1. Review What is SWOT? What are Porter’s Generic Strategies?
What is the Miles and Snow Typology?
What is the Product Life Cycle?
What types of diversification strategies are there?
What are there strengths/weaknesses?
How does one evaluate opportunities?
BCG Matrix
GE Business Screen
What is the Prisoners’ Dilemma?

2. Decision Making and Problem Solving
Choosing one alternative from among a set of alternatives.
Not simply multiple choice
You also have to identify the choices
Types of decisions
Programmed
Structured and re-occurs
Nonprogrammed
Unstructured and infrequent
Examples?

3. Decision Making Conditions
Certainty
Know all alternatives
Know outcome for each alternative
Risk
Each alternative has a probability
Uncertainty
Do not even know all the alternatives
Examples

4. Classical Decision Making
Theory
Obtain complete and perfect information on alternatives
Eliminate uncertainty – identify all alternatives
Evaluate alternatives
Practice
Good or bad approach?

5. Rational Decision Making
Theory
Recognize and define the decision situation
- Sometimes hard to see the problem
Identify alternatives
Evaluate alternatives
Select best alternative
Implement choice
Evaluate results – “Post mortem”
Practice
Sometimes projects go on too long when should be killed
People get invested in a particular approach
Just because it is “rational” doesn’t mean it will produce good results. E.g. New Coke, Netflix, others?

6. Administrative Model Theory
Describes how decisions are made, not how they should be made
Characteristics
Bounded Rationality
Decision makers are limited by skills and incomplete information
Satisficing
Search until find solution meeting min. req.
Does not necessarily lead to the “best” decisions
Examples

7. Other Factors in Decision Making
Practice
Political forces
Power of customers and suppliers
McDonalds Styrofoam, animal testing, etc.
Intuition
As opposed to “Paralysis by Analysis”
Escalation of commitment
Sticking with a decision even when looks wrong
“Sunk costs are sunk”
Risk propensity
Willingness to take and comfort with risk

8. Group Decision Making Practice Interactive groups (teams)
Delphi groups
Ask group of experts for opinion, e.g. on date
Average the inputs and repeat until consensus
Nominal groups
Group in name only
Bring experts together, get ideas, and vote
Manager implications:
If you ask, be prepared for all responses
Do you retain the right to accept or reject?

9. Group Decision Making Advantages More information More alternatives
Greater acceptance
May get better comm.
Usually better decisions
Disadvantages
Slower
Costlier
Compromises are not necessarily better decisions
One person may dominate
“Groupthink” where desire for consensus overwhelms getting to correct decision

10. Managing Group Decision Making
Practice
Need to be careful that you don’t abdicate your responsibility
Need to be careful that you don’t empower group and then take it back
Set deadlines
Carefully select members
Make it clear that all decisions will be subject to testing and scrutiny

11. Exercise Deal or No Deal
You have a 50/50 chance of getting either $500,000 or $1. I offer you either those odds or $200,000 guaranteed. What do you take?
You have a 50/50 chance of either losing $100 or losing $1. I offer you either those odds or a guaranteed loss of $45. What do you take?
What affects your decision?
Expected value
Expected utility

12. More Mental Exercises Exercise C
Have a 3K sq. ft. home when everyone else has 4K sq. ft. or
Have a 2K sq. ft. home when everyone else has a 1K sq. ft. home
Exercise D
Get 4 weeks vacation when everyone else gets 6 weeks or
Get 2 weeks vacation when everyone else gets 1 week.

13. Videos DVD – McDonalds – One Owner
DVD – Google Ch. 5, Guess Where Google is Now