PART THREE

C H A P T E R

Decision Making:
The Essence of the
Managers Job
Lecture Outline

77

S I X

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 Todays World

Everyone

in an organization makes
decisions, but decision making is
particularly important in a managers
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 decisionmaking process and study models and
guidelines
for
making
effective
programmed
and
nonprogrammed
decisions.
The opening situation in A Managers
Dilemma
tells
of
Renee
Lums
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 Lums 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 decisionmaking process and begin again? How
might your students use the decisionmaking process in their lives at the
present time?

78

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
decision-making process is a set of eight steps that include
identifying a problem, selecting an alternative, and evaluating
the decisions 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.
79

 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
Joans 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.

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
80

weighting for each alternative, as illustrated in Exhibits

6-2 and 6-3.
NOTES

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:

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
decision-making processes.

H.

NOTES

Step 8: Evaluating decision effectiveness. This last step

in the decision-making process assesses the result of the
decision to determine whether or not the problem has
been resolved.
Materials I Plan to Use:

81

Q&A

6.3 What if the problem isnt solved by my decision? Did I make a bad
decision?

3.

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.
NOTES
Materials I Plan to Use:

A.

NOTES

Managers can make decisions on the basis of rationality,

bounded rationality, or intuition.
1.
Rational decision making. Managerial decision
making is assumed to be rationalthat 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:

82

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
isnt realistic, managers tend to operate under
assumptions of bounded rationality, which is
decision-making behavior that is rational, but
limited (bounded) by an individuals 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.

NOTES

Q&A

Managers decision making may be strongly

influenced by the organizations culture,
internal politics, power considerations, and
by a phenomenon called escalation of
commitmentan increased commitment to
a previous decision despite evidence that it
may have been wrong.
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

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
doesnt 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.

Materials I Plan to Use:

83

Q&A

6.4 What, if anything, is wrong in using intuition in making decisions?

B.

Q&A

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?

2.

3.

NOTES

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:

84

Q&A

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.

Managing Your Career

Taking Risks

85

How will you approach your various career moves over the course of your lifetime?
Will you want to do what youve 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:
n
n
n
n
n

n
n
n

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 involvesthe
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.
Its 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:

86

Managing IT

Making Better Decisions

with IT

We know that many students in todays 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 individuals way of thinking
rational or intuitive. The other is the individuals
tolerance for ambiguitylow 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
87

How Well Do I Handle Ambiguity? You may want to reflect on the

following questions:
n
n
n

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?

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 persons 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
Styles

in

Decision-Making

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 decision-making styles, complete SelfAssessment #I.D.1 Whats My Decision-Making Style? You may want
to reflect on the following questions:
n
n
n

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?

Workforce
?Managing
Diversity

The Value of Diversity

in Decision Making

88

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.

E.

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.
89

9.
10.

11.
12.

NOTES

F.

NOTES

4.

Randomness bias describes the effect when

decision makers try to create meaning out of
random events.
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.
Self-serving bias is exhibited by decision makers
who are quick to take credit for their successes and
blame failure on outside factors.
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:

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 TODAYS WORLD

Todays 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.
90

C.
D.

Use an effective decision-making process.

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
Change

to

Turbulent

Often, managers must make decisions under conditions of turbulent

change. To better understand your ability to make decisions in times of
rapid change, complete Self-Assessment #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?

n
n
n

Focus on Leadership

Cultural Differences in
Leaders Decision-Making
Styles

91

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
What
time and
What
study of
cultures?

aspects of these quizzes surprised you?

implications does this exercise have for you (a) at the present
(b) in your business leadership role in the future?
kinds of resources have you already discovered through the
this chapter that will help you learn more about diverse

Answers to Thinking About Management

Issues

1.

Why is decision making often described as the essence of the

managers 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 organizations culture influence the way in which

managers make decisions?
An organizations 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
92

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 should be
aware that biases can cloud a decision makers identification
or evaluation of alternatives, which ultimately affect the final
decision.
4.

Would you call yourself a systematic or intuitive thinker? What

are the decision-making 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,

theyll 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 todays world with the rationality and bounded
rationality models of decision making, or can they? Explain.
A balance is required. Under todays business conditions (such
as intense time pressure and higher degrees of risk and
uncertainty), managers must practice sound decision-making
approaches. Knowing when its 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 todays business environment may lead to
ineffective decision making.
Managers can improve their
93

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
Exercise

TOGETHERTeam-Based

In this team-based activity, small groups of students are to discuss

previous decision-making experiences. They should discuss whether
they feel they made good/bad decisions and what happened during the
decision-making process that contributed to the 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 companys 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
94

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
companys current fans and, at the same time, building a more
diverse customer base.
After identifying the companys
problem, Brian must apply decision criteria that are consistent
with the companys philosophy and goals. Once the decision
alternative has been selected and implemented, it must be
followed through and monitored through customer feedback.
Much of NASCARs historical success can be attributed to
managements responsiveness to its loyal customers, and one
can expect that the companys leadership will actively seek this
customer feedback for its decisions now and in the future.

3.

What criteria do you think would be most important to Brian as

he makes decisions about the companys 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 companys 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 NASCARs 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?
95

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. NASCARs 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 decisionmaking styles appear to have been used by management in this
situation?

96