1. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 0 E. FRANK HARRISON Fifth Edition The Managerial Decision-Making Process

2. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 1 The Managerial Decision-Making Process Fifth Edition Author: E. Frank Harrison, Ph.D. Slides by Monique A. Pelletier, Ph.D. Author: E. Frank Harrison, Ph.D. Slides by Monique A. Pelletier, Ph.D.

3. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 2 General Motors and Philip Morris Chapter 14 Case Set No. 3

4. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 3 Table 14.1 General Motors: A Chronology of Significant Events DateEvent 1978GM’s CEO Thomas A. Murphy establishes a long-range strategic objective to use $40 billion to spend the “competition into the ground.” 1981Roger B. Smith succeeds Thomas A. Murphy as GM’s CEO. 1982Roger Smith conceives the Saturn automobile. 1983GM enters into a joint venture with Toyota (NUMMI). 1983GM creates the Saturn Corporation and earmarks $5.1 billion to produce the Saturn automobile. 1984GM purchases Electronic Data Systems (EDS) from Ross Perot for $2.5 billion. 1984GM undertakes a vast internal reorganization.

5. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 4 Table 14.1 General Motors: A Chronology of Significant Events (cont’d) DateEvent 1985GM purchases Hughes Aircraft for $5.2 billion in cash and stock. 1986GM commences production of the Saturn automobile. 1990The Saturn automobile comes to market. 1990Roger B. Smith retires as GM’s CEO. 1990Robert C. Stempel is named GM’s CEO. 1992Robert C. Stempel steps down as GM’s CEO. 1992John (Jack) Smith, Jr. is named GM’s CEO. 2

6. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 5 Comparative Case Summaries of Decision Success n Managerial attitudes toward the decision-making process l Philip Morris: open decision-making l Philip Morris: open decision-making process; attainable objective process; attainable objective l General Motors: closed decision-making process; unattainable objective l General Motors: closed decision-making process; unattainable objective

7. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 6 Comparative Case Summaries of Decision Success (cont’d) n Managerial attitudes toward the decision l Philip Morris: Judgmental decision making strategy; satisficing outcome l Philip Morris: Judgmental decision making strategy; satisficing outcome l General Motors: computational decision-making strategy; maximized outcome l General Motors: computational decision-making strategy; maximized outcome

8. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 14 - 7 Comparative Case Summaries of Decision Success (cont’d) n Strategic decision type l Philip Morris: TYPE A l Philip Morris: TYPE A l General Motors: TYPE D l General Motors: TYPE D