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Download Strategic Management 6th Edition Hubbard Solutions Manual all chapters
Download Strategic Management 6th Edition Hubbard Solutions Manual all chapters
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Chapter 7: Strategic decision making
Learning Objectives
7.1 Summarise the rational approach to strategic decision making
7.2 Discuss reasons why the rational approach is limited in its practical
application
7.3 Identify alternative conceptual approaches to decision making
7.4 Explain what an effective strategic decision-making process looks like,
including innate risks in such decisions
7.5 Explain how analysing failure can contribute to better strategic decision
making
Chapter Summary
In this chapter we have dealt with the critical issue of how organisations make strategic
decisions between alternative choices. We have outlined a desired, rational, evidence-based
framework for decision making. We have explained the many reasons why there is a gulf
between the theory of desired rational decision making and the politically based decision
making that mostly occurs in practice. We have developed a model for practical, effective
strategic decision making, including assessing for risk. We have considered how reacting to
failure can and should impact decision making by the organisation in the future. What is
important in getting decisions approved is to understand the practice of the organisation’s
decision-making processes and to fit the strategic proposal within that framework. Decision
making, however, often tends to vary from one decision to another, providing hope for any
new proposal, but gloom for those seeking consistent, rational, just and equitable decisions.
Copyright © 2019 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488617348/Hubbard/Strategic
Management 6e
End of chapter questions
Answer:
This is a ‘personal reflection’ question that is suitable for a tutorial discussion, but only if
adequate warning has been given to allow for appropriate preparation. Students should be
required to produce evidence of their experience (unless their answer has to be
hypothetical).
Question 2: Give an example of a decision that you know that departed significantly
from a rational approach?
Answer:
Student answers will vary but should include elements of the rational approach to decision
making that ignores the subjective and emotional side of people who, after all, are the ones
who actually make the decisions or are affected by the decisions made. An example might
be an accountant intentionally took cash out of a bank deposit to spend for a relative’s gift,
since he/she was short a few dollars.
Copyright © 2019 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488617348/Hubbard/Strategic
Management 6e
Question 3: Rationality requires full knowledge, yet this is rarely possessed by key
decision makers. Discuss an example of a decision that seemed rational given the
knowledge at hand, but in hindsight was not.
Answer:
Students answers will vary but should include elements of the rational approach to decision
making that ignores the subjective and emotional side of people who, after all, are the ones
who actually make the decisions or are affected by the decisions made. Taco Bell tried to
move into China. However, the Chinese people do not have an acquired taste for Mexican
food and it is ‘notoriously hard to market in China,’ so the Taco Bell shops in Shanghai and
Shenzhen were shut down in 2008 *. In hindsight, the company should have done more
research about the culinary culture.
*10 Successful American Businesses That Have Failed Overseas (Retrievable at
https://www.internationalbusinessguide.org/10-successful-american-businesses-that-have-failed-overseas/)
Answer:
Students answers will vary, but should mention that people have emotions and values. They
work in an organisational culture that has its own values and ethics, and people are social and
political—they have their own desires, personality, likes and dislikes. All these factors ensure
that one person’s ‘rationality’ is not the same as another person’s. An example of a poor
decision made on emotional issues is when Henry Ford wanted to ensure that he would have
a constant and affordable pipeline of rubber from South America. So, he recreated a suburb
of Detroit row houses in a dense South American forest and called it Fordlandia. Of course,
many things went wrong, including disease, skyrocketing costs, lack of supplies, extreme
weather conditions that were not considered, worker problems, crime, etc.
Answer:
Political decisions are usually decisions made in a climate of conflict with two basic
approaches:
1. Decision making as a power struggle
2. Decision making as a result of coalition formation.
Even though political decisions evolve in an atmosphere of conflict, they can have several
positive aspects for the organisation. One positive way to confront the conflict of political
Copyright © 2019 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488617348/Hubbard/Strategic
Management 6e
strategic decision-making is to build coalitions, since individual power is often necessary to
build a coalition. For example, lobby groups (or coalitions) often influence the government
to change a decision.
Answer:
This is a ‘personal research’ question that is suitable for a tutorial discussion, but only if
adequate warning has been given to allow for appropriate preparation. Students should be
required to demonstrate how their example meets the steps in the process and the criteria
for rational decision making.
Question 7: Using the example in Question 2, show how concepts of decision making in
practice might have influenced the process and outcome.
Answer:
Adequate warning needs to be given to allow for appropriate preparation. Students should
be required to demonstrate how the limitations of rational decision making in practice
Copyright © 2019 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488617348/Hubbard/Strategic
Management 6e
might have influenced the process and the outcome. The factors are divided into three
types of limitations: individual, organisational and political.
Individual limitations
• limited/bounded rationality giving rise to ‘satisficing’
• reality and ambiguity
• problems of interpretation
o framing
o anchoring
o sunk costs or escalating commitments
o perpetuating the status quo
o herding instinct
o representativeness
o cognitive maps or schemas of beliefs, explained by industry recipes
• intuition
• individual emotions and values
• ethics
Organisational limitations
• existing organisation decision-making rules
• groups as decision makers
• the talk trap
Political limitations
• individuals/groups in conflict as decision makers
• external relationships and networks
• the layers of decision making
• where and how decisions are made
competitor actions
Answer:
This is a ‘personal research’ question that is suitable for a tutorial discussion, but only if
adequate warning has been given to allow for appropriate preparation. Students should be
encouraged to draw on their own experiences—for example, a sports club.
In Australia, one of the largest transport and logistics companies was struggling with labour-
intensive, paper-based proof of delivery and quality control processes that were difficult to
change. When the company started using a business rules engine to automate the
processing of 100,000 transactions per day and identify quality control issues based on 60
input variables, the quality control checks were completed faster, customer service
improved, and staff engaged in activities that added value to the business.
Copyright © 2019 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488617348/Hubbard/Strategic
Management 6e
Question 9: Give an example of: a) framing, b) anchoring, c) sunk costs, d)
perpetuating the status quo, e) representativeness, f) the herding instinct, and g) the
talk trap.
Answer: This is a ‘personal research’ question that is suitable for a tutorial discussion, but
only if adequate warning has been given to allow for appropriate preparation. Students
should be required to explain how their example displays the characteristics of a particular
aspect of ‘Interpretation’:
a) Framing: This describes the context in which a particular issue is presented for a decision,
e.g. demanding a quick decision despite having limited data, imposes a time constraint
that frames the outcome.
b) Anchoring: This describes the process that sets an initial perception of the likely outcome,
e.g. setting any target indicates, by implication, what is not acceptable while setting no
particular target does not.
c) Sunk costs: This describes a process whereby a subsequent action is justified in the hope
that it will retrieve the situation that has eventuated from an initial inferior decision, e.g.
an investment has not been profitable, but further incremental investments are made in
the hope or belief that it will achieve ‘critical mass’, recover the initial investment and turn
a profit.
d) Perpetuating the status quo: This describes a process that combines anchoring and sunk
costs and manifests itself in clinging to processes or products while refusing to recognise
that an innovation has outmoded them, e.g. persisting in investment in a manual
production process that can now be performed by robotics.
e) Representativeness: This describes another common interpretation problem which occurs
when a decision is made on the basis of selecting only supportive data and discarding,
ignoring or de-emphasising conflicting information, e.g. when ‘upside’ benefits are given
greater prominence than ‘downside’ risks.
f) The herding instinct: This demonstrates that individuals desire to conform to the behaviour
and opinions of others.
g) The talk trap: Decisions are often based on verbal arguments not on the basis of actual
outcomes. The person who can ‘talk smart’ often succeeds on winning the decision
regardless of their ability to perform the tasks.
Question 10: Some organisations seek to learn from their former mistakes. Discuss an
example of how this may have occurred, and whether this was a useful process.
Answer:
Coca-Cola introduced new Coke, which was a major flop and had to be withdrawn.
However, they have introduced many other new products since that time, but their CEO,
Copyright © 2019 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488617348/Hubbard/Strategic
Management 6e
James Quincey, urges the managers below him to get beyond the fear of failing and says: ‘If
we’re not making mistakes, we’re not trying hard enough.’*
*Taylor, Bill. (2017). How Coca-Cola, Netflix, and Amazon Learn from Failure. Harvard Business Review, Nov. 10
(Retrievable online at https://hbr.org/2017/11/how-coca-cola-netflix-and-amazon-learn-from-failure)
Copyright © 2019 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488617348/Hubbard/Strategic
Management 6e
Another random document with
no related content on Scribd:
of bone-breaking. It was when ai o Uma, a koali aela iluna,
Uma was about to turn and go nolaila, poho lalo ihola o Uma
on his way that the man jumped malalo, a hemo aku la mahope o
on his back and grabbed his na uha, a loaa ihola na hua o ke
neck, swinging Uma up. kanaka nui, paa loa ihola ia
Therefore Uma slipped down Uma, a hemo aela na hua, a
and behind the man’s leg. He got make loa ihola, pela i pakele ai o
hold of the man’s testicles and Uma.
tore them from the body, and the
man was killed. Thus Uma
escaped.
OF NAPUELUA. NO NAPUELUA.
OF HAWAE. NO HAWAE.
OF KAHAUOLOPUA. NO KAHAUOLOPUA.
FORNANDER COLLECTION
OF
HAWAIIAN ANTIQUITIES
AND FOLK-LORE
THE HAWAIIANS’ ACCOUNT OF THE
FORMATION OF THEIR ISLANDS AND
ORIGIN OF THEIR RACE, WITH THE
TRADITIONS OF THEIR MIGRATIONS,
Etc., AS GATHERED FROM ORIGINAL
SOURCES
BY
ABRAHAM FORNANDER
Author of “An Account of the
Polynesian Race”
WITH TRANSLATIONS REVISED AND
ILLUSTRATED WITH NOTES BY
THOMAS G. THRUM
Honolulu, H. I.
Bishop Museum Press
1919
[iii]
[Contents]
CONTENTS.
Mythical Tales.
PAGE
Traditionary Stories.
A Story of Kawelo.
CHAPTER PAGE
[505]
[Contents]
[506]
Mythical Tales. 1
This is a prominent hill situated He Puu nui keia; aia keia puu
at Hana, Maui. It is named Ka- ma Hana, Maui nei; ka mea i
iwi-o-Pele, 2 on account of a man kapaia ai ka inoa o keia puu Ka
named Namakaeha, who came iwi o Pele, no ka hele ana mai o
from Kahiki and met Mahinahina. kekahi kanaka, o Namakaeha
On meeting her, Namakaeha kona inoa, mai Kahiki mai keia
spoke to her because she was a kanaka i hele mai ai, a halawai
good-looking woman. Her me Mahinahina, a i kona halawai
husband was Kapapauoa who ana me Mahinahina, pane aku o
lived near Puuhele, Hana, Maui, Namakaeha iaia, nokamea, he
the place referred to by the wahine maikai ia, o kana kane
bards as “The surf of Puuhele oia o Kapapauoa ua kokoke no
that is ridden.” ia ma Puuhele, ma Hana o Maui
nei, oia ka mea i olelo ia e ka
poe haku mele, “O ka nalu hee o
Puuhele,” a pela ’ku.
You have arrived this day, Hiki mai hiki mai e ka la—e,
Looking round for an opponent O ka imi ana o ka ikaika la,
Where the wind swirls the leaves A loaa ka lau o ka hau i ka
of the hau, makani,
Perhaps calling to me to be E-i mai ana paha ia’u i hoa
friendly, nona-a,
This is what you are searching O keia imi ia e ka ikaika, a pela
for, ye stalwart! etc. aku.
After his prayer, Pele looked up Apau kai nei pule ana, o ko Pele
from where she was digging ea ae la no ia mai ke kilo uala
potatoes and spoke to ana. A pane mai ia Namakaeha,
Namakaeha. She also saw ike e mai la nae ia Lehoula e
Lehoula lying down and peeping, moe ana ilalo e kiei mai ana, ike
so Pele chanted as follows: aku ua Pele nei a kau aku i kana
pule:
Pele asked: “What is the purport Pane mai ua Pele nei: “He
of the journey?” “A journey taken huakai aha ka huakai?” “He
to see the country,” said huakai makaikai,” wahi a
Namakaeha, “and also to seek Namakaeha, “ame ka imi ikaika
out champions” (for opponents). no hoi kekahi.” Pane mai o Pele:
Pele said: “I had thought it was a “Kai no he huakai no ka pono,
journey for a good purpose, but it eia ka he huakai no ka ino.” Ia
is a journey with an evil design.” manawa no a laua nei e kamailio
While they were talking Lehoula ana, o ka nalo aku la no ia o