Deck 5: Managerial Decision Making

Question 1

Bateman & Snell (2004) and Huber (1980) identify four steps in the decision-making process model, although they include the evaluation of the solution.

Answer 1

False

Question 2

In decision making, the condition in which a chosen action could lead to losses, rather than the intended result, is called uncertainty.

Answer 2

False

Question 3

The four general activities in the generate alternative solutions step in an effective decision-making process are restrict criticism of alternatives, offer as many ideas as possible, remain ethical and combine and improve on ideas.

Answer 3

False

Question 4

When a solution is difficult to reverse, only one solution remains with the organisation - to do more careful planning in future.

Question 5

The tendency to be overly influenced by stereotypes, in making judgements about the likelihood of occurrences, is an example of a bias in information (representativeness).

Question 6

The concept sunk costs is the equivalent to accelerated appreciation.

Question 7

To cope with uncertainty, small organisations prefer not to hire permanent staff. Instead they hire temporary professional employees, although they cost more. The real option chosen for the situation is referred to as immediate exit.

Question 8

Decision making is important at which levels?

A) Middle and senior levels
B) Most levels
C) All levels
D) Senior levels only

Question 9

Managerial decision making typically centres on three types of problems. The type of problem in which there is a potential for significant organisational gain to be made, if appropriate action is taken is called:

A) an opportunity.
B) a non-programmed decision.
C) a rational problem.
D) a crisis.

Question 10

Decisions used for routine situations, where pre-determined answers for immediate actions are important, are called:

A) programmed decisions.
B) non-programmed decisions.
C) predetermined decisions.
D) routine decisions.

Question 11

Most of the decisions made by top-level managers are:

A) non-programmed decisions.
B) crisis problems.
C) opportunities.
D) programmed decisions.

Question 12

In decision making, the condition in which the decision maker must choose a course of action, without complete knowledge of the consequences that will follow implementation of the decision is called:

A) crisis.
B) risk.
C) uncertainty.
D) opportunity.

Question 13

Which of the major classifications or models, regarding how managers make decisions, is based on the notion that managers understand all the possible alternatives, outcomes and ramifications of their decisions?

A) The economic model
B) The rational model
C) The bonus model
D) The Friedman-Keleman model

Question 14

There are three non-rational models of managerial decision making: satisficing, incremental and:

A) spinnaker.
B) bounded.
C) non-marginality.
D) rubbish-bin.

Question 15

Bounded rationality suggests:

A) rational decision making is limited by time restraints.
B) rational decision making is limited to progress decisions.
C) knowing the limitations of recompensing.
D) preferring rational decisions to irrational decisions.

Question 16

A manager using the satisficing model of decision making is most likely to:

A) compile an extensive amount of information about the subject.
B) stop the decision process upon finding a solution that is good enough.
C) test many possible solutions until the best or optimum solution is found.
D) assign a subordinate to decide, as this level of decision is generally regarded as being of minimal importance.

Question 17

The model of decision making that is typified by (1) an apparent random pattern of decision-making behaviour by managers, (2) an apparent lack of goal preferences and (3) a favourite solution looking for a problem to solve is the:

A) bounded rationality model.
B) irrational bounded explosive model.
C) rubbish-bin model.
D) Simon model.

Question 18

A manager who quickly assesses whether an investment could produce results:

A) has no business sense.
B) uses the incremental decision-making process.
C) uses the intuitive model by relying on his gut feeling.
D) had monitored the market carefully before making the speedy decision.

Question 19

The first step in the normative decision-making model presented by the text is to:

A) define the solution.
B) identify the problem.
C) gather and analyse information.
D) scan the external and internal environments.

Question 20

Once the problem has been identified and an alternative solution has been decided on, what activity should follow within the effective decision-making process?

A) Evaluate cost
B) Be sensitive to the decision's effects on others
C) Rethink and improve on ideas
D) None of the given answers is correct

Question 21

Bartol indicates that the identify-the-problem step in the decision-making process has three general stages. At which of these stages does the manager gather additional information and attempt to specify both the nature and causes of the problem?

A) Scanning
B) Tri-level
C) Categorisation
D) Diagnosis

Question 22

The text suggests strongly that the _____________ step in the decision-making process is the key step to higher quality solutions.

A) scan the environment
B) generate alternative solutions
C) evaluate and choose an alternative
D) implement alternative through participation

Question 23

There are four principles involved in brainstorming. They are (1) do not criticise ideas while generating possible solutions, (2) offer as many ideas as possible, (3) combine and improve on ideas and (4):

A) evaluate acceptability.
B) evaluate feasibility.
C) evaluate costs.
D) offer seemingly outrageous and wild ideas.

Question 24

Ethics, quality and reversibility are all:

A) criteria for evaluating possible decision alternatives.
B) diagnostic analyses used in environmental scanning.
C) steps in improving group creativity.
D) requirements in the goal-setting process.

Question 25

Complacency, defensive avoidance and panic are all basic reaction patterns that are barriers to effective decision making because individuals:

A) fail to accept the challenge of the problem.
B) conduct an insufficient search for alternatives.
C) are unable to overcome these common decision-making biases.
D) so affected become a major part of the escalation phenomenon.

Question 26

What are the three major barriers to effective decision making?

A) Complacency, deciding-to-decide and defensive avoidance
B) Complacency, defensive avoidance and panic
C) Panic, hyper-vigilance and denying responsibility
D) Complacency, panic and frantic problem solving

Question 27

Rationalisation, buck-passing and procrastination are all forms of _____________, one of the behaviour patterns often seen when an individual is faced with a problem or an opportunity.

A) the decision escalation phenomenon
B) the environmental-scan reaction
C) defensive avoidance
D) panic

Question 28

Individuals are unable to attend to every potential problem they might face. Bartol suggests that three criteria be checked in making the decision of whether to decide or not. These are: check the credibility of the information you have, ___________________

A) determine the costs and determine the benefits involved.
B) count the number of participants involved and determine their willingness.
C) scan the external environment and improve communication with the internal environment.
D) determine how important this particular threat or opportunity really is and determine how urgent it is.

Question 29

Bartol reported a study about the amount of effort made by managers to actively work at developing possible alternative solutions for their decision-making within their organisations. They reported that in about __________ per cent of the cases a significant effort was made.

A) 15
B) 50
C) 80
D) nearly 100

Question 30

Framing, anchoring and adjustment and representativeness are all:

A) weaknesses in group decision making.
B) advantages of synectics.
C) biases in processing information.
D) benefits that usually come from converting non-programmed decisions into programmed ones.

Question 31

According to Kahneman and Tversky, decision makers are generally loss-averse, i.e. they find it more painful to consider the prospect of an actual loss than the prospect of losing the possibility of a gain. This paradoxical decision pattern is called the:

A) prospect theory.
B) adjusting anchor theory.
C) Abilene paradox.
D) availability theory.

Question 32

Prospect theory refers to:

A) decision makers being more respective to gain.
B) managers making decisions based on how the problem is presented.
C) decision makers considering actual loss to be more painful than losing a gain.
D) All of the given answers are correct

Question 33

When managers are influenced by irrelevant initial figures, the information processing bias is best described as:

A) framing.
B) availability.
C) the Hackman-Oldham complex.
D) anchoring and adjustment.

Question 34

Decision makers, according to the text, often display a tendency toward overconfidence where more trust is put into the occurrence of future events than the data seems to warrant. Further, this overconfidence seems most likely to occur:

A) when the chips are down.
B) at the eleventh hour.
C) in the most unfamiliar areas.
D) with the high and the mighty.

Question 35

Making sure to obtain enough information to be fairly well-versed about the issues associated with important decisions, and thinking about why judgements might be wrong are suggestions Bartol makes to:

A) overcome resistance to change.
B) successfully introduce participative management.
C) avoid some of the ill effects of information-processing biases.
D) make the anchoring adjustments required when the availability response is improperly framed in decision making.

Question 36

Often, when confronted with the results of an expensive decision that did not quite work out, managers will react by allocating even more resources to 'fix it'. Sometimes this is done even when the best expectations for turning the situation around are dim. Bazerman called this kind of situation:

A) bounded rationality.
B) scapegoating.
C) non-rational escalation.
D) decisional freefall.

Question 37

Situations that have previously involved significant costs and may be ________________ or compounded in future are known as escalation situations.

A) ignored
B) maintained
C) reversed
D) accelerated

Question 38

Access to more information, generation of alternative solutions and a better acceptance of final decisions are all advantages of:

A) programmed decisions.
B) group decision making.
C) divergent thinking.
D) the normative-satisfice model.

Question 39

Several advantages have been described by the text for group decision making. Which of the following is not one of them?

A) More knowledge and information is usually available
B) Decisions are usually made more quickly
C) The group is more likely to generate more alternative solutions
D) Members often develop the knowledge base and decision-making skills needed in the future

Question 40

Several disadvantages have been described by the text for group decision making. Which of the following is not one of them?

A) Hard feelings can result from disagreements within the group
B) The group might be dominated by one person or by a few group members
C) The group might overemphasise agreement at the expense of realistic solutions
D) Too much knowledge and information become focused on the issue

Question 41

In using groups to make or to aid in making decisions, a tendency sometimes arises for the group to seek agreement about an issue at the expense of realistically appraising the situation. Usually this is done, according to the text, to preserve group cohesiveness and because of the reluctance to risk disagreement within the group. This tendency or process is usually called:

A) dialectical inquiry.
B) groupthink.
C) PGC.
D) rational escalation.

Question 42

Several techniques are recognised as steps that can help avoid the major disadvantages that sometimes arise in group decision-making. Which of the following is not one of them?

A) Choose to use a group when group members possess knowledge and information that has an important bearing on the decision outcome.
B) Choose group members carefully to try to avoid situations where one member can dominate the group.
C) Use a group in making decisions when group acceptance of the decision is critical to the successful implementation of the decision.
D) Define carefully the time constraints the group has in making its final decision; usually, the more . quickly the decision is made, the better the results.

Question 43

Two mechanisms have been found to be somewhat successful in avoiding groupthink in group decision making. They are (1) providing for the role of a devil's advocate and (2) using:

A) forced-choice rankings.
B) the incremental model.
C) better categorisation of the scanning stage.
D) dialectical inquiry.

Question 44

One approach to help minimise groupthink in group decision making is forcing two opposite points of view regarding a particular situation the group is to resolve. Confronting the implications of these two views (and the assumptions that accompany each) is thought to aid the group decision-making process. This approach is called:

A) dialectical inquiry.
B) the participative imperative.
C) the egalitarian maxim.
D) the devil's advocate.

Question 45

The real option analysis is a tool used:

A) to gauge the market situation.
B) for reducing uncertainty in decision making.
C) to facilitate group decision making.
D) for improving certainty.

Question 46

Creativity in organisations is important, including creativity in the decision-making process. One approach to, or method of, thinking about problems and their solutions encourages the generation of new ways of viewing a problem and its possible solutions, by thinking logically. It is called:

A) convergent thinking.
B) entrepreneurial consensus.
C) the Einsteinian model.
D) creativity in organisations (CO).

Question 47

According to creativity expert Amabile, three basic ingredients are necessary for creativity: domain-relevant skills, creativity-relevant skills and ____________ skills:

A) group-cohesion
B) task-motivation
C) implied-consent
D) universal-relevant

Question 48

The four stages of creativity presented by the text are preparation, ____________, ____________ and verification.

A) hibernation/demarcation
B) incubation/illumination
C) imagination/dedication
D) perspiration/inspiration

Question 49

What type of decision-making problems do managers face and how does categorising decisions as programmed or non-programmed assist managers?

Question 50

Managers are required to make decisions that impact positively on organisational success. In what ways do various decision-making models assist managers?

Question 51

How does choosing an alternative fit in a four-step decision-making process? Describe evaluation activities that a manager could use before choosing an alternative.

Question 52

What barriers does a manager face in accepting problem challenges and searching for sufficient alternatives? How might these be overcome?

Question 53

What four information processing biases can affect decision-making operations? Give an example to illustrate the meaning of each type of bias.

Question 54

What is the decision-escalation problem and how can it be avoided?

Question 55

What are the advantages and disadvantages of group decision-making? Give examples from your own experience to show whether you think the advantages outweigh the disadvantages or vice-versa and how you could improve decision-making.

Question 56

What features are included in each of the three basic creativity ingredients?

Question 57

Use the internet or a library data base to search for a model of the stages of creativity. How does this model compare and contrast with the four-stage model of Haefele (1962)?

Question 58

Why are brainstorming and nominal group technique useful in enhancing group creativity? Describe a situation for each to show how the technique is best used.

Question 59

First line managers and many middle-level managers are primarily making __________________