Southwest Airline QSPM matrix Discussion

For case analysis (100 points)
Criteria
Exceeds
Expectations
Meets
Expectations
Doesn’t
Completely
Meet
Expectations
Unacceptable
Performance
Content of
assignment
Covers the
assignment facts
and questions in
exemplary fashion,
shows deep and
broad analysis to
reach conclusions,
explains
conclusions fully
with no resulting
questions
Exceeds
expectations to
include precise,
concise editing,
word choice and
organization as
suggested in
lectures and
support
documents
No misspelling or
grammatical
errors based on
APA or MLA style
manual
Covers the
assignment facts
and questions in
adequate fashion,
shows analysis to
reach conclusions,
explains
conclusions fully
Fails to cover the
assignment facts
and questions
completely, shows
little analysis to
reach conclusions,
explains
conclusions
Fails to cover the
assignment facts
and questions,
shows no analysis
to reach
conclusions,
shows no
conclusions
Meets
expectations to
include precise,
concise editing,
word choice and
organization as
suggested in
lectures and
support
documents
A few misspellings
or a few minor
grammatical
errors based on
APA or MLA style
manual
On time
submission
Fails to meet
expectations to
include precise,
concise editing,
word choice and
organization as
suggested in
lectures and
support
documents
Many misspellings
or grammatical
errors based on
APA or MLA style
manual
Fails in all aspects
of effective and
efficient
assignment
implementation
30%
Execution of
assignment
30%
Spelling/Grammar
30%
Submission by
Deadline
10%
Fails in all aspects
of effective and
efficient
assignment
implementation
Late submission
Decision Making & QSPM
Sibin Wu, Ph.D.
UTRGV
Do managers matter?
If you just randomly turn to the first page of
any business magazines, what do you think
are the topics of the first news?
Leaders! Presidents,
congressmen/congresswomen, governors,
mayors, and CEOs.
Why?
Upper Echelons Strategic
Choice
• When a firm’s external environment changes, people
need to make strategic decisions.
• Those strategic decisions (choices) are determined by
decision makers’ cognitive base and values.
• Most of the time, however, it is not seeing is believing.
Rather it is: Believing is seeing! We see what we want to
see. We hear what we want to hear. This is called
selective perception.
• It is predicted by the administrative decision making
process.
The Administrative Model
• Administrative Model of Decision Making
– 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.
The Administrative Model
• Administrative Model of Decision Making
(cont’d)
– Bounded rationality
• There is a large number of alternatives and
available information can be so extensive that
managers cannot consider it all.
• Decisions are limited by people’s cognitive
abilities.
– Incomplete information
• most managers do not see all alternatives and
decide based on incomplete information.
The Administrative Model
• Because we don’t have complete information and limited cognitive
ability, we are boundedly rational. When we make decisions, we do
satisficing not maximizing.
– Satisficing means searching for and choosing an acceptable, or
satisfactory response to problems and opportunities, rather than
trying to make the best decision.
• Managers explore a limited number of options and
choose an acceptable decision rather than the
optimum decision.
• Managers assume that the limited options they
examine represent all options.
• This is the typical response of managers when
dealing with incomplete information.
Cognitive Biases and Decision
Making
• Heuristics
– Rules of thumb to deal with complex
situations.
– Decision makers use heuristics to deal with
bounded rationality.
• If the heuristic is wrong, however, then poor
decisions result from its use.
• Systematic errors can result from use of an
incorrect heuristic and will appear over and over
since the rule used to make decision is flawed.
Hidden Traps
• Therefore, we often fall into decision traps. Here
are some common decision traps.
• Anchoring-We tend to put more weight in the
first piece of information we obtain.
• Status-quo: Humans like to turn to habits for our
decisions (past decisions).
• Sunk-cost (escalation of commitment). Even
when we know something is not working,
because we have put some investment, we
believe we have to continue.
Hidden traps
• Conforming-evidence (prior hypothesis): We start with
some hypotheses, then we only collect data that can
support our hypotheses. We ignore information that
contradicts with our beliefs.
• Framing: Different ways of arranging the information can
lead to different decisions or judgment. When we buy a
car, it may cost us $20,000. When the sales person tells
you that you need only pay 300 dollars a month,
suddenly we believe we can afford the car. Of course, it
will take you 7 years to pay back. The total cost will be
far more than $20,000.
• Estimating and forecasting
Overconfidence, prudence, recallability
Decision making styles
• To minimize those traps, managers should adopt
different decision making styles at different levels.
• Management levels and decision making
Decisive-focus on one thing and do it fast, suitable for
lower level managers
Flexible-focus on a few things and do them fast, good for
middle level managers
Integrative: focus on many things and have enough time
to collect time and make a sound decision, good for top
managers
QSPM is a tool for top managers to make such decisions.
QSPM
• 1. Make a list of key external and internal
factors
• 2. Assign weights to each factor
• 3. Identify strategies
• 4. Determine attractiveness score (AS)
• 5. Compute the total attractive score (TAS)
• 6. Compute the sum and compare
Please see video clip for detailed
information.
QSPM matrix
Factors
Strength
1
2
3
4
5
Weaknesses
1
2
3
4
5
Opportunities
1
2
3
4
5
Threats
1
2
3
4
5
Weight
ratings
Going global
Attractive
Total
Score
Attractive
Score
Strengthening Domestic
Attractive
Total
Score
Attractive
Score

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