fundamentals of management 3 foundations of decision making

Fundamentals of Management, 7e (Robbins/DeCenzo/Coulter)Chapter 3 Foundations of Decision Making

1) In decision making, a problem can be defined as a discrepancy between what exists and what the problem solver desires to exist.Answer: TRUE

2) The second step in the decision-making process is identifying a problem.Answer: FALSE

3) A decision criterion defines factors that are relevant in a decision.Answer: TRUE

4) Managers identify a problem by comparing the current state of affairs to some standard.Answer: TRUE

5) All criteria are equally important in the decision-making process.Answer: FALSE

6) Identifying the wrong problem is just as much a failure for a manager as identifying the right problem and failing to solve it.Answer: TRUE

7) The final step of the decision-making process is to implement the alternative that has been selected.Answer: FALSE

8) A heuristic can simplify the decision-making process.Answer: TRUE

9) Because heuristics simplify the decision-making process, they are unlikely to lead to errors.Answer: FALSE

10) Decision makers who "cherry-pick" information that matches what they already know are guilty of confirmation bias.Answer: TRUE

11) A basketball coach who takes a very good shooter out of a game because she missed her last two shots has availability bias.Answer: TRUE

12) A rational decision will never fail to provide the best and most successful solution to a problem.Answer: FALSE

13) Maximizing value means a decision will have the best possible outcome for the parties involved. Answer: TRUE

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14) One assumption of bounded rationality is that managers can analyze all relevant information about all alternatives for a situation.Answer: FALSE

15) A synonym for the word satisfice is maximize.Answer: FALSE

16) One assumption of bounded rationality is that managers usually make rational decisions.Answer: TRUE

17) Intuitive decision making is systematic, logical, and orderly.Answer: FALSE

18) Intuitive decision making cannot be a part of the rational decision-making process.Answer: FALSE

19) The expression "throwing good money after bad" is an example of an escalation of commitment.Answer: TRUE

20) Emotions should always be strictly ignored in a decision-making process.Answer: FALSE

21) Programmed decisions tend to be routine.Answer: TRUE

22) A rule is simpler than a policy or a procedure to implement.Answer: TRUE

23) Implementing a procedure requires more judgment and interpretation than implementing a policy.Answer: FALSE

24) A highway speed limit is an example of a policy.Answer: FALSE25) Managerial decisions are likely to become more programmed as managers rise in an organizational hierarchy.Answer: FALSE

26) Most managerial decisions include an element of risk.Answer: TRUE

27) Uncertainty involves a situation in which the probability of a certain outcome is known to be small.Answer: FALSE

28) A manager is more confident of his assessment of a situation if it involves risk rather than uncertainty.Answer: TRUE


29) Group decisions tend to provide more complete information than individual decisions.Answer: TRUE

30) An advantage of group decisions is that they increase the perception of the legitimacy of the solution.Answer: TRUE

31) A drawback of group decision making is groupthink.Answer: FALSE

32) Groups tend to be more efficient and less effective than individual decision making.Answer: TRUE

33) Two major advantages of electronic meetings are anonymity and honesty.Answer: TRUE

34) A country with high uncertainty avoidance and high power distance is more likely to engage in groupthink than a country with low uncertainty avoidance and low power distance.Answer: TRUE

35) Creative solutions to problems are valued because they are new and different from traditional solutions.Answer: FALSE

36) Decision making begins with ________.A) selecting alternativesB) identifying decision criteriaC) identifying a problemD) eliminating false alternativesAnswer: C

37) Which of the following defines a problem in the decision-making process?A) a discrepancy between what exists and what the decision maker desires to exist B) a discrepancy between the ideal and the practicalC) something that causes irritationD) something that calls for attentionAnswer: A


38) The decision-making process consists of a series of eight steps that identify a problem and work toward ultimately ________.A) determining if there is a solution to the problemB) solving the problemC) making a plan to solve the problemD) breaking down the problem into a series of stepsAnswer: B

39) To identify a problem, a manager ________.A) compares one set of standards or goals to a second set of standards or goalsB) looks for unhappy customersC) uses intuition to see that things don't look rightD) compares the current state of affairs with some standard or goalAnswer: D

40) A manager can faithfully execute the decision-making process, but still end up with nothing of value if ________.A) he fails to identify the correct problemB) he fails to assign number values to different criteriaC) he solves the problem inefficientlyD) he fails to correctly identify the steps of the processAnswer: A41) A manager is considering purchasing new computers for her department. The manager spends time assessing the computers her department now has. Which stage of the decision-making process is she going through? A) identification of a problemB) identification of decision criteriaC) development of alternativesD) implementation of an alternativeAnswer: A

42) A manager is determining what kind of new computers she should purchase for her department. She has made a list of five different computer models for consideration. Which stage of the decision-making process is this? A) selection of an alternativeB) identification of decision criteriaC) development of alternativesD) analysis of alternativesAnswer: C


43) After purchasing new computers for her department, a manager is now comparing the performance of the new computers to the computers they replaced. Which stage of the decision-making process is she carrying out?A) analysis of alternativesB) evaluation of decision effectivenessC) selection of an alternativeD) implementation of an alternativeAnswer: B

44) For a high-tech bicycle buyer, decision criteria would be determined by ________.A) whatever most bike buyers recommendB) expert ratings in bike magazinesC) technical specificationsD) personal preferences of the buyerAnswer: D

45) Which of the following is LEAST likely to be a decision criterion for a high-tech bicycle buyer who cares primarily about performance?A) warrantyB) gear mechanismC) frame compositionD) brake assemblyAnswer: A

46) Which of the following would be a fairly objective criterion by which a bicycle buyer could assess different bike models? A) handlingB) weightC) quality of craftsmanshipD) styleAnswer: B

47) A manager chooses to ignore a rigorous decision-making process and select TV monitor A over monitor B because he "trusts" company A more than company B. If the decision he made was rational, which of the following is true?A) Monitor A is really the better choice.B) The manager should have included "trust" as a criterion.C) Monitor B is really the better choice.D) The manager must have made a mistake in calculating his weighted criteria.Answer: B

48) In allocating weights to the decision criteria, which of the following is most helpful to remember?A) All weights must be the same.B) The total of the weights must sum to 100.C) The high score should be a 10, and no two criteria should be assigned the same weight.D) Assign the most important criterion a score, and then assign weights against that standard.Answer: D


49) What is a heuristic? A) a complicated and systematic method of decision makingB) a purely intuitive method of decision makingC) a totally unreliable method of decision makingD) a shortcut or rule of thumb that is used for decision makingAnswer: D

50) Because they are not systematic or comprehensive, using heuristics in place of an eight-step decision-making process can lead to ________. A) errors and biasesB) consistently better decisionsC) more imaginative decisionsD) decisions that more directly solve problemsAnswer: A

51) Which of the following is NOT a reason why managers often resort to using heuristics?A) They seem to eliminate complexity.B) They seem to eliminate ambiguity.C) They save time.D) They thoroughly explore all alternatives.Answer: D


52) A banker opts for short-term gain despite indications that his decision might not pay off in the long run. Which error or bias is the banker guilty of?A) overconfidenceB) immediate gratificationC) selective perception biasD) representationAnswer: B

53) A scientist cites two studies that show a positive effect for her drug and ignores five other studies that show a negative effect. Which error or bias is she committing?A) hindsightB) anchoring effectC) confirmation biasD) self-servingAnswer: C

54) One legislator sees decreased tax revenue as the key problem in the budget. A second legislator sees increased spending as the problem. Each of these legislators has a(n) ________.A) representation biasB) self-serving biasC) availability biasD) framing biasAnswer: D

55) Which of the following is NOT a common decision-making error or bias?A) sunk costsB) randomnessC) forest for the treesD) overconfidence biasAnswer: C

56) The three main models that managers use to make decisions are ________.A) rational, bounded rational, and intuitiveB) rational, irrational, bounded rationalC) intuitive, unintuitive, rationalD) bounded rational, intuitive, systematicAnswer: A57) It is assumed that a rational decision maker ________.A) would never make a wrong choiceB) would be subjective and impracticalC) would face only difficult decisionsD) would be objective and logicalAnswer: D


58) What does it mean for a decision maker to maximize value?A) to make the decision to be as clear and logical as possibleB) to make the achievement of goals as likely as possibleC) to waste as little time and energy as possibleD) to make decision making as simple as possibleAnswer: B

59) Maximizing value for an organization means making sure that ________.A) the organization makes moneyB) the best interests of the organization are addressed C) the decision made is as rational as possibleD) the decision is as simple as possibleAnswer: B

60) Which of the following is NOT assumed in a rational decision?A) a clear and specific goalB) a clear and unambiguous problemC) many alternatives and consequences are knownD) value is maximizedAnswer: C

61) It is assumed that in most cases, the decisions of all managers are limited by ________.A) greed and short-sightednessB) having too much informationC) not being able to analyze all information for all alternativesD) not being able to act rationally or in the best interests of their organizationAnswer: C

62) Which term best characterizes a decision that has bounded rationality?A) virtually perfectB) rigorous and comprehensiveC) not good enoughD) good enoughAnswer: D

63) Software programs that use a series of questions to aid humans in decision making are called ________.A) text reading softwareB) expert systemsC) group systemsD) support softwareAnswer: B

64) Expert systems are primarily used to help what kinds of decision makers?A) lower-level managersB) top managersC) senior managersD) expertsAnswer: A


65) Neural networks are able to outdo the performance of humans by ________.A) analyzing symbolsB) handling up to three variables at onceC) handling hundreds of variables at onceD) reading facial expressionsAnswer: C66) Neural networks differ from expert systems in that they can ________.A) draw conclusions from dataB) ask questions to the decision makerC) perform sophisticated calculationsD) learn from experienceAnswer: D

67) Neural networks outperfom expert systems in uncovering ________.A) credit card fraudB) false positives for pregnancyC) potential credit card customersD) credit problems in bank mortgagesAnswer: A

68) Herbert Simon won the Nobel Prize in economics for his work in describing ________.A) how people spend moneyB) how most people are perfectly rationalC) how people make decisionsD) how people avoid decisionsAnswer: C69) Which of the following is the best definition for the word satisfice?A) very satisfyingB) not sufficientC) accepts a less than perfect solutionD) requires a perfect solutionAnswer: C

70) Simon found that in making decisions, most people satisficed because they had limited ability to ________.A) be truthful and honest in situations that deal with other peopleB) think independentlyC) deal with difficult situationsD) grasp present conditions and anticipate future conditionsAnswer: D

71) A person who satisfices fails to ________.A) maximize his or her decisionB) understand his or her positionC) accept the truth of a situationD) make any kind of decisionAnswer: A


72) Sticking to a decision despite evidence that it is a mistake is called ________.A) escalation of commitmentB) escalation of rationalityC) satisficing commitmentD) error enhancementAnswer: A

73) Escalation of commitment can occur when people don't ________.A) want to make a decisionB) want to admit that an earlier decision was flawedC) accept current conditionsD) understand that conditions have changedAnswer: B

74) Which model of decision making takes advantage of unconscious reasoning?A) rationalB) non-rationalC) intuitiveD) factualAnswer: C75) Compared to fully rational decision making, what is a major advantage of intuitive decision making?A) total reliabilityB) fully quantifiedC) thoroughnessD) speedAnswer: D

76) How often do managers typically use intuitive decision making?A) 100 percent of the timeB) almost neverC) almost all of the timeD) more than half of the timeAnswer: D

77) Intuitive decision making can complement ________.A) rational decision making onlyB) bounded rationality onlyC) both rationality and bounded rationalityD) neither rationality nor bounded rationalityAnswer: C

78) Which of the following is NOT a way in which intuition guides people who are making decisions?A) Intuition provides ethics and values guidelines.B) Intuition provides a formal analysis method.C) Intuition provides experiences to draw from.D) Intuition draws on knowledge, skills, and training.Answer: B


79) Emotions and feelings ________ decision making.A) have no effect onB) can improveC) decrease performance inD) are more important than facts and logic inAnswer: B

80) Structured problems are ________.A) ambiguousB) undefined and vagueC) clear and straightforwardD) incompleteAnswer: C

81) Unstructured problems are ________.A) perfectly rationalB) clear and straightforwardC) situations in which all options are knownD) situations in which all options are not knownAnswer: D

82) Which of the following is an example of a structured problem?A) designing a new MP3 playerB) hiring a lawyerC) deciding shipping options for a vacuum cleanerD) drafting a quarterback for a pro football teamAnswer: C

83) Which of the following is an example of an unstructured problem?A) finding the list price of different copy machinesB) choosing the best wardrobe for an executiveC) comparing gas mileage for different car modelsD) measuring pollution levels in a power plantAnswer: B

84) Structured problems typically have ________ while unstructured problems typically have ________.A) only one solution; many solutionsB) many solutions; one solutionC) many solutions; fewer solutionsD) two solutions; three solutionsAnswer: A


85) Programmed decisions work well for solving ________.A) structured problemsB) unstructured problemsC) both structured and unstructured problemsD) poorly defined problemsAnswer: A

86) Programmed decisions draw heavily on which of the following?A) mistakes made in the pastB) past solutions that were successfulC) past solutions that were unsuccessfulD) innovative new solutionsAnswer: B

87) Which of the following is NOT a type of programmed decision?A) systematic procedureB) policyC) brainstormD) ruleAnswer: C

88) Following the directions to put together an elliptical exercise machine is an example of which way to solve a problem?A) procedureB) ruleC) general practiceD) policyAnswer: A

89) A football coach makes the decision to punt or not to punt on fourth down based on whether or not he is past his own 50-yard line. Which decision-making method does the coach use?A) a policyB) a hunchC) a procedureD) a ruleAnswer: D

90) Which pair or pairs of terms is true? (This question can have more than one correct answer.)A) structured problem, programmed decisionB) structured problem, structured decisionC) unstructured problem, programmed decisionD) unstructured problem, nonprogrammed decisionAnswer: A, D


91) A judge consults guidelines before handing down an award for damages in a legal case. What kind of decision making is she doing?A) following a policyB) following a ruleC) programmedD) following a procedureAnswer: A

92) Top managers in an organization tend to ________.A) make programmed decisionsB) solve structured problemsC) make nonprogrammed decisionsD) solve well-defined problemsAnswer: C

93) Which three conditions do decision makers face?A) certainty, risk, uncertaintyB) certainty, uncertainty, confidenceC) risk, high risk, low riskD) certainty, risk, high riskAnswer: A

94) In a condition of certainty, ________.A) most outcomes are knownB) the decision is already madeC) all outcomes of all alternatives are knownD) some alternatives are not knownAnswer: C

95) If a car buyer knows the inventory dealer price of the same car at different dealerships, he or she is operating under what type of decision-making condition?A) riskB) uncertaintyC) certaintyD) factualAnswer: C96) A retail clothing store manager who estimates how much to order for the current spring season based on last spring's outcomes is operating under what kind of decision-making condition?A) seasonalB) riskC) uncertaintyD) certaintyAnswer: B


97) ________ is a situation in which a decision maker has only incomplete information about outcomes and does not have ability to reasonably estimate outcomes that are not known.A) CertaintyB) RiskC) UncertaintyD) High certaintyAnswer: C

98) A low-level manager is most likely to solve problems under which condition?A) certaintyB) low riskC) uncertaintyD) low certaintyAnswer: A

99) A top manager is most likely to solve problems under which condition?A) certaintyB) riskC) uncertaintyD) high certaintyAnswer: C

100) A manager has a choice of three investment funds. To assess them, he looks at their past investment records over the previous five years. The manager is operating under which condition?A) certaintyB) probabilityC) uncertaintyD) riskAnswer: D

101) A manager has a choice of three bank CDs that pay different amounts of interest over different time periods. The manager is operating under which condition?A) jeopardyB) certaintyC) uncertaintyD) riskAnswer: B

102) A manager wants to invest in one of three start-up companies. All three of the companies seem to have a good business plan. None of the companies has a track record. The manager is operating under which condition?A) uncertaintyB) certaintyC) low certaintyD) riskAnswer: A


103) A key to what is commonly used to assess risk is for a decision maker to examine the ________ an investment.A) the promises made by a company forB) the ads posted by a company forC) historical data forD) the minor details ofAnswer: C

104) Managers in organizations make group decisions ________.A) frequentlyB) neverC) almost neverD) rarelyAnswer: A

105) The eight steps of decision making ________.A) can only be employed by individualsB) can only be employed in very small groupsC) can be employed by individuals and groups D) can only be employed by groupsAnswer: C

106) One advantage of group decision making is that it usually provides ________ than individual decision making.A) faster decisionsB) more ethical decisionsC) less confusionD) more informationAnswer: D

107) Group decisions generally feature ________ acceptance than decisions made by an individual.A) greaterB) lessC) neither greater or lessD) more enthusiasticAnswer: A

108) Group decision making typically increases the legitimacy of a decision because the decision was made ________.A) over a long period of timeB) democraticallyC) by expertsD) primarily by the group leaderAnswer: B


109) Decisions made by individuals typically suffer from suspicions that the decision maker ________.A) is dishonestB) is not rationalC) did not try to analyze the situation D) did not consult all interested partiesAnswer: D

110) Seeking the views of a diverse group of people can provide a decision maker with ________ on issues.A) fresh perspectivesB) conventional wisdomC) universal agreementD) a foolproof way to get the perfect answerAnswer: A

111) Which of the following is a drawback to seeking diverse views in decision making?A) less reliable decisionB) easier decision-making processC) more time consumingD) less time consumingAnswer: C

112) Which phrase best summarizes the drawbacks of group decisions?A) A camel is a racehorse put together by a manager.B) A camel is a racehorse put together by a committee.C) A camel is a no racehorse when it comes to speed.D) A camel beats a racehorse in a long race.Answer: B

113) Groups decisions are usually ________ individual decisions.A) more efficient thanB) less efficient thanC) equal in efficiency toD) more efficient but less effectiveAnswer: B

114) Since all members of a group are rarely equal in status, most groups suffer from ________.A) minority dominationB) majority dominationC) too much diversityD) gridlockAnswer: A


115) ________ can cause people in a group to fail to express their true opinions.A) Ambiguous responsibilityB) Group imbalanceC) Pressure to conformD) Years of experienceAnswer: C

116) Which of the following is a primary characteristic of groupthink?A) conflict among group membersB) failure to reach consensus within a groupC) complete conformity among group membersD) a group that is candid and openAnswer: C

117) Which of the following is NOT a factor that can increase the probability of groupthink?A) Influential group members dominate the discussion and the decision-making process.B) Group leaders stress the importance of consensus above all other concerns.C) The group has more than 40 group members.D) Group leaders solicit ideas from all group members without passing judgment on their ideas.Answer: D

118) Which of the following is the most effective number of people to have in a group?A) 5-7B) 2-4C) 10-15D) 16-25Answer: A

119) Which of the following is used to exclusively generate creative ideas in a group setting?A) brainstormingB) nominal group techniqueC) groupthinkD) electronic meetingsAnswer: A120) Which of the following is NOT allowed in a brainstorming session?A) clear definition of the problemB) criticism or dismissal of poor ideasC) large number of alternativesD) recording of all alternativesAnswer: B

121) Which of the following group techniques allows group members to meet together, but at the same time facilitates independent decision making?A) brainstormingB) nominal group techniqueC) large meetings of over 50 individualsD) small meetings of less than 10 individualsAnswer: B


122) The ________ blends the nominal group technique with sophisticated computer technology.A) personal meetingB) electronic meetingC) virtual meetingD) preliminary meetingAnswer: B

123) What advantages does videoconferencing provide for group decision making? A) anonymous expression of opinionsB) less groupthinkC) less minority dominationD) savings on travel and timeAnswer: D

124) Mid-level managers in a country with high power distance are ________ than managers from a low power distance country. A) more likely to make risky decisions B) less likely to make risky decisionsC) less likely to make safe, conservative decisionsD) more likely to disagree with their leaders' decisionsAnswer: B

125) Mid-level managers in a country with low uncertainty avoidance are ________ than managers from a high uncertainty avoidance country. A) more likely to make risky decisions B) less likely to make risky decisionsC) less likely to make foolish decisionsD) more likely to avoid making decisionsAnswer: A

126) Individualistic countries like the United States tend to have ________ than group-oriented countries like Japan. A) more conformity and more cooperationB) more conformity and less cooperationC) less conformity and more cooperationD) less conformity and less cooperationAnswer: D

127) The use of ringisei in Japanese organizations reflects which of the following values in Japanese culture?A) tradition-followingB) consensus-seekingC) risk takingD) go-it-aloneAnswer: B


128) French management style tends to be ________ in style.A) permissiveB) group orientedC) rule followingD) autocraticAnswer: D

129) When dealing with international organizations, managers must be ________ in order to accommodate the managing styles of different cultures.A) as flexible as possibleB) as inflexible as possibleC) as strict as possibleD) as thoroughAnswer: A

130) ________ helps people find better solutions to problems using innovative problem-solving methods.A) PlanningB) CreativityC) OrganizationD) StructureAnswer: B

131) According to one study, about ________ of men and women were somewhat creative.A) 1 percentB) 10 percentC) 30 percentD) 60 percentAnswer: D

132) One well-accepted model states that individual creativity requires ________, or a commanding understanding of a subject matter.A) expertiseB) task motivationC) high interestD) intuitionAnswer: A

133) Which of the following is NOT a characteristic of a creative problem solver?A) self confidenceB) tolerance for ambiguityC) frustrates easilyD) accepts risks readilyAnswer: C


134) Which of the following traits do all creative people seem to share?A) They like to save time.B) They get along well with others.C) They love their work.D) They don't like to work hard.Answer: C

135) Which of the following tends to impede a person's creativity?A) providing time and resources B) clearly defined goalsC) being watched while you workD) internal motivationAnswer: C

Decisions, Decisions (Scenario)

Sondra needed help. Her insurance company's rapid growth was necessitating making some IT changes, but what changes? Should they modify the servers that they currently used, or purchase an entirely new system? Sondra was confused and needed help in making the correct decision.

136) According to the decision-making process, the first step Sondra should take is to ________.A) analyze alternative solutionsB) identify decision criteriaC) evaluate her decision's effectivenessD) identify the problemAnswer: D

137) Sondra has decided to collect information about the features the company needs for its system. Which stage of the decision-making process is she carrying out?A) identify alternative solutionsB) identify decision criteriaC) evaluate her decision's effectivenessD) allocate weights to the criteriaAnswer: B

138) Sondra has determined that the speed of the system she settles on is twice as important as the capacity of the system. Which stage of the decision-making process is she carrying out?A) allocation of weights to criteriaB) selecting an alternativeC) implementing the alternativeD) identifying the problemAnswer: A


139) Sondra has decided to purchase a new system. After obtaining permission, she has ordered the system from a reputable company. Which stage of the decision-making process is she carrying out in making the order?A) analyzing alternative solutionsB) selecting an alternativeC) implementing the alternativeD) identifying the problemAnswer: C

140) The very last step Sondra should take, according to the decision-making process, is to ________.A) analyze alternative solutionsB) select alternativesC) implement the alternativeD) evaluate the decision's effectivenessAnswer: D

141) In a short essay, list and discuss the first four steps in the decision-making process. Give an example of each step.

Answer: Step 1: Identification of a problemThe decision-making process begins with a discrepancy between an existing and a desired state of affairs. An example of identifying a problem is choosing a new car.

Step 2: Identification of decision criteriaOnce the manager has identified a problem that needs attention, the decision criteria important to resolving the problem must be identified. That is, managers must determine what factors are relevant in making a decision. An example of identifying decision criteria is deciding what features you need in a new car.

Step 3: Allocation of weights to the criteriaAt this step, the decision maker must compare the items in order to give them the correct priority in the decision. The most important criterion is assigned the heaviest weight. Other criteria are assigned weights in comparison with that standard. Weights can be quantitative—with number values—or determined on a qualitative scale. An example of weighting decision criteria is ranking the features of a new car in order of their importance.

Step 4: Development of alternativesThe fourth step requires the decision maker to use the criteria to develop a list of possible alternatives that may solve the problem. An example of developing alternatives is making a list of possible new cars.


142) In a short essay, list and discuss the final four steps in the decision-making process. Give an example of each step.

Answer: Step 5: Analysis of alternativesOnce the alternatives have been identified, the decision maker must critically analyze each alternative. From this comparison, the strengths and weaknesses of each alternative become evident. An example of analyzing alternatives is to make a table of weighted scores for possible new cars.

Step 6: Selection of an alternativeThe sixth step is the important act of choosing the best alternative from among those considered. All the pertinent factors should be considered here, both objective and subjective. Then a choice of a single alternative—or group of alternatives—should be selected. An example of selecting an alternative is to choose a single new car from a list of alternatives.

Step 7: Implementation of the alternativeImplementation involves carrying out the decision that was made. In the car example, it involves purchasing the car that was selected.

Step 8: Evaluation of decision effectivenessThe last step in the decision-making process involves appraising the outcome of the decision to see if the problem has been resolved. Did the alternative chosen and implemented accomplish the desired result? If not, the decision maker may consider returning to a previous step or may even consider starting the whole decision process over. An example of this final step would be to assess the success of the car-buying decision. Was the right car selected? Did it have all of the features and characteristics that were needed? Did it perform all of the functions that were needed?


143) In a short essay, discuss why creativity is important to decision making. Describe a situation in which a creative solution is used to solve a problem.

Answer: Creativity is important to decision making because it allows managers to solve problems in more efficient, effective, and innovative ways. Innovation is valuable because it can open up new paths of exploration for an organization, sometimes exposing needs that weren't known about and possible opportunities that weren't suspected.

An example of a creative solution to a problem is the recent development of a software bowling game for senior citizens. Rather than try to develop a new game for children or young adults—two fairly saturated markets—the company turned its attention to a neglected market, senior citizens. Could the company get seniors—who typically don't use computers—to play video games? They could if they created the right game.

The company worked hard to develop a program that was "friendly" to its typical user—a senior citizen who had no computer skills or knowledge. The result was a huge hit. Seniors all over the United States now rave about this fun new game. Leagues have formed. Tournaments have been organized. Seniors especially enjoy the fact that they can play the game at home, and that physical disabilities don't prevent them from playing. The success of the game is a good example of how being creative can solve a problem.

144) In a short essay, discuss bounded rationality and satisficing.Answer: Perfect rationality requires that the decision maker face a clear and unambiguous problem with a clear and specific goal and have knowledge of all possible alternatives for his or her decision, and all outcomes and consequences that result from choosing each one of those alternatives. In the real world, these conditions are almost never met. Rather than address the virtually impossible chore of identifying all alternatives and outcomes of the decision, the decision maker chooses to apply bounded rationality, which limits the scope of the decision to just some, rather than all alternatives and consequences. Bounded rationality requires the decision maker to satisfice, or choose a "good enough" solution to the problem rather than maximize his or her decision by identifying the perfect rational solution.


145) In a short essay, discuss the differences among a procedure, a rule, and a policy. Include specific examples of each to support your answer.

Answer: A procedure is a series of sequential steps that a manager can use for responding to a well-structured problem. An example of a procedure are instructions for how to install a new thermostat for your home heating system. You follow the instructions in a step-by-step manner to remove the old thermostat and install the new one.

A rule is an explicit statement that tells a manager what he or she can or cannot do. Managers frequently use rules when they confront a well-structured problem because rules are simple to follow and ensure consistency. For example, a rule at a local tennis club might dictate that if the courts are full, players can play no longer than one hour. When their hour is up they can get bumped from their court.

A policy provides guidelines to channel a manager's thinking in a specific direction. In contrast to a rule, a policy establishes parameters for the decision maker rather than specifically stating what should or should not be done. Policies differ from procedures in that they typically leave quite a bit of interpretation up to the decision maker. An example of a policy is guidelines that require scientists at a research lab have an advanced degree in their field, at least three years of post-doctoral work, and at least five published scientific papers to their credit. These requirements are guidelines—candidates who lack all of the qualifications but have other strengths may also be considered for the job. It would be up to the decision maker to determine how rigorously the policy would be followed.


146) In a short essay, identify and explain the advantages and disadvantages to group decision making.

Answer: Group decisions provide more complete information than do individual ones, as a group will bring a diversity of experiences and perspectives to the decision process that an individual acting alone cannot. In addition, because groups have a greater quantity and diversity of information, they can identify more alternatives than can an individual. Furthermore, group decision making increases acceptance of a solution. Finally, the group decision-making process is consistent with democratic ideals; therefore, decisions made by groups may be perceived as more legitimate than decisions made by a single person.

Group decisions are not without their drawbacks. It takes time to assemble a group and the interaction that takes place once the group is in place is frequently inefficient. Groups almost always take more time to reach a solution than an individual would take to make the decision alone. Groups may also be subject to minority domination, in which one or a few group members compel others to adhere to their agenda.

Another problem is the pressure to conform in groups. In groupthink, a form of conformity, group members withhold their views in order to avoid controversy, avoid taking responsibility for their actions, and give the appearance of agreement. As a result, groupthink undermines critical thinking in the group and eventually harms the quality of the final decision. And, finally, ambiguous responsibility can become a problem. Group members share responsibility, so the responsibility of any single member is watered down and no one ends up taking "ownership" of the group's final decision.

147) In a short essay, describe how brainstorming can help avoid groupthink and enhance creativity in group decision making.

Answer: Brainstorming is a relatively simple technique for overcoming the pressures for conformity that retard the development of creative alternatives. Brainstorming utilizes an idea-generating process that specifically encourages any and all alternatives while withholding any criticism of those alternatives. In a typical brainstorming session, participants "freewheel" as many alternatives as they can in a given time. No criticism is allowed, and all the alternatives are recorded for later discussion and analysis.


148) In a short essay, describe how nominal group technique can help avoid groupthink and enhance creativity in group decision making.

Answer: Nominal group technique helps groups arrive at a satisfactory solution to a problem. The technique restricts discussion during the decision-making process. Group members must be present, as in a traditional committee meeting, but they are required to operate independently. They secretly write a list of general problem areas or potential solutions to a problem. The chief advantage of this technique is that it permits the group to meet formally but does not restrict independent thinking, as so often happens in the traditional interacting group. Since opinions are expressed anonymously, participants are more candid, honest, creative, and ambitious with their comments and suggestions.

149) In a short essay, describe how electronic meetings can help avoid groupthink and enhance creativity in group decision making.

Answer: The most recent approach to group decision making blends the nominal group technique with sophisticated computer technology. It is called the electronic meeting. Once the technology for the meeting is in place, the concept is simple. Participants sit around a horseshoe-shaped table that is empty except for a series of computer terminals. Issues are presented to the participants, who type their responses onto their computer screens. Individual comments, as well as aggregate votes, are displayed on a projection screen in the room. The major advantages of electronic meetings are anonymity, honesty, and speed.

150) In a short essay, discuss the assumptions of rationality and the validity of those assumptions.

Answer: A decision maker who was perfectly rational would be fully objective and logical. He or she would carefully define a problem and would have a clear and specific goal. Moreover, making decisions using rationality would consistently lead toward selecting the alternative that maximizes the likelihood of achieving that goal.

The assumptions of rationality apply to any decision. Rational managerial decision making assumes that decisions are made in the best economic interests of the organization. That is, the decision maker is assumed to be maximizing the organization's interests, not his or her own interests.

Managerial decision making can follow rational assumptions if the following conditions are met: the manager is faced with a simple problem in which the goals are clear and the alternatives limited; the time pressures are minimal; and the cost of seeking out and evaluating alternatives is low. However, most decisions that managers face in the real world don't meet all of those tests.


fundamentals of management 3 foundations of decision making

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