ecet518 midterm engineering management(2)
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Decision-Making:
The Essence of aManagers Job
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The Decision-Making Process
Decision
A choice made from two or more alternatives
Decision-making process
A set of eight steps that include identifying aproblem, selecting an alternative, and
evaluating the decisions effectiveness.
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The Decision-Making Process
Step 1: Identifying a Problem
Step 2: Identifying Decision CriteriaStep 3: Allocating Weights to the Criteria
Step 4: Developing Alternatives
Step 5: Analyzing AlternativesStep 6: Selecting an Alternative
Step 7: Implementing the Alternative
Step 8: Evaluating Decision Effectiveness
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Defining some terms
Problem
A discrepancy between an existing and adesired state of affairs
Characteristics of a Problem Awareness of discrepancy
Sufficient resources to do something
Pressure to act
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Well-Structured Problems andProgrammed Decisions
Well-Structured Problems Straightforward,
familiar, easily defined problemsProgrammed Decision - A repetitive decision
that can be handled by a routine approach
Procedure A series of interrelatedsequential steps that can be used to respondto a structured problem
Rule An explicit statement that tells
managers what they ought or ought not to do Policy A guide that establishes parameters
for making decisions
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Ill-Structured Problems andNonprogrammed Decisions
Ill-Structured Problems New problemsin which information is ambiguous orincomplete
Nonprogrammed Decision - A uniquedecision that requires a custom-madesolution
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Integration
Level
Well-Structured
ProgrammedDecisions
TopIll-Structured
Type
Lower
Nonprogrammed
Decisions
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Planning
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Definition of Planning
Planning
A process that involves defining the
organizations objectives or goals, establishing
an overall strategy for achieving those goals,
and developing a comprehensive hierarchy ofplans to integrate and coordinate activities
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Planning and Performance
According to studies
1. Formal planning is associated with higherprofits and positive financial results.
2. The quality of the planning process and
appropriate implementation contribute moreto higher performance than the extent ofplanning.
3. In those studies in which formal planningdidntlead to higher performance, theenvironment was the culprit.
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Objectives: The Foundation of
Planning
Objectives
Desired outcomes for individuals, groups, or
entire organizations
Multiplicity of objectives
Closer analysis reveals that all organizations
have multiple objectives
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Types of Plans
By breadth:
Strategic versus Operational
Strategic Plans
Plans that are organization-wide, establishoverall objectives, and position anorganization in terms of its environment
Operational Plans
Plans that specify details on how overallobjectives are to be achieved
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Types of Plans
By time frame:
Short-term versus Long-term
Short-term Plans
Plans that cover one year or less
Long-term Plans
Plans that extend beyond three years
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Types of Plans
By specificity:
Specific versus Directional
Specific Plans
Plans that are clearly defined and leave noroom for interpretation
Directional Plans
Flexible plans that set out general guidelines
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Types of PlansBy frequency of use:
Single-use versus StandingSingle-use Plans
A one-time plan that is specifically designed to meetthe needs of a unique situation and s created in
response to non-programmed decisions managersmake
Standing Plans
Ongoing plans that provide guidance for activitiesrepeatedly performed in the organization and that arecreated in response to programmed decisions thatmanagers make
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Techniques for Assessing the
Environment
Environmental Scanning - The screening of
large amounts of information to detectemerging trends and to create scenarios
Competitor Intelligence Environmental scanningactivity that seeks to identify who competitors are,
what they are doing, and how their actions willaffect the focus organization.
Forecasting - Predictions of outcomes
Benchmarking - The search for the bestpractices among competitors ornoncompetitors that lead to their superiorperformance.
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BudgetsA numerical plan for allocating
resources to specific activities
Fixed budget
a budget that assumes a fixed levelof sales or production
Variable budget
A budget that takes into account thecosts that vary with volume
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Operational Planning ToolsScheduling A list of necessary activities, their
order of accomplishment, who is to do each,and the time needed to complete them
Gantt chart a scheduling chart developed byHenry Gantt that shows actual and plannedoutput over a period of time
Load chart A modified Gantt chart thatschedules capacity by work stations
Program Evaluation and Review Technique(PERT) A technique for scheduling complicatedprojects comprising many activities, some ofwhich are interdependent
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Gantt Chart
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Load Chart
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PERT Network
Critical Path: A - B -C - D - G - H - J - K
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Organizing
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DefinitionsOrganizing
Determining what tasks are to be done, whois to do them, how the tasks are to begrouped, who reports to whom, and where
decisions are to be made
or
The process of creating an organizationalstructure
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DefinitionsOrganizational Structure
The organizations formal framework bywhich job tasks are divided, grouped, andcoordinated
Organizational Design
The developing or changing of an
organizations structure
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Six Key Elements
1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of control5. Centralization and Decentralization
6. Formalization
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Work Specialization The degree to which tasks in an organization
are divided into separate jobs. Also knownas division of labor.
Most managers today see work specialization as
an important organizing mechanism but not as asource of endlessly increasing productivity.
Overspecialization can result in humandiseconomies from boredom, fatigue, stress, poorquality, increased absenteeism, and higherturnover.
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Departmentalization by Type Functional
Grouping jobs byfunctions performed
Product
Grouping jobs by
product line
Geographic
Grouping jobs on the
basis of territory orgeography
Process
Grouping jobs on thebasis of product orcustomer flow
Customer
Grouping jobs by typeof customer and needs
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Functional Departmentalization
Advantages
Efficiencies from putting together similar specialties and people
with common skills, knowledge, and orientations
Coordination within functional area
In-depth specialization
Disadvantages
Poor communication across functional areas
Limited view of organizational goals
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Geographical Departmentalization
Advantages
More effective and efficient handling of specific regional
issues that arise
Serve needs of unique geographic markets better
Disadvantages
Duplication of functions
Can feel isolated from other organizational areas
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Product Departmentalization
+ Allows specialization in particular products and services+ Managers can become experts in their industry
+ Closer to customers
Duplication of functions
Limited view of organizational goals
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Process Departmentalization
+ More efficient flow of work activities
Can only be used with certain types of products
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Customer Departmentalization
+ Customers needs and problems can be met by specialists
- Duplication of functions
- Limited view of organizational goals
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Chain of Command
The continuous line of authority that extends
from upper levels of an organization to thelowest levels of the organization and clarifieswho reports to who.
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Chain of Command Authority
The rights inherent in a managerial position totell people what to do and to expect them to doit.
Responsibility The obligation or expectation to perform.
Unity of Command
The concept that a person should have oneboss and should report only to that person.
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Span of ControlThe number of employees who can be effectively
and efficiently supervised by a manager. Width of span is affected by:
Skills and abilities of the manager
Employee characteristics Characteristics of the work being done
Similarity of tasks
Complexity of tasks
Physical proximity of subordinates
Standardization of tasks
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Centralization &
DecentralizationCentralization
The degree to which decision-making is concentrated in theupper levels of the organization
Decentralization The handing down of decision-
making authority to lower levels in
an organization
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Factors that Influence
Centralization and DecentralizationMore Centralization Environment is stable
Lower-level managers are notas capable or experienced atmaking decisions as upper-levelmanagers
Lower-level managers do notwant to have a say in decisions
Decisions are significant Organization is facing a crisis or
the risk of company failure
Company is large
Effective implementation ofstrategies depends onmanagers retaining say overwhat happens
More Decentralization Environment is complex,
uncertain Lower-level managers are
capable and experienced atmaking decisions
Lower-level managers want avoice in decisions
Decisions are relatively minor Company culture is open to
allowing managers to have asay in what happens
Company is geographicallydispersed
Effective implementation ofcompany strategies depends onmanagers having involvementand flexibility to make decisions
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FormalizationThe degree to which jobs within the
organization are standardized and the extentto which employee behavior is guided by rulesand procedures.
Highly formalized jobs offer little discretion overwhat is to be done.
Low formalization means fewer constraints onhow employees do their work.
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Mechanistic versus Organic
OrganizationMechanistic Organization
A rigid and tightly controlled
structure High specialization
Rigid departmentalization
Clear chain of command
Narrow spans of control Centralization
High formalization
Limited information network
(downward) Low decision participation
Highly flexible and adaptable
structure Cross-functional / Cross-
hierarchal teams
Open communication
network / Free flow ofinformation
Wide spans of control
Decentralization / Littledirect supervision
Low formalization
Non-standardized jobs
Empowered employees