Market Failure and Government Intervention
Figure 17-1. Types of Constraints
SECTION 2. STUDIES AND OBJECTIVES OF ORGANIZATIONS
While there are tradeoffs between objectives within families, similar tradeoffs must be made in organizations. A manager must balance the different problem solving talents of the staff to find an optimal solution to any problems facing an organization. Because employees have been trained to solve different kinds of problems they will have very different points of view about how to solve any given problem a firm may confront. A manager must optimize with respect to an organization's overall goals by reconciling the competing interests.
The variety of competing interests (and objectives) facing a firm is expressed in its organization chart. The organization chart for a firm is likely to consist of departments, each of which has specialized responsibilities to solve problems with DIFFERENT objectives, constraints, and choices. In this section we will review some of the most frequently observed departments, the kinds of problems they typically encounter, what kinds of studies they are often asked to perform, and how business schools are organized to educate for these different kinds of problems.
A. Minimizing Error of Prediction: Forecasts