Chapter 03 – Managerial Decision Making
3-20
Advantages:
➢ More information is available when several people are making the decision.
➢ Wider range of perspectives and approaches to problem solving.
Disadvantages:
➢ Domination of the group process by one individual.
9. Suppose you are the CEO of a major corporation and one of your company’s oil tanks
has erupted, spilling thousands of gallons of oil into a river that empties into the ocean.
What do you need to do to handle the crisis?
There are a number of very different elements affecting the CEO’s decision-making process under
these circumstances, and it may be useful to have the student’s list and prioritize the actions. Students
probably will not agree as to the order in which they should be handled.
➢ Contact the appropriate local, state, and federal authorities—a number of notifications will be le-
gally required, and this will enable the authorities to mobilize their resources.
10. Identify some problems you want to solve. Brainstorm with others a variety of creative
solutions.
This question represents a good opportunity for some lively and amusing discussion. For example,
how to get a good grade in this class might be an appropriate topic for discussion! Or how to ask
somebody to a dance? Or how to propose marriage?
Chapter 03 – Managerial Decision Making
3-21
Or you might use the example of the two attorneys who share a reception area and two offices. They
want to replace the dark brown color with something more attractive but can’t agree on what color to
Chapter 03 – Managerial Decision Making
EXERCISE 3.1 – DECISION MAKING IN ACTION
Objective
Learn how to improve your ability to make good decisions.
Instructions
Refer back to Exhibit 3.3 in the chapter. Think back to a recent expensive purchase you made. It
Decision Making Worksheet
1. What problem did you hope to solve by making this purchase?
2. What alternative (or competing) products did you consider?
______________________________________________________________________________
______________________________________________________________________________
3. How did you evaluate the different alternative (or competing) products? Did you identify each
product’s strengths and weaknesses?
______________________________________________________________________________
______________________________________________________________________________
4. When you made the final choice, was is a maximizing, satisficing, or optimizing outcome?
5. After purchasing the product, how frequently did you test it out?
______________________________________________________________________________
______________________________________________________________________________
EXPERIENTIAL EXERCISES
Chapter 03 – Managerial Decision Making
3-23
6. Was your decision to make the purchase a positive or negative one? Did it satisfy your original
need(s)?
Chapter 03 – Managerial Decision Making
3-24
EXERCISE 3.2 – GROUP PROBLEM SOLVING AT A SOCIAL ENTERPRISE
Objective
To understand the dynamics of group decision making through role-playing a meeting between a presi-
dent and her employees.
Instructions
1. Identify 5 students to play the roles of the employees. Ask these five individuals to read
their roles below.
2. Identify 1 student to play the role of the president of the social enterprise. Ask this indi-
Discussion Questions
1. How did each member frame the problem? What did each member discuss?
2. How effectively did the group generate and evaluate alternatives?
Overview
The role-play exercise is based on a meeting between a manager of a social enterprise and her five em-
ployees. Each character’s role is designed to re-create a realistic business meeting. Each character brings
Cast of Characters
Taylor Johnson, the president, founded the enterprise 10 years ago as a way to connect outstanding teach-
ers who have recently earned their teaching degrees with students in schools located in economically dis-
advantaged areas. The new teachers agree to serve in the disadvantaged schools for a three-year period in
Chapter 03 – Managerial Decision Making
3-25
Amit Patel, head of information technology, has worked for the enterprise for 6 months. A recent college
graduate, Amit reports directly to Taylor. She is on a mission to modernize the way the enterprise does its
Felipe Rodriguez, director of fund raising, reports directly to Johnson. He has held this position for 8
years and is a very close friend of Taylor’s. Donations and grants for the most recent year are down by 10
Mike Clarke, manager in charge of recruiting new teachers, works for Felipe. After working for the en-
terprise as an entry-level recruiter for two years, Mike was recently promoted to this position. Though a
Today’s Meeting
Taylor has called the meeting with these three managers to decide whether the social enterprise should
begin preparing its new recruits to not only teach traditional face-to-face classes, but also hybrid and
online classes. This decision has to be made within 15 minutes because the enterprise’s largest client just
Chapter 03 – Managerial Decision Making
3-26
Soaring Eagle Skate Company
Case Summary:
The initial growth of Soaring Eagle Skate Company has slowed as skateboarding is no longer a
Chapter Topics Related to the Case:
• Discuss the concept of decision making
• Identify advantages of group versus individual decision making
Case Discussion Questions:
1. How do the characteristics of management decisions—uncertainty, risk, conflict, and lack of struc-
ture—affect the decisions facing Stan Eagle?
Suggested Responses:
The business owners have discovered that they have insufficient information to know the consequences of
expanding into different product lines; this is the condition of risk. With more sophisticated market re-
2. What steps can Eagle take to increase the likelihood of making the best decision in this situation?
Suggested Responses:
Ways of improving a decision include following a careful, thorough decision making process that in-
cludes identifying and diagnosing the problem, generating alternative solutions, evaluating the alterna-
CONCLUDING CASE
Chapter 03 – Managerial Decision Making
3-27
SSS Software in Basket Exercise
Item 1
Student responses will vary.
Write a memo to all staff in the department asking staff to come in and introduce themselves.
Item 2
Write this information in “note to self.” Recently SSS Software has lost two key personnel, Michael
Item 3
Memo to Paula Sprague thanking her for this information. It will be valued and kept confidential.
Item 4
Memo to Wanda Manners thanking her for the information and asking her to meet with me as soon as
Item 5
Memo to Paula Sprague thanking her for taking responsibility on this project for C.A.R.E.
Item 5 copy
No response.
Item 7
Call Jim Bishop regarding this issue. Set up meeting if needed. Get additional information from Jose
Martinez.
Item 8
Item 11
PART I SUPPORTING CASE
Chapter 03 – Managerial Decision Making
3-28
Phone call to Lorraine Adams from Westside Hospital regarding conversion of existing software.
Item 12
Voice mail to Roosevelt Moore to set up an appointment to talk about this issue.
“Note to self” Get information on work record and review before meeting with Roosevelt.
Item 13
E-mail or voice mail to set up meeting with Jose Martinez. Get his side of issue then talk with Jim
Bishop.
Item 14
Item 15
E-mail to Roger regarding meeting.
Item 16
E-mail to Sharon Shapiro thanking her for the information.
OPTION 2: EXAMINING A DECISION
Prior to class, ask students to write a brief paragraph describing a problem they had within the past year or
two which required a major decision. After describing the problem, students should make a list of all the
Teaching Tip:
One way of demonstrating both brainstorming and the effects of group decision making in large lecture
sections is to divide students into small groups of no more than five people. Ask each person in the group
to briefly describe the problem they faced, without telling the rest of the group what decision they finally
Chapter 03 – Managerial Decision Making
3-29
Chapter 03 – Managerial Decision Making
3-30
Example 3.1 – Uncertainty and Risk: A decision made with certainty is a decision made with complete
information – for example, a manager who decides to buy a new computer for the office knows exactly
how much that computer will cost. A decision made with uncertainty is a decision made with little or no
information – for example, a manager who decides to design and manufacture an entirely new product,
Example 3.2 – Rational decision-making: Rational decision-making may seem to be straightforward – a
relatively easy process that most people use instinctively. But researchers Thomas Turrentine and Ken-
about gas consumption and cost savings when we are at the dealership shopping for a new car.4
Example 3.3 – Best decision: Sometimes, coming up with the “best” decision involves a willingness to
simply admit failure. Coca Cola’s CEO and Chairman, Neville Isdell, is candid about the fact that suc-
cess is often built on failed decisions. At Coke’s annual meeting in 2006, Isdell told investors, “You will
Example 3.4 – Groupthink: Is the evening news an example of groupthink at work? According to Brian
Lowry, a reporter for the Daily Variety, journalists propagate groupthink every time they latch onto a sto-
Example 3.5 – Problems with group decision-making: Jared Diamond, the professor of Geography at
the University of California, Los Angeles, who wrote “Guns, Germs, and Steel”, tells a story about the
Easter Islanders, a Polynesian people who settled a heavily forested island. Over time, the group learned
the benefits of chopping down trees to make everything from shelters to canoes. Unfortunately, they con-
3 Connerly, B. “Uncertainty and risk management: What to do about Black Swans?” Forbes, February 20, 2013.
4 Turrentine, T.S. & Kurani, K.S. “Car buyers and fuel economy?” Energy Policy; Feb2007, Vol. 35 Issue 2, p1213-1223.
EXAMPLES
Chapter 03 – Managerial Decision Making
3-31
Diamond offers four reasons for problems with group decision making:
1) failure to anticipate a problem;
Example 3.6 – Thinking creatively: With 9/11, Victorinox and Wenger, manufacturers of Swiss Army
Knives faced a dilemma. Sales plunged as people found out that they were not allowed to carry pocket
knives on planes. Thinking creatively, Victorinox and Wenger took two different approaches to the prob-
Teaching Tip:
This is a good brainstorming problem if you want the entire class to work on the same problem. In large
lectures, break the class into small groups and give a prize for the most creative idea, the idea closest to
the one suggested by the manufacturer, etc.
Example 3.7 – Decision-making in the Marines: General Peter Pace, U.S. Marine Corps and Vice
Chairman of the Joint Chiefs of Staff, offers the following insights into how decisions are made in the
Marine Corps.:9
• People who have the responsibility for making decisions must make them. Pace tells the sto-
ry of being in Vietnam on patrol. Each time the unit came to a fork in the road, Pace asked
his commander whether he should go left or right. Finally the commander said “You’re the
Chapter 03 – Managerial Decision Making
3-32
Don Mackey asks for aerial surveillance of the fire – his request is
turned down.
Mackey and another smokejumper, Butch Blanco, the leader of
another crew, take a helicopter up to survey the fire.
Mackey suggests the risky strategy of cutting a fire line below the
flames on the west flank of the ridge – Blanco agrees.
Mackey wonders whether he or Blanco is in charge, but does not
one to a lookout position.
As the fire blows up and becomes a continuous flaming front,
Mackey sends six firefighters to Lunchspot Ridge, where they all
reach safety.
Mackey risks and loses his life by going back to the fire line to as-
sist crew members in getting to safety on the ridge.
Example 3.8 – Decision-making in a crisis: The crises described in the text talk primarily about
what a CEO should do when something bad has happened to the organization. But it is also in-
structive for students to study how the decisions team leaders make in a crises can literally mean
Teaching Tip:
The following website has a good diagram of key points in the Storm King Mountain fire:
10 Useem, Michael A., “In the heat of the moment: Anatomy of a tragedy”, Fortune, Vol. 151, No. 13, June 27, 2005, pp.125-134.
Decision Made
Don Mackey, a smokejumper who has leaped into the Storm King
fire six hours prior, radios a request for two more fire crews.
A local weather forecast predicts strong winds, but no rain.
Mackey neither asks for, nor receives, the information.
Mackey orders another firefighter, Sarah Doehring, to leave the
fire line, and go to the top of the main ridge. As a result, Doehring
is not killed with the other firefighters.
Chapter 03 – Managerial Decision Making
3-33
Please see the following additional materials in Connect.
• PODS
PODS has revolutionized the storage industry. They move their PODS anywhere in the country
for you and allow you to pack at your own pace until you need the company to pick their PODS
up again and deliver them to a new location. They serve more than 240 million consumers
through its franchise network. They have over 140,000 PODS containers in service.
1. What decision led to the creation of PODS?
A group of firemen came up with the idea because they realized that when individuals experi-
2. What common decisions to start-ups often face?
New business owners have to make a variety of decisions. For example, is the idea worth
Partnership: The Unbalancing Act
I. Introduction
This scenario highlights a business partnership that is in decline. The conflict that this creates
II. Learning Objectives
III. Scenario Description:
Overview: Jonas Goldberg and Rande Gedaliah, lifelong friends, went into business together to
SUPPLEMENTAL FEATURES
CHAPTER VIDEO
MANAGER’S HOT SEAT (MHS)
Chapter 03 – Managerial Decision Making
3-34
Profile:
• Rande Gedaliah is a Partner, manager, and co–owner of The LivingRoom, a café and
bookstore with an active community center and bakery. She is solely responsible for
References: The references included in the DVD are:
• Sources of Conflict in Organizations (PPT 7-3)
Back History: “The Living Room” is a small business located in the Boston suburbs. The busi-
ness is a new spin on the café bookstore, with the additions of an active community center and
bakery, with distribution to local restaurants/stores.
They split most of the business duties, share the larger tasks, and each spend a certain number of
hours in the café supervising – they are 50-50 partners. They have known each other for years and
years [their parents are family-friends] and have had a generally smooth relationship. Jonas and
Rande had agreed completely about increasing business hours so drastically about two months
ago. But Jonas did not anticipate the impact this would have on his life and is struggling to deal
with it.
Scene Set-up: After calling Jonas three times to remind him, Rande and Jonas are finally meeting
to discuss Rande’s dissatisfaction with Jonas’ contribution to the company.
Scene Location: Back-room coffee-break area
Chapter 03 – Managerial Decision Making
3-35
to the business. Rande asks him what can be done to improve this situation. Jonas cuts the meet-
ing off because he has to pick up his daughter. Rande tries to pin him down on another meeting
time which he half-heartedly agrees to.
6 Days Later – Rande finally meets with Jonas again and asks him what solutions he came up
Afterthoughts – Summary: Rande is shocked at Jonas’ expectation that he could sell his share of
the business to anyone he wants. She feels the interaction went very poorly and is saddened that
Dossier: The specific artifacts included in the DVD are:
1. Meeting notes on establishing the business
IV. Discussion Questions:
The References and related Discussion Questions may be found in PowerPoint slides 7-1 to 7-9.
Learning Objective #1: To assess students’ understanding of the sources of conflict in organizations.
1. Jonas and Rande are facing a difficult situation. What sources of conflict contributed to the prob-
lems they are having? See PPT 7-3.
Several of the sources on PPT 7-3 could be offered. Specifically, scarce resources seem to be a
1. What is the key problem?
A. Time management
fulfill his responsibilities.
2. Jonas’ behavior indicates:
A. Disinterest
Chapter 03 – Managerial Decision Making
3-36
Learning Objective #2: To analyze and evaluate approaches to conflict in a novel situation.
1. Which type of conflict is depicted in this scenario? (see PPT 7-5)
2. Evaluate Rande’s approach to resolving this conflict. What conflict management style did she
use: avoiding, accommodating, forcing, compromising, or collaborating? Support your answer
with examples from the scene.
Rande used a problem oriented approach, rather than person oriented. She maintained ownership
3. How was this meeting?
A. A success
Learning Objective #3: To identify issues concerning business partnerships.
1. What unique challenges did Rande and Jonas face when entering into this partnership?
They both have family obligations to juggle as well as shared responsibility of every aspect of the
2. What impact did their friendship seem to have on this partnership?
Their friendship did not prevent them from creating a legal partnership agreement which was a
3. What partner duties did Jonas fail to perform? See PPT 7-7.
Chapter 03 – Managerial Decision Making
3-37
4. What should happen to ensure that a nonwrongful dissociation of the partnership occurs? See PPT
7-8.
The partner is volunteering to leave but he needs to abide by the partnership agreement. Rande
4. How should Rande respond [to Jonas’ suggestion that he find a buyer]?
A. Accept offer
5. What are Rande’s rights?
A. Choose partner
6. What is the best solution?
A. End partnership
ness, they should probably end the partnership.
• Your Preferred Decision Style
SELF-ASSESSMENT