation: multidisciplinary teams, minimal standardization, innovative, and adaptable.
      • The Missionary Organisation: strong ideology, small units, charismatic leadership, and high employee alignment.
      • The Political Organisation: influenced by politics, authority, and expertise, with potential for internal conflicts.
    • Network organizations:
      • Collaborate between autonomous entities or individuals to achieve goals.
      • Leverage each other's strengths to create added value for common clients.
      • Interdependence, reducing individual risk and focusing on mutual product development or expertise sharing.
      • Characteristics: globalization, advancements in information technology, and horizontal relationships based on trust.
    • Cluster organizations:
      • Focus on team structures, forming project, quality, or cross-functional teams.
      • Expected to become more prevalent, according to Peter Drucker.
    • Virtual organizations:
      • Enabled by the internet and other technologies, allowing for global collaboration without a central physical location.
      • Reduce costs by eliminating the need for complex international setups.
      • Support project-based connections, improving flexibility, commitment, and balance between individual work and teamwork.

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    Learn about the importance of decision-making in management, including problem-solving, data gathering, and dealing with uncertainty.

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