chap 003

Chapter 03

Managerial Decision Making

True / False Questions

1. Managers often avoid taking action when faced with challenges. True False

2. Managers typically face structured problems they have seen before, which makes the decision process easier because there is a procedure to follow already. True False

3. Reggie is the owner of a new bike shop and must decide how much to withhold from employee paychecks as income tax. This is an example of a nonprogrammed decision. True False

4. Programmed decisions are useful when there is no predetermined structure on which to rely. True False

5. Important, difficult decisions tend to be nonprogrammed, and they demand creative approaches. True False

6. During and after the BP oil spill, which devastated large areas in the Gulf of Mexico, the decisions made by government officials and BP were mostly programmed. True False

7. Managers prefer uncertainty to certainty because it makes the job more challenging and interesting. True False

8. Risk is a fact of life in nonprogrammed management decisions. True False

9. Another way of referring to "risk" is "taking a risk." True False

10.

Conflict exists when the manager must consider opposing pressures from different sources. True False

11.

A school principal faces conflict when she must decide whether to give all staff an 8 percent pay cut or lay off four full-time employees. True False

12.

The first stage of decision making requires the decision maker to generate alternatives. True False

13.

The "problem" in decision making may actually be an opportunity that needs to be exploited. True False

14.

Sara, a warehouse manager, needed a fast solution when an employee asked for a day off for the following week when the whole crew was supposed to be doing inventory. For her, a ready-made alternative will be quicker than designing a custom-made solution. True False

15.

Ideas that have been seen or tried before are known as ready-made solutions. True False

16.

Fundamental to choosing an alternative is predicting the consequences that will occur if the various options are put into effect. True False

17.

After a decision is made and implemented, only then should contingency plans be developed. True False

18.

Managers use satisficing to achieve the best possible outcome. True False

19.

When you satisfice, you compare your choice against your goal, not against other options. True False

20.

Maximizing means that you achieve the best possible balance among several goals. True False

21.

Decision makers should presume that with a carefully made decision, things will go smoothly during implementation. True False

22.

Evaluating the decision is always useful, whether the outcome has been positive or negative. True False

23.

To exhibit vigilance, a decision maker must evaluate every decision he or she makes. True False

24.

Following all six stages of the decision making process guarantees successful decisions. True False

25.

Barriers to effective decision making include psychological biases, time pressures, and social realities. True False

26.

Patrick was disappointed when the marketing research team reported that a new product was not received well by customers in a focus group. He felt the company should go ahead with its release, convinced it was a revolutionary idea that he could make successful. Patrick could be suffering from the illusion of control. True False

27.

Framing effects refer to a decision bias influenced by the way in which a problem or decision alternative is phrased or presented. True False

28.

Governmental budget deficits, environmental destruction, and decaying urban infrastructure can be partially explained by the bias known as discounting the future. True False

29.

In almost every business situation, the quality of the decision is far more important than the speed at which the decision is made. True False

30.

Many organizational decisions are the result of intensive social interactions, bargaining, and politicking. True False

31.

If enough time is available, groups typically make better decisions than most individuals acting alone. True False

32.

One advantage of using a group for decision making is groupthink. True False

33.

One potential advantage of a group for decision making is that people are likely to be more committed to the decision. True False

34.

A condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges is called goal displacement. True False

35.

The three requirements for effective group decision making are an appropriate leadership style, the constructive use of disagreement and conflict, and the enhancement of creativity. True False

36.

The most constructive type of conflict is affective conflict. True False

37.

Cognitive conflict is differences in perspectives or judgments about issues, whereas abject conflict is emotional and directed at other people. True False

38.

The job of a "devil's advocate" is to add a personal or emotional element to the conflict. True False

39.

The most fundamental unit of value in the creativity revolution is ideas. True False

40.

In brainstorming, group members generate as many ideas about a problem as they can while simultaneously critiquing them. True False

41.

Complimenting one another and telling stories are examples of behaviors that can make brainstorming less effective. True False

42.

Bounded rationality is a less-than-perfect form of rationality in which decision makers cannot be perfectly rational because decisions are complex and complete information is unavailable or cannot be fully processed. True False

43.

The incremental model of decision making occurs when managers make small decisions and move cautiously toward a bigger solution. True False

44.

The confrontational model of decision making arises when people disagree on goals or compete with one another for resources. True False

45.

The kitchen sink model of decision making occurs when people aren't sure of their goals, or disagree about the goals, and likewise are unsure of or in disagreement about what to do. True False

46.

Decision making under crisis conditions will inevitably result in poor decisions and negative publicity. True False

Multiple Choice Questions

47.

Managers often ignore challenges for which of the following reasons?

A. They don't agree with the outcome.

B. It's not the managers' job to solve problems, so they typically refer issues to HR.

C. Getting involved won't impress their bosses.

D. Employees actually prefer a hands-off boss who lets them handle conflict on their own.

E. Managers cannot be sure how much time, energy, or trouble lie ahead once they start working on a problem.

48.

Characteristics of managerial decisions include which of the following?

A. Guaranteed success.

B. Certainty.

C. Conflict.

D. Structure.

E. Speed.

49.

__________ are those decisions encountered and made before, having objectively correct answers, and solvable by using simple rules, policies, or numerical computations.

A. Structured decisions

B. Unstructured decisions

C. Restructured decisions

D. Nonprogrammed decisions

E. Programmed decisions

50.

Important, difficult decisions that require creative approaches tend to be

A. Qualitative decisions.

B. Programmed decisions.

C. Noneconomic decisions.

D. Nonprogrammed decisions.

E. Policy decisions.

51.

New, novel, complex decisions having no proven answers are

A. Nonprogrammed decisions.

B. Standing decisions.

C. Single-use decisions.

D. Corporate objectives.

E. Programmed decisions.

52.

Gemma, who owns the tutorial service Math Machine, is contemplating whether to let one of her experienced tutors open a second location in an adjacent town. She is facing a _______ decision.

A. routine

B. programmed

C. nonroutine

D. nonprogrammed

E. satisficing

53.

Ari works for the federal government in acquisitions. Policy requires that in contracting with suppliers, at least three bids must be received and the lowest bid that meets specifications will be accepted. Ari's decisions regarding the contracts with suppliers would be classified as

A. Minimized.

B. Programmed.

C. Structured.

D. Logical.

E. Maximized.

54.

The state that exists when decision makers have incomplete information is known as

A. Uncertainty.

B. Probability analysis.

C. Ambiguity.

D. Policy formulation.

E. Risk.

55.

________ regarding the strength and timing of the economic recovery in 2010 and 2011 made businesses slow to start hiring.

A. Uncertainty

B. Improbability

C. Conflict

D. Policy formulation

E. Risk

56.

Uncertainty exists when the manager

A. Faces two conflicting issues.

B. Knows the risk involved in making the decision.

C. Has accurate and comprehensive information to make the decision.

D. Has insufficient information to make the decision.

E. Knows that the probability of success is less than 100 percent.

57.

The state that exists when the probability of success is less than 100 percent and losses may occur is

A. Uncertainty.


C. Risk.

D. Certainty.

E. Policy formulation.

58.

A manager is dealing with ________ if she is considering opposing pressures from different sources.

A. conflict

B. cooptation

C. collusion

D. cohesiveness

E. groupthink

59.

Marisol has received two job offers. One is from a firm in Seattle, where she would like to live, but the other offer in Kansas City is near her family and friends. Marisol is having a difficult time making a decision due to experiencing

A. Internal conflict.

B. Organizational conflict.

C. Physiological conflict.

D. Psychological conflict.

E. Individual conflict.

60.

Casey, a middle manager at a cosmetics company, is encountering an issue between two of her departments because both want a new copier to be located in their areas. This would best be described as

A. Emotional conflict.

B. Conflict between groups.

C. Identificational conflict.


E. External conflict.

61.

The initial step in the decision making process is to

A. Select an alternative.

B. Evaluate the decision.

C. Challenge the status quo.

D. Generate alternatives.

E. Identify the problem.

62.

A manager may discover that a problem exists with current company performance by comparing it with

A. Past performance.

B. The performance of other organizations.

C. Future performance forecasts.

D. Desired performance based on the business plan for the year.

E. All of these.

63.

The manager of the Capitol Restaurant noted that the restaurant had experienced a decreased number of evening customers. The manager promptly ordered the chef to rewrite the evening menu. Customer feedback later indicated that the problem had not been the menu but poor service from the wait staff. The manager's decision to have the menu revised suggests that he failed to

A. Challenge the status quo.

B. Evaluate the alternatives and consequences.

C. Properly diagnose the cause of the problem.

D. Evaluate the decision and its consequences.

E. Identify a solution.

64.

Once a problem is identified and properly diagnosed, the next stage in the decision making process involves

A. Evaluating alternatives.

B. Evaluating consequences.

C. Evaluating information.

D. Evaluating the decision.

E. Generating alternative solutions.

65.

When a solution is specifically designed for a particular problem or set of problems, it is called a

A. Designer-enhanced solution.

B. Dynamic solution.

C. Ready-made solution.

D. User-generated solution.

E. Custom-made solution.

66.

Custom-made decisions most often require

A. A consultant.

B. In-depth computations.

C. Top management approval.

D. Creativity.

E. Brainstorming.

67.

Alternative courses of action that can be implemented based on how the future unfolds are called

A. Single-use plans.

B. Contingency plans.

C. Standing plans.


E. Shadow plans.

68.

Irena, the manager of Kiddy Couture, knows that the economy greatly affects her business. She has developed a plan of action for each of four possible economic outcomes may occur in her geographic area over the next four to six years. Here Irena is

A. Facing a stable environment.

B. Utilizing contingency planning.

C. Focusing on efficient decisions.

D. Engaging in satisficing.

E. An irrational decision maker.

69.

__________ requires searching thoroughly for a complete range of alternatives, carefully assessing each alternative, comparing one to another, and then choosing or creating the very best.

A. Benchmarking

B. Maximizing

C. Minimizing

D. Satisficing

E. Optimizing

70.

Making a decision by accepting the first option that meets your goal is referred to as

A. Optimizing.

B. Satisficing.

C. Maximizing.

D. Minimizing.

E. Accepting.

71.

Victor, an administrative assistant in accounting, orders office supplies biweekly; today he needs pens, sticky notes, and staples. He looks at the office supply catalog and quickly picks a selection for each that is priced acceptably. Here Victor is using

A. Minimizing.

B. Optimizing.

C. Satisficing.

D. Management by exception.

E. Maximizing.

72.

To maximize a decision is to

A. Realize the largest possible production benefit.

B. Involve as many people affected by the decision as possible in its design.

C. Achieve the best possible outcome.

D. Utilize groupthink for individual decisions.

E. Generate many alternatives for evaluation.

73.

Managers who optimize their decisions will attempt to choose

A. The first minimally acceptable alternative.

B. Among those alternatives with most predictable results.

C. The least expensive alternative.

D. That alternative that produces the least conflict.

E. An alternative that achieves the best possible balance among several goals.

74.

Nigel, a manager at Montlucon Eyewear, needed to purchase a new secure display case for his most expensive sunglasses. He wanted one that was high in quality and security, yet low in price. The case he chose was neither the highest quality available, nor the lowest in price available, yet it had a good combination of attributes. Nigel's choice illustrates

A. Maximizing.

B. Satisficing.

C. Optimizing.

D. Minimizing.

E. Programming.

75.

Implementing a decision must be planned carefully. Adequate planning most often requires which of the following steps?

A. Determine how things will turn out before the decision is made.

B. List the resources and activities required.

C. Be sure the CEO agrees with the implementation decision.

D. Allow employees to take on responsibility once the implementation has begun.

E. Encourage vigilance.

76.

The final stage in the decision-making process is

A. Anticipating the results.

B. Implementing the solution.

C. Diagnosing remaining issues.

D. Criteria analysis.

E. Evaluating the decision.

77.

Negative feedback received during the final evaluation of the decision indicates that either the implementation will require more time or that

A. The problem cannot be solved.

B. The implementation has used too many resources.

C. The manager is not capable of rational decisions.

D. The decision was a bad one.

E. The scenarios were labeled incorrectly.

78.

Vigilance in decision making means

A. The customer realizes increased value as a result of the decision.

B. The manager has carefully and conscientiously completed all stages in the decision-making process.

C. The manager has been monitored during the decision making process.

D. The employees monitor the implementation of the decision carefully.

E. The employees have been monitored to see their reactions to the decision.

79.

Psychological bias in decision making is best described as

A. The effect that people's psychological capabilities have upon the decisions they must make under pressure.

B. What happens when a decision maker must balance the preferences of many interested parties, diluting effectiveness.

C. The conflict that results from too many people involved with making a decision.

D. The inability to be objective when gathering, evaluating, and applying information for decision making.

E. The fact that people are motivated by a need for power that clouds their decision making capabilities.

80.

Illusion of control, discounting the future, and framing effects are all examples of

A. Social realities.

B. Psychological biases.

C. Rationality.

D. Vigilance.

E. Time pressures.

81.

The psychological bias known as "illusion of control" refers to a

A. Belief that you have ultimate control and no one can take it from you.

B. Belief that you can influence events even when you have no control over what will happen.

C. Lack of confidence in your ability to control your employees.

D. Belief that you have no control and so you don't put any effort into the decision.

E. Belief that some unknown person actually has the control and is waiting for you to make a poor decision.

82.

When business managers ignore risks and fail to objectively evaluate the odds of success for their decisions, it is an example of which of the following psychological biases?

A. Illusion of control.

B. Framing effects.

C. Discounting the future.

D. Time pressure.

E. Social realities.

83.

Which of the following is an example of subjective bias that many corporate executives exhibit?

A. Groupthink.

B. Satisficing.

C. Goal displacement.

D. Framing effects.

E. Minimizing.

84.

The way in which the alternatives to a decision are stated or phrased may have an impact on which alternative is chosen. Varying alternatives can be presented in a more favorable or less favorable way, affecting the decision. This is referred to as

A. Framing effects.

B. Phrasing effects.

C. Biasing effects.

D. Illusional effects.

E. Discounting effects.

85.

Discounting the future refers to

A. Valuing longer-term benefits and costs more heavily than shorter-term benefits and costs.

B. Overestimating the long-term effects of the decision.

C. Underestimating the short-term effects of the decision.

D. Valuing short-term benefits and costs more heavily than longer-term benefits and costs.

E. Making quick decisions with whatever information is at hand.

86.

Which of the following is the best example of a manager discounting the future?

A. "I must consult others in order to make good decisions."

B. "It is important to plan for the long-term health of the company."

C. "Even if it is becoming popular, e-commerce is expensive and difficult."

D. "We must make a profit in order to survive."

E. "I must focus more on quarterly profits now than long-term profitability."

87.

The band Pearl Jam decided not to book any concerts through Ticketmaster as an objection to the virtual monopoly Ticketmaster had on the industry. Initial strong public support was followed by fewer concerts, lower revenues, reduced exposure, and more hassles for the band. In retrospect, the band's decision seems to have

A. Been improperly framed.

B. Been socially irresponsible.

C. Discounted the future.

D. Used psychological conflict.

E. Involved too many conflicting groups.

88.

People who avoid regular dental checkups, students who don't study, and dieters who sneak dessert are all examples of which psychological bias?


B. Framing effects.


D. Time pressures.


89.

Tactics that are used to make decisions quickly while maintaining the high quality of such decisions include

A. Taking a realistic view of the conflict.

B. Involving people in the decision who are experts and can be trusted.

C. Focusing on real-time information.

D. Involving people more effectively and efficiently.

E. Doing all of these.

90.

Real-time information is information that

A. Is obtained with little or no delay.

B. Is based on past performance.

C. Represents a realistic forecast.

D. Is based on adjusted predictions.

E. Is discounted for the future.

91.

Each morning OfficeMax's CEO has a computer-based conference with all store managers. The previous day's challenges are discussed so that problems can be quickly and effectively resolved or even avoided. OfficeMax is utilizing __________ to retain a competitive edge.

A. social realities

B. real-time information

C. psychological biases

D. framing effects

E. quality initiatives

92.

Omar dreaded annual performance reviews. His company had few performance standards, and worse still, if his employees did not like their reviews, they went over his head, and Omar's boss often overturned decisions! These interpersonal factors that decrease the effectiveness of the organization's decisions are best described as

A. Time pressures.

B. Gut feelings.

C. The illusion of control.

D. A lack of control.


93.

The basic philosophy behind group decision making is that "two heads are better than one." But does this statement hold true in an organizational setting?

A. Yes, always.

B. Yes, potentially.

C. No, two does not constitute a group.

D. No, never.

E. No evidence exists to determine this.

94.

Advantages in using a group for decision making include

A. Intellectual stimulation.

B. Domination of the discussion by one member.

C. Groupthink.

D. Satisficing.

E. Goal displacement.

95.

Andersen Tree Farm in Kansas is looking for ways to be more environmentally friendly. Managers interviewed frontline staff to get their opinions and ideas, and invited everyone to participate in deciding which ideas to advance. Staff members were then aware of the various options and recognized the benefits and costs of each. In this scenario, involving the staff most likely helped them to

A. Dominate the discussion and reinforce the organizational structure.

B. Use groupthink to gain buy-in.

C. Please everyone completely.

D. Displace obsolete goals in favor of new ones.

E. Understand the decisions and be more committed to them.

96.

Which of the following is a potential disadvantage of group decisions?

A. Satisficing.

B. A larger pool of information, which causes confusion.

C. Intellectual stimulation, which takes up much more time and delays the decision.

D. Too many approaches and perspectives on the problem.

E. People understand the decision details and are highly critical.

97.

Which of the following statements about group decision making improves the chances that the decision will be implemented successfully?

A. More information is available when several people are making the decision.

B. Different approaches to solving the problem are available.

C. People who participate in a group discussion are more likely to understand why the decision was made.

D. Group discussion provides an opportunity for intellectual stimulation.

E. A single group member can dominates the discussion.

98.

Allowing one person to control a discussion or decision would best be described as

A. Groupthink.

B. Satisficing.

C. Individual dominance.

D. Goal displacement.

E. Esprit de corps.

99.

Nicole was disappointed with her team's discussion regarding next year's marketing campaign. Adam rammed all his ideas through; they were good, but nobody else got a word in or had the opportunity to share. This group experienced

A. Vigilance.

B. Individual dominance.

C. Satisficing.

D. Intellectual stimulation.


100.

A phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus is known as

A. Goal displacement.

B. Domination.

C. Intuition.

D. Groupthink.

E. Satisficing.

101.

When a group accepts an alternative that seems to please the members of the group, but the group has not taken the time or effort to explore many options, the group has

A. Exercised groupthink.

B. Stimulated the intellects of its members.

C. Optimized.

D. Exercised vigilance.

E. Participated in goal displacement.

102.

Groupthink is

A. Avoiding disagreement while striving for consensus.

B. Accomplished by obtaining all members' input.

C. The result of high levels of creativity.

D. Typically superior to individual decision making.

E. An extreme form of satisficing.

103.

Groups that operate under a condition known as groupthink are most likely to be

A. Creative.

B. Lacking in confidence about their abilities.

C. Overcritical.

D. Concerned with maintaining a positive team spirit.

E. Unclear about the decision at hand.

104.

A condition that occurs when a decision-making group loses sight of its original goal and a new, possibly less important, goal emerges is


B. Groupthink.

C. Conflict.

D. Domination.

E. Group alternatives.

105.

When a group member is more interested in winning an argument than solving a problem, __________ has occurred.

A. domination

B. goal displacement

C. groupthink

D. satisficing

E. synergy

106.

Leaders of decision-making groups should

A. Discourage conflict.

B. Encourage groupthink.

C. Help the group satisfice.

D. Pay close attention to the group process.

E. Dominate the discussion.

107.

Issue-based differences in perspectives or judgments are

A. Compromises.

B. Affective conflicts.

C. Cognitive conflicts.

D. Satisfactory conflicts.

E. Dialectic conflicts.

108.

Emotional disagreements directed toward other people are known as

A. Compromises.





109.

Of the possibilities here, the most constructive type of conflict is __________ conflict.

A. the absence of

B. emotional

C. cognitive

D. affective

E. dialectic

110.

Two of your employees consistently disagree with each other; but lately the arguments have become personal, leading to anger and bitterness, and this has begun to impact the whole work group. This situation is best described as

A. Cognitive conflict.

B. Affective conflict.

C. Dialectic conflict.

D. Alliant conflict.

E. Comprehensive conflict.

111.

There seemed to be complacence in the group, so in an effort to combat groupthink and an overall lack of creativity, the group leader Tim assigned Trisha the task of pointing out problems throughout the meeting. In this example, Trisha was playing the role of

A. Conflict manager.

B. Devil's advocate.

C. Dialectic leader.

D. Antagonist.

E. Affective leader.

112.

Which of the following best describes the requirements of the dialectic method?

A. Someone intentionally presents negative arguments to force further investigation of the alternative under consideration.

B. A structured debate between two conflicting courses of action is held.

C. Conflict generated within the group is minimized by enforcing group unity.

D. Conflict generated within the group is maximized by including not only factual counterarguments but also personal attacks.

E. The leader performs the role of peacekeeper when attacks are directed at individuals.

113.

In trying to make a conflict between two employees less personal and emotional, their manager asks each of them to approach the problem from a different viewpoint than their original one. This is an example of encouraging the use of



C. A devil's advocate.

D. Vigilance.

E. Groupthink.

114.

Which of the following statements about encouraging creativity is true?

A. The fundamental unit of value in the creative revolution is artistic ability.

B. You are being creative if you join two previously unrelated things.

C. To be creative you need to be a top student.

D. Your employees will be more creative if you set a tight deadline for them.

E. People are much more likely to be creative if they work alone.

115.

A process in which group members generate as many ideas about a problem as they can and criticism is withheld until all ideas have been proposed is called

A. Brainstorming.

B. Forecasting.

C. Groupthink.

D. Cooperation.

E. Innovation.

116.

In order to be creative, a brainstorming session must

A. Be free of criticism.

B. Be held in private.

C. Be done quickly.

D. Be done face-to-face.

E. Involve industry experts.

117.

____________ is the concept that decision makers cannot be truly rational because decisions are complex and complete information is unavailable.

A. Bounded rationality

B. Incremental decision making

C. Cognitive rationality

D. Coalitional decision making

E. Affective rationality

118.

The _______ model of decision making occurs when decision makers make small decisions and move in piecemeal fashion toward a bigger solution.

A. stepped

B. incremental

C. coalitional

D. garbage can

E. staged

119.

The ___________ model of decision making arises when two or more groups form, each representing a different preference, and each tries to use power and negotiation to sway the decision.

A. bounded rationality

B. incremental

C. garbage can

D. coalitional

E. affective rationality

120.

Sasha leads a research team of engineers and found herself in the midst of a battle between coalitions, each with its own solution to a challenge the team faced. Sasha would be best served by following which of these courses of action?

A. Sasha should collect information both sides and decide herself which is the best approach.

B. Sasha should ask parties from both sides to solve the problem in whatever way they can.

C. Sasha should find a mediator to solve the problem.

D. Sasha should encourage both teams to engage in affective conflict to solve the problem.

E. Sasha should use a collaborative method in which she establishes a goal around which the entire group can rally.

121.

Which of the following statements about decision making in a crisis is true?

A. In crises, managers should make decisions only after taking all of the details into account.

B. Crisis management can be best handled as the crisis occurs.

C. Early warning signals of crisis are unavailable, so bounded rationality must be used.

D. An effective plan for crisis management is essential to include on the management agenda.

E. Crises can never provide benefits to a company.

122.

Which of the following is an element of an effective plan for crisis management?

A. A communication plan that indicates that the company is in complete control.

B. Competitive actions to bounce back immediately.

C. Psychological and cultural actions for the human and emotional toll.

D. A template for a press statement, to be released before details are learned.

E. A method to quickly distance the company from the crisis.

Scenario A

The local Ace Hardware Store manager has several decisions she has to make as the week begins. She always comes in early on Mondays to sift through the paperwork on her desk and decide what needs to be done for the week and in which order. The decisions facing her this week are:

1. Determining which sales representatives to see this week to place orders.2. Providing a report to the owner detailing her opinion of whether or not she should purchase several more Ace locations that are for sale in the area.3. Interviewing applicants for two open part-time positions and hiring them.4. Providing input to the owner on a possible upgrade to the checkout technology currently in use.

123.

The decisions in Scenario A can best be classified as either

A. Risky or nonrisky.

B. Programmed or nonprogrammed.

C. Simple or complex.

D. Necessary or unnecessary.

E. Certain or uncertain.

124.

Decision 4 is an example of which type of decision?

A. Programmed.

B. Nonprogrammed.

C. Simple.

D. Complex.

E. Necessary.

125.

Decisions 1 and 3 are both __________ decisions because ______________.

A. necessary; they are novel and complex

B. nonprogrammed; they are novel and complex

C. programmed; they are can be solved using rules, procedures, and structures

D. risky; they are novel and complex

E. simple; there is a clear and precise correct answer

126.

If, in decision 3, the manager takes the first candidate she sees that meets the minimum requirements, without going through every candidate's file to see if anyone else is better, she is

A. Maximizing.

B. Satisficing.

C. Optimizing.

D. Experiencing internal conflict.

E. Experiencing external conflict.

Scenario B

You work for a new start-up marketing consulting firm. There are five highly opinionated but very committed employees in your group. The owner firmly believes that he should make every decision since he is, as he often says, "the one who signs the checks." While this is true, he often jumps to conclusions, and doesn't even take time to diagnose the problem at hand because he does not like to ask you and your colleagues for your opinions. It has become a very emotional and personal issue for all of you. At this point, most people in the firm agree that the decision making of the owner is going to destroy the young firm before it really gets started.

127.

The owner's belief that he should make every decision himself by diagnosing the problem as he sees it and then immediately implementing a solution is

A. Correct.

B. A mistake that often leads to suboptimal decisions.

C. An example of vigilance.

D. An example of satisficing.

E. An example of maximizing.

128.

Suppose the owner tells you that the reason he makes every decision himself is because he believes that he will be able to influence everything that happens in the business. This unrealistic view is called

A. Framing effects.

B. Discounting the future.

C. Time pressures.

D. The illusion of control.

E. Disillusionment.

129.

If, in the beginning of your work with the company, your differences with the owner were purely based on differences in judgment, but have now deteriorated to the point that your differences are more emotional and directed personally toward one another, it can be said that you initially experienced ___________ but now are experiencing ___________.

A. satisficing; maximizing

B. cognitive conflict; affective conflict

C. affective conflict; cognitive conflict

D. maximizing, satisficing

E. uncertainty; certainty

Scenario C

Jeremy is the lead on a new project at work, and it is essential that he make a good impression on top management. He recently had his first staff meeting to solve a fairly large problem with the project, and it didn't go well. The whole staff of 10 was there, which he thought would lead to buy-in from the group. Instead the group didn't get much done in that meeting.

130.

Jeremy opened the meeting by suggesting to the group that he had put a lot of thought into the problem and that perhaps they should use his ideas to solve the problem. He spent the meeting explaining why this should occur. Jeremy was practicing

A. Satisficing.

B. Groupthink.



E. Intellectual stimulation.

131.

Since the first meeting didn't go well, Jeremy read several management books on working with groups and thought perhaps a longer meeting would allow time to explore several points of view. He chose a Friday afternoon so everyone could go home afterward and not have to rush off to other work appointments. To his surprise, the first idea he suggested was accepted by the group, and the meeting was over in no time! The group was most likely engaging in __________ so they could end the meeting and go home early.

A. groupthink

B. satisficing

C. goal displacement

D. domination

E. intellectual stimulation

132.

Jeremy decided to try another meeting because the project deadline was drawing closer and he was beginning to feel pressure to get something done with his group. He put the agenda out early and felt he was ready to lead the meeting. Shortly after the meeting began, one of his colleagues asked a question that didn't seem to relate to the issue at hand. Nonetheless, trying to be a good leader, Jeremy began to discuss the issues around this new question. Soon the group was in a heated discussion with each side seeming to stop at nothing to "win" the argument. In this meeting the group was engaged in

A. Groupthink.

B. Satisficing.


D. Domination.


Scenario D

Effectively Organized Inc. has hired a consultant to help with organizational decision making. The consultant's first meeting is set up to describe to the managers of Effectively Organized Inc. the models of organizational decision processes. Each of the managers seems to prefer one of the models over the others.

133.

The president of Effectively Organized Inc. responds most positively to the model that is the most cautious. She explains that the budget process is the easiest decision for her because she breaks it into smaller pieces and builds the decisions as she goes. The president seems to prefer which model?

A. Bounded rationality.

B. The incremental model.

C. The garbage can model.

D. The coalitional model.

E. The crisis model.

134.

The vice president of human resources believes decision makers cannot be truly rational in their decisions. He tells the group that he sees many situations with managers who don't have enough time to process all the relevant information and who regularly face very complex problems. He seems to expect which decision process?






135.

The vice president of production tells the group that in his area of the company, many managers don't even agree about what their goals are and certainly cannot agree on what action to take. His managers are using which model of decision making?






136.

The vice president of marketing declares that her people disagree on goals and have now formed groups to advocate for their own interests. Her managers are using






Essay Questions

137.

Differentiate between programmed and nonprogrammed decisions. Give an example of each.

138.

List and explain the six steps of the decision making process.

139.

Define psychological biases and explain how they relates to managerial decision making.

140.

Explain the four disadvantages of using a group to make decisions.

141.

Explain the three requirements of effectively managing group decision making.

142.

Briefly describe the brainstorming process using an example.

143.

Compare and contrast three models of organizational decision processes thought to occur when bounded rationality conditions hold.

144.

Describe the elements of an effective crisis management plan.

Chapter 03 Managerial Decision Making Answer Key

True / False Questions

1. Managers often avoid taking action when faced with challenges. TRUE

Managers often avoid taking action when faced with challenges for a number of reasons. They may not be sure how much time, energy, or trouble lies ahead, getting involved is risky, and problems can be perplexing.

AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-01 Describe the kinds of decisions you will face as a manager.

Level of Difficulty: 2 MediumTopic: Characteristics of Managerial Decisions

2. Managers typically face structured problems they have seen before, which makes the decision process easier because there is a procedure to follow already. FALSE

Lack of structure is the usual state of affairs in managerial decision making. Although some decisions are routine and clear-cut, for most there is no automatic procedure to follow. Problems are novel and unstructured, leaving the decision maker uncertain about how to proceed.

AACSB: Analytic



3. Reggie is the owner of a new bike shop and must decide how much to withhold from employee paychecks as income tax. This is an example of a nonprogrammed decision. FALSE

A nonprogrammed decision is a new, novel, complex decision having no proven answers. How much money Reggie must withhold from employee paychecks has an objectively correct answer and is thus a programmed decision.

AACSB: Analytic



4. Programmed decisions are useful when there is no predetermined structure on which to rely. FALSE

If you face a programmed decision, a clear procedure or structure exists for arriving at the right decision.

AACSB: Analytic



5. Important, difficult decisions tend to be nonprogrammed, and they demand creative approaches. TRUE

Important, difficult decisions tend to be nonprogrammed, and they demand creative approaches. There are a variety of possible solutions, all of which have merits and drawbacks. The decision maker must create or impose a method for making the decision; there is no predetermined structure on which to rely.

AACSB: Analytic



6. During and after the BP oil spill, which devastated large areas in the Gulf of Mexico, the decisions made by government officials and BP were mostly programmed. FALSE

Programmed decisions are those that have been made before, having objectively correct answers and solvable by using simple rules, policies, or numerical computations. The decisions made during and after the oil spill were nonprogrammed decisions in that they were complex decisions having no proven answers.

AACSB: Analytic



7. Managers prefer uncertainty to certainty because it makes the job more challenging and interesting. FALSE

Managers are expressing their preference for certainty when they are not satisfied hearing about what might have happened or may happen, and insist on hearing what did or will happen.

AACSB: Analytic



8. Risk is a fact of life in nonprogrammed management decisions. TRUE

For important, nonprogrammed managerial decisions, uncertainty is the rule. When you can estimate the likelihood of various consequences but still do not know with certainty what will happen, you are facing risk.

AACSB: Analytic



9. Another way of referring to "risk" is "taking a risk." FALSE

Risk, like uncertainty, is a fact of life in managerial decision making. But this is not the same as taking a risk. Good decision makers prefer to manage risk rather than thrive on taking risks.

AACSB: Analytic



10. Conflict exists when the manager must consider opposing pressures from different sources. TRUE

Conflict results from opposing pressures from different sources, occurring on the level of psychological conflict or of conflict between individuals or groups.

AACSB: Analytic

Blooms: RememberLearning Objective: 03-01 Describe the kinds of decisions you will face as a manager.

Level of Difficulty: 1 EasyTopic: Characteristics of Managerial Decisions

11. A school principal faces conflict when she must decide whether to give all staff an 8 percent pay cut or lay off four full-time employees. TRUE

Individual decision makers experience psychological conflict when several options are attractive, or when none of the options is attractive. For instance, a manager may have to decide whom to lay off when she doesn't want to lay off anyone.

AACSB: Analytic

Blooms: ApplyLearning Objective: 03-01 Describe the kinds of decisions you will face as a manager.

Level of Difficulty: 3 HardTopic: Characteristics of Managerial Decisions

12. The first stage of decision making requires the decision maker to generate alternatives. FALSE

The ideal decision making process includes six stages, as Figure 3.2 illustrates: (1) identify and diagnose the problem, (2) generate alternative solutions, (3) evaluate alternatives, (4) make the choice, (5) implement the decision, and (6) evaluate the decision.

Refer To: Figure 3.2

AACSB: Analytic

Blooms: RememberLearning Objective: 03-02 Summarize the steps in making "rational" decisions.

Level of Difficulty: 1 EasyTopic: The Stages of Decision Making

13. The "problem" in decision making may actually be an opportunity that needs to be exploited. TRUE

The "problem" may actually be an opportunity that needs to be exploited: a gap between what the organization is doing now and what it can do to create a more positive future. In that case, decisions involve choosing how to seize the opportunity.

AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-02 Summarize the steps in making "rational" decisions.

Level of Difficulty: 2 MediumTopic: The Stages of Decision Making

14. Sara, a warehouse manager, needed a fast solution when an employee asked for a day off for the following week when the whole crew was supposed to be doing inventory. For her, a ready-made alternative will be quicker than designing a custom-made solution. TRUE

Because a ready-made solution is an idea that has been seen or tried before, it is likely to be implemented more quickly than a custom-made solution that is designed specifically for the problem at hand.

AACSB: Analytic

Blooms: ApplyLearning Objective: 03-02 Summarize the steps in making "rational" decisions.

Level of Difficulty: 3 HardTopic: The Stages of Decision Making

15. Ideas that have been seen or tried before are known as ready-made solutions. TRUE

Decision makers who search for ready-made solutions use ideas they have tried before or follow the advice of others who have faced similar problems.

AACSB: Analytic



16. Fundamental to choosing an alternative is predicting the consequences that will occur if the various options are put into effect. TRUE

Fundamental to the alternative evaluation process is predicting the consequences that will occur if the various options are put into effect. Managers should consider several types of consequences, including quantifiable measures of success, such as lower costs, higher sales, lower employee turnover, and higher profits.

AACSB: Analytic



17. After a decision is made and implemented, only then should contingency plans be developed. FALSE

While a manager is evaluating alternatives, he or she should predict the consequences that will occur if the various options are put into effect; that is, the best time to imagine scenarios and develop contingency plans is during the alternative evaluation process.

AACSB: Analytic



18. Managers use satisficing to achieve the best possible outcome. FALSE

Satisficing is choosing the first option that is minimally acceptable or adequate.

AACSB: Analytic



19. When you satisfice, you compare your choice against your goal, not against other options. TRUE

Satisficing is choosing the first option that is minimally acceptable or adequate. When you satisfice, you compare your choice against your goal, not against other options. The search for alternatives stops at the first one that is okay.

AACSB: Analytic



20. Maximizing means that you achieve the best possible balance among several goals. FALSE

Maximizing is achieving the best possible outcome. Optimizing means that you achieve the best possible balance among several goals, like good quality at a reasonable price.

AACSB: Analytic



21. Decision makers should presume that with a carefully made decision, things will go smoothly during implementation. FALSE

Decision makers should presume that things will NOT go smoothly during implementation. It is useful to take a little extra time to identify potential problems and opportunities associated with implementation.

AACSB: Analytic



22. Evaluating the decision is always useful, whether the outcome has been positive or negative. TRUE

Decision evaluation is useful whether the conclusion is positive or negative. Feedback that suggests the decision is working implies that the decision should be continued and perhaps applied elsewhere in the organization. Negative feedback means that either (1) implementation will require more time, resources, effort, or thought or (2) the decision was a bad one.

AACSB: Analytic



23. To exhibit vigilance, a decision maker must evaluate every decision he or she makes. TRUE

Vigilance occurs when decision makers carefully and conscientiously execute all six stages of decision making, including making provisions for implementation and evaluation.

AACSB: Analytic

Blooms: RememberLearning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions.

Level of Difficulty: 1 EasyTopic: The Best Decision

24. Following all six stages of the decision making process guarantees successful decisions. FALSE

Even if managers reflect on their decision-making activities and conclude that they executed each step conscientiously, they still will not know whether the decision will work; after all, nothing guarantees a good outcome.

AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions.

Level of Difficulty: 2 MediumTopic: The Best Decision

25. Barriers to effective decision making include psychological biases, time pressures, and social realities. TRUE

There are many reasons why people do not use rational decision-making processes. Decisions are influenced by subjective psychological biases, time pressures, and social realities, for example.

AACSB: Analytic


Level of Difficulty: 2 MediumTopic: Barriers to Effective Decision Making

26. Patrick was disappointed when the marketing research team reported that a new product was not received well by customers in a focus group. He felt the company should go ahead with its release, convinced it was a revolutionary idea that he could make successful. Patrick could be suffering from the illusion of control. TRUE

The illusion of control is a belief that one can influence events even when one has no control over what will happen. In business, such overconfidence can lead to failure because decision makers ignore risks and fail to objectively evaluate the odds of success.

AACSB: Analytic

Blooms: ApplyLearning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions.

Level of Difficulty: 3 HardTopic: Barriers to Effective Decision Making

27. Framing effects refer to a decision bias influenced by the way in which a problem or decision alternative is phrased or presented. TRUE

Framing effects refer to how problems or decision alternatives are phrased or presented and how these subjective influences can override objective facts.

AACSB: Analytic


Level of Difficulty: 1 EasyTopic: Barriers to Effective Decision Making

28. Governmental budget deficits, environmental destruction, and decaying urban infrastructure can be partially explained by the bias known as discounting the future. TRUE

Discounting the future is a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits. Discounting the future is said to partly explain governmental budget deficits, environmental destruction, and decaying urban infrastructure.

AACSB: Analytic



29. In almost every business situation, the quality of the decision is far more important than the speed at which the decision is made. FALSE

In today's rapidly changing business environment, the premium is on acting quickly and keeping pace. The most conscientiously made business decisions can become irrelevant and even disastrous if managers take too long to make them.

AACSB: Analytic



30. Many organizational decisions are the result of intensive social interactions, bargaining, and politicking. TRUE

Important managerial decisions are marked by conflict among interested parties. Therefore, many decisions are the result of intensive social interactions, bargaining, and politicking.

AACSB: Analytic



31. If enough time is available, groups typically make better decisions than most individuals acting alone. TRUE

If enough time is available, groups usually make higher-quality decisions than most individuals acting alone. However, groups are often inferior to the best individual in decision making.

AACSB: Analytic

Blooms: Understand

Learning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions.Level of Difficulty: 2 Medium

Topic: Decision Making in Groups

32. One advantage of using a group for decision making is groupthink. FALSE

According to Table 3.2, one potential disadvantage of using a group to make decisions is groupthink.

Refer To: Table 3.2

AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions.

Level of Difficulty: 2 MediumTopic: Decision Making in Groups

33. One potential advantage of a group for decision making is that people are likely to be more committed to the decision. TRUE

Group discussion typically leads to a higher level of commitment to the decision. Buying into the proposed solution translates into high motivation to ensure that it is executed well.

Refer To: Table 3.2

AACSB: Analytic



34. A condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges is called goal displacement. TRUE

The goal of group members should be to come up with the best possible solution to the problem. But when goal displacement occurs, new goals emerge to replace the original ones. Sometimes saving face and defeating the other person's idea become more important than solving the problem.

AACSB: Analytic

Blooms: RememberLearning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions.

Level of Difficulty: 1 EasyTopic: Decision Making in Groups

35. The three requirements for effective group decision making are an appropriate leadership style, the constructive use of disagreement and conflict, and the enhancement of creativity. TRUE

The leader of a decision-making body must attempt to minimize process-related problems. Furthermore, total and consistent agreement among group members can be destructive and lead to groupthink. Finally, the group may need to be creative in generating ideas, especially if custom-made solutions to problems are needed.


AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-05 Identify procedures to use in leading a decision-making group.

Level of Difficulty: 2 MediumTopic: Managing Group Decision Making

36. The most constructive type of conflict is affective conflict. FALSE

The most constructive type of conflict is cognitive conflict, or differences in perspectives or judgments about issues. In contrast, affective conflict is emotional and directed at other people. Affective conflict is likely to be destructive to the group because it can lead to anger, bitterness, goal displacement, and lower-quality decisions.

AACSB: Analytic



37. Cognitive conflict is differences in perspectives or judgments about issues, whereas abject conflict is emotional and directed at other people. FALSE

The most constructive type of conflict is cognitive conflict, or differences in perspectives or judgments about issues. In contrast, affective conflict is emotional and directed at other people. Affective conflict is likely to be destructive to the group because it can lead to anger, bitterness, goal displacement, and lower-quality decisions.

AACSB: Analytic

Blooms: RememberLearning Objective: 03-05 Identify procedures to use in leading a decision-making group.

Level of Difficulty: 1 EasyTopic: Managing Group Decision Making

38. The job of a "devil's advocate" is to add a personal or emotional element to the conflict. FALSE

A devil's advocate has the job of criticizing ideas. The group leader can formally assign people to play this role. Requiring people to point out problems can lessen inhibitions about disagreeing and make the conflict less personal and emotional.

AACSB: Analytic



39. The most fundamental unit of value in the creativity revolution is ideas. TRUE

Some have said we are in the midst of the next great business revolution: the "creative revolution." Said to transcend the agricultural, industrial, and information revolutions, the most fundamental unit of value in the creativity revolution is ideas.

AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-06 Explain how to encourage creative decisions.


40. In brainstorming, group members generate as many ideas about a problem as they can while simultaneously critiquing them. FALSE

Brainstorming is a process in which group members generate as many ideas about a problem as they can but criticism is withheld until all ideas have been proposed.

AACSB: Analytic



41. Complimenting one another and telling stories are examples of behaviors that can make brainstorming less effective. TRUE

Brainstorming isn't necessarily as effective as some people think. Sometimes in a brainstorming session people engage in noncreative behaviors, including cocktail party-type conversations (complimenting one another, repeating ideas, telling stories) that are nice but don't promote creativity.

AACSB: Analytic



42. Bounded rationality is a less-than-perfect form of rationality in which decision makers cannot be perfectly rational because decisions are complex and complete information is unavailable or cannot be fully processed. TRUE

According to Simon's bounded rationality, decision makers cannot be truly rational because (1) they have imperfect, incomplete information about alternatives and consequences; (2) the problems they face are so complex; (3) human beings simply cannot process all the information to which they are exposed; (4) there is not enough time to process all relevant information fully; and (5) people, including managers within the same firm, have conflicting goals.

AACSB: Analytic

Blooms: RememberLearning Objective: 03-07 Discuss the processes by which decisions are made in organizations.

Level of Difficulty: 1 EasyTopic: Organizational Decision Making

43. The incremental model of decision making occurs when managers make small decisions and move cautiously toward a bigger solution. TRUE

The incremental model of decision making occurs when decision makers make small decisions, take little steps, and move cautiously in piecemeal fashion toward a bigger solution.

AACSB: Analytic



44. The confrontational model of decision making arises when people disagree on goals or compete with one another for resources. FALSE

The coalitional model of decision making arises when people disagree on goals or compete with one another for resources. The decision process becomes political as groups of individuals band together and try collectively to influence the decision.

AACSB: Analytic



45. The kitchen sink model of decision making occurs when people aren't sure of their goals, or disagree about the goals, and likewise are unsure of or in disagreement about what to do. FALSE

The garbage can model of decision making occurs when people aren't sure of their goals, or disagree about the goals, and likewise are unsure of or in disagreement about what to do. This model implies that some decisions are chaotic and almost random.

AACSB: Analytic



46. Decision making under crisis conditions will inevitably result in poor decisions and negative publicity. FALSE

A crisis, managed effectively, can have benefits, such as strengthened bonds with those that are assisted during the crisis.

AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-08 Describe how to make decisions in a crisis.

Level of Difficulty: 2 MediumTopic: Organizational Decision Making

Multiple Choice Questions

47. Managers often ignore challenges for which of the following reasons?

A. They don't agree with the outcome.

B. It's not the managers' job to solve problems, so they typically refer issues to HR.

C. Getting involved won't impress their bosses.

D. Employees actually prefer a hands-off boss who lets them handle conflict on their own.

E. Managers cannot be sure how much time, energy, or trouble lie ahead once they start working on a problem.

Managers often ignore problems for several reasons: they can't be sure how much time, energy, or trouble lie ahead once they start working on a problem; getting involved is risky; and it is easier to procrastinate or to get busy with less demanding activities.

AACSB: Analytic



48. Characteristics of managerial decisions include which of the following?

A. Guaranteed success.

B. Certainty.

C. Conflict.

D. Structure.

E. Speed.

Figure 3.1 illustrates the four characteristics of managerial decisions: risk, uncertainty, conflict, and lack of structure.


AACSB: Analytic



49. __________ are those decisions encountered and made before, having objectively correct answers, and solvable by using simple rules, policies, or numerical computations.

A. Structured decisions

B. Unstructured decisions

C. Restructured decisions

D. Nonprogrammed decisions

E. Programmed decisions

Programmed decisions have been encountered and made before. They have objectively correct answers and can be solved by using simple rules, policies, or numerical computations. If you face a programmed decision, a clear procedure or structure exists for arriving at the right decision.

AACSB: Analytic



50. Important, difficult decisions that require creative approaches tend to be

A. Qualitative decisions.

B. Programmed decisions.

C. Noneconomic decisions.

D.Nonprogrammed decisions.

E. Policy decisions.

Nonprogrammed decisions are new, novel, complex decisions having no certain outcomes. Important, difficult decisions tend to be nonprogrammed, and they demand creative approaches.

AACSB: Analytic



51. New, novel, complex decisions having no proven answers are

A.Nonprogrammed decisions.

B. Standing decisions.

C. Single-use decisions.


E. Programmed decisions.

Nonprogrammed decisions are new, novel, complex decisions having no certain outcomes. Important, difficult decisions tend to be nonprogrammed, and they demand creative approaches.

AACSB: Analytic



52. Gemma, who owns the tutorial service Math Machine, is contemplating whether to let one of her experienced tutors open a second location in an adjacent town. She is facing a _______ decision.

A. routine

B. programmed

C. nonroutine

D.nonprogrammed

E. satisficing

Gemma is facing a nonprogrammed decision; that is, it is a new, novel, complex decision having no certain outcomes.

AACSB: Analytic



53. Ari works for the federal government in acquisitions. Policy requires that in contracting with suppliers, at least three bids must be received and the lowest bid that meets specifications will be accepted. Ari's decisions regarding the contracts with suppliers would be classified as

A. Minimized.

B.Programmed.

C. Structured.

D. Logical.

E. Maximized.

Programmed decisions have been encountered and made before. Ari faces a programmed decision because a clear procedure or structure exists for arriving at the right decision.

AACSB: Analytic



54. The state that exists when decision makers have incomplete information is known as

A.Uncertainty.


C. Ambiguity.

D. Policy formulation.

E. Risk.

Uncertainty means the manager has insufficient information to know the consequences of different actions.

AACSB: Analytic



55. ________ regarding the strength and timing of the economic recovery in 2010 and 2011 made businesses slow to start hiring.

A.Uncertainty

B. Improbability

C. Conflict

D. Policy formulation

E. Risk

Uncertainty means the manager has insufficient information to know the consequences of different actions. Businesspeople do not like uncertainty; it can hold them back from taking action. For example, uncertainty about the strength and timing of the economic recovery in 2010 and 2011 made businesses slow to start hiring.

AACSB: Analytic



56. Uncertainty exists when the manager

A. Faces two conflicting issues.

B. Knows the risk involved in making the decision.

C. Has accurate and comprehensive information to make the decision.

D.Has insufficient information to make the decision.

E. Knows that the probability of success is less than 100 percent.

Uncertainty means the manager has insufficient information to know the consequences of different actions.

AACSB: Analytic



57. The state that exists when the probability of success is less than 100 percent and losses may occur is

A. Uncertainty.


C. Risk.

D. Certainty.

E. Policy formulation.

Risk exists when the probability of an action being successful is less than 100 percent and losses may occur. If the decision is the wrong one, you may lose money, time, reputation, or other important assets.

AACSB: Analytic



58. A manager is dealing with ________ if she is considering opposing pressures from different sources.

A.conflict

B. cooptation

C. collusion

D. cohesiveness

E. groupthink

Conflict occurs when there are opposing pressures from different sources, occurring on the level of psychological conflict or of conflict between individuals or groups.

AACSB: Analytic



59. Marisol has received two job offers. One is from a firm in Seattle, where she would like to live, but the other offer in Kansas City is near her family and friends. Marisol is having a difficult time making a decision due to experiencing

A. Internal conflict.

B. Organizational conflict.

C. Physiological conflict.

D.Psychological conflict.

E. Individual conflict.

Conflict occurs when there are opposing pressures from different sources, occurring on the level of psychological conflict or of conflict between individuals or groups. Marisol's conflict is psychological since both opportunities are attractive to her in some way.

AACSB: Analytic



60. Casey, a middle manager at a cosmetics company, is encountering an issue between two of her departments because both want a new copier to be located in their areas. This would best be described as

A. Emotional conflict.

B.Conflict between groups.

C. Identificational conflict.


E. External conflict.

Conflict occurs when there are opposing pressures from different sources, occurring on the level of psychological conflict or of conflict between individuals or groups. This conflict is between groups, the two departments.

AACSB: Analytic



61. The initial step in the decision making process is to

A. Select an alternative.

B. Evaluate the decision.

C. Challenge the status quo.

D. Generate alternatives.

E. Identify the problem.

As Figure 3.2 illustrates, decision makers should (1) identify and diagnose the problem, (2) generate alternative solutions, (3) evaluate alternatives, (4) make the choice, (5) implement the decision, and (6) evaluate the decision.


AACSB: Analytic



62. A manager may discover that a problem exists with current company performance by comparing it with

A. Past performance.

B. The performance of other organizations.

C. Future performance forecasts.

D. Desired performance based on the business plan for the year.

E. All of these.

The first stage in the decision-making process is to recognize that a problem exists and must be solved. Typically a manager realizes some discrepancy between the current state (the way things are) and a desired state (the way things ought to be). Here all are comparisons a manager might make.

AACSB: Analytic



63. The manager of the Capitol Restaurant noted that the restaurant had experienced a decreased number of evening customers. The manager promptly ordered the chef to rewrite the evening menu. Customer feedback later indicated that the problem had not been the menu but poor service from the wait staff. The manager's decision to have the menu revised suggests that he failed to

A. Challenge the status quo.

B. Evaluate the alternatives and consequences.

C. Properly diagnose the cause of the problem.

D. Evaluate the decision and its consequences.

E. Identify a solution.

The manager must dig in deeper and attempt to diagnose the situation of decreased customers rather than promptly changing the menu without considering the true cause of the drop in customers; he must identify the real problem.

AACSB: Analytic



64. Once a problem is identified and properly diagnosed, the next stage in the decision making process involves

A. Evaluating alternatives.

B. Evaluating consequences.

C. Evaluating information.

D. Evaluating the decision.

E. Generating alternative solutions.

The second stage of decision making links problem diagnosis to the development of alternative courses of action aimed at solving the problem.

AACSB: Analytic



65. When a solution is specifically designed for a particular problem or set of problems, it is called a

A. Designer-enhanced solution.

B. Dynamic solution.

C. Ready-made solution.

D. User-generated solution.

E. Custom-made solution.

Custom-made solutions must be designed for specific problems. This technique often combines ideas into new, creative solutions.

AACSB: Analytic



66. Custom-made decisions most often require

A. A consultant.

B. In-depth computations.

C. Top management approval.

D.Creativity.

E. Brainstorming.

Custom-made solutions must be designed for specific problems. This technique often combines ideas into new, creative solutions.

AACSB: Analytic



67. Alternative courses of action that can be implemented based on how the future unfolds are called

A. Single-use plans.

B.Contingency plans.

C. Standing plans.


E. Shadow plans.

Sometimes decision makers can build in safeguards against an uncertain future by considering the potential consequences of several different scenarios. Then they generate contingency plans, alternative courses of action that can be implemented depending on how the future unfolds.

AACSB: Analytic



68. Irena, the manager of Kiddy Couture, knows that the economy greatly affects her business. She has developed a plan of action for each of four possible economic outcomes may occur in her geographic area over the next four to six years. Here Irena is

A. Facing a stable environment.

B.Utilizing contingency planning.

C. Focusing on efficient decisions.

D. Engaging in satisficing.

E. An irrational decision maker.

Sometimes decision makers can build in safeguards against an uncertain future by considering the potential consequences of several different scenarios. Then they generate contingency plans, alternative courses of action that can be implemented depending on how the future unfolds.

AACSB: Analytic



69. __________ requires searching thoroughly for a complete range of alternatives, carefully assessing each alternative, comparing one to another, and then choosing or creating the very best.

A. Benchmarking

B.Maximizing

C. Minimizing

D. Satisficing

E. Optimizing

The maximizing decision realizes the greatest positive consequences and the fewest negative consequences. Maximizing requires searching thoroughly for a complete range of alternatives, carefully assessing each alternative, comparing one to another, and then choosing or creating the very best.

AACSB: Analytic



70. Making a decision by accepting the first option that meets your goal is referred to as

A. Optimizing.

B.Satisficing.

C. Maximizing.

D. Minimizing.

E. Accepting.

When you satisfice, you compare your choice against your goal, not against other options. Satisficing is choosing the first option that is minimally acceptable or adequate.

AACSB: Analytic



71. Victor, an administrative assistant in accounting, orders office supplies biweekly; today he needs pens, sticky notes, and staples. He looks at the office supply catalog and quickly picks a selection for each that is priced acceptably. Here Victor is using

A. Minimizing.

B. Optimizing.

C. Satisficing.

D. Management by exception.

E. Maximizing.

When you satisfice, you compare your choice against your goal, not against other options. Satisficing is choosing an option that is acceptable (the first items Victor saw that were priced acceptably), although not necessarily the best or perfect.

AACSB: Analytic



72. To maximize a decision is to

A. Realize the largest possible production benefit.

B. Involve as many people affected by the decision as possible in its design.

C. Achieve the best possible outcome.

D. Utilize groupthink for individual decisions.

E. Generate many alternatives for evaluation.

Maximizing is achieving the best possible outcome. The maximizing decision realizes the greatest positive consequences and the fewest negative consequences.

AACSB: Analytic



73. Managers who optimize their decisions will attempt to choose

A. The first minimally acceptable alternative.

B. Among those alternatives with most predictable results.

C. The least expensive alternative.

D. That alternative that produces the least conflict.

E. An alternative that achieves the best possible balance among several goals.

Optimizing means that you achieve the best possible balance among several goals.

AACSB: Analytic



74. Nigel, a manager at Montlucon Eyewear, needed to purchase a new secure display case for his most expensive sunglasses. He wanted one that was high in quality and security, yet low in price. The case he chose was neither the highest quality available, nor the lowest in price available, yet it had a good combination of attributes. Nigel's choice illustrates

A. Maximizing.

B. Satisficing.

C. Optimizing.

D. Minimizing.

E. Programming.

Optimizing is achieving the best possible balance among several goals. Nigel balanced goals of high quality, security, and low price.

AACSB: Analytic



75. Implementing a decision must be planned carefully. Adequate planning most often requires which of the following steps?

A. Determine how things will turn out before the decision is made.

B.List the resources and activities required.

C. Be sure the CEO agrees with the implementation decision.

D. Allow employees to take on responsibility once the implementation has begun.

E. Encourage vigilance.

Adequate planning for implementing a decision requires several steps, including listing the resources and activities required.

AACSB: Analytic



76. The final stage in the decision-making process is

A. Anticipating the results.

B. Implementing the solution.

C. Diagnosing remaining issues.

D. Criteria analysis.

E. Evaluating the decision.

The final stage in the decision-making process is evaluating the decision. It involves collecting information on how well the decision is working.

AACSB: Analytic



77. Negative feedback received during the final evaluation of the decision indicates that either the implementation will require more time or that

A. The problem cannot be solved.

B. The implementation has used too many resources.

C. The manager is not capable of rational decisions.

D.The decision was a bad one.

E. The scenarios were labeled incorrectly.

Negative feedback means that either (1) implementation will require more time, resources, effort, or thought or (2) the decision was a bad one.

AACSB: Analytic



78. Vigilance in decision making means

A. The customer realizes increased value as a result of the decision.

B.The manager has carefully and conscientiously completed all stages in the decision-making process.

C. The manager has been monitored during the decision making process.

D. The employees monitor the implementation of the decision carefully.

E. The employees have been monitored to see their reactions to the decision.

Vigilance occurs when the decision makers carefully and conscientiously execute all six stages of decision making, including making provisions for implementation and evaluation.

AACSB: Analytic


Level of Difficulty: 1 EasyTopic: The Best Decision

79. Psychological bias in decision making is best described as

A. The effect that people's psychological capabilities have upon the decisions they must make under pressure.

B. What happens when a decision maker must balance the preferences of many interested parties, diluting effectiveness.

C. The conflict that results from too many people involved with making a decision.

D.The inability to be objective when gathering, evaluating, and applying information for decision making.

E. The fact that people are motivated by a need for power that clouds their decision making capabilities.

Decision makers are far from objective in the way they gather, evaluate, and apply information in making their choices. People have biases that interfere with objective rationality.

AACSB: Analytic



80. Illusion of control, discounting the future, and framing effects are all examples of

A. Social realities.

B.Psychological biases.

C. Rationality.

D. Vigilance.

E. Time pressures.

Illusion of control, discounting the future, and framing effects represent only a few of the many documented subjective psychological biases in decision making.

AACSB: Analytic



81. The psychological bias known as "illusion of control" refers to a

A. Belief that you have ultimate control and no one can take it from you.

B.Belief that you can influence events even when you have no control over what will happen.

C. Lack of confidence in your ability to control your employees.

D. Belief that you have no control and so you don't put any effort into the decision.

E. Belief that some unknown person actually has the control and is waiting for you to make a poor decision.

The illusion of control is a belief that one can influence events even when one has no control over what will happen.

AACSB: Analytic



82. When business managers ignore risks and fail to objectively evaluate the odds of success for their decisions, it is an example of which of the following psychological biases?


B. Framing effects.


D. Time pressure.


The illusion of control is a belief that one can influence events even when one has no control over what will happen. In business, such overconfidence can lead to failure because decision makers ignore risks and fail to objectively evaluate the odds of success.

AACSB: Analytic



83. Which of the following is an example of subjective bias that many corporate executives exhibit?

A. Groupthink.

B. Satisficing.


D.Framing effects.

E. Minimizing.

Subjective biases that managers hold often interfere with objective rationality. One type of subjective bias is framing effects; that is, a decision bias influenced by the way in which a problem or decision alternative is phrased or presented.

AACSB: Analytic



84. The way in which the alternatives to a decision are stated or phrased may have an impact on which alternative is chosen. Varying alternatives can be presented in a more favorable or less favorable way, affecting the decision. This is referred to as

A.Framing effects.

B. Phrasing effects.

C. Biasing effects.

D. Illusional effects.

E. Discounting effects.

Framing effects refer to how problems or decision alternatives are phrased or presented and how these subjective influences can override objective facts.

AACSB: Analytic



85. Discounting the future refers to

A. Valuing longer-term benefits and costs more heavily than shorter-term benefits and costs.

B. Overestimating the long-term effects of the decision.

C. Underestimating the short-term effects of the decision.

D.Valuing short-term benefits and costs more heavily than longer-term benefits and costs.

E. Making quick decisions with whatever information is at hand.

Often decision makers discount the future. That is, in their evaluation of alternatives, they weigh short-term costs and benefits more heavily than longer-term costs and benefits.

AACSB: Analytic



86. Which of the following is the best example of a manager discounting the future?

A. "I must consult others in order to make good decisions."

B. "It is important to plan for the long-term health of the company."

C. "Even if it is becoming popular, e-commerce is expensive and difficult."

D. "We must make a profit in order to survive."

E. "I must focus more on quarterly profits now than long-term profitability."

Often decision makers discount the future. That is, in their evaluation of alternatives, they weigh short-term costs and benefits more heavily than longer-term costs and benefits.

AACSB: Analytic



87. The band Pearl Jam decided not to book any concerts through Ticketmaster as an objection to the virtual monopoly Ticketmaster had on the industry. Initial strong public support was followed by fewer concerts, lower revenues, reduced exposure, and more hassles for the band. In retrospect, the band's decision seems to have

A. Been improperly framed.

B. Been socially irresponsible.

C. Discounted the future.

D. Used psychological conflict.

E. Involved too many conflicting groups.

Discounting the future is a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits. Here the band made short-term headlines and had strong public support, but this was followed by long-term difficulties because of realities in the market.

AACSB: Analytic



88. People who avoid regular dental checkups, students who don't study, and dieters who sneak dessert are all examples of which psychological bias?


B. Framing effects.


D. Time pressures.


Discounting the future is a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits. Many people decide to avoid the short-term costs of studying, eating healthfully, or dental care, and they pay for their actions in the longer term.

AACSB: Analytic



89. Tactics that are used to make decisions quickly while maintaining the high quality of such decisions include

A. Taking a realistic view of the conflict.

B. Involving people in the decision who are experts and can be trusted.

C. Focusing on real-time information.

D. Involving people more effectively and efficiently.

E. Doing all of these.

Managers under time pressure can make decisions that are timely and of high quality by using real-time information, involving people more effectively and efficiently in the decision-making process, relying heavily on trusted experts, and taking a realistic view of conflict.

AACSB: Analytic



90. Real-time information is information that

A. Is obtained with little or no delay.

B. Is based on past performance.

C. Represents a realistic forecast.

D. Is based on adjusted predictions.

E. Is discounted for the future.

Instead of relying on old data, long-range planning, and futuristic forecasts, managers should focus on real-time information: current information obtained with little or no time delay.

AACSB: Analytic



91. Each morning OfficeMax's CEO has a computer-based conference with all store managers. The previous day's challenges are discussed so that problems can be quickly and effectively resolved or even avoided. OfficeMax is utilizing __________ to retain a competitive edge.

A. social realities

B. real-time information

C. psychological biases

D. framing effects

E. quality initiatives

Managers under time pressure can make decisions that are timely and of high quality in part by using real-time information. The CEO of Office Max is relying on frontline managers for real-time information to stay competitive.

AACSB: Analytic



92. Omar dreaded annual performance reviews. His company had few performance standards, and worse still, if his employees did not like their reviews, they went over his head, and Omar's boss often overturned decisions! These interpersonal factors that decrease the effectiveness of the organization's decisions are best described as

A. Time pressures.

B. Gut feelings.

C. The illusion of control.

D. A lack of control.


Social realities of a firm dictate that even the manager acting alone is accountable to the boss and to others and must consider the preferences and reactions of many people. Important managerial decisions are marked by conflict among interested parties. Therefore, many decisions are the result of intensive social interactions, bargaining, and politicking.

AACSB: Analytic



93. The basic philosophy behind group decision making is that "two heads are better than one." But does this statement hold true in an organizational setting?

A. Yes, always.

B.Yes, potentially.

C. No, two does not constitute a group.

D. No, never.

E. No evidence exists to determine this.

If enough time is available, groups usually make higher-quality decisions than most individuals acting alone. However, groups often are inferior to the best individual in decision making.

AACSB: Analytic



94. Advantages in using a group for decision making include

A. Intellectual stimulation.

B. Domination of the discussion by one member.

C. Groupthink.

D. Satisficing.


All are disadvantages to group decision making except intellectual stimulation. Group discussion provides an opportunity for this, and it can get people thinking and unleash their creativity to a far greater extent than would be possible with individual decision making.

AACSB: Analytic



95. Andersen Tree Farm in Kansas is looking for ways to be more environmentally friendly. Managers interviewed frontline staff to get their opinions and ideas, and invited everyone to participate in deciding which ideas to advance. Staff members were then aware of the various options and recognized the benefits and costs of each. In this scenario, involving the staff most likely helped them to

A. Dominate the discussion and reinforce the organizational structure.

B. Use groupthink to gain buy-in.

C. Please everyone completely.

D. Displace obsolete goals in favor of new ones.

E. Understand the decisions and be more committed to them.

People who participate in a group discussion are more likely to understand why the decision was made. They will have heard the relevant arguments both for the chosen alternative and against the rejected alternatives.

AACSB: Analytic

Blooms: ApplyLearning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions.

Level of Difficulty: 3 HardTopic: Decision Making in Groups

96. Which of the following is a potential disadvantage of group decisions?

A.Satisficing.

B. A larger pool of information, which causes confusion.

C. Intellectual stimulation, which takes up much more time and delays the decision.

D. Too many approaches and perspectives on the problem.

E. People understand the decision details and are highly critical.

Satisficing is more likely with groups. Most people don't like meetings and will do what they can to end them. This may include criticizing members who want to continue exploring new and better alternatives. The result is a satisficing rather than an optimizing or maximizing decision.

AACSB: Analytic



97. Which of the following statements about group decision making improves the chances that the decision will be implemented successfully?

A. More information is available when several people are making the decision.

B. Different approaches to solving the problem are available.

C. People who participate in a group discussion are more likely to understand why the decision was made.

D. Group discussion provides an opportunity for intellectual stimulation.

E. A single group member can dominates the discussion.

People who participate in a group discussion are more likely to understand why the decision was made, thus improving the chances that the decision will be implemented successfully.

AACSB: Analytic



98. Allowing one person to control a discussion or decision would best be described as

A. Groupthink.

B. Satisficing.



E. Esprit de corps.

Sometimes one group member dominates the discussion. When this occurs, such as when a strong leader makes his or her preferences clear, the result is the same as it would be if the dominant individual made the decision alone.

AACSB: Analytic



99. Nicole was disappointed with her team's discussion regarding next year's marketing campaign. Adam rammed all his ideas through; they were good, but nobody else got a word in or had the opportunity to share. This group experienced

A. Vigilance.

B. Individual dominance.

C. Satisficing.

D. Intellectual stimulation.


Individual dominance refers to a strong group member who makes his or her preferences clear as Adam did, with the result being the same as it would be if Adam made the decision alone.

AACSB: Analytic



100. A phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus is known as


B. Domination.

C. Intuition.

D.Groupthink.

E. Satisficing.

Pressure to avoid disagreement can lead to a phenomenon called groupthink. It occurs when people choose not to disagree or raise objections because they don't want to break up a positive team spirit. They want to think as one, tolerate no dissent, and strive to remain cordial.

AACSB: Analytic



101. When a group accepts an alternative that seems to please the members of the group, but the group has not taken the time or effort to explore many options, the group has

A.Exercised groupthink.

B. Stimulated the intellects of its members.

C. Optimized.

D. Exercised vigilance.

E. Participated in goal displacement.


AACSB: Analytic



102. Groupthink is

A.Avoiding disagreement while striving for consensus.

B. Accomplished by obtaining all members' input.

C. The result of high levels of creativity.

D. Typically superior to individual decision making.

E. An extreme form of satisficing.


AACSB: Analytic



103. Groups that operate under a condition known as groupthink are most likely to be

A. Creative.

B. Lacking in confidence about their abilities.

C. Overcritical.

D.Concerned with maintaining a positive team spirit.

E. Unclear about the decision at hand.


AACSB: Analytic



104. A condition that occurs when a decision-making group loses sight of its original goal and a new, possibly less important, goal emerges is

A.Goal displacement.

B. Groupthink.

C. Conflict.

D. Domination.

E. Group alternatives.

The goal of group members should be to come up with the best possible solution to the problem. But when goal displacement occurs, new goals emerge to replace the original ones. Winning an argument becomes the new goal.

AACSB: Analytic



105. When a group member is more interested in winning an argument than solving a problem, __________ has occurred.

A. domination

B.goal displacement

C. groupthink

D. satisficing

E. synergy

The goal of group members should be to come up with the best possible solution to the problem. But when goal displacement occurs, new goals emerge to replace the original ones. Winning an argument becomes the new goal.

AACSB: Analytic



106. Leaders of decision-making groups should

A. Discourage conflict.

B. Encourage groupthink.

C. Help the group satisfice.

D.Pay close attention to the group process.

E. Dominate the discussion.

Effective managers pay close attention to the group process; they manage it carefully.

AACSB: Analytic



107. Issue-based differences in perspectives or judgments are

A. Compromises.





The most constructive type of conflict is cognitive conflict, or differences in perspectives or judgments about issues.

AACSB: Analytic



108. Emotional disagreements directed toward other people are known as

A. Compromises.

B.Affective conflicts.




Affective conflict is emotional and directed at other people. Affective conflict is likely to be destructive to the group because it can lead to anger, bitterness, goal displacement, and lower-quality decisions.

AACSB: Analytic



109. Of the possibilities here, the most constructive type of conflict is __________ conflict.

A. the absence of

B. emotional

C. cognitive

D. affective

E. dialectic

The most constructive type of conflict is cognitive conflict, or differences in perspectives or judgments about issues. Cognitive conflict can air legitimate differences of opinion and develop better ideas and problem solutions.

AACSB: Analytic



110. Two of your employees consistently disagree with each other; but lately the arguments have become personal, leading to anger and bitterness, and this has begun to impact the whole work group. This situation is best described as


B.Affective conflict.

C. Dialectic conflict.

D. Alliant conflict.

E. Comprehensive conflict.

Affective conflict is emotional and directed at other people. Affective conflict is likely to be destructive to the group because it can lead to anger, bitterness, goal displacement, and lower-quality decisions.

AACSB: Analytic



111. There seemed to be complacence in the group, so in an effort to combat groupthink and an overall lack of creativity, the group leader Tim assigned Trisha the task of pointing out problems throughout the meeting. In this example, Trisha was playing the role of

A. Conflict manager.

B.Devil's advocate.

C. Dialectic leader.

D. Antagonist.

E. Affective leader.

A devil's advocate has the job of criticizing ideas such as was assigned to Trisha.

AACSB: Analytic



112. Which of the following best describes the requirements of the dialectic method?

A. Someone intentionally presents negative arguments to force further investigation of the alternative under consideration.

B.A structured debate between two conflicting courses of action is held.

C. Conflict generated within the group is minimized by enforcing group unity.

D. Conflict generated within the group is maximized by including not only factual counterarguments but also personal attacks.

E. The leader performs the role of peacekeeper when attacks are directed at individuals.

The dialectic goes a step beyond devil's advocacy by requiring a structured debate between two conflicting courses of action.

AACSB: Analytic



113. In trying to make a conflict between two employees less personal and emotional, their manager asks each of them to approach the problem from a different viewpoint than their original one. This is an example of encouraging the use of

A.Cognitive conflict.


C. A devil's advocate.

D. Vigilance.

E. Groupthink.

Cognitive conflict refers to issue-based differences in perspectives or judgments. In this case the manager is trying to help the employees see the other side of the conflict by requiring them to approach the problem from the other's view.

AACSB: Analytic



114. Which of the following statements about encouraging creativity is true?

A. The fundamental unit of value in the creative revolution is artistic ability.

B.You are being creative if you join two previously unrelated things.

C. To be creative you need to be a top student.

D. Your employees will be more creative if you set a tight deadline for them.

E. People are much more likely to be creative if they work alone.

Creativity can occur when new things are brought into being (creation), two previously unrelated things are joined (synthesis), or something is improved or given a new application (modification).

AACSB: Analytic



115. A process in which group members generate as many ideas about a problem as they can and criticism is withheld until all ideas have been proposed is called

A.Brainstorming.

B. Forecasting.

C. Groupthink.

D. Cooperation.

E. Innovation.

Brainstorming is a process in which group members generate as many ideas about a problem as they can and criticism is withheld until all ideas have been proposed.

AACSB: Analytic

Blooms: RememberLearning Objective: 03-06 Explain how to encourage creative decisions.


116. In order to be creative, a brainstorming session must

A.Be free of criticism.

B. Be held in private.

C. Be done quickly.

D. Be done face-to-face.

E. Involve industry experts.

When brainstorming, the group is encouraged to say anything that comes to mind, with one exception: no criticism of other people or their ideas is allowed.

AACSB: Analytic



117. ____________ is the concept that decision makers cannot be truly rational because decisions are complex and complete information is unavailable.

A.Bounded rationality

B. Incremental decision making

C. Cognitive rationality

D. Coalitional decision making

E. Affective rationality

Bounded rationality is a less-than-perfect form of rationality in which decision makers cannot be perfectly rational because decisions are complex and complete information is unavailable or cannot be fully processed.

AACSB: Analytic



118. The _______ model of decision making occurs when decision makers make small decisions and move in piecemeal fashion toward a bigger solution.

A. stepped

B. incremental

C. coalitional

D. garbage can

E. staged

The incremental model of decision making occurs when decision makers make small decisions, take little steps, move cautiously, and move in piecemeal fashion toward a bigger solution.

AACSB: Analytic



119. The ___________ model of decision making arises when two or more groups form, each representing a different preference, and each tries to use power and negotiation to sway the decision.

A. bounded rationality

B. incremental

C. garbage can

D.coalitional

E. affective rationality

The coalitional model of decision making arises when people disagree on goals or compete with one another for resources. The process becomes political as groups of individuals band together in coalitions, each representing a different preference, and each tries to use power and negotiations to sway the decision.

AACSB: Analytic

Blooms: UnderstandLearning Objective: 03-07 Discuss the processes by which decisions are made in organizations.


120. Sasha leads a research team of engineers and found herself in the midst of a battle between coalitions, each with its own solution to a challenge the team faced. Sasha would be best served by following which of these courses of action?

A. Sasha should collect information both sides and decide herself which is the best approach.

B. Sasha should ask parties from both sides to solve the problem in whatever way they can.

C. Sasha should find a mediator to solve the problem.

D. Sasha should encourage both teams to engage in affective conflict to solve the problem.

E. Sasha should use a collaborative method in which she establishes a goal around which the entire group can rally.

One of the best ways to reduce organizational politics, and to make sure that constructive cognitive conflict does not degenerate into affective conflict, is to create common goals for members of the team; that is, make it a collaborative rather than a competitive exercise.

AACSB: Analytic

Blooms: ApplyLearning Objective: 03-07 Discuss the processes by which decisions are made in organizations.

Level of Difficulty: 3 HardTopic: Organizational Decision Making

121. Which of the following statements about decision making in a crisis is true?

A. In crises, managers should make decisions only after taking all of the details into account.

B. Crisis management can be best handled as the crisis occurs.

C. Early warning signals of crisis are unavailable, so bounded rationality must be used.

D.An effective plan for crisis management is essential to include on the management agenda.

E. Crises can never provide benefits to a company.

Although many companies don't concern themselves with crisis management, it is imperative that it be on management's agenda. With it, old and new problems can be resolved, new strategies and competitive advantages may appear, and positive change can emerge.

AACSB: Analytic



122. Which of the following is an element of an effective plan for crisis management?

A. A communication plan that indicates that the company is in complete control.

B. Competitive actions to bounce back immediately.

C. Psychological and cultural actions for the human and emotional toll.

D. A template for a press statement, to be released before details are learned.

E. A method to quickly distance the company from the crisis.

An effective plan for crisis management should include the following elements: (1) strategic actions, (2) technical and structural actions, (3) evaluation and diagnostic actions, (4) communication actions, (5) psychological and cultural actions.

AACSB: Analytic



Scenario A

The local Ace Hardware Store manager has several decisions she has to make as the week begins. She always comes in early on Mondays to sift through the paperwork on her desk and decide what needs to be done for the week and in which order. The decisions facing her this week are:

1. Determining which sales representatives to see this week to place orders.2. Providing a report to the owner detailing her opinion of whether or not she should purchase several more Ace locations that are for sale in the area.3. Interviewing applicants for two open part-time positions and hiring them.4. Providing input to the owner on a possible upgrade to the checkout technology currently in use.

123. The decisions in Scenario A can best be classified as either

A. Risky or nonrisky.

B.Programmed or nonprogrammed.

C. Simple or complex.

D. Necessary or unnecessary.

E. Certain or uncertain.

Programmed decisions have been encountered and made before, such as those in two of the choices. Nonprogrammed decisions are new, novel, complex decisions having no proven answers, such as those in the remaining choices.

AACSB: Analytic



124. Decision 4 is an example of which type of decision?

A. Programmed.

B.Nonprogrammed.

C. Simple.

D. Complex.

E. Necessary.

Nonprogrammed decisions are new, novel, complex decisions having no proven answers, such as those in decisions 2 and 4.

AACSB: Analytic



125. Decisions 1 and 3 are both __________ decisions because ______________.

A. necessary; they are novel and complex

B. nonprogrammed; they are novel and complex

C. programmed; they are can be solved using rules, procedures, and structures

D. risky; they are novel and complex

E. simple; there is a clear and precise correct answer

Programmed decisions have been encountered and made before, such as those in decisions 1 and 3.

AACSB: Analytic



126. If, in decision 3, the manager takes the first candidate she sees that meets the minimum requirements, without going through every candidate's file to see if anyone else is better, she is

A. Maximizing.

B.Satisficing.

C. Optimizing.

D. Experiencing internal conflict.

E. Experiencing external conflict.

Satisficing is choosing the first option that is minimally acceptable or adequate.

AACSB: Analytic



Scenario B

You work for a new start-up marketing consulting firm. There are five highly opinionated but very committed employees in your group. The owner firmly believes that he should make every decision since he is, as he often says, "the one who signs the checks." While this is true, he often jumps to conclusions, and doesn't even take time to diagnose the problem at hand because he does not like to ask you and your colleagues for your opinions. It has become a very emotional and personal issue for all of you. At this point, most people in the firm agree that the decision making of the owner is going to destroy the young firm before it really gets started.

127. The owner's belief that he should make every decision himself by diagnosing the problem as he sees it and then immediately implementing a solution is

A. Correct.

B.A mistake that often leads to suboptimal decisions.

C. An example of vigilance.

D. An example of satisficing.

E. An example of maximizing.

Managers can tell whether they made the best decision possible if they follow the proper procedures that will yield the best possible decision under the circumstances by being vigilant.

AACSB: Analytic


Level of Difficulty: 3 HardTopic: The Best Decision

128. Suppose the owner tells you that the reason he makes every decision himself is because he believes that he will be able to influence everything that happens in the business. This unrealistic view is called

A. Framing effects.

B. Discounting the future.

C. Time pressures.

D.The illusion of control.

E. Disillusionment.

The illusion of control is a belief that one can influence events even when one has no control over what will happen.

AACSB: Analytic



129. If, in the beginning of your work with the company, your differences with the owner were purely based on differences in judgment, but have now deteriorated to the point that your differences are more emotional and directed personally toward one another, it can be said that you initially experienced ___________ but now are experiencing ___________.

A. satisficing; maximizing

B.cognitive conflict; affective conflict

C. affective conflict; cognitive conflict

D. maximizing, satisficing

E. uncertainty; certainty

Cognitive conflict arises from issue-based differences in perspectives or judgments, whereas affective conflict is emotional and directed toward other people.

AACSB: Analytic

Blooms: ApplyLearning Objective: 03-05 Identify procedures to use in leading a decision-making group.

Level of Difficulty: 3 HardTopic: Managing Group Decision Making

Scenario C

Jeremy is the lead on a new project at work, and it is essential that he make a good impression on top management. He recently had his first staff meeting to solve a fairly large problem with the project, and it didn't go well. The whole staff of 10 was there, which he thought would lead to buy-in from the group. Instead the group didn't get much done in that meeting.

130. Jeremy opened the meeting by suggesting to the group that he had put a lot of thought into the problem and that perhaps they should use his ideas to solve the problem. He spent the meeting explaining why this should occur. Jeremy was practicing

A. Satisficing.

B. Groupthink.




Sometimes one member like Jeremy dominates the discussion. When this occurs the result is the same as it would be if the dominant individual made the decision alone.

AACSB: Analytic



131. Since the first meeting didn't go well, Jeremy read several management books on working with groups and thought perhaps a longer meeting would allow time to explore several points of view. He chose a Friday afternoon so everyone could go home afterward and not have to rush off to other work appointments. To his surprise, the first idea he suggested was accepted by the group, and the meeting was over in no time! The group was most likely engaging in __________ so they could end the meeting and go home early.

A. groupthink

B.satisficing

C. goal displacement

D. domination

E. intellectual stimulation

Satisficing is more likely with groups. Most people don't like meetings and will do what they can to end them. The result is a satisficing rather than an optimizing or maximizing decision.

AACSB: Analytic



132. Jeremy decided to try another meeting because the project deadline was drawing closer and he was beginning to feel pressure to get something done with his group. He put the agenda out early and felt he was ready to lead the meeting. Shortly after the meeting began, one of his colleagues asked a question that didn't seem to relate to the issue at hand. Nonetheless, trying to be a good leader, Jeremy began to discuss the issues around this new question. Soon the group was in a heated discussion with each side seeming to stop at nothing to "win" the argument. In this meeting the group was engaged in

A. Groupthink.

B. Satisficing.


D. Domination.


Goal displacement is a condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges.

AACSB: Analytic



Scenario D

Effectively Organized Inc. has hired a consultant to help with organizational decision making. The consultant's first meeting is set up to describe to the managers of Effectively Organized Inc. the models of organizational decision processes. Each of the managers seems to prefer one of the models over the others.

133. The president of Effectively Organized Inc. responds most positively to the model that is the most cautious. She explains that the budget process is the easiest decision for her because she breaks it into smaller pieces and builds the decisions as she goes. The president seems to prefer which model?


B.The incremental model.




The incremental model is a model of organizational decision making in which major solutions arise through a series of smaller decisions.

AACSB: Analytic



134. The vice president of human resources believes decision makers cannot be truly rational in their decisions. He tells the group that he sees many situations with managers who don't have enough time to process all the relevant information and who regularly face very complex problems. He seems to expect which decision process?

A.Bounded rationality.





Bounded rationality is a less-than-perfect form of rationality in which decision makers cannot be perfectly rational because decisions are complex and complete information is unavailable or cannot be fully processed.

AACSB: Analytic



135. The vice president of production tells the group that in his area of the company, many managers don't even agree about what their goals are and certainly cannot agree on what action to take. His managers are using which model of decision making?






The garbage can model of organizational decision making depicts a chaotic process and seemingly random decisions.

AACSB: Analytic



136. The vice president of marketing declares that her people disagree on goals and have now formed groups to advocate for their own interests. Her managers are using




D.The coalitional model.


The coalitional model of organizational decision making is one in which groups with differing preferences use power and negotiation to influence decisions.

AACSB: Analytic



Essay Questions

137. Differentiate between programmed and nonprogrammed decisions. Give an example of each.

Answers will vary.

AACSB: Analytic



138. List and explain the six steps of the decision making process.

Answers will vary.

AACSB: Analytic



139. Define psychological biases and explain how they relates to managerial decision making.

Answers will vary.

AACSB: Analytic



140. Explain the four disadvantages of using a group to make decisions.

Answers will vary.

AACSB: Analytic



141. Explain the three requirements of effectively managing group decision making.

Answers will vary.

AACSB: Analytic



142. Briefly describe the brainstorming process using an example.

Answers will vary.

AACSB: Analytic

Blooms: ApplyLearning Objective: 03-05 Identify procedures to use in leading a decision-making group.

Level of Difficulty: 3 HardTopic: Managing Group Decision Making

143. Compare and contrast three models of organizational decision processes thought to occur when bounded rationality conditions hold.

Answers will vary.

AACSB: Analytic



144. Describe the elements of an effective crisis management plan.

Answers will vary.

AACSB: Analytic

