Tom is in the marketing department with HomeMade Soups. He was given the responsibility of determining if customers liked the new spicy chicken noodle soup. According to HomeMade Soups' sales data, over 4,000 customers purchased the new soup last month. If Tom surveys 25 of those customers, he has selected an appropriate sample size for decision making. (True/False) |
FALSE |
Decision making is the process of identifying and choosing alternative courses of action. (True/False) |
TRUE |
When evaluating the alternatives of a decision, managers need to base decisions strictly on cost, quality, and feasibility. (True/False) |
FALSE |
Luis, the sales manager of IT Sales, mentioned to his assistant, Marla, "I just got off the phone with one of our best customers and he told me about quite a few customer service issues, and I'm glad he took the time to call. You know, most people will not call a company when they have a problem; they just tell friends, family, and coworkers." This statement about who customers call when complaining about faulty customer service is accurate. (True/False) |
TRUE |
The rational model assumes that managers have complete information, are able to make an unemotional analysis, and are able to make the best decision for the organization. (True/False) |
TRUE |
Non-rational models of decision making assume that managers have complete information and are able to make the best decision for the organization. (True/False) |
FALSE |
With satisficing, managers look for alternatives until they find one that is satisfactory, not optimal. (True/False) |
TRUE |
Managers with a low tolerance for ambiguity and an orientation toward task and technical concerns when making decisions have an analytical decision-making style. (True/False) |
FALSE |
Anne, the electronics department manager at a local Target store, has a good working relationship with her employees. She believes in an open-door policy, and she encourages the open exchange of opinions in her department. Anne utilizes the directive style of management. (True/False) |
FALSE |
A decision tree, which is the hierarchy or chain of command used by many organizations when discussing alternatives, must be followed when getting decisions approved. (True/False) |
FALSE |
Last year, Eduardo's home of 50 years, which contained so many family, school, and career memories, was destroyed in a fire. It is normal for this event to have a negative impact on his life and decision-making abilities for at least three years. (True/False) |
FALSE |
When faced with a decision, Myles asks himself "Why not just take the easiest way out?" This approach, known as relaxed change, is a form of evidence-based decision making. (True/False) |
FALSE |
Danielle, the IT department chair at a community college, has been having problems with her students not coming to class, so their grades are suffering. If Danielle were to use defensive avoidance to respond to this situation, she would likely respond by procrastinating, passing the buck, or denying the risk of any negative consequences. (True/False) |
TRUE |
With an escalation of commitment bias, decision makers increase their commitment to a project despite negative information about it. (True/False) |
TRUE |
The larger and more diverse the group, the higher the quality of the decision. (True/False) |
FALSE |
__________ is the tendency for people with strong prior beliefs, when confronted with a choice, to make their decisions based on their beliefs even if their beliefs are false. |
A. Prior-hypothesis bias |
A ____ is a choice made from among available alternatives. |
A. decision |
George, a longtime hotel manager for Holiday Inn, was meeting with Sally, a new front-desk manager, and telling her about his recent decision not to fire a front desk employee about whom several guests had complained. George discussed the four stages of the decision process. He said, "I first identified the problem, and then I gathered alternative solutions. I evaluated each choice and selected a solution. I then implemented my decision to not fire the employee but instead to provide him with additional training. Finally, I followed up with an evaluation of the solution I'd chosen." George is using the ______ process. |
E. rational decision-making model |
The model of decision making that explains how managers should make decisions, assuming managers will make logical decisions that will be the optimum in furthering the organization's best interests, is known as the ____. For example, a manager who uses this model may be personally opposed to outsourcing jobs overseas, but she nonetheless decides to outsource customer-service operations to India because doing so is in the company's best interests. |
E. rational decision-making model |
Alex is the R&D manager with Digital Copier Inc. The company is having a problem with one of its most popular copiers jamming. The vice president of marketing told Alex that "we need to quickly discover how to turn this problem into a desirable situation. You need to determine the underlying cause of the problem and perhaps even make improvements to the copier." When Alex analyzes the underlying causes of the paper-jam problem, which function is he performing? |
B. diagnosis |
Female investors make trades much less often than men because they |
B. do more research, and they tend to base their investment decisions on considerations other than just numbers. |
In the third step of rational decision making (evaluating alternatives and selecting a solution), you need to evaluate each alternative not only according to cost and quality but also according to which of the following questions? |
D. Is it ethical, feasible, and effective? |
José, the sales manager for a software development firm, is working on the problem of increasing sales by using the rational model of decision making. In the first step he identified the problem of his employees needing more training. In the second step he thought of alternative solutions; and in the third step he evaluated alternatives and selected a solution. José needs to _____ in the fourth and final step. |
C. implement and evaluate the training program chosen |
The rational model of decision making is also called the ____ model. |
D. classical |
Elvira is using the rational model of decision making. The alternative that she chose and implemented does not appear to be working. To correct the situation, Elvira should consider |
A. giving it more time, changing it slightly, trying another alternative, or starting over. |
_____ are difficulties that inhibit the achievement of goals. For example, the lack of parking may be the main reason why a new restaurant is failing. |
D. Problems |
Patricia is the owner of a floral shop. A successful global candle company approached her about selling its products in her shop. Patricia knows this product and company can help her exceed her existing goals. Selling candles is a(n) _____ for Patricia. |
B. opportunity |
With the community interested in eating healthy, Sue Ellen, a restaurant owner, is considering adding more vegetarian dishes to her menu. This decision is uncertain and risky, and she finally decides to go with her gut feelings. Sue Ellen is exhibiting |
C. non-rational decision making. |
_____ is the idea that proposes that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time, cognitive capacity, values, skills, habits, and unconscious reflexes. |
E. Bounded rationality |
Susanne, the CEO of a national IT manufacturer, was approached by Simple Phones, a new company that is marketing a new type of phone, to partner with the company on a project. The results of the partnership are uncertain because the company (Simple Phones) and its technology are new. Susanne is uncertain what to do because she is limited by numerous constraints, such as the uncertainty and complexity of the technology, the management success of Simple Phones, and time (because other companies are interested in the partnership). Susanne is experiencing |
B. bounded rationality. |
Paula, the controller of Tasty Pizza, is purchasing several new delivery vehicles. Paula has numerous work responsibilities, so she has limited time to shop for cars. Because of the time constraints, she cannot make an extensive search for the best alternative, so she looks for cars until she finds a model that is satisfactory. Paula is following the _____ model. |
D. satisficing |
Chad and his partner, John, have decided to update their computer network, although they have no expertise in this area. During a meeting with John, Chad commented that "Our decision is limited by numerous constraints, such as our understanding of the complexity of technology, time and money, imperfect information, and our conflicting goals." These limitations are hindrances to |
B. rational decision making. |
Sal has been in the landscaping business for over 40 years. When Jaime, his business partner, suggested adding snow removal as an extra service, Sal responded with "My gut feeling is to say yes because of my experience in the past and what I have seen other companies do over the years, both successfully and not." Sal is acting on _____ in his response to Jaime. |
E. intuition |
Which of the following is an example of the "curse of knowledge"? |
A. A writer with a large vocabulary writers a novel using many words that the average reader cannot understand. |
Which of the following is not a hindrance to perfectly rational decision making? |
B. intuition |
Olivia, the owner of The Town Gazette, a small city newspaper, started her business two years ago, believing that there was still enough demand for her product. However, because people are busy and because so much news is now available online, she has seen the demand for her paper drop steadily. Olivia made a decision to change the original direction of the company and focus more on an Internet news service. Olivia is relying on _______ by demonstrating that managers need to think and act as if their company is an unfinished prototype, and by seeing her business as outsiders do. |
D. evidence-based decision making |
Despite your best intentions, it's hard to bring the best evidence to bear on your decisions. Why? |
D. There's too much evidence; and there's not enough good evidence and the side effects outweigh the cure. |
Style Mart uses time-series forecasts, such as past holiday sales and the strength of store sales this year, to predict future sales based on patterns of historical data. Style Mart is using |
A. analytics. |
______ is a data-mining technique used to predict future behavior and anticipate the consequences of change. |
D. Predictive modeling |
ABC Medical Technology, a fast-growing global research firm, has accumulated so much client information that conventional database management systems cannot handle its customers' needs. Therefore, ABC purchased very sophisticated analysis software and supercomputing-level hardware. For the company's work with hospitals and university medical schools, ABC has been noted in The Wall Street Journal as a "real pioneer in innovation and productivity." ABC Medical Technology is tapping the power of |
E. Big Data. |
Which of the following is NOT recognized as a key implementation principle of evidence-based management? |
D. Treat your organization as a closed system. |
A person's ________ reflects the combination of how he or she perceives and responds to information. |
B. decision-making style |
_____ is the process of studying large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information. |
E. Big Data analytics |
Debbie likes working in the banking industry because it has a lot of structure and certainty, and the daily work is routine. Debbie probably |
C. has a low tolerance for ambiguity. |
Dave is a salesperson who takes a long time to make decisions. He loves sales because he responds well to the pressure he faces in the many new or uncertain situations he encounters as a salesperson. Like most successful salespeople, he is high in his tolerance for ambiguity. Dave likely has a(n) _____ decision-making style. |
E. analytical |
Marie is a small-business owner who loves to take risks. She also enjoys going out and meeting customers and potential clients—the social aspect of her job. Marie relies on intuition and discussions with others to acquire information. As an interior decorator, Marie utilizes her imaginative strengths, taking a broad perspective to problem solving, and she likes to consider many options and future possibilities. Marie's decision-making style is best described as |
B. conceptual. |
Manuel, a server in a popular family restaurant, is the most popular employee with both customers and employees, and as a result, he usually earns the most in tips. He is always ready to lend a hand when asked, and with his warm personality and supportive nature, people confide in him. Manuel does have a problem telling people no, and he has a tendency to avoid conflict because he is concerned about hurting others or getting people mad. Manuel likely has a(n) ______ decision-making style. |
D. behavioral |
Sam was recently promoted to the production manager of a busy shoe factory. He was chosen because prior to his promotion he had proven himself to be very efficient, and as a department manager he had a logical and practical approach to solving problems. Sam has a reputation for being decisive and getting things done. Most of the factory's employees like Sam, but they feel his style is autocratic, because he likes to do things by the book. Sam has a(n) ______ style. |
A. directive |
Scott has a bachelor's degree in ethics and human resources, and he has extensive experience working with employees and managers regarding ethics, especially in the area of ethical dilemmas. In his current position he has assisted extensively in determining if the company's decisions are both ethical and lawful. Which position in the company does Scott's background make him ideally suited for? |
E. ethics officer |
A decision tree is |
C. a graph of decisions and their possible consequences. |
"Is the proposed action legal? If yes, does the proposed action maximize shareholder value? If yes, is the proposed action ethical? If no, would it be ethical to take the proposed action?" These four questions, which managers of all organizations should ask when confronted with a decision on an action, form the basis of |
D. Bagley's ethical decision tree. |
Patty, the CEO of an oil drilling company, and her top management team recently discovered that their facilities are damaging an Asian beach and the local wildlife. They understand that they need to decide if temporarily closing or not closing the facility is unethical. To help them make their decision, they consider the following four questions: "Is not temporarily closing the facility legal? If yes, does this proposed action maximize shareholder value? If yes, is not temporarily closing the facility ethical? If no, would it be ethical to take the proposed action?" Patty and her top managers are using ____ to help them make their decision. |
A. Bagley's ethical decision tree |
BP and Halliburton executives made the decision not to invest in the oil well blowout preventer that experts believe would have prevented the Deepwater Horizon oil rig explosion and fire off the coast of Louisiana. The executives made their decision based on their belief that their decision would have no great negative consequences. Their decision is an example of |
D. relaxed avoidance. |
Dwight, the general manager of a hotel, knows that one of his housekeeping employees has a serious substance-abuse issue. Dwight knows that because of the seriousness of the issue he needs to talk with the employee. However, his assistant manager asks Dwight if he would like her to deal with it. Dwight knows this is not the best option, but he agrees, knowing it is the easy way out. Dwight's decision is an example of |
B. relaxed change. |
With defensive avoidance, a manager "acts" by _______ when he or she can't find a good solution to a problem. |
D. procrastinating, passing the buck, or denying the risk of any negative consequences |
Ace Manufacturing has high turnover due to issues with the corporate office. Trevor, the plant manager, is frustrated and cannot find a solution to stop it. At first he offered raises to many of the good employees who were leaving, but after a while, Paul started blaming those who were leaving, saying, "They are poor-quality employees and they are to blame for leaving." Trevor is engaged in |
D. defensive avoidance. |
Orlando, the manager of a camera store, believes that his store may be closed by corporate in the near future, so he cannot sleep well at night and he is dealing with severe anxiety and irritability, and he has been ill several times this month. Several times Orlando has missed important details in his job, and he almost got in an automobile accident this morning. Orlando is experiencing |
A. panic. |
"How high priority is this situation? How believable is the information about the situation? How quickly must I act on the information about the situation?" Managers can use these questions to make decisions about (respectively) |
D. importance, credibility, and urgency. |
Gregory was talking with Kareem, his assistant manager, saying, "When I make a decision on which employees will do a project, I use three simple factors, which I call my decision-making 'rules of thumb.' I consider their attitude and knowledge, and how hard they work." Gregory's rules of thumb, _________, is what he uses when making a decision. |
E. heuristics |
Readily available information may not present a complete picture of a situation due to |
A. availability bias. |
When Marcos, the sales manager, is deciding on who will train the new sales trainee, he tries not to look at just the recent sales numbers but also checks past sales reports to determine who is the most productive salesperson. By using this method he is not affected by the ______ bias. |
D. availability |
Phil, the store manager, recently had to fire Sue, an employee who graduated from North College. He felt that Sue was not well trained at her school. So when Steven, also a graduate from North College, applied for Sue's old position, he did not want to consider hiring him, feeling Steven also probably did not receive the proper training. Phil was affected by _____ bias. |
D. representativeness |
When people seek information to support their point of view and discount data that do not, they are subject to ______ bias. For example, Joe uses the fact that his commute is now shorter to confirm his belief that there are fewer cars on the road. However, Joe is not accounting for the fact that he recently took over the graveyard shift, and that traffic is always lighter at night and in the wee hours of the morning. |
C. confirmation |
Malik and his managers spent a large sum of money on the new training program, and they feel that there has been little improvement as a result of the investment. The training is scheduled to continue for two more months, and Malik feels that the company has already spent too much money on the training to simply abandon it. Malik is experiencing |
D. sunk-cost bias. |
Felipe and Meg are selling their home. They listed their house three months ago at an extremely high selling price, a price they randomly chose. They do not want to reduce the price to reflect what the marketplace shows their home is really worth. Felipe and Meg are participants in _____ bias. |
E. anchoring and adjustment |
____ occurs when people's subjective confidence in their decision making is greater than their objective accuracy. For example, Sara thinks she is a superb writer and editor, but her reports are always filled with typos, grammatical errors, and sentence fragments. |
B. Overconfidence bias |
Republic advertisements about Representative Joe Smith, the Democratic candidate, portray him as lazy, dishonest, and poor at his job. At the same time, the Democratic ads for Joe Smith describe him as a caring, honest, hard worker. The sponsors of these advertisements know that ads can affect whom voters choose on Election Day. The tendency of decision makers (the voters in this example) to be influenced by how a situation or problem is presented to them is an example of |
A. framing bias. |
Peter, the owner of a local real estate agency, is even more committed to making the used copier, which he recently purchased, work even though it keeps jamming, and his employees have been telling him about other problems they have been having with the copier. The ______ affects Peter's decision making. |
D. escalation of commitment bias |
_____ causes people to view events as being more predictable than they really are. |
B. Hindsight bias |
The advantages of _______ are having a greater pool of knowledge, gaining different perspectives, gaining intellectual stimulation, having a better understanding of decision rationale, and having a deeper commitment to the decision. |
A. group decision making |
Goal displacement, satisficing, and groupthink are |
C. the disadvantages of group decision making |
George, Donna, and Maria are on the five-member Benefits Task Force that is researching options for the new benefits package. Over lunch, George suggests that going with the Members' Choice HMO is the best course of action, and Donna and Maria agree with George for the sake of unanimity, without ever researching and accurately assessing the decision. George, Donna, and Maria are engaged in |
A. groupthink. |
Satisficing is the tendency of |
C. a group to settle on a decision that is "good enough." |
The Safety Committee at Office Supply Mart was formed to help make the store a safer place, and some of the committee's suggestions are going to be costly. During the committee meeting, the vice president of accounting announced that company profits were much lower than expected, and she suggested that profits are more important than safety. The profit goal is now outweighing the committee's safety goal, which is an example of |
E. goal displacement. |
In regard to decision making, which of the following statements reflects what research has found? |
D. Groups make better decisions than most individuals acting alone. |
With regard to decision making, it is accurate to say that groups |
C. have higher decision-making accuracy when group members know a good deal about the relevant issues. |
Roberta, the computer department manager at IT Mart, is considering whether to use a group to develop a plan to help employees sell extended warranties on technology sales. Roberta should consider having the group make this decision if |
B. it will increase acceptance of the plan. |
____ is a technique used to help groups generate multiple ideas and alternatives for solving problems. |
D. Brainstorming |
The Delphi technique is a group process that uses physically dispersed experts who fill out questionnaires to |
B. anonymously generate ideas. |
Don, a new manager, commented to a friend, "I am excited about different aspects of my new job. The company computers have entered the field of decision making. The network not only collects information more quickly, but the system also reduces the roadblocks when I need a group consensus." Don is referring to |
D. a decision support system. |
A(n) _______ is a computer-based information system that provides a flexible tool for analysis and helps managers focus on the future. |
E. decision support system |
How do you know that a group in which you're taking part is suffering from groupthink? |
A. Peer pressure makes you agree with the ideas of the other people in your group. |
Which of the following is not a guideline that can lead to effective brainstorming? |
B. Eliminate ideas that will be too costly. |