Management 310A Exam 2 Study Guide Chapters 6 7 8 9 10 Highlighted Text Suggested to be on the Exam CHAPTER 6 Perception and Decision Making Perception a process by which individuals organize interpret their sensory impressions in order to give meaning to their environment Distinctiveness whether an individual displays different behaviors in different situations Attribution Theory a theory that tries to explain the ways in which we judge people differently based on the meaning we attribute to a given behavior When behavior is observed it is determined to be either externally or internally caused which is based on the factors of distinctiveness consensus and consistency Internally individual caused behaviors are under the personal control of the individual specified for example laziness 1 2 Externally environmental caused behaviors are typically the result of the situation for example a traffic accident that slowed traffic work late 3 Distinctiveness is the measure of whether an individual behaves differently in specific situations Is this unusual If so it s probably external If not it s probably internal 4 Consensus is whether or not everyone in a similar situation behaves the same way Was everyone that took this route to 5 Consistency is how an individual responds to things over time Is this person late every day or is it the first time in a few months The more consistent the more internal 6 Fundamental Attribution Error The tendency to underestimate the influence of external factors and overestimate the importance of internal factors when judging behavior a We tend to blame the person not the situation b For example when poor sales are attributed to the laziness of the employees as opposed to a competitive product line 7 Self Serving Bias the individual tendency to attribute successes to internal factors while deferring failures to external factors for example Doing well on tests due to studying hard but Failing tests due to the difficulty of the exam Halo Effect drawing a general impression about an individual based on a specific characteristic For example being unable to come up with positive attributes of an opposing political party or the image that comes to mind of somebody intelligent skillful practical industrious determined and warm as opposed to someone intelligent skillful practical industrious determined and cold Contrast Effect Evaluation of a person s characteristics that are affected by comparisons with other people recently who rank higher or lower on the same characteristics For example an interviewer might find your interview more impressive right after a poor interview but less impressive if the previous interview was stellar Stereotyping Judging someone on the basis of one s perception of the group to which that person belongs for example assuming an Asian person is a good student or assuming a person in Greek life is an alcoholic Projection the tendency for us to project our own characteristics onto others for example assuming an introvert is motivated by social attention because you are extroverted 6 Steps in the Rational Decision Making Model a decision making model that describes how individuals should behave in order to maximize a desired outcome DIADES 1 Define the problem 2 3 Allocate weights to the criteria which of the previously decided factors is most important Identify the decision criteria what impacts the outcome 4 Develop the alternatives what are my choices 5 Evaluate the alternatives what are the pros and cons of each choice 6 Select the best alternative what is the best choice 6 Types of Bias and Errors 1 Overconfidence Bias believing too strongly in our own ability to make good choices as people tend to overestimate themselves How often are people wrong when they say they are 100 sure Actually only about 70 to 85 2 Anchoring Bias when we allow the first received information to impact our subsequent decisions and judgments for example imagine two employees are laid off The first employee made 100K per year while the second made 50K per year If they are both offered a 75K annual job the second employee will be much happier while the first would be anchored by his previous pay 3 Confirmation Bias the effect of selective perception the tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgments For example we immediately accept political facts that we agree with while skeptical of those that we disagree with 4 Escalation of Commitment increased commitment to a previous commitment in spite of new negative information for example when someone stays in a destructive relationship because they have so much invested in that person 5 Randomness Error the tendency to believe that we can predict the outcome of random events or creating meaning out of 6 Hindsight Bias looking back on a past outcome and believing that you could have accurately predicted that outcome I random events Friday the 13th is unlucky studied enough to get an A on this test Ethical Decision Criteria 1 Utilitarianism Outcome based seeking the greatest good for the greatest number Flaw you could justify something like slavery by saying that a substantial amount of people benefit 2 Rights Based rights we should always respect and protect the basic rights of individuals for example protecting whistle blowers with their right to free speech Flaw someone s rights to due process may cause a CEO to suffer less of a consequence for the same crime as an employee Justice imposing and enforcing rules fairly and impartially Flaw what if a murderer acted to protect his family from a criminal Ignoring the situation 3 Ethical Relativism Ethics are relative depending on culture location and other factor For example bribery is much more commonplace in China CHAPTER 7 Foundations of Planning 3 Levels of Strategic Planning 1 Corporate What business are we in a Growth Strategies i Concentration increase products or services within primary line of business ii Vertical Integration become one s own supplier or distributor iii Horizontal Integration acquisitions mergers iv Diversification add new products services b Retrenchment Strategies i Turnaround major changes in business processes ii Divestiture sell off units or businesses 2 Business How do we compete in each of our major businesses a Strategic Business Units SBUs Organization s single businesses that are independent formulate their own competitive strategy b Competitive Strategy