PART THREE
C H A P T E R
S I X
Decision Making:
The Essence of the
Manager’s Job
6
Lecture Outline
Introduction
The Decision-Making Process
Step 1: Identifying a Problem
Step 2: Identifying Decision Criteria
Step 3: Allocating Weights to the Criteria
Step 4: Developing Alternatives
Step 5: Analyzing Alternatives
Step 6: Selecting an Alternative
Step 7: Implementing the Alternative
Step 8: Evaluating Decision Effectiveness
The Manager as Decision Maker
Making Decisions: Rationality, Bounded
Rationality, and Intuition
Assumptions of Rationality
Bounded Rationality
Role of Intuition
Types of Problems and Decisions
Structured Problems and Programmed
Decisions
Unstructured Problems and
Nonprogrammed Decisions
Integration
Decision-Making Conditions
Certainty
Risk
Uncertainty
Decision-Making Styles
Decision-Making Biases and Errors
Summing Up Managerial Decision Making
Decision Making For Today’s World
Everyone in an organization makes decisions, but
decision making is particularly important in a
manager’s job. Decision making is such an
important part of all four managerial functions
that decision making is said to be synonymous
with managing. The complexity of managerial
decision making ranges from routine choices to
highly complicated issues. In Chapter Six, students
learn about the decision-making process and study
models and guidelines for making effective
programmed and nonprogrammed decisions.
The opening situation in “A Manager’s Dilemma”
tells of Renee Lum’s challenge as a customer
service manager at American Savings Bank in
Hawaii. The bank has received very few customer
comments on the installation of an interactive
voice response system designed to facilitate
customers’ use of its services. Students are asked
to put themselves in Lum’s position and decide
how they would evaluate the effectiveness of the
new system. What decision criteria would they
use? How would they evaluate the effectiveness
of their decision? Can they foresee a situation in
which they might have to retrace their steps in the
decision-making process and begin again? How
might your students use the decision-making
process in their lives at the present time?
77
A variety of PowerPoint slides, including both original text art and newly created
images, are available for your use in enhancing the presentation of Chapter Six materials
to your students.
ANNOTATED OUTLINE
1.
INTRODUCTION
Every manager should strive to make good decisions because the overall quality
of managerial decisions has a major influence on organizational success or
failure. The concept of decision making is explored in this chapter.
 NOTES
2.
Materials I Plan to Use:
THE DECISION-MAKING PROCESS
A decision is a choice made from two or more alternatives. The decisionmaking process is a set of eight steps that include identifying a problem,
selecting an alternative, and evaluating the decision’s effectiveness. (See
Exhibit 6-1 and PowerPoint slide 6-6 for an illustration of the decision-making
process.)
A.
Step 1: Identifying a problem. A problem is a discrepancy between an
existing and a desired state of affairs. In order to identify a problem, you
as a manager should recognize and understand the three characteristics
of problems:
1.
You must be aware of the problem. Be sure to identify the actual
problem rather than a symptom of the problem.
2.
You must be under pressure to act. A true problem puts pressure
on the manager to take action; a problem without pressure to act
is a problem that can be postponed.
3.
You must have the authority or resources to act. When managers
recognize a problem and are under pressure to take action but do
not have necessary resources, they usually feel that unrealistic
demands are being put upon them.
 NOTES
B.
Materials I Plan to Use:
Step 2: Identifying decision criteria. Decision criteria are criteria that
define what is relevant in a decision.
78
 NOTES
C.
 NOTES
Q&A
Materials I Plan to Use:
Step 3: Allocating weights to the criteria. The criteria identified in
Step 2 of the decision-making process do not have equal importance, so
the decision maker must assign a weight to each of the items in order to
give each item accurate priority in the decision. Exhibit 6-2 and
PowerPoint slide 6-9 list the criteria and weights for Joan’s franchise
purchase decision.
Materials I Plan to Use:
6.1 How do decision makers know what weight to assign to the decision criteria?
D.
 NOTES
Step 4: Developing alternatives. The decision maker must now identify
viable alternatives that could resolve the problem.
Materials I Plan to Use:
Practical Interactive Skills Modules
PRISM #12
Have students go to the Web and explore PRISM #12, which
deals with setting goals and creative problem solving.
E.
 NOTES
Step 5: Analyzing alternatives. Each of the alternatives must now be
critically analyzed by evaluating it against the criteria established in
Steps 2 and 3. Exhibit 6-3 and PowerPoint slide 6-11 show the values
that Joan assigned to each of her eight alternatives for a franchise
opportunity. Exhibit 6-4 and PowerPoint slide 6-13, showing
evaluation of her alternatives, reflect the weighting for each alternative,
as illustrated in Exhibits 6-2 and 6-3.
Materials I Plan to Use:
79
F.
Step 6: Selecting an alternative. This step to select the best alternative
from among those identified and assessed is critical. If criteria weights
have been used, the decision maker simply selects the alternative that
received the highest score in Step 5.
 NOTES
G.
 NOTES
Q&A
Materials I Plan to Use:
Step 7: Implementing the alternative. The selected alternative must be
implemented by effectively communicating the decision to the
individuals who will be affected by it and winning their commitment to
the decision.
Materials I Plan to Use:
6.2 What role, if any, do you think politics plays in organizational decision making?
Passport
Passport Part 3 Scenario 1
Have your students complete Passport Part 3 Scenario 1 involving decisionmaking processes.
H.
 NOTES
Q&A
3.
Step 8: Evaluating decision effectiveness. This last step in the decisionmaking process assesses the result of the decision to determine whether
or not the problem has been resolved.
Materials I Plan to Use:
6.3 What if the problem isn’t solved by my decision? Did I make a bad decision?
THE MANAGER AS DECISION MAKER
At this point in the study of Chapter Six, students will learn about the manager
as a decision maker and how decisions are actually made in organizations. In this
section, students examine how decisions are made, the types of problems and
decisions faced by real-life managers, the conditions under which managers
make decisions, and decision-making styles.
80
 NOTES
A.
 NOTES
Materials I Plan to Use:
Managers can make decisions on the basis of rationality, bounded
rationality, or intuition.
1.
Rational decision making. Managerial decision making is
assumed to be rational—that is, making choices that are
consistent and value-maximizing within specified constraints. If
a manager could be perfectly rational, he/she would be
completely logical and objective. The assumptions of rationality
are summarized in Exhibit 6-6 and PowerPoint slide 6-17.
a.
Rational decision making assumes that the manager is
making decisions in the best interests of the
organization, not in his/her own interests.
b.
The assumptions of rationality can be met if the
manager is faced with a simple problem in which (1)
goals are clear and alternatives limited, (2) time
pressures are minimal and the cost of finding and
evaluating alternatives is low, (3) the organizational
culture supports innovation and risk taking, and (4)
outcomes are concrete and measurable.
Materials I Plan to Use:
2.
Q&A
Bounded rationality. In spite of these limits to perfect
rationality, managers are expected to “appear” rational as they
make decisions. Because the perfectly rational model of decision
making isn’t realistic, managers tend to operate under
assumptions of bounded rationality, which is decision-making
behavior that is rational, but limited (bounded) by an
individual’s ability to process information.
a.
Under bounded rationality, managers make satisficing
decisions, in which they accept solutions that are “good
enough.”
6.4 Satisficing seems like settling for second best. Is that true?
b.
Managers’ decision making may be strongly influenced
by the organization’s culture, internal politics, power
considerations, and by a phenomenon called escalation
of commitment—an increased commitment to a
previous decision despite evidence that it may have been
wrong.
81
 NOTES
Q&A
Materials I Plan to Use:
6.5 Do most high school seniors maximize or satisfice in making their choice of what
college to attend?
3.
 NOTES
Q&A
Materials I Plan to Use:
6.4 What, if anything, is wrong in using intuition in making decisions?
B.
Q&A
Intuitive decision making. Managers also regularly use their
intuition. Intuitive decision making is a subconscious process of
making decisions on the basis of experience and accumulated
judgment. Exhibit 6-7 and PowerPoint slide 6-20 describe the
five different aspects of intuition.
a.
Making decisions on the basis of gut feeling doesn’t
necessarily happen independently of rational analysis;
the two complement each other.
b.
Although intuitive decision making will not replace the
rational decision-making process, it does play an
important role in managerial decision making.
Types of Problems and Decisions
Managers encounter different types of problems and use different types
of decisions to resolve them.
1.
Structured problems are straightforward, familiar, and easily
defined. In dealing with structured problems, a manager may use
a programmed decision, which is a repetitive decision that can
be handled by a routine approach. Managers rely on three types
of programmed decisions:
a.
A procedure is a series of interrelated sequential steps
that can be used to respond to a structured problem.
b.
A rule is an explicit statement that tells managers what
they can or cannot do.
c.
A policy is a guideline for making decisions.
6.7 Policies seem kind of wishy-washy. What purpose do they serve?
82
2.
3.
 NOTES
Q&A
?
Unstructured problems are problems that are new or unusual
and for which information is ambiguous or incomplete. These
problems are best handled by a nonprogrammed decision that
is a unique decision that requires a custom-made solution.
Exhibit 6-8 and PowerPoint slide 6-25 describe differences
between programmed versus nonprogrammed decisions.
a.
At higher levels in the organizational hierarchy,
managers deal more often with difficult, unstructured
problems and make nonprogrammed decisions in
attempting to resolve these problems and challenges.
b.
Lower-level managers handle routine decisions
themselves, using programmed decisions. They let
upper-level managers handle unusual or difficult
decisions.
Materials I Plan to Use:
6.8 How do experience and creativity interact in the decision-making process?
Thinking Critically About Ethics
Hiring a Friend?
This critical thinking exercise describes a situation sometimes encountered in organizations when a
hiring decision must be made. This decision-making situation can be difficult because it involves a
friend. How will your students view the rationality of this decision, given that it now involves a
personal variable? Will it make a difference? Should it make a difference?
Have students defend their “decisions” by applying the decision-making rules discussed in this
chapter.
C.
Decision-Making Conditions
1.
Certainty is a situation in which a manager can make accurate
decisions because all outcomes are known. Few managerial
decisions are made under the condition of certainty.
2.
More common is the situation of risk, in which the decision
maker is able to estimate the likelihood of certain outcomes.
Exhibit 6-9 shows an example of how a manager might make
decisions using “expected value,” considering the conditions of
risk.
83
?
Managing Your Career
Taking Risks
How will you approach your various career moves over the course of your lifetime? Will you want
to do what you’ve always done? Will you be willing to take chances? How comfortable will you be
about taking chances?
Responsible risk taking can make outcomes more predictable. One decision-making technique
involves making a list of the pros and the cons for each of the decision alternatives. These lists are
then compared to determine whether a clear choice is apparent. Considering and answering the
following questions may help in making decisions under the condition of risk:








Have you thoroughly evaluated the risk?
Before committing to a career risk, consider what you could lose or who might be hurt.
How important are those things or those people to you?
Can you reach your goal in another way, making the risk unnecessary?
Find out everything you can about what taking this career risk involves—the timing, the
people involved, the changes it will entail, and the potential gains and losses both in the short
run and the long run.
Are you afraid?
Are you ready to act now?
Will you know if you have risked more than you can afford to lose?
3.
 NOTES
Uncertainty is a situation in which the decision maker is not
certain and cannot even make reasonable probability estimates
concerning outcomes of alternatives.
a.
The choice of alternative is influenced by the limited
amount of information available to the decision maker.
b.
It’s also influenced by the psychological orientation of
the decision maker.
1)
An optimistic manager will follow a maximax
choice, maximizing the maximum possible
payoff. (See Exhibit 6-10 and PowerPoint
slide 6-28.)
2)
A pessimistic manager will pursue a maximin
choice, maximizing the minimum possible
payoff. (See Exhibit 6-10 and PowerPoint
slide 6-28.)
3)
The manager who desires to minimize the
maximum regret will opt for a minimax choice.
(See Exhibit 6-11 and PowerPoint slide 6-30.)
Materials I Plan to Use:
84
?
Managing IT
Making Better Decisions with IT
We know that many students in today’s college classrooms have already gained experience
in the business world and are employed part time, and even full time, while pursuing their
degree. In this activity, ask students to use their experience in the real world of business
to discuss how they have observed and used IT at work.
As students share this information, ask them to consider how IT is used in their workplace
to help their managers make better decisions. Your students should enjoy and learn from
hearing their classmates’ insight into the value of IT in decision making in a variety of work
environments.
You might expand the discussion by asking students to relate ways in which IT is helping
them to make better decisions in their daily lives.
D.
Decision-Making Styles
Managers have different styles in making decisions and solving
problems. One perspective proposes that people differ along two
dimensions in the way they approach decision making.
1.
One dimension is an individual’s way of thinking—rational or
intuitive. The other is the individual’s tolerance for ambiguity—
low or high.
2.
Diagramming these two dimensions lead to a matrix showing
four different decision-making styles. (See Exhibit 6-12 and
PowerPoint slide 6-33.)
a.
The directive style is characterized by low tolerance for
ambiguity and a rational way of thinking.
b.
The analytic style is one characterized by a high
tolerance for ambiguity and a rational way of thinking.
c.
The conceptual style is characterized by a high
tolerance for ambiguity and an intuitive way of thinking.
d.
The behavioral style is characterized by a low tolerance
for ambiguity and an intuitive way of thinking.
Self-Assessment Library
Exercise in Handling Ambiguity
Managers often face ambiguous challenges and situations in the decision-making
process. To better understand your tolerance in managing ambiguous information,
complete Self-Assessment #I.A41 “How Well Do I Handle Ambiguity?” You may want
to reflect on the following questions:



What did you find out about yourself in doing this exercise? Did anything
surprise you about your assessment?
How can you use this information in helping you refine your decision-making
skills?
How do you think this information could help you as a manager?
85
3. In reality, most managers have both a dominant style and alternate
styles, with some managers relying almost exclusively on their
dominant style and others being more flexible, depending on the
particular situation.
 NOTES
Q&A
Materials I Plan to Use:
6.9 If a person’s decision-making style is relatively fixed, how can organizations get
managers to make decisions that are compatible with its culture?
Self-Assessment Library
Q&A
Exercise in Decision-Making Styles
6.10 Is there a best style of decision making?
Managers develop various decision-making styles to use in addition to their intuition,
creativity, and logic in the decision-making process. To better understand your decisionmaking styles, complete Self-Assessment #I.D.1 “What’s My Decision-Making Style?”
You may want to reflect on the following questions:



What did you find out about yourself in doing this exercise? Did anything
surprise you about your assessment?
How can you use this information in helping you refine your decision-making
skills?
How do you think this information could help you as a manager?
?
Managing Workforce Diversity
The Value of Diversity in
Decision Making
Making good decisions can be tough! One important suggestion for making better decisions
is to tap into the diversity of the work group. Diverse employees can provide fresh
perspectives on issues, offer differing interpretations on how a problem can be defined, be
more open to trying new ideas, be more creative in generating alternatives, and be more
flexible in resolving issues.
Even though diversity in decision making can be valuable, drawbacks exist. Some
drawbacks may include a lack of common perspective, which requires more time required
to discuss issues; communication challenges (particularly if language barriers are present);
and additional complexity, confusion, and ambiguity as a result of diverse opinions.
Ask your students about an important decision such as deciding on a major. Did they ask
others for their opinions? Did they seek out advice from a variety of people? As future
managers in the business world, your students should consider the value added through
diversity in decision making.
86
E.
 NOTES
Decision-Making Biases and Errors
Managers use different styles and “rules of thumb” (heuristics) to
simply their decision making.
1.
Overconfidence bias occurs when decision makers tend to think
that they know more than they do or hold unrealistically positive
views of themselves and their performance.
2.
Immediate gratification bias describes decision makers who tend
to want immediate rewards and avoid immediate costs.
3.
The anchoring effect describes when decision makers fixate on
initial information as a starting point and then, once set, fail to
adequately adjust for subsequent information.
4.
Selective perception bias occurs when decision makers
selectively organize and interpret events based on their biased
perceptions.
5.
Confirmation bias occurs when decision makers seek out
information that reaffirms their past choices and discount
information that contradicts their past judgments.
6.
Framing bias occurs when decision makers select and highlight
certain aspects of a situation while excluding others.
7.
Availability bias is seen when decision makers tend to remember
events that are the most recent and vivid in their memory.
8.
Decision makers who show representation bias assess the
likelihood of an event based on how closely it resembles other
events or sets of events.
9.
Randomness bias describes the effect when decision makers try
to create meaning out of random events.
10.
The sunk costs error is when a decision maker forgets that
current choices cannot correct the past. Instead of ignoring sunk
costs, the decision maker cannot forget them. In assessing
choices, the individual fixates on past expenditures rather than
on future consequences.
11.
Self-serving bias is exhibited by decision makers who are quick
to take credit for their successes and blame failure on outside
factors.
12.
Hindsight bias is the tendency for decision makers to falsely
believe, once the outcome is known, that they would have
accurately predicted the outcome.
Materials I Plan to Use:
87
F.
 NOTES
4.
Summing Up Managerial Decision Making
1.
Exhibit 6-14 and PowerPoint slide 6-39 provide an overview of
managerial decision making. Managers want to make good
decisions because doing so is in their best interests.
2.
Regardless of the decision, it has been shaped by a number of
factors, which have been discussed in Chapter Six.
Materials I Plan to Use:
DECISION MAKING FOR TODAY’S WORLD
Today’s business world revolves around making decisions, which are often risky
ones made with incomplete or inadequate information and under intense time
pressure. How can managers make effective decisions under these conditions?
A.
Understand cultural differences.
B.
Know when it is time to call it quits.
C.
Use an effective decision-making process.
D.
Build highly reliable organizations (HROs) that practice five habits:
1.
Do not be tricked by your own success.
2.
Defer to the experts on the front lines.
3.
Let unexpected circumstances provide the solution.
4.
Embrace complexity.
5.
Anticipate, but also recognize the limits to your ability to
anticipate.
Self-Assessment Library
Responding to Turbulent Change
Often, managers must make decisions under conditions of turbulent change. To better
understand your ability to make decisions in times of rapid change, complete SelfAssessment #III.C.1 “How Well Do I Respond to Turbulent Change?” You may want to
reflect on the following questions:



What did you find out about yourself in doing this exercise? Did anything
surprise you about your assessment?
How can you use this information in helping you refine your decision-making
skills?
How do you think this information could help you as a manager?
88
Focus on Leadership
?
Cultural Differences in Leaders’
Decision-Making Styles
To strengthen your students’ appreciation for the importance of learning about diverse
national cultures in preparation for leadership roles in business, access the following Web
sites in class and have students take the culture quizzes on these sites, noting the number
of questions that address leadership issues.



http://leadershipcrossroads.com/rs_quiz.htm
http://www.branchor.com/culturequiz.htm
http://channel.nationalgeographic.com/channel/worldsapart/
After completing the quizzes, ask students to discuss the following questions in small
groups of two or three students:
 What aspects of these quizzes surprised you?
 What implications does this exercise have for you (a) at the present time and
(b) in your business leadership role in the future?
 What kinds of resources have you already discovered through the study of this
chapter that will help you learn more about diverse cultures?
Answers to Thinking About Management Issues
1.
Why is decision making often described as the essence of the manager’s job?
As shown in Exhibit 6.5, decisions are made throughout the performance of all
four functions of management. Almost anything a manager does in terms of
planning, organizing, leading, and controlling involves decision making. The
pervasiveness of decision making in management explains why managers are
often called decision makers.
2.
How might an organization’s culture influence the way in which managers make
decisions?
An organization’s culture might influence how managers make decisions by
indicating how much risk taking is permitted and how much importance is placed
on the effectiveness of the decisions made. For example, if an organizational
culture rewards decisions that reinforce the status quo, these types of decisions
will likely be made.
3.
All of us bring biases to the decisions we make. What types of biases might a
manager have? What would be the drawbacks of having biases? Could there
be any advantages to having biases? Explain. What are the implications for
managerial decision making?
Students should be encouraged to identify biases that they have encountered or
feel that they themselves might have. Examples could include the halo/horn
effect, cultural biases, and age biases. The drawback of biases is their limiting
effect on behavior. However, when managers are aware of potential biases, they
can use their awareness to an advantage. They can better recognize biases held
by others and respond more effectively as a result of their knowledge. Managers
89
should be aware that biases can “cloud” a decision maker’s identification or
evaluation of alternatives, which ultimately affect the final decision.
4.
Would you call yourself a systematic or intuitive thinker? What are the decisionmaking implications of these labels? What are the implications for choosing an
employer?
Student responses to these questions will vary. A systematic thinker is one who
is more logical and rational in searching for and processing information. An
intuitive thinker relies more on instincts and past experiences in searching for
and processing information. The decision-making implication of this label is that
it describes the way we think or process information and in turn, influences how
we tend to make decisions. Organizations need both systematic and intuitive
thinkers. Each of these styles provides a different perspective.
5.
“As managers use computer and software tools more often, they’ll be able to
make more rational decisions.” Do you agree or disagree with that statement?
Why?
Although computer and software tools allow managers to gather information and
analyze it more efficiently, utilizing computers does not necessarily allow
managers to be more rational. Looking at the assumptions of rationality (see
Exhibit 6.6), it is apparent that adding computers to the decision-making process
does not guarantee perfectly rational decision making by managers.
6.
How can managers blend the guidelines for making effective decisions in
today’s world with the rationality and bounded rationality models of decision
making, or can they? Explain.
A balance is required. Under today’s business conditions (such as intense time
pressure and higher degrees of risk and uncertainty), managers must practice
sound decision-making approaches. Knowing when it’s time to quit, for
example, is not inconsistent with rationality and bounded rationality.
7.
Is there a difference between wrong decisions and bad decisions? Why do
good managers sometimes make wrong decisions? Bad decisions? How can
managers improve their decision-making skills?
Time pressures, incomplete information, and higher levels of uncertainty in
today’s business environment may lead to ineffective decision making.
Managers can improve their decision-making skills by focusing on six
characteristics of effective decision-making, including focusing on important
criteria, logic and consistency; blending subjective and objective thinking with
analysis; requiring the information necessary to resolve a particular dilemma;
gathering relevant and informed opinions; and remaining flexible.
WORKING TOGETHER—Team-Based Exercise
In this team-based activity, small groups of students are to discuss previous decisionmaking experiences. They should discuss whether they feel they made good/bad
decisions and what happened during the decision-making process that contributed to the
90
quality of the decision. The group should develop a list of practical suggestions for
making good decisions.
In preparation for this exercise, you might initiate a class discussion centered on a
particular decision-making situation. Ask the class if anyone is considering making a
large purchase, such as a car, stereo, computer, or house. Students can help this
individual make the decision by offering suggestions following the eight steps of the
decision-making process for making a “good decision.” Compiling a variety of decision
criteria for a car purchase, for instance, and weighting each criterion can create interest
and provide insight for students. Although one student may think that having heated car
seats is a must, others may totally disregard this criterion. This class activity should help
students to become more comfortable and skillful in using the decision-making process.
Answers to Case Application Questions
Fast Company
1.
How do you think good decision making has contributed to the success of
NASCAR?
The decisions made by the management of NASCAR have been carefully
considered since the founding of the company in 1948 by “Big Bill” France Sr.
His grandson Brian carries on the legacy today as chairman and CEO of
NASCAR. As the company’s top manager, Brian France uses the steps in the
decision-making process to adapt to a changing environment while preserving
strengths that have contributed to the phenomenal growth and success of
NASCAR.
In identifying problems, for example, Brian gathers information from a variety of
sources and secures the resources necessary for taking action. Since NASCAR
remains a privately held company, the number of its stockholders is much
smaller than would be the case if it were a publicly held firm, but Brian is still
clearly mindful of the interests of all of the stakeholders of the company when he
contemplates alternatives to use in making corporate decisions.
2.
A decision to go after a new market as Brian is doing is a major decision. How
could he have used the decision-making process to help make this decision?
It is clear that Brian is using the eight-step decision-making process in reaching
the decision to expand his target market. He faces a two-fold problem: holding
the loyalty of the company’s current fans and, at the same time, building a more
diverse customer base. After identifying the company’s problem, Brian must
apply decision criteria that are consistent with the company’s philosophy and
goals. Once the decision alternative has been selected and implemented, it must
be followed through and monitored through customer feedback. Much of
NASCAR’s historical success can be attributed to management’s responsiveness
to its loyal customers, and one can expect that the company’s leadership will
actively seek this customer feedback for its decisions now and in the future.
91
3.
What criteria do you think would be most important to Brian as he makes
decisions about the company’s future?
These criteria would include maintaining the viability of the firm; retaining the
brand loyalty of NASCAR devotees; ensuring responsible corporate behavior,
including car and driver safety; maintaining high quality products and services;
and remaining true to the company’s philosophy of origin.
4.
Would you characterize the conditions surrounding NASCAR as conditions of
certainty, risk, or uncertainty? Explain your choice.
Elements of all three conditions can be found. Conditions of certainty exist in
the importance of adapting to changing times and changing demographics and
being a socially responsible company. The element of risk can be seen as Brian
considers changes that threaten to erode his customer base and the support of
NASCAR’s sponsors and advertisers, while attracting new markets. The
NASCAR organization must make decisions under the condition of uncertainty
when it considers factors in the external environment of the future over which it
has little control, including the national economy, government regulations, and
competing entertainment industries.
5.
What could Brian learn from the concept of highly reliable organizations to
help him be a better decision maker?
Brian is learning several important concepts associated with HROs. As he
prepares the NASCAR organization to adapt to changing times, he is leading
proactively and is not being “tricked by . . . success.” He remains alert to
potential problems and acts quickly and early to prevent them. He recognizes and
studies the complexity of the changing business environment in which his
company operates and is open to consideration of a variety of alternatives.
NASCAR’s leadership anticipates, but also anticipates its limits, as top
management thinks by acting and uses decisiveness after careful consideration of
the steps in the decision-making process.
ADDITIONAL CHAPTER INFORMATION
You may want to provide additional challenges for your students by asking them to
research a recent business situation in the news. Why do they think some of the decisions
were made? Which decision-making styles appear to have been used by management in
this situation?
92