Questions 1 (Information Technology) Today, all the various compu.docx

Questions 1 (Information Technology): Today, all the various
computer-based systems have begun to merge into an overall IT
system that add strategic value by enabling close coordination
internally and externally. (a) Explain IT applications for
increasing internal coordination efficiency. (b) Explain IT
application for strengthening coordination with external parties.
(c) Advanced IT is having a significant impact on organization
design, and some experts suggest that it will eventually replace
traditional hierarchy as a primary means of coordination and
control. Explain. (20%)
Questions 2 (Decision-Making processes): (a) Explain the
Rational Approach to individual decision making. On the other
hand, many organizational decisions involve several managers,
while problem identification and problem solution involve many
departments, multiple view points, and other organizations,
which are beyond the scope of an individual manager. There are
four primary types of organizational decision models. (b)
Explain the management science model, Carnegie model, and
incremental decision model. (c) The Garbage Can Model deal
with the pattern of multiple decisions. Compare this model with
three other models in b (20%)
Questions 3 (Conflict, Power, and Politics): Intergroup conflict
requires three ingredients: group identification, observable
group differences, and frustration. (a) Explain organizational
characteristics generating conflict as sources of intergroup
conflict. (b) When conflict is low, manager can use the rational
model of organization; when conflict is high, the political
model describes the way organizations operate. Explain. (c)
Managers consciously apply a variety techniques to overcome
conflict between departments or groups in the organization.
Introduce tactics for enhancing collaboration. (20%)

Questions 4 (General Application of organization Theory) After
getting MBA degree from Howard university, you are going to
start a new small business with your own money of one Hundred
Million US Dollars (US$100,000,000) in cash. How would you
apply organization Theories for new your business? You must
include major external and internal factors considered in the
system Approach Management with a full evaluation. (30%)
Question 5 (Theoretical Background): What are the differences
and similarities of the application of organization theory
between the US. Federal Government and private corporations
pursuing profits? (10%)

I. Marketing: Managing Profitable Customer Relationships
1. Marketing Definition: In the old sense, marketing is selling
and advertising, but the new sense of marketing is the process
by which companies create value for customers and build strong
customer relationship in order to capture value from customers
in return.
2. A Simple Model of the Marketing Process

Figure: A Simple Model of the marketing Process
Understand the marketplace and customer needs and wants
Design a customer-driven marketing strategy
Construct an integrated marketing program that delivers
superior value
Build profitable relationships and create customer delight
Capture value from customers to create profits and customer
equity
3. Building Customer Relationships: The Overall process of
building and maintaining profitable customer relationship by
delivering superior customer value and satisfaction. The aim of
customer relationship management is to produce high customer
equity, the total combined customer lifetime values of all of the
company's customers. The key to building lasting relationships
is the creation of superior customer value and satisfaction.
II. Company and Marketing Strategy
Marketing's role in strategic planning: Under the strategic plan,
the major function departments must work together to
accomplish strategic objectives. Marketing plays a key role in
the company's strategic planning by providing a marketing-
concept philosophy and inputs regarding attractive market
opportunities. within individual business units, marketing
designs strategies for reaching the unit's objectives and helps to
carry them out profitably. Marketers alone cannot produce
superior value for customers. A company's success depends on
how well each department performs its customer value-adding
activities and how well the departments work together to serve

the customer. And they must partner effectively with other
companies in the marketing system to form a competitively
superior value-deliver network.
Part II. Understanding the Market Place and Consumers
I. The Marketing Environment
Marketing environment: The actors and forces outside
marketing that affect marketing ability of management to build
and maintain successful relationship with target customers.
(a) Microenvironment - The actors close to the company that
affect its ability to serve its customers - the company, suppliers,
marketing intermediaries, customer markets, competitors, and
public.
(b) Macro-environment - The larger societal forces that affect
the microenvironment - demographic, economic, natural,
technological, political and cultural forces.
II. Managing Market Information
Marketing information system - People, equipment, and
procedures to gather, sort, analyze, evaluate, and distribute
needed, timely, and accurate information to marketing decision
makers.
1. Developing Marketing Information: Marketers can obtain the
needed information from internal data, marketing intelligence,
and marketing research.
(a) Internal Databases: Electronic collections of consumer and
market information obtained from data sources within the
company network.

(b) Marketing Intelligence: The systematic collection and
analysis of publicly available information about competitors and
developments in the marketing environment.
(c) Marketing Research: The systematic design, collection,
analysis, and reporting of data relevant to a specific marketing
situation facing an organization.
2. Analyzing Marketing Information:
3. distributing and Using marketing Information
II. Consumer Markets and Consumer Buyer Behavior
1. Characteristics affecting Consumer Behavior
(a) Cultural factors: Culture, Subculture, Social class -
Relatively permanent and ordered divisions in a society whose
members share similar values, interests, and behaviors. Major
American social classes are Upper, Middle, Working, and Lower
classes.
(b) Social Factors: Groups - Two or more people who interact to
accomplish individual or mutual goals. Opinion leader - Person
within a reference group who, because of special skills,
knowledge, personality, or other characteristics, exerts social
influence on others.
(c) Personal Factors: A buyer's decisions also are influenced by
personal characteristics such as the buyer's age and life-cycle
stage, occupation, economic situation, lifestyle, and personality
and self-concept.
2. Types of Buying Decision Behavior

(a) Complex Buying Behavior: Consumer buying behavior in
situations characterized by high consumer involvement in a
purchase and significant perceived differences among brands.
(b) Dissonance-reducing buying behavior: Consumer buying
behavior in situations characterized by high involvement but
few perceived difference among brands.
(c) Habitual buying behavior: Consumer buying behavior in
situations characterized by low consumer involvement and few
significant perceived brand differences.
(d) Variety-seeking buying behavior: Consumer buying
behavior in situations characterized by low consumer
involvement and significant perceived brand differences.
3. The Buyer Decision Process
Stages
Explanation
1. Need recognition
The consumer recognizes a problem or need
2. Information search
The consumer is aroused to search for more information; the
consumer may simply have heightened attention or may to into
active information search.
3. Evaluation of alternatives
The consumer uses information to evaluate alternative brands in
the choice set.

4. Purchase decision
The buyer's decision about which brand to purchase.
5. Post-purchase behavior
The consumers take further action after purchase, based on their
satisfaction or dissatisfaction. Buyer discomfort caused by
post-purchase conflict.
III. Business Markets and Business Buyer Behavior
1. Business buyer behavior refers to the buying behavior of the
organizations that buy goods and services for use in the
production of other products and services that are sold, rented,
or supplied to others. It also includes the behavior of retailing
and wholesaling firms that acquire goods for the purpose of
reselling or renting them to others at a profit. As compared to
consumer markets, business markets usually have fewer, larger
buyers who are more geographically concentrated. Business
demand is derived, largely inelastic, and more fluctuating.
More buyers are usually involved in the business buying
decision, and business buyers are better trained and more
professional than are consumer buyers. In general, business
purchasing decisions are more complex, and the buying process
is more formal than consumer buying.
2. Major factors influencing business buyer behavior: Business
buyers make decisions that vary with the three types of buying
situations: straight re-buys, modified re-buys, and new tasks.
(a) Straight rebuy - the buyers routinely reorders something
without any modification. (b) Modified rebuy - the buyer wants
to modify product specifications, prices, terms, or suppliers.
(c) New task - the buyer purchases a product or service for the
first time.
3. The business buying process: Eight Stages

1. Problem recognition
2. General need description
3. Product specification
4. Supplier search
5. Proposal solicitation
6. Supplier selection
7. Order-routine specification
8. Performance review
4. Institutional and government markets: The institutional
market consists of schools, hospitals, prisons, and other
institutions that provide goods and services to people in their
care. These markets are characterized by low budgets and
captive patrons. The government market consists of
government units - federal, state, and local - that purchase or
rent goods and services for carrying out the main functions of
government. Government buyers purchase products and
services for defense, education, public welfare, and other public
needs. Government buying practices are highly specialized and
specified, with open bidding or negotiated contracts
characterizing most of the buying. Government buyers operate
under the watchful eye of Congress and many private watchdog
groups. Hence, they tend to require more forms and signatures
and to respond more slowly and deliberately when placing
orders.

Part III. Designing a Customer-Driven Marketing Strategy and
Integrating Marketing Mix
I. Customer-Driven marketing Strategy
Major Steps in designing a customer-driven marketing strategy
Steps
Actions
1. Market Segmentation
Dividing a market into smaller groups with distinct needs,
characteristics, or behaviors who might require separate
products or marketing mixes.
2. Market Targeting
The process of evaluating each market segment's attractiveness
and selecting one or more segments to enter.
3. Differentiation
Actually differentiating the firm's market offering to create
superior customer value.
4. Positioning
Arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of
target consumers.
Arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of
target consumers.
II. Product, Services, and Branding Strategy

1. The Major Classifications of Products and Services: (a)
Consumer Products - those brought by final consumers - are
usually classified according to consumer shopping habits. (b)
Industrial products - purchased for further processing or for use
in conducting a business - include materials and parts, capital
items, and supplies and services. Other marketable entities -
such as organizations, persons, places, and ideas - can also be
thought of as products.
2. Individual product decisions involve product attributes,
branding, packaging, labeling, and product support services. A
product line is a group of products that are related in function,
customer-purchase needs, or distribution channels. Line
stretching involves extending a line downward, upward, or in
both directions to occupy a gap that might otherwise by filled
by a competitor. In contrast, line filling involves adding items
within the present range of the line. All product lines and items
offered to customers by a particular seller make up the product
mix. The mix can be described by four dimensions: width,
length, depth, and consistency.
3. Brand strategy: In building brands, companies need to make
decisions about brand positioning, brand name selection, brand
sponsorship, and brand development. A company has four
choices when it comes to developing brands. - line extensions,
brand extensions, multi-brands, or new brands.
4. Four Characteristics affecting the marketing of services:
Services are characterized by four key characteristics: they are
intangible, inseparable, variable, and perishable. Good service
companies focus attention on both customers and employees.
They understand the service-profit chain, which links service
firms profits with employee and customer satisfaction. Service
marketing strategy calls not only for external marketing but also
for internal marketing to motivate employees and interactive
marketing to create service delivery skills among service

providers. To succeed, service marketers must create
competitive differentiation, offer high service quality, and find
way to increase service productivity.
III. New-Product Development and Product Life-Cycle
Strategies
1. Developing New-Product Ideas: Companies find and develop
new-product ideas from a variety of sources. Many new-
product ideas stem from internal sources. Companies conduct
formal research and development, pick the brains of their
employees, and brainstorm at executive meetings. Other ideas
come from external sources. By conducting surveys and focus
groups and analyzing customer questions and complaints,
companies can generate new-product ideas that will meet
specific consumer needs.
2. Major Stages in New-product Development Process:
1 Idea generation; 2 Idea screening; 3 Concept development and
testing
4 Marketing strategy development; 5 Business analysis; 6
Product development
7 Test marketing; 8 Commercialization
3. The Stages of the product life cycle
1 Product development; 2 Introduction stage; 3 Growth; 4
Maturity; 5 Decline
IV. Pricing Products: Understanding and Capturing Customer
Value
Factors to Consider when Setting Prices
1. Value-based Pricing: Setting prices based on buyers'
perceptions of value rather than on the seller's cost. 2. Cost-

based Pricing: Setting prices based on the costs for producing,
distributing, and selling the product plus a fair rate of return for
effort and risk.
3. Other Internal and External Considerations affecting Price
Decisions
Internal factors: the company's overall marketing strategy,
objectives, and marketing mix, as well as other organizational
considerations.
External factors: the nature of the market and demand,
competitors' strategies and prices, and other environmental
factors.
V. Price-Adjustment Strategies
Strategy
Description
Discount and allowance pricing
Reducing prices to reward customer responses such as paying
early or promoting the product
Segmented pricing
Adjusting prices to allow for differences in customers, products,
or locations
Psychological pricing
Adjusting prices for psychological effect
Promotional pricing
Temporarily reducing prices to increase short-run sales
Geographical pricing

Adjusting prices to account for the geographic location of
customers
Dynamic pricing
Adjusting prices continually to meet the characteristics and
needs of individual customers and situations
International pricing
Adjusting prices for international markets
VI. Marketing Channels and Supply-Chain Management
1. Marketing Channel (Distribution Channel) is a set of
interdependent organizations involved in the process of making
a product or service available for use or consumption by the
consumer or business user. through their contacts, experience,
specialization, and scale of operations, intermediaries usually
offer the firm more than it can achieve on its own. Members of
the marketing channel perform many key functions helping
transactions: information, promotion, contact, matching,
negotiation, physical distribution, financing, and risk taking.
Figure: Comparison of Conventional Distribution Channel with
Vertical marketing System
Conventional marketing channel
Vertical marketing system
Producer

Producer
Wholesaler
Retailer
Wholesaler
Retailer
Consumer
Consumer
Figure: Multichannel Distribution System
Producer
Distributors
Retailers
Dealers
Consumer Segment 1
Consumer Segment 2
Business Segment 1
Business Segment 2

VII. Retailing and Wholesaling
1. Major Store Retailer Types: Specialty Stores, Department
Stores, Supermarkets, Convenience Stores, Discount Stores,
Off-Price Retailers, and Superstore.
2. Major Types of Retail Organizations: Corporate chain stores,
Voluntary chains, Retailer cooperatives, Franchise
organizations, Merchandising conglomerates.
3. Major Types of Wholesalers
Type
Sub-type
Sub-sub-type
Merchant wholesalers
Full-service wholesalers
Wholesale merchants
Industrial distributors
Limited-service wholesalers
Cash-and-carry wholesalers

Truck wholesalers
Drop shippers
Rack jobbers
Producers' cooperatives
Mail-order wholesalers
Brokers and agents
Brokers
Agents
Manufacturers' agents
Selling agents
Purchasing agents
Commission merchants
Manufacturers' and Retailers'
Branches and offices
Sales Branches and offices
Purchasing officers
VIII. Communicating Customer Value
Integrated Marketing Communications Strategy

Figure: Integrated marketing communications
Carefully blended mix of promotion tools
Figure: Elements in the Communication Process
Sender
Encoding
Message
Media
Decoding
Receiver
Noise
Feedback
Response
Figure: Push versus Pull Promotion Strategy
Push Strategy

Producer
Retailers and
Wholesalers
Consumers
Producer
Retailers and
Wholesalers
Consumers
Pull Strategy
IX. Advertising and Public Relations
Figure: Major advertising decisions
Objective setting
Communication objectives, Sales objectives
Budget decisions
Affordable approach, Percent of sales, Competitive parity,
Objective and task
Message decisions
Message strategy
Message execution

Media decisions*
Reach, frequency, impact
Major media types
Specific media vehicles
Media timing
Advertising evaluation
Communication impact, Sales and profit impact, Return on
advertising
*Profiles of major media types
Television, Newspapers, Direct mail, Magazines, Radio,
Outdoor, Internet
Public Relations (PR): Building good relation with the
company's various publics by obtaining favorable publicity,
building a good corporate image, and handling or heading off
unfavorable rumors, stories, and events.
X. Personal Selling and Sales Promotion
Personal selling - personal presentation by the firm's sales force
for the purpose of making sales and building customer
relationships.
Major steps in sales force management
Designing sales force strategy and structure
Recruiting and selecting salespeople
Training - Compensating - Supervising - Evaluating

Sales Promotion: Short-term incentives to encourage the
purchase or sale of a product or service. Sales promotion
campaigns call for setting sales promotions objectives; selecting
tools; and developing and implementing the sales promotion
program by using consumer promotion tools (coupons, cash
refund offers, price packs, premiums, advertising specialties,
patronages rewards, point-of-purchase promotions, and contests,
sweepstakes, and games), and business promotion tools
(conventions, trade shows, and sales contests) as well as
deciding on such things as the size of the incentive, the
conditions for participation, how to promote and distribute the
promotion package, and the length of the promotion. After this
process is completed, the company evaluates it sales promotion
results.
XI. Direct and Online Marketing
Forms of direct marketing
Form
Description
Direct-mail marketing
Direct marketing by sending an offer, announcement, reminder,
or other item to a person at a particular address
Catalog marketing
Direct marketing through print, video, or electronic catalogs
that are mailed to selected customers, made available in stores,
or presented online.
Telephone marketing

Using the telephone to sell directly to customers.
Direct-response
Television marketing
Direct marketing via television, including direct-response
television advertising and home shopping channels.
Kiosk marketing
Many companies are placing information and ordering machines
in stores, airports, and other locations.
New digital direct marketing technologies
Mobile phone marketing, Podcasts and Vodcasts, Interactive TV
Online marketing
Company efforts to market products and services and build
customer relationship over the internet.
Integrated direct marketing
Direct-marketing campaigns that use multiple vehicles and
multiple stages to improve response rates and profits.
Part IV. Extending Marketing
I. Creating Competitive Advantage
1. Basic Competitive Strategies

*Overall cost leadership
*Differentiation
*Focus
*Operational excellence
*Customer intimacy
*Product leadership
2. Market Leader Strategies
*Market Leader strategy
*Market Challenger strategy
*Market Follower strategy
*Market Nicher strategy
II. The Global Marketplace
1. Looking at the Global Marketing Environment
The international trade system - WTO and GATT
Economic, Political-legal, Technological, and Socio-cultural
Environments: Uncertainty - changing environment gives MNEs
both threats and opportunities.
2. Deciding Whether to go global,
which markets to enter, and
how to enter the market
3. Deciding on the Global marketing program and
Global marketing organization
III. Marketing Ethics and Social Responsibilities
1. Social criticisms of marketing

(a) Marketing's impact on individual consumers: High prices;
Deceptive practices; High-pressure selling; Shoddy, harmful or
unsafe products; Planned obsolescence; Poor service to
disadvantaged consumers.
(b) Marketing's impact on Society as a whole: False wants and
too much materialism; Too few social goods; Cultural pollution;
Too much political power
(c) Marketing's impact on other businesses: Acquisitions of
competitors; marketing practices that create barriers to entry;
and unfair competitive marketing practices.
2. Citizen and public actions to regulate marketing
(a) Consumerism: An organized movement of citizens and
government agencies to improve the rights and power of buyers
in relation to sellers.
(b) Environmentalism: An organized movement of concerned
citizens and government agencies to protect and improve
people's living environment
(c) Public actions to regulate marketing
3. Business actions toward socially responsible marketing
(a) Enlightened marketing: A marketing philosophy holding that
a company's marketing should support the best long-run
performance of the marketing system.
(b) Marketing ethics: Increasingly, companies are responding to
the need to provide company policies and guidelines to help
their managers deal with questions of marketing ethics. One
principle states that issues should be decided by the free market

and legal system. Second puts responsibility not on the system
but in the hands of individual companies and managers, based
on personal integrity, corporate conscience, and long-term
consumer welfare.
(End of Lecture Notes #10)
ORGANIZATION CONTROL
Organizational control means (1) curbing or restraining, (2)
directing or commanding, and (3) regulating organizational
activities. We are primarily concerned with the third one.
Organizations have relatively programmed behavior pattern -
standard operating procedures - that provide stability over time
(maintenance systems). But there are processes for making
innovative decisions (adaptive systems) that change the
organization in response to external and internal stimuli, the
process can best be described as a dynamic equilibrium. In an
organization context, control includes coordination of
individual and group activities. Organizational control is
defined as that phase of managerial system that monitors human
performance and provides feedback information that can be used
in adjusting both ends and means. Given certain objectives and
plans for achieving them, the control function involves
measuring actual conditions, comparing them to standards, and
initiating feedback that can be used to coordinate organizational
activity, focus it in the right direction, facilitate the
achievement of a dynamic equilibrium
A Simplified Feedback Control Model (See Lecture Notes #1)

1. Set Strategic Goals
4. Take corrective
action as needed
2. Establish metrics and standards of performance
3. Compare metrics of actual performance to standards
Another primary use of information in organizations is for
control. Effective control systems involve the use of feedback
to determine whether organizational performance meets
established standards to help the organization attain its goals.
Managers set up systems for organizational control that consist
of the four key steps in the feedback control model illustrated in
the above figure.
I. Controlling Human Behavior
Social values, norms, moral, and laws all serve as background
control processes in organizations. They affect individual
propensities to behave in certain ways and underlie the general

dilemma of individualism versus collaboration in group and
organizational endeavors. In general, society seeks to develop
mature individuals who progress from dependence to
independence, from self-centeredness to cooperation, from
subjective thinking to objective thinking, and from control by
others to self-control. Obviously, these are countervailing
tendencies that are present in all situations. Homogeneous
value systems, internalization of group norms, and knowledge
and acceptance of laws should lead to self-control and behavior
that is within appropriate limits for a given situation.
A. Means of controlling behavior in work organizations range
on a continuance from explicit to implicit,, from direct to
indirect, and from obvious to subtle. Organization culture is a
subtle and implicit form of control, but it is very powerful.
Participants who internalize the values, guidelines, and spirit of
an organization can be counted on to behave correctly and
energetically. Developing the necessary control in
organizations can range from implicit norms to direct attempts
to influence behavior through goals, policies, and rules. Hiring
people who fit is one approach; socializing participants to a
particular set of values and beliefs is another approach; and
using a formal performance appraisal process is a more direct
approach to controlling behavior.
Exhibit: Means of Control in Organization
Factors
Organization
Informal Group
Individual
Direction for controls deriving from
Organizational plans, strategies, responses to competitive

demands
Mutual commitments, group ideals
Individual goals, aspirations
Behavioral and performance measure
Budget,
standard costs,
sales targets
Group norms
Self-expectations, intermediate targets
Signal for
corrective action
Variance
Deviance
Perceived impending failure, missed targets
Reinforcements or rewards for compliance
Management commendation
Monetary incentives, promotions
Peer approval, membership, leadership
Satisfaction of being in control, elation

Sanctions or punishments for noncompliance
Request for explanation,
dismissal
Kidding, ostracism, hostility
Sense of disappointment, feeling of failure
B. Examples of Control
1. Budgetary Control: (a) Expressing in dollars the results of
plans anticipated in a future period; (b) Coordinating these
estimates into a well-balanced program; (c) Comparing actual
results with the program estimates that emerge from the
previous step.
2. Quality Control: quality refers to physical or nonphysical
characteristics that constitute the basic nature of something.
Size, shape, and color are straightforward qualities. Tensile
strength, expected life, and integrity are more difficult to
define, measure, and control.
3. Human Asset Accounting: The complexity of evaluating the
structure or process of complex multiunit subsystems in society
is evident. The task becomes more manageable if a single unit
is involved.
CONFLICT, POWER, AND POLITICS
I. Departmental Conflict in Organizations
Conflict among departments and groups in organizations, called
intergroup conflict, requires three ingredients: group
identification, observable group differences, and frustration.

First, employees have to perceive themselves as part of an
identifiable group or department. Second, there has to be an
observable group difference of some form. Group may be
located on different floors or the building, members may have
different social or educational backgrounds, or members may
work in different departments. The third ingredient is
frustration, which means that if one group achieves its goal, the
other will not; it will be blocked.
Frustration need not be served and only needs to be anticipated
to set off intergroup conflict. Intergroup conflict will appear
when one group tries to advance its position in relation to other
groups. Intergroup conflict can be defined as the behavior that
occurs among organizational groups when participants identify
with one group and perceive that other groups may block their
group's goal achievement or expectations. Conflict means that
groups clash directly, that they are in fundamental opposition.
Conflict is similar to competition but more severe. Competition
is rivalry among groups in the pursuit of a common prize,
whereas conflict presumes direct interference with goal
achievement.
Intergroup conflict within organizations can occur horizontally
across departments or vertically between different levels of the
organization. Vertical conflict may occur when employees
clash with bosses about new work methods, reward systems, or
job assignments. Another typical areas of conflict is between
groups such as unions and management or franchise owners and
headquarters. Conflict can also occur between different
divisions or business units within an organization, such as
between the auditing and consulting units of big firms.
!. Sources of Conflict
a. Goal Incompatibility: The goals of each department reflect
the specific objectives members are trying to achieve. The

achievement of one department's goals often interferes with
another department's goals, leading to conflict. University
police versus Student life.
2. Differentiation: Differentiation is the differences in
cognitive and emotional orientations among managers in
different functional departments. Functional specialization
requires people with specific education, skills, attitudes, and
time horizons.
3. Task Interdependence refers to the dependence of one unit on
another for materials, resources, or information - polled,
sequential, reciprocal interdependences.
4. Limited resources can be a source of conflict - Limited
money, physical facilities, staff resources, and human resources
to share among departments.
B. Rational versus Political Model
Exhibit: Use of Rational versus Political Model
When Conflict is Low
Rational Model describes Organization
Goals
Power and control

Decision process
Rules and norms
Information
When Conflict is High
Political Model describes Organization
*Consistent across participants
*Centralized
*Orderly, logical, rational
*Norm of efficiency
*Extensive, systematic, accurate
*Inconsistent, pluralistic within the organization.
*Decentralized, shifting coalitions and interest groups
*Disorderly, result of bargaining and interplay among interests
*Free play of market forces; conflict is legitimate and expected
*Ambiguous; information used and withheld strategically
1. Rational Model:
When goals are in alignment, there is little differentiation,
departments are characterized by polled interdependence, and
resources seem abundant, managers can use a rational model of
organization.
2. Political Model:
When differences are great, organization groups have separate
interests, goals, and values. Disagreement and conflict are

normal, so power and influence are needed to reach decisions.
C. Tactics for Enhancing Collaboration
Exhibit: Tactics for Enhancing Collaboration
1. Create integration devices - Labor Management Team
2. Use confrontation and negotiation - Win-Win Strategy,
collective bargaining
3.Schedule intergroup consultation - Workplace mediation
4. Practice member rotation
5. Create shared mission and super-ordinate goals, requiring
cooperation
II. Power and Organizations
Power is the ability of one person or department in an
organization to influence other people to bring about desired
outcome. Powerful managers are often able to get bigger
budgets for their departments, more favorable production
schedules, and more control over the organization's agenda.
A. Individual versus Organizational Power
Legitimate power is the authority granted by the organization to
the formal management position a manager holds. Reward
power stems from the ability to bestow rewards to other people.

The authority to punish or recommend punishment is called
coercive power. Expert power derives from a person's greater
skill or knowledge about the tasks being performed. Referent
power is derived from personal characteristics: people admire
the manager and want to be like or identify with the manager
out of respect and admiration.
B. Power versus Authority
Authority is vested in organizational positions.
Authority is accepted by subordinates.
Authority flows down the vertical hierarchy.
C. Vertical Sources of Power
1. Formal Position
2. Control ofResources
3. Control of Information
4. Network Centrality means being centrally located in the
organization and having access to information and people that
are critical to the company's success. Managers as well as
lower-level employees are more effective and more influential
when they put themselves at the center of a communication
network, building connections with people throughout the
company.
4. People: Top leaders often increase their power by
surrounding themselves with a group of loyal executives. Loyal
managers keep the leader informed and in touch with events and
report possible disobedience or troublemaking in the
organization.
D. The Power of Empowerment

Top managers want lower-level employees to have greater
power so they can do their jobs more effectively.
Empowerment is power sharing, the delegation of power or
authority to subordinates in an organization. Empowering
employees involves giving them three elements that enable them
to act more freely to accomplish their jobs.
1. employees receive information about company performance
2. Employees have knowledge and skill to contribute to
company goals.
3. Employees have the power to make substantive decisions.
E. Horizontal Sources of Power
Horizontal power pertains to relationships across departments,
divisions, or other units.
1. Strategic Contingencies are events and activities both inside
and outside an organization that are essential for attaining
organizational goals. Departments involved with strategic
contingencies for the organization tend to have greater power.
Departmental activities are important when they provide
strategic value by solving problems or crises for the
organization.
2. Power Sources:
(a) Interdepartmental dependency is a key element underlying
relative power.
(b) Financial resources: Money can be converted into other
kinds of resources.
(c) Centrality reflects a department's role in the primary activity
of an organization.
(d) Non-substitutability: Power is determined by non-
substitutability, which means that a department's function
cannot be performed by other readily available resources.
(e) Coping with uncertainty: elements in the environment can
change swiftly and can be unpredictable and complex. In the

face of uncertainty, little information is available to managers
on appropriate courses of action. Depart that reduce this
uncertainty for the organization will increase their power.
III. Political Processes in Organizations
Politics is the use of power to influence decisions in order to
achieve desired outcomes. The exercise of power to influence
others has led to two ways to define politics: as self-serving
behavior or as a natural organizational decision process.
Organizational politics involves activities to acquire, develop,
and use power and other resources to influence other and obtain
the preferred outcome when there is uncertainty or disagreement
about choices.
The political model is associated with conflict over goals,
shifting coalitions and interest groups, ambiguous information,
and uncertainty. Political activity tends to be most visible when
managers confront non-programmed decisions, and is related to
the Carnegie model of decision making. Three domains of
political activities in most organizations are structural change,
management succession, and resource allocation.
IV. Using Soft Power and Politics
A. Tactics for Increasing Power
1. Enter areas of high uncertainty
2. Create dependencies
3. Provide scarce resources
4. Satisfy strategic contingencies - A contingency could be a
critical event, a task for which there are no substitutes, or a
central task that is interdependent with many others in the
organization
B. Political Tactics for Using Power

1. Build coalitions and expand networks
3. Use reciprocity
4. Enhance legitimacy and expertise
5. Make a direct appeal(End of Lecture Notes #12)
I. Strategy and Sustainability
Operations and Supply Chain Management (OSCM) is defined
as the design, operation, and improvement of the systems that
create and deliver the firm's primary products and services.
A. Operations and Supply Chain Processes
1. Planning consists of the processes needed to operate an
existing supply chain strategically. Here a firm must determine
how anticipated demand will be met with available resources.
A major aspect of planning is developing a set of metrics to
monitor the supply chain so that it is efficient and delivers high
quality and value to customers.
2. Sourcing involves the selection of suppliers that will deliver
the goods and services needed to create the firm's product. A
set of pricing, delivery, and payment processes is needed
together with metrics for monitoring and improving the
relationships between partners of the firm.
3. Making is where the major product is produced or the service
provided. The step requires scheduling processes for workers

and the coordination of material and other critical resources
such as equipment to support producing or providing the
service.
4. Delivering is also referred to as logistics processes. Carriers
are picked to move products to warehouses and customers,
coordinate and schedule the movement of goods and information
through the supply network, develop and operate a network of
warehouses, and run the information systems managing the
receipt of orders, and invoicing systems to collect payments
from customers.
5. Returning involves the processes for receiving worn-out,
defective, and excess products back from customers and support
for customers who have problems with delivered products. In
the case of services, this may involve all types of follow-up
activities that are required for after-sales support.
B. The Triple Bottom Line - A Sustainable Strategy
1. Social: Pertains to fair and beneficial business practices
toward labor, the community, and the region in which a firm
conducts its business. A triple bottom line company seeks to
benefit its employees, the community, and other social entities
that are impacted by the firm's existence.
2. Economic: The firm is obligated to compensate shareholders
who provide capital through stock purchases and other financial
instruments via a competitive return on investment. Company
strategies should promote growth and grow long-term value to
this group in the form of profit.
3. Environmental: This refers to the firm's impact on the
environment. The company should protect the environment as
much as possible - or at least cause no harm. Managers should
move to reduce a company's ecological footprint by carefully
managing its consumption of natural resources and by reducing
waste, and ensuring that the waste is less toxic before disposing
of it in a safe/legal manner.
Operations and supply chain strategy should be focused on

operations effectiveness subject to two constraints - social
benefits and environment preservation.
II. Product and Service Design
Product development is a major challenge that directly impacts
the long-range success of a firm. Effectively managing the
process requires an integrated effort involving all the functional
areas of the firm.
Exhibit: The Product Development Process
Phase 0 to 5
Design
Manufacturing
Marketing
Phase 0
Planning
*Consider product platform and architecture
*Assess new technologies
*Identify production constraints
*Set supply chain strategy
*Articulate market opportunity
*Define market segments
Phase 1
Concept Development
*Investigate feasibility of product concepts
*Develop industrial design concepts
*Build and test experimental prototypes

*Estimate manufacturing cost
*Assess production feasibility
*Collect customer needs
*Identify lead users
*Identify competitive products
Phase 2
System-level Design
*Generate alternative product architectures
*Define major subsystems and interfaces
*Refine industrial design
*Identify suppliers for key components
*Perform make-buy analysis
*Define final assembly scheme
*Set target costs
*Develop plan for product options and extended product family
*Set target sales price point(s)
Phase 3
Detail Design
*Define part geometry
*Choose materials
*Assign tolerances
*Complete industrial design control documentation

Define piece-part production processes
*Design tooling
*Define quality assurance processes
*Begin procurement of long-lead tooling
*Develop marketing plan
Phase 4
Testing and Refinement
*Reliability testing
*Life testing
*Performance testing
*Obtain regulatory approvals
*Implement design changes
*Facilitate supplier ramp-up
*Refine fabrication and assembly processes
*Train workforce
*Refine quality assurance processes
*Develop promotion and launch materials
*Facilitate field testing
Phase 5
Production Ramp-up
*Evaluate early production output
*Begin operation of entire production system
*Place early production with key consumers

Variant of Generic Product Development Process:
Generic (market-pull production), technology-push, platform,
process-intensive, customized, high-risk, quick-built, complex
systems products.
III. Designing a Manufacturing System
In designing a manufacturing system, process selection refers to
the strategic decision of selecting which kind of production
processes to use to produce a product or provide a service.
Many techniques are available to determine the actual layouts of
the production process.
Exhibit: The Layouts of the Production Process
Production Process
Layout
Explanation
1. Project Layout
The product remains in a fixed location. Manufacturing
equipment is moved to teh product rather than vice versa.
2. Work-centers
It refers to as a job shop, is where similar equipment or
functions are grouped together, such as all drilling machines in
one area and all stamping machines in another. A part being
worked on travels, according to the established sequence of
operations, from work center to work center.
3. Manufacturing cell
It is a dedicated area where products that are similar in
processing requirements are produced. These sells are designed

to perform a specific set of processes, and the cells are
dedicated to a limited range of products. A firm may have
many different cells in a production area, each set up to produce
a single product or a similar group of products efficiently.
4. Assembly Line
It is where work processes are arranged according to the
progressive steps by which the product is made. The path for
each part is, in effect, a straight line. Discrete products are
made by moving from workstation to workstation at a controlled
rate, following the sequence needed to build the product.
5. Continuous process
It is similar to an assembly line in that production follows a
pre-determined sequence of steps, but the flow is continuous
such as with liquids, rather than discrete. Such structures are
usually highly automated and, in effect, constitute one
integrated machine that may operate 24 hours a day to avoid
expensive shutdowns and start-ups.
Contemporary Application
1. The Digital Factory - Computer-integrated manufacturing:
Digital factories link manufacturing components that previously
stood alone: robots, machines, product design, and engineering
analysis are coordinated by a single computer system. The
digital factory is typically the result of subcomponents such as
computer-aided design, computer-aided manufacturing,
manufacturing process management, integrated information
network, and product life-cycle management.
2. Lean Manufacturing uses highly trained employees at every

stage of the production process, who take a painstaking
approach to details and problem solving to cut waste and
improve quality. Lean manufacturing incorporate
technological elements, but heart of lean manufacturing is not
machines or software, but people - essentially centered on
preserving value with less work. Lean manufacturing requires
changes in organizational systems, such as decision-making
processes and management processes, as well as an
organizational culture supporting active employee participation,
a quality perspective, and focus on the customers. Employees
are trained to attack waste and strive for continuous
improvement in all areas.
IV. Designing a Service Organization
Exhibit: Differences between Manufacturing and Service
Technologies
Service Technology
Manufacturing technology
1. Intangible output
2. Production & consumption take place simultaneously
3. Labor- and Knowledge-intensive
4. Customer interaction generally high
5. Human element very important
6. Quality is perceived and difficult to measure
7. Rapid response time is usually necessary
8. Site of facility is extremely important
1. Tangible product
2. Products can be inventoried for later consumption
3. Capital asset-intensive
4. Little direct customer interaction
5. Human element may be less important
6. Quality is directly measured
7. Longer response time is acceptable
8. Site of facility is moderately important

Service
Airlines, Hotels, Consultants,
Health care, Law firms
Product
Soft drink companies, Steel companies, Automobile
manufacturers, Mining corporations,
Food processing plants
Service organizations accomplish their primary purpose through
the production and provision of services, such as education,
healthcare, transportation, banking, and hospitality. The
characteristics of service technology are compared to those of
manufacturing technology in Exhibit above.
Designing the service organization: The impact of customer
contact on organization design is reflected in the use of
boundary roles and structural disaggregation. Boundary roles
are used extensively in manufacturing firms to handle customers
and to reduce disruptions for the technical core. They are used
less in service firms because a service is intangible and cannot
be passed along by boundary spanners, so service customers
must interact directly with technical employees, such as doctors
or brokers. A service firm deals in information and intangible
outputs and does not need to be large. Its greatest economies
are achieved through disaggregation into small units that can be
located close to customers. Service technology also influence
internal organization characteristics used to direct and control
the organization, though the needed skills are higher.
Employees need social and interpersonal skills as well as
technical skills, and decision making often tends to be
decentralized in service firms.
Exhibit: Configuration and Structural Characteristics of Service
Organizations versus Product Organization
Characteristics

Service
Product
Structural Characteristic
1 Separate boundary roles
2 Geographical dispersion
3 Decision making
4 Formalization
Few
Much
Decentralized
Lower
Many
Little
Centralized
Higher
Human Resources
1 Employee skill level
2 Skill emphasis
Higher
Interpersonal
Lower
Technical
V. The Impact of Technology on Job Design
A. Job Design

1. Job design includes the assignment of goals and tasks to be
accomplished by employees. Managers may consciously change
job design to improve productivity or worker motivation.
However, managers may also unconsciously influence job
design through the introduction of new technologies, which can
change who jobs are done and the very nature of jobs.
Managers should understand how the introduction of a new
technology may affect employees' jobs. The common theme of
new technologies in the workplace is that they in some way
substitute machinery for human labor in transforming inputs
into outputs.
Exhibit: Job Design Decision
Factors
Explanation
Who
Mental and physical characteristics of the workforce
What
Task(s) to be performed
Where
Geographic locale of organization: location of work areas
When
Time of day: time of occurrence in the work flow
Why
Organizational rationale for the job: objectives and motivation
of workers
How
Method of performance and motivation
2. In addition to replacing human workers, technology may have
several different effects on the human jobs that remain. Mass-
production technologies tend to produce job simplification,
which means that the variety and difficulty of tasks performed
by a single person are reduced, and boring and repetitive jobs
provide little satisfaction. Hence, managers introduced job
rotation and job enrichment. On the other hand, digital

manufacturing and other advanced technology may contribute to
job enlargement, which is an expansion of the number of
different tasks performed by an employee.
B. Socio-technical Systems
The socio-technical systems approach recognizes the
interactions of technical and human needs for technical
efficiency. The socioportion of the approach refers to the
people and groups that work in organizations and how work is
organized and coordinated. The technical portion refers to the
materials, tools, machines, and processes used to transform
organizational inputs into outputs. The goal of the socio-
technical systems approach is to design the organization for
joint optimization, which means that an organization functions
best when the social and technical systems are designed to fit
the needs of one another. Joint Optimization = Social System +
Technical System.
Exhibit: Socio-technical Systems Model
The Social System
Design for Joint Optimization
Work roles, tasks,
Work flow
Goals and values
Skills and abilities
The Technical System
*Individual and team behaviors
*Organizational/team culture
*Management practices
*Leadership style
*Degree of communication openness
*Individual needs and desires

*Type of production technology
*Level of interdependence
*Physical work setting
*Complexity of production process
*Nature of raw materials
*Time pressure
VI. Strategic Sourcing
A. Strategic sourcing is the development and management of
global supplier relationship to acquire goods and services in a
way that aids in achieving the immediate needs of the business.
The Bullwhip Effect is an observed phenomenon in forecast-
driven distribution channels. It refers to a trend of larger and
larger swings in inventory in response to changes in demand, as
one looks at firms further back in the supply chain for a
product. Moving up the supply chain from end-consumer to raw
materials supplier, each supply chain participant has greater
observed variation in demand and thus greater need for safety
stock. In periods of rising demand, down-stream participants
increase orders. In periods of falling demand, orders fall or
stop, thereby not reducing inventory. The effect is that
variations are amplified as one moves upstream in the supply
chain (further from the customer).
B. Outsourcing is the act of moving some of a firm's internal
activities and decision responsibility to outside providers.
Outsourcing goes beyond the more common purchasing and
consulting contracts because not only are the activities
transferred, but resources that make the activities occur,
including people, facilities, equipment, technology, and other
assets, are also transferred.

C. Green Sourcing is to revamp their procurement policies to be
more sustainable and efficient by finding new environmentally
friendly technologies or increasing the use of recyclable
materials.
1. Assess the opportunity
2. Engage internal supply chain sourcing agents
3. Assess the supply base
4. Develop the sourcing strategy
5. Implement the sourcing strategy
6. Institutionalize the sourcing strategy
VII. Location, Logistics, and Distribution
A. Logistic System Design
*Water, Rail, Highway, Airline, Pipeline, and Hand delivery.
- High volume (or Deliver cost) versus Speed of delivery
* Cross-docking is a practice in logistics of unloading materials
from an incoming semi-trailer truck or railroad car and loading
these materials directly into outbound trucks, trailers, or rail
cars, with little or no storage in between. This may be done to
change type of conveyance, to sort material intended for
different destinations, or to combine material from different
origins into transport vehicles (or containers) with the same, or
similar destination. Advantages of retail cross-docking are:
· Streamlines the supply chain from point of origin to point of
sale
· Reduces handling costs, operating costs, and the storage of
inventory
· Products get to the distributor and consequently to the
customer faster
· Reduces, or eliminates warehousing costs
· May increase available retail sales space.
B. Issues in Facility Location: Proximity to customers;
business climate; total costs; infrastructure; quality of labor;
suppliers; other facilities; free trade zones; political risk;

government barriers; trading blocs; environmental regulations,
host community, and competitive advantage.
VIII. Demand Management and Forecasting
A. Linear Regression Analysis is functional relationship
between two or more correlated variables. It is used to predict
one variable given the other. The relationship is usually
developed from observed data, which should be plotted first to
see if they appear linear or if at least parts of the data are
linear.
B. Time Series Analysis: It can be defined as chronologically
ordered data that may contain one or more components of
demand: trend, seasonal, cyclical, auto-correlation, and random.
IX. Sales and Operations Planning
A. Sales and operations planning is a process that helps firms
provide better customer service, lower inventory, shorten
customer lead times, stabilize production rates, and give top
management a handle on the business.
B. The Aggregate Operations Plan is concerned with setting
production rate by product group or other broad categories for
the intermediate term (3 to 18 months). The main purpose of
the aggregate plan is to specify the optional combination of
production rate, workforce level, and inventory on hand.
Production rate refers to the number of unites completed per
unit of time.
Workforce level is the number of workers needed for
production.
Inventory on hand is unused inventory carried over from the
previous period.
C. Yield Management can be defined as the process of

allocating the right type of capacity to the right type of
customers at the right price and time to maximize revenue or
yield.
D. Inventory Systems: An inventory system provides the
organizational structure and the operating policies for
maintaining and controlling goods to be stocked. The system is
responsible for ordering and receipt of goods: timing the order
placement and keeping track of what has been ordered, how
much, and from whom.
*Fixed order quantity models; *Fixed - Time period models
*Inventory control and supply chain management; *Price-Break
models
X. Material Requirements Planning and Scheduling
A. Master Production Scheduling: All production systems have
limited capacity and limited resources. This presents a
challenging job of the master scheduler. Although the
aggregate plan provides the general range of operation, the
master schedule must specify exactly what is to be produced.
These decisions are made while responding to pressures from
various functional areas such as the sales department (meet the
customer's due date), finance (minimize inventory),
management (maximize productivity and customer service,
minimize resource needs), manufacturing (have level schedules
and minimize setup time).
B. Manufacturing Execution Systems: A manufacturing
execution system is an information system that links schedules,
dispatches, tracks, monitors, and controls the customer's
encounters with the service organization and its employees.
The common features are a central database that contains all the
relevant information on resource availability and customers and
a management control function that integrates and oversees the
process.

I. Information Technology (IT) Evolution
Evolution of Organizational Applications of IT
Management Level - System Complexity
Applications
1. Operations
*Transaction processing systems
*Data warehousing
*Data mining
2. Decision Making and Control
*Management information systems
*Decision support systems
*Executive information systems
*Management control systems
*Balanced scorecard

3. Adding Strategic Value
Internal Coordination
*Intranets
*Social networking
*Knowledge management
*Enterprise resource planning
External Coordination
*Integrated enterprise
*Customer relationships
*E-business
Initially, IT systems in organizations were applied to
operations. These initial applications were based on the notion
of machine-room efficiency - that is, current operations could
be performed more efficiently with the use of computer
technology. The goal was to reduce labor costs by having
computer take over some tasks. These systems became known
as transaction processing systems (TPS), which automate the
organization's routine, day-to-day business transactions. A TPS
collects data from transactions such as sales, purchase from
suppliers, and inventory changes, and stores them in a database.
In recent years, the use of data warehousing and business
intelligence software has expanded the usefulness of these
accumulated data. Data warehousing is the use of huge
databases that combine all of a company's data and allow users
to access the data directly, create reports, and obtain responses
to what-if-questions. Building a database at a large corporation
is a huge undertaking that includes defining hundreds of
gigabytes of data from many existing system, providing a means

of continually updating the data, making it all compatible, and
linking it to software that make it possible for users to search
and analyze the data and produce helpful reports. Software for
business intelligence, also called analytic software, helps users
make sense of all these data. Business intelligence refers to the
high-tech analysis of a company's data in order to make better
strategic decisions. Sometimes referred to as data mining,
business intelligence means searching out and analyzing data
from multiple sources across the enterprise, and increasingly
from outside sources as well, to identify patterns and
relationships that might be significant. Retailers are some of
the biggest users of business intelligence software.
By collecting the right data and using business intelligence
software to analyze it and spot trends and patterns, manager can
make smarter decisions. IT evolved to more complex systems
for managerial decision making and control of the organization,
the second state illustrated in above exhibit. Further
advancements have led to teh use of IT to add strategic value b
providing tight coordination both internally and with external
customers, suppliers, and partners, the highest level of
application as shown in above.
II. Information for Decision Making and Control
Through the application of more sophisticated computer-based
systems, managers have tools to improve the performance of
departments and the organization as a whole. These
applications use information stored in corporate databases to
help managers control the organization and make important
decisions. Management information systems - including
information reporting systems, decision support systems, and
executive information systems - facilitate rapid and effective
decision making. Elements for control include various
management control systems, including executive dashboards,

and a procedure known as the balanced scorecard. In an
organization, these systems are interconnected, as illustrated by
the dashed lines in the figure below. The systems for decision
making and control often share the same basic data, but the data
and reports are designed and used for a primary purpose of
decision making versus control.
Corporate
Database
Figure: Information Systems for
Decision Making and Managerial Control
Information for Decision Making
Management Information Systems
Information for Control
Feedback Control Systems
1. Executive Information Systems
2. Reporting Systems
Decision Support Systems
1. Balanced Scorecard
2. Management Control Systems;
Behavior vs. Outcome Control

A. Organizational Decision-Making Systems
A management information system (MIS) is a computer-based
system that provides information and support for managerial
decision making. The MIS is supported by the organization's
transaction processing systems and by organizational and
external databases. The information reporting system, the most
common form of MIS, provides mid-level managers with reports
that summarize data and support day-to-day decision making.
For example, when managers need to make decisions about
production scheduling, they can review data on the anticipated
number of orders within the next month, inventory levels, and
availability of human resources.
An executive information system (EIS) is a higher-level
application that facilitates decision making at the highest levels
of management. These systems are typically based on software
that can convert large amounts of complex data into pertinent
information and provide that information to top managers in a
timely fashion. For example, Motorola's Semiconductor
Products Sector, based in Austin, Texas, had massive amounts
of stored data, but managers couldn't find what they needed.
The company implemented an EIS using online analytical
processing software so that more than a thousand senior
executives, as well as managers and project analysts in finance,
marketing, sales, and accounting departments around the world,
could quickly and easily get information about customers
buying trends, manufacturing, and so forth, right from their
desktop computers without having to learn complex and arcane
search commands.
A decision support system (DSS) provides specific benefits to
managers at all levels of the organization. These interactive,
computer-based systems rely on decision models and integrated
databases. Using decision-support software, users can pose a

series of what-if questions to test possible alternatives. Based
on assumptions used in the software or specified by the user,
managers can explore various alternatives and receive
information to help them choose the alternative that will likely
have the best outcome. The German airline Deutche Lufthansa
AG have collaborated on a valuable computerized system that
help make decision to improve luggage handling.
@ Feedback Control Model
A Simplified Feedback Control Model (See Lecture 1)
1. Set Strategic Goals
4. Take corrective
action as needed
2. Establish metrics and standards of performance
3. Compare metrics of actual performance to standards
Another primary use of information in organizations is for
control. Effective control systems involve the use of feedback

to determine whether organizational performance meets
established standards to help the organization attain its goals.
Managers set up systems for organizational control that consist
of the four key steps in the feedback control model illustrated in
the above figure.
B. Management Control Systems
Management control systems are broadly defined as the formal
routines, reports, and procedures that use information to
maintain or alter patterns in organizational activities. These
feedback control systems include the formalized information-
based activities for planning, budgeting, performance
evaluation, resource allocation, and employee rewards. Targets
are set in advance, outcomes compared to targets, and variances
reported to managers for corrective action. Following table
lists four control system elements that are often considered the
core of management control systems: the budget and financial
reports; periodic nonfinancial statistical reports; reward
systems; and quality-control systems.
Exhibit: Management Control Systems
Subsystem
Content and Frequency
Budget, financial reports
Financial, resource expenditures, profit and loss; monthly
Statistical report
Nonfinancial outputs; weekly or monthly, often computer-based
Reward systems
Evaluation of managers based on department goals and
performance, set rewards; yearly

Quality control systems
Participation, benchmarking guidelines, Six Sigma goals;
continuous
1. Financial Reports: The budget is typically used to set targets
for the organization's expenditures for the year and then report
actual costs on a monthly or quarterly basis. As a means of
control, budgets report actual as well as planned expenditures
for cash, assets, raw materials, salaries, and other resources so
that managers can take action to correct variances. Sometimes,
the variance between budgeted and actual amounts for each line
item is listed as a part of the budget. Managers also rely on a
variety of other financial reports.. The balance sheet shows a
firm's financial position with respect to assets and liabilities at
a specific point in time. An income statement, sometimes
called a profit and loss statement, summarizes the company's
financial performance of a given time interval, such as for the
week, month, or year. The bottom line indicates the net income
- profit or loss - for the given time period. Moreover, a cash
flow statement indicates the available amount of cash a
company can use at a specific time
2. Nonfinancial Reports: Managers use periodic statistical
reports to evaluate and monitor nonfinancial performance, such
as customer satisfaction, employee performance, or rate of staff
turnover. For e-commerce organizations, important
measurements of nonfinancial performance include metrics such
as stickiness (how much attention a site gets over time), the
conversion rate, the ratio of buyers to site visitors, and site
performance data, such as how long it takes to load a page or
how long it takes to place an order. E-commerce managers
regularly review reports on conversion rates, customer drop-off,
and other metrics to identify problems and improve their
business. For all organizations, nonfinancial reports typically

are computer based and may be available daily, weekly, or
monthly.
Managers often track both nonfinancial and financial data by
means of an executive dashboard. An executive dashboard,
sometimes called a business performance dashboard, is a
software program that presents key business information in
graphical, each-to-interpret form and alerts managers to any
deviations or unusual patterns in the data. Dashboards pull data
from a variety of organizational systems and databases; gauge
the data against key performance metrics; and pull out the right
nuggets of information to deliver to managers' laptops or PCs
for analysis and action. For example, dashboards enable
managers to quickly see when performance thresholds related to
patient wait times or other metrics aren't being met at various
hospitals.
3. Reward Systems offer incentives for managers and employees
to improve performance and meet departmental goals.
Managers and employees evaluate how ell previous goals were
met, set new goals, and establish rewards for meeting the new
targets. Rewards are often tied to the annual performance
appraisal process, during which managers assess employee
performance and provide feedback to help people improve
performance and obtain rewards.
4. Quality-control Systems involve training employees in
quality-control methods, setting targets for employee
participation, establishing benchmarking guidelines, and
assigning and measuring Six Sigma goals. Benchmarking means
the process of persistently measuring products, services, and
practices against tough competitors or other organizations
recognized as industry leaders. Six Sigma specifically means a
highly ambitious quality standard that specifies a goal or no
more than 3.4 defects per million parts. However, it has
deviated from that precise meaning to refer to a whole set of

control procedures that emphasize the relentless pursuit of
higher quality and lower costs. The discipline is based on a
methodology referred to as DMAIC (Define, Measure, Analyze,
Improve, and Control, pronounced de-MAY-ic), which provides
a structured way for organizations to approach and solve
problems. Many large companies have saved millions of dollars
by rooting out inefficiencies and waste through Six Sigma
processes.
The budget is used primarily to allocate resource inputs.
Managers use the budget for planning the future and reducing
uncertainty about the availability of human and material
resources needed to perform department tasks. Computer-based
statistical reports are used to control outputs. These reports
contain data about output volume and quality and other
indicators that provide feedback to middle management about
departmental results. The reward system and quality control
system are directed at the production process. Quality control
systems specify standards for employee participation,
teamwork, and problem solving. Reward systems provide
incentives to meet goals and can help guide and correct
employee behavior. Manager may also use direct supervision to
keep departmental work activities within desired limits.
III. The Level and Focus of Control Systems
Managers consider both control of the overall organization and
control of departments, teams, and individuals. Some control
strategies apply to the top levels of an organization, where the
concern is for the entire organization or major divisions.
Control is also an issue at the lower, operation level, where
department managers and supervisors focus on the performance
of teams and individual employees.
A. Organization Level: The Balanced Scorecard

Most companies use a combination of metrics for measuring
organizational performance and effectively controlling the
organization. A recent control system innovation is to integrate
internal financial measurements and statistical reports with a
concern for markets and customers, as well as employees. The
balanced scorecard (BSC) is a comprehensive management
control system that balances traditional financial measures with
operational measures relating to a company's critical success
factors. A balanced scorecard contain four major perspectives,
as illustrate below: financial performance, customer service,
internal business processes, and the organization's capacity for
learning and growth.
Exhibit: Major Perspectives of the Balanced Scorecard
Financial
Do actions contribute to better financial performance?
Measures: Profit
Return on investment
Customers
How well do we serve
our customers?
Measures: customer
satisfaction, customer loyalty
Overall Goals
Mission-Objectives -
Strategies - Policies

Internal Business Processes
Do work processes add value for customers and shareholders?
Measures:
Order-rate fulfillment,
Cost-per-order
Learning and Growth
Are we learning, changing,
and improving?
Measures: Continuous
process improvement,
employee retention
Within these four areas, managers identify key performance
indicators the organization will track. The financial perspective
reflects a concern that the organization's activities contribute to
improving short- and long-term financial performance. It
includes traditional measures such as net income and return on
investment. Customer service indicators measure such as things
as how customers view the organization as well as customers
retention and satisfaction. Business process indicators focus on
production and operating statistics, such as order fulfillment or
cost per order. The final component looks at the organization's
potential for learning and growth, focusing on how well
resources and human capital are being managed for the
company's future. Measurements include such things as
employee retention, business process improvements, and the

introduction of new products. The components of the scorecard
are designed in an integrative manner so that they reinforce one
another and link short-term actions with long-term strategic
goals, as illustrated above exhibit. Managers can use the
scorecard to set goals, allocate resources, plan budgets, and
determine rewards.
Executive information systems and dashboards facilitate use of
the balanced scorecard by enabling top managers to easily track
metrics in multiple areas, rapidly analyze the data, and convert
huge amounts of data into clear information reports. The
scorecard has become the core management control system for
many organizations. Scorecards serve as the agenda for
monthly management meetings, where managers evaluate
performance, discuss what corrective actions need to be taken,
and set new targets for the various BSC categories.
Exhibit: A Strategy Map for Performance Management
Accomplish Mission; Create Optimal Value
Financial
Performance Goals
Increase revenues in
Existing markets
Increase productivity
and efficiency
Increase revenues in new markets and products

Customer
Service Goals
Build and maintain
Good customer relationships
Be the leader in
Quality and reliability
Provide innovative solutions to customer needs
Internal Business
Process Goals
Build good
relationships with suppliers and partners
Improve cost,
Quality, and flexibility of operations
Excel at innovative product development and next-generation
market opportunities
Learning and Growth
Goals
Promote employee

Development via
Ongoing trading
Enable continuous
Learning and knowledge sharing
Cultivate a culture of innovation and
high performance
The cause-effect control technique is the strategy map. A
strategy map provides a visual representation of the key drivers
of an organization's success and shows how specific outcomes
in each area are linked. The strategy map is a powerful way for
managers to see the cause-and-effect relationships among
various performance metrics. The simplified strategy map
illustrates the four key areas that contribute to a firm's long-
term success - learning and growth, internal processes, customer
service, and financial performance - and how the various
outcomes in one area link directly to performance in another
area. The idea is that effective performance in terms of
learning and growth serves as a foundation to help achieve
excellent internal business processes. Excellent business
processes, in turn, enable the organization to achieve high
customer service and satisfaction, which enables the
organization to reach its financial goals and optimize its value
to all stakeholders.
The organization ahs learning and growth goals that include
employee training and development, continuous learning and
knowledge sharing, and building a culture of innovation.
Achieving these will help the organization build efficient
internal business processes that promote good relationship with
suppliers and partners, improve the quality and flexibility of
operations, and excel at developing innovative products and
services. Accomplishing internal process goals, in turn, enables
the organization to maintain strong relationships with

customers, be a leader in quality and reliability, and provide
innovative solutions to emerging customer needs.
B. Department Level: Behavior versus Outcome Control
The balanced scorecard and strategy map are techniques used
primarily by top and upper-level managers. Lower-level
managers focus on the performance of people at the department
level, who must meet goals and standards if the organization is
to attain its overall goals. Although lower-level managers may
use any of the control systems listed previously, the reward
system is often of paramount concern at the supervisory level.
There are two different approaches to evaluating and controlling
team or individual performance and allocating rewards. One
approach focuses primarily on how people do their jobs,
whereas the other focuses primarily on the outcomes people
produces. Behavior control is based on manager observation of
employee actions to see whether the individual follows desired
procedures and performs tasks as instructed. Do people get to
work on time? Do they stay focused on their tasks or spend a
lot of time socializing with colleagues" Do they dress
appropriately for the job" Do they perform their jobs according
to established methods or supervisor instructions? With
behavior control, managers provide heavy supervision and
monitoring, pay attention to the methods people use to
accomplish their jobs, and evaluate and reward people based on
specific criteria, which might include areas such as appearance,
punctuality, skills, activities, and so forth.
Outcome control is based on monitoring and rewarding results,
and managers might pay little attention to how those results are
obtained. With outcome control, managers don't supervise
employees in the traditional sense. People have a great deal of
autonomy in terms of how they do their jobs - and sometimes in
terms of where and when they do their jobs - as long as they
produce desired outcomes. rather than monitoring how many

hours an employee works, for example, managers focus on how
much work the employee accomplishes. This is the Result-Only
Work Environment.
In most organizations, managers use both behavior and outcome
control.
IV. Strategic Approach I
Strengthening Employee Coordination and Efficiency
It has evolved further as a strategic tool for both increasing
internal coordination and efficiency and enhancing coordination
with customers and external partners. This is the highest level
of application. Primary IT applications for increasing internal
coordination and efficiency are intranets, knowledge-
management, social networking, and enterprise resource
planning (ERP). Let's deal with this first.
A. Intranets:
Networking, which links people and departments within a
particular building or across corporate offices, enabling them to
share information and cooperate on projects, is an important
strategic tool for many companies. One prevalent form of
corporate networking is an intranet, a private, companywide
information system that uses the communications protocols and
standards of the Internet but is accessible only to people within
a company. To view files and information, users simply
navigate the site with a standard web browser, clicking on links.
Today, most companies with intranets have moved their
management information systems, executive information
systems, and so forth over to the intranet so they are accessible
to anyone who needs them. In addition, having these systems as
part of the intranet means new features and applications can
easily be added and accessed through a standard browser.
Intranets can improve internal communications and unlock
hidden information. They enable employees to keep in touch
with what's going on around the organization, quickly and

easily find information they need, share ideas, and work on
projects collaboratively.
B. Knowledge Management
Knowledge management refers to the efforts to systematically
find, organize, and make available a company's intellectual
capital and to foster a culture of continuous learning and
knowledge sharing. The company's intellectual capital is the
sum of its knowledge, experience, understanding, relationships,
processes, innovations, and discoveries.
Companies need ways to transfer both codified knowledge and
tacit knowledge across the organization. Codified knowledge is
formal, systematic knowledge that can be articulated, written
down, and passed on to others in documents, rules, or general
instructions. Tacit knowledge, on the other hand, is often
difficult to put into words. Tacit knowledge is based on
personal experience, rules of thumb, intuition, and judgment. It
includes professional know-how and expertise, individual
insight and experience, and creative solutions that are difficult
to communicate and pass on to others. As much as 80 percent
of an organization's valuable knowledge may be tacit knowledge
that is not easily captured and transferred. Thus, one hot topic
in corporate IT concerns expert-locator systems that identify
and catalog experts in a searchable database so people can
quickly identify who ahs knowledge they use.
Exhibit: Two Approaches to Knowledge Management
Codified
Provide high-quality, reliable, and fast information systems for
access of explicit, reusable knowledge
People-to-document approach
Strategic Category
Tacit

Channel individual expertise to provide creative advice on
strategic problems
Person-to-person approach
Develop an electronic document system that codifies, stores,
disseminates, and allows
reuse of knowledge
Knowledge Management
Strategy
Develop networks for
linking people so that tacit knowledge can be shared
Invest heavily in information technology, with a goal of
connecting people with reusable, codified knowledge
Information Technology
Approach
Invest moderately
in information technology, with a goal of facilitating
conversations and the personal exchange of
tacit knowledge
1. Knowledge Management Approach deals with the collection
and sharing of codified knowledge, largely through the use of
sophisticated IT systems. Codified knowledge may include
intellectual properties such as parents and licenses; work

processes such as policies and procedures; specific information
on customers, markets, suppliers, or competitors; competitive
intelligence reports; benchmark data; and so forth.
2. Information Technology Approach focuses on leveraging
individual expertise and know-how -tacit knowledge - by
connecting people face to fact or through interactive media.
Tacit knowledge includes professional know-how, individual
insights and creativity, and personal experience and intuition.
with this approach, managers concentrate on developing
personal networks that link people together for the sharing of
tacit knowledge.
C. Social Networking
Encouraging and facilitating the sharing of tacit knowledge isn't
easy. Despite the fact that companies have spent billions on
software and other technology for knowledge management,
there is some indication that knowledge sharing has fallen short
of managers' goals.
A recent approach that holds promise for more effective sharing
of tacit knowledge is the use of social media, including
corporate social networking and other social technology tools
such as blogs and wikis. A blog is a running web log that
allows an individual to post opinions and ideas about work
projects and processes. The simplicity and informality of blogs
make them an easy and comfortable medium for people to
communicate and share ideas. In addition, the micro-blogging
service Twitter is increasingly being used by companies as a
fast way to solve problems. People can send a question and
quickly get responses from all over the organization or from
outsiders. A wiki is similar to a blog and uses software to
create a website that allows people to create, share, and edit
content through a browser-based interface. Rather than simply

sharing opinions and ideas as with a blog, wikis are free-form,
allowing people to edit what they find on the site and add
content.
Social networking is an extension of blogs and wikis. Social
networking sites provide an unprecedented peer-to-peer
communication channel where people interact in an online
community, sharing personal and professional inf9rmation and
photos, producing and sharing all short of ideas and opinions.
Because of the popularity of Facebook in people's personal
lives, most employees are comfortable with the idea of
"following" and communicating with their colleagues online.
Using social networks for a business enables people to easily
connect with one another across organizational and
geographical boundaries based on professional relationships,
shared interests, problems, or other criteria. People can use the
social network to search for tags that will identify others with
knowledge and resources that can help them solve a problem or
do their jobs better. Moreover, the nature of social networking
build trust so that people are more likely to cooperate and share
information.
D. Enterprise Resource Planning
Many companies are using broad-scale information system that
take a comprehensive view of the organization's activities.
These enterprise resource planning (ERP) systems collect,
process, and provide information about a firm's entire
enterprise, including order processing, product design,
purchasing, inventory, manufacturing, distribution, human
resources, receipt of payments, and forecasting of future
demand. ERP systems can be expensive and difficult to
implement, but when applied successfully, an ERP system can
serve as the backbone for an organization by integrating and
optimizing all the various business processes across the entire
firm.

An example of an ERP Network
Sales
General Database
Financial and Accounting
Human Resources
Purchasing
Inventory and Manufacturing
Distribution
IV. Strategic Approach II
Strengthening Coordination with External Partners
External applications of IT for strengthening coordination with
customers, suppliers, and partners include systems for supply
chain management and the integrated enterprise, tools for
enhancing customer relationship, and e-business organization
design. One basic approach is to extend the corporate intranet
to include customers and partners. An extranet is an external
communications system that uses the Internet and is shared by
two or more organizations. Each organization moves certain

data outside of the private intranet, but makes the data available
only to the other companies sharing the extranet.
A. The Integrated Enterprise
Extranets play a critical role in today's integrated enterprise.
The integrated enterprise is an organization that uses advanced
IT to enable close coordination within the company as well as
with suppliers, customers, and partners. An important aspect of
the integrated enterprise is using supply chain management
systems, which manage the sequence of suppliers and
purchasers converting all stages of processing from obtaining
raw materials to distributing finished goods to consumers.
1. Information Linkages: Applying supply chain management
systems enables organizations to achieve the right balance of
low inventory levels and customer responsiveness. The Exhibit
below illustrates horizontal information linkages in the
integrated enterprise. By establishing electronic linkages
between the organization and key partners for the sharing and
exchange of data, the integrated enterprise creates a seamless,
integrated line stretching from end consumers to raw materials
suppliers.
2, Horizontal Relationships: The purpose of integrating the
supply chain is for everyone to work closely together, moving
in lockstep to meet customers' product and time demands.
Honeywell, which makes turbocharger for cars, trucks, and light
aircraft, uses an extranet to give suppliers access to its
inventory and production data so they can respond rapidly to the
manufacturer's need for parts. Honeywell is also working with
big customers to integrate their systems so the company will
have better information about turbocharger demands from
customers as well. For the integrated enterprise to work,
horizontal relationships get more emphasis than vertical
relationships.

B. Customer Relationships
Many organizations have hired social media directors that are in
charge of a blend of activities such as marketing and
promotions, customer service, and support. Social media
directors use blogs, Twitter, Facebook, company websites, and
other technology primarily to do one thing - strengthen
customer relationships. Managers responding to one survey say
they use these technologies for improving customer service,
developing new markets, getting customer participation in
product development, and offering opportunities for customers
to interact with one another. Social networks and blogs are
particularly popular customer-facing technologies.
V. E-Business Organization Design
E-business can be defined as any business that takes place by
digital processes over a computer network rather than in
physical space. However, e-business most commonly refers to
electronic linkages over the Internet with customers, partners,
suppliers, employees, or other key constituents. E-commerce is
a more limited term that refers specifically to business
exchanges or transactions that occur electronically. Today, e-
commerce is transforming into m-commerce, which simply
means the ability to conduct business transactions through a
mobile device. The world has gone mobile. For many people,
their cell phone is always within reach, and they use it for
everything ordering a pizza to accessing their bank account.
Many traditional organizations have set up Internet operations,
but managers have to make a decision about how best to
integrate bricks and clicks - that is, how to blend their
traditional operations with an Internet initiative. One option is
to set up an Internet division as a separate business, either by
creating a spin-off company or by participating in a joint
venture with another organization. Some companies choose to

establish an in-house division that is more closely integrated
with the traditional business. As the Internet continues to
evolve, other companies are moving to a third option, which is
to blend traditional and e-business operations in a totally
integrated design.
Exhibit: Strategies of Integrating Bricks and Clicks
Spin-OffIn-House DivisionFully-Integrated
Company A
Company A
Separate E-business Company
E-business
Division 2
E-business
Division 1
E-business Division
Division 2
Division 1
Separation Benefits Integration Benefits
Focus; Autonomy; Responsiveness Broad recognition,
Coordination
Entrepreneurial culture Shared information, Customer
efficiencies

A. Separate Business
To give the Internet operation autonomy and flexibility, some
organizations choose to create a separate company, using either
a spin-off or a joint venture. A separate business is a free-
standing Internet business that competes with other Internet
companies. Advantages of a separate business include faster
decision making, increased flexibility and responsiveness to
changing market conditions, an entrepreneurial culture, and
management that is totally focused on the success of the online
operation. Potential disadvantages are the loss of brand
recognition and marketing opportunities, higher start-up costs,
and loss of leverage with suppliers. For example, retailer
Kmart originally created a spin-off division called
Bluelight.com, and the drugstore CVS originally launched
CVS.com as a separate business. In both cases, operating e-
business as a separate unit proved to be inefficient for the
retailers in the long run. Managers began bringing online
operations back under the umbrella of the traditional business
so that functions such as marketing, merchandising, and
purchasing could be handled more efficiently. The autonomy,
flexibility, and focus of the spin-off was an advantage during
the start-up phase, but the organizations later gained
efficiencies by bringing the web business back in-house for
better coordination with other departments. Another approach
to creating a separate business is to enter into a joint venture or
partnership. Particularly for companies that have little Internet
experience, forming a joint venture with an experienced partner
can be more successful than going it alone.
B. In-House Division
An in-house division offers tight integration between the
Internet operation and the organization's traditional operation.
The organization creates a separate unit within the company that

functions within the structure and guidance of the traditional
organization. For example, Disney.com is a division under the
guidance and control of the Walter Disney Company. The in-
house approach gives the new division several advantages by
piggybacking on the established company. These include brand
recognition, purchasing leverage with suppliers, shared
customer information and marketing opportunities, and
distribution efficiencies. A potential problem with an in-house
division, however, is that the new operation doesn't have the
flexibility needed to move quickly in the Internet world.
D. Integrated Design
There is no separation between what is defined as the traditional
part of the business and what is defined as the e-business part.
E-business is incorporated into every employee's work. That is,
what might have started out as an in-house division is broken up
and assigned to various departments and business units as part
of the everyday way of operating. Virtually every employee is
involved in both traditional and e-business activities.
VI. IT Impact on Organization Design
IT Impact
Explanation
1. Smaller organizations
Some Internet-based businesses exist almost entirely in
cyberspace; there is no formal organization in terms of a
building with office, desks, and so forth
2. Decentralized organization structures

Most organizations today use technology to further
decentralization
3. Improved horizontal coordination
One of the great outcome of IT is its potential to improve
coordination and communication within the firm.
4. Improved inter-organizational relationships
IT can improve horizontal coordination and collaboration with
external parties such as suppliers, customers, and partners.
5. Enhanced network structures
The high level of inter-organizational collaboration needed in a
network organization structure, and that would not be possible
without the use of advanced IT.

I. The Managerial Task
A. Organizational Performance
The managerial task centers on the concept of organizational
performance, which is primarily measured by dollar sales,
market share, profitability, return on investment, and asset
growth. On the other hand, managers pay attention to
intermediate objectives such as product quality and customer
satisfaction as well as social responsibility in terms of
consumer protection, affirmative action, and preservation of the
environment - stockholders, senior managers, employee unions,
customers, or environmentalists. For example, the Union may
complain that improved profitability came from the pay-cut of
employees; the environmentalists may be happy with the profit
loss due to environmental protection; but stockholders are
unhappy for this because of the fall of dividends and of share
prices.
B. Basic Functions of Management
The managerial system functions in the context of an external
environment and internal subsystems - goals and values, the
organizational structure, organizational behavior, human
resources, finance, operations and supply chain, information
technology, and so forth. Managers make decisions on a wide
variety of issues. "Figuring out what to do despite uncertainty,
great diversity, and an enormous amount of potentially relevant
information. Getting things done through a large and diverse
set of people despite having little direct control over most
them."
Few managerial decisions are final. Rather, the managerial task
involves a continual stream of choices and actions that should
be followed up to see if the system is on track. Problems are

rarely solved once and for all time. Therefore, it is important to
follow up with some adjustments along the way and new
decisions. Managers are in the middle of many interactive
processes, that require a continuing flow of decisions in order
to maintain a dynamic equilibrium. Good managers are
continually in sensing threats and opportunities from the
external environment and strengths and weaknesses from the
internal subsystems. Manages pursue high performance through
managerial functions: planning, organizing, staffing, directing,
and controlling: they maximize external opportunities by
utilizing internal strengths and minimize external threats by
reducing internal weaknesses.
C. Managerial Roles
Roles of Managers by Henry Mintzberg
Managerial Roles
Sets of Behavior
1. Interpersonal Roles
1 Figurehead; 2 Leader; 3 Liaison
2. Information Roles
1 Monitor; 2 Disseminator; 3 Spokesperson
3. Decisional Roles
1 Entrepreneur; 2 Disturbance handler;
3 Resource allocator; 4 Negotiator
II. Types of Decisions
Organizational decision making is formally defined as the
process of identifying and solving problems. In the problem
identification, information about environmental and
organizational conditions is monitored to determine if

performance is satisfactory and to diagnose the cause of
shortcomings. The problem solution stage is when alternative
courses of action are considered and one alternative is selected
and implemented.
A. Programmed Decisions are repetitive and dwell defined, and
procedures exist for resolving the problem. They are well
structured because criteria of performance are normally clear,
good information is available about current performance,
alternatives are easily specified, and there is relative certainty
that the chosen alternative will be successful.
B. Non-programmed Decision are novel and poorly defined, and
no procedure exists for solving the problem. They are used
when an organization has not seen a problem before and may
not know how to respond. Clear-cut decision criteria do not
exist. Alternatives are fuzzy. There is uncertainty about
whether a proposed solution will solve the problem. Typically,
few alternatives can be developed for a non-programmed
decision, so a single solution is custom-tailored to the problem.
Many non-program-med decisions involve strategic planning
because uncertainty is great and decisions are complex.
Exhibit: Decision Making in Today's Environment
Today's Business Environment
Greater Complexity
Rapid ChangeUncertainty
New Decision Making Requirements
*Must be made faster
*No one individual has all information needed
*Require more cooperation

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