PR 662 Lecture Notes - Lecture 76: Bounded Rationality, Satisficing

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23 Oct 2020

School

Ball State University

Department

Public Relations

Course

PR 662

Professor

Dr. Lee

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Document Summary

Optimum decision: the most appropriate decision in light of what managers believe to be the most desirable consequences for their organization. Optimum decision: the most appropriate decision in light of what managers believe to be the most desirable future consequences for their organization. List all the alternative courses of action possible and the consequences of the different alternatives: assumes all information about alternatives is available to managers. Rank each alternative from least preferred to most preferred according to personal preferences: assumes managers possess the mental facility to process this information. Select the alternative that leads to desired future consequences: assumes managers know what future course of action is best for the organization. Administrative model: an approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions. Bounded rationality: cognitive limitations that constrain one"s ability to interpret, process, and act on information.

Related Questions

The year is 2020. Youjust got your dream job as a stock broker on Wall Street. They gaveyou a nice signing bonus and you are making a lot of money. Youalso have the opportunity to make a large year-end bonus if youmeet your sales quota. But your Boss has a reputation for firingnew employees that donât reach those sales goals. Timing could nothave been better because your student loans are thru the roof andyour parents were just threatening to kick you out of the basement.You buy yourself a couple new suits, rent your apartment inManhattan and show up 30 minutes early to work ready to start yourcareer.

Your Boss, Mr. Moneybags, has you start cold calling people to get them to buy stock inTEXLA corporation. He says that TEXLA is a great new company thatis working on a new drug that might cure cancer. He failed to tellyou that the President of Texla is his brother-in-law. You startmaking sales calls and find out that the easiest people to convinceto buy the stock are senior citizens.

The first year youmake reach your sales quota and receive a 1 Million Dollars bonuswhich you immediately invest in TEXLA stock because it has beendoing so well. You also invested all of your parentâs retirementsavings in TEXLA. Later that year you accidentlyreceive an email that was addressed to Mr. Moneybags from hisbrother-in-law the President of TEXLA which informed him that thetesting shows their new drug actually makes cancer worse. You arethe only one who has this information and know that once thisinformation hits the internet the value of the stock will drop toZERO but no one will ever find out that you have this insideinformation. You also remembered from your awesome business lawclass that it is illegal to use âInside Informationâ to benefityourself or your clients.

Your Boss will losehis investment, you will lose your investment, your parentâsretirement savings will be lost along with all of those seniorcitizens that listened to your advice.

You only have an hourbefore the news will hit the press which means you canât calleveryone. What do you do?????

Identify theethical dilemma(s) in this situation.

REQUIREMENT

Use an ethical decision making model to determine theright course of action to take in thissituation.Use the Business Process Pragmatism as aguide for your answer.

BusinessProcess Pragmatism is :

Step 1
Inquiry

First, the decision maker must understand the problem. This stepinvolves identifying the parties involved (the stakeholders) andcollecting the relevant facts. Once the ethical problem or problemsare clarified, the decision maker lists any relevant legal andethical principles that will guide the decision.
Step 2
Discussion

In this step, the decision maker lists possible actions. Theultimate goals for the decision are determined, and each option isevaluated using the laws and ethical principles listed in Step1.
Step 3
Decision

In this step, those participating in the decision making worktogether to craft a consensus decision or consensus plan of actionfor the corporation.
Step 4
Justification

In this step, the decision maker articulates the reasons for theproposed action or series of actions. Generally, these reasonsshould come from the analysis done in Step 3.

The following case further demonstrates the types of situationsthat can occur when management demonstrates a lack of concern aboutethics.

5. Evaluation

This final step occursonce the decision has been made and implemented. The solutionshould be analyzed to determine if it was effective. The results ofthis evaluation may be used in making future decision

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ETHICAL DILEMMA

The management of the Auto Parts Division of the SantanaCorporation receives a bonus if the division's income achieves aspecific target. For 2013 the target will be achieved by a widemargin. Mary Beth Williams, the controller of the division, hasbeen asked by Philip Stanton, the head of the division's managementteam, to try to reduce this year's income and "bank" some of theprofits for future years. Mary Beth suggests that the division'sbad debt expense as a percentage of net credit sales for 2013 beincreased from 3% to 5%. She believes that 3% is the more accurateestimate but knows that both the corporation's internal auditors aswell as the external auditors allow some flexibility when estimatesare involved.

Presented below is a sequence of steps that provide a frameworkfor analyzing ethical issues. These steps can help you apply yourown sense of right and wrong to ethical dilemmas.

Step 1: Determine the facts of the situation. This involvesdetermining the who, what, where, when, and how.

Step 2: Identify the ethical issue and the stakeholders.Stakeholders may include shareholders, creditors, management,employees, and the community.

Step 3: Identify the values related to the situation. Forexample, in some situations confidentiality may be an importantvalue that may conflict with the right to know.

Step 4: Specify the alternative courses of action.

Step 5: Evaluate the courses of action specified in step 4 interms of their consistency with the values identified in step 3.This step may or may not lead to a suggested course of action.

Step 6: Identify the consequences of each possible course ofaction. If step 5 does not provide a course of action, assess theconsequences of each possible course of action for all of thestakeholders involved.

Step 7: Make your decision and take any indicated action.

note: Working managers may complete this exercise based on the practices of their own organizations. Students may complete this exercise based on the practices of a current or previous employer. Instructions 1. Select and describe the boundaries of the system of interest; the term âorganizationâ will be used to refer to this selected system. You may select a team, a department, a small organization (e.g., an office practice), or an entire organization. 2. To familiarize yourself with the criteria, review the section called âCategory and Item Descriptionsâ in the Baldrige Criteria for Performance Excellence available from: www.nist.gov/baldrige/ publications/hc_criteria.cfm 3. The Organizational Assessment Worksheet provides a general description of the criteria category followed by selected questions from the respective 2011â2012 Health Care Criteria for Performance Excellence category. 4. Based on the system selected in question 1, write a brief reply to the selected questions. Briefly describe your organization, including its services; size; geographic community; key patient or customer groups; and current facilities, equipment, and technology, as well as the number of patients or clients it serves. Briefly describe your organizationâs key challenges and your organizationâs current performance improvement system. How do senior leaders deploy your organizationâs vision and values through your leadership system, to the workforce, to key suppliers and partners, and to patients and stakeholders as appropriate? How do senior leaders encourage frank two-way communication throughout the organization? How does your organization conduct strategic planning? Summarize your organizationâs action plans, how they are deployed, and key action plan performance measures or indicators. How do you identify patient, stakeholder, and market requirements for service offerings? How do you build and manage relationships with patients and stakeholders to meet their requirements and exceed their expectations at each stage of their relationship with you? What are your key organizational performance measures? How do you use these data and information to support organizational decision making and innovation? How do you assess your workforce capability and capacity needs, including skills, competencies, and staffing levels? How do you address workplace environmental factors to ensure and improve workplace health, safety, and security? How do you design and innovate your work processes to meet all the key requirements? How do you improve your work processes to improve healthcare outcomes, to achieve better performance, to reduce variability, and to improve healthcare services? Provide data for one key measure or indicator of healthcare outcomes that is important to your patients and stakeholders. Provide data for one key measure or indicator of patient or stakeholder satisfaction. Provide data for one key measure or indicator of financial performance. Provide data for one key measure or indicator related to operational performance. Provide data for one key measure related to achieving legal, regulatory, and accreditation requirements. Prioritizing Improvement Opportunities 1. Review the responses to the organizational assessment questions. 2. Note any questions for which you could not provide a response (i.e., the organization does not have a defined process or approach to address the topic of the question). 3. Review the organizational performance results data. 4. Select one or more measures that demonstrate less than desirable results. 5. Select one item from question 2 or 4 as the performance gap for the performance improvement exercise .

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PR 662 Lecture Notes - Lecture 76: Bounded Rationality, Satisficing

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