Test Bank For Management Leading and Collaborating in a Competitive World 12th Edition Bateman

Chapter 03 Managerial Decision Making True / False Questions 1. Important, difficult decisions tend to be nonprogrammed, and they demand creative approaches. True False 2. The manager of a burger restaurant faces conflict when she must decide whether to cut hours for all employees or layoff two employees. True False 3. Contingency plans should be developed only after a decision has been made and implemented. True False 4. Following all six stages of the decision-making process guarantees successful decisions. True False 5. When Luke words his suggestions as positively as possible, his managers are more likely to be interested in them because of the bias known as the framing effect. True False 6. The most constructive type of conflict is affective conflict. True False 7. The most fundamental unit of value in the creativity revolution is ideas. True False 8. Complimenting one another and telling stories are examples of behaviors that can make brainstorming less effective. True False 9. The confrontational model of decision making arises when people disagree on goals or compete with one another for resources. True False 10. All companies should have a crisis management plan. True False Multiple Choice Questions 11. What is the usual state of affairs in managerial decision making? A. Clear-cut procedures B. Routine situations C. Low risk D. Automatic solutions E. Lack of structure 12. Fergie is the owner of a health food shop and must decide on next week's work schedule for his employees. This is an example of a A. nonprogrammed decision. B. programmed decision. C. reprogrammed decision. D. risky decision. E. complex decision. 13. If a manager faces a programmed decision, that means A. a clear structure or procedure exists for arriving at the right decision. B. the decision maker has no predetermined structure on which to rely. C. there are a variety of possible solutions, each of which has merits or drawbacks. D. the decision maker can be creative in choosing what to do. E. the decision most likely carries substantial risk. 14. Risk exists when the probability of an action being successful is less than _____ percent and losses may be higher than gains. A. 20 B. 40 C. 60 D. 80 E. 100 15. When a manager must consider opposing pressures from different sources, the manager faces _____. A. risk B. conflict C. certainty D. groupthink E. vigilance 16. Angus has been going through a decision-making process. He diagnosed a problem with the shipping service his company used, identified alternative shipping services, evaluated those companies, made a choice, and implemented it. Which of the following statements is an accurate description of Angus's decision-making process? A. Angus has successfully completed the decision-making process. B. Angus now needs to evaluate the decision he made. C. Angus left out the first step of the decision-making process. D. Angus did steps three and four of the decision-making process in reverse order. E. Angus left out the second step of the decision-making process. 17. Leila has identified a problem that consists of a gap between what her company is doing now and what it can do to create a more profitable future. The "problem" that Leila has identified is also a(n) A. opportunity. B. danger. C. benefit. D. trap. E. secret. 18. Eliana, the manager of a retail store, needs a fast solution when an employee asked for a day off during the busiest shopping week of the year. A _____ solution will be most helpful to Eliana in this situation. A. customized B. ready-made C. creative D. personal E. one-time 19. When choosing a phone plan, Max decides on the first option that meets the company's requirements rather than investigating all available options. This is an example of _____. A. maximizing B. compromising C. optimizing D. satisficing E. framing 20. In the decision-making process, _____ means achieving the best possible balance among several goals. A. maximizing B. compromising C. optimizing D. satisficing E. framing 21. When decision makers carefully and conscientiously execute all six stages of decision making, the decision makers are said to have exercised ______. A. optimizing B. maximizing C. satisficing D. vigilance E. diligence 22. Which of the following is a psychological bias that can act as a barrier to good decision making? A. Framing effects B. Affective conflict C. Cognitive conflict D. Groupthink E. Dialectic 23. David is a small business owner who thinks it is more important to spend money on marketing his current product line than to invest in research to develop new products. Which psychological bias is David displaying? A. Framing effects B. Discounting the future C. Illusion of control D. Affective conflict E. Cognitive conflict 24. The belief that one can influence events even when one has no power over what will happen is known as _____. A. framing effects B. discounting the future C. illusion of control D. affective conflict E. cognitive conflict 25. Which of the following statements about group decision making is true? A. Group decisions are always better than individual decisions. B. Individual decisions are always better than group decisions. C. If enough time is available, groups usually make higher-quality decisions than most individuals. D. If enough time is available, most individuals usually make higher-quality decisions than a group. E. There are far more disadvantages than advantages to group decision making. 26. Which of the following is a disadvantage of group decision making? A. Drawing on more perspectives B. Having a larger pool of information C. Understanding the decision D. Experiencing groupthink E. Being more committed to a decision 27. In goal displacement, a decision-making group A. loses sight of its original goal and a new, less-important goal emerges. B. becomes so eager to avoid conflict that it adopts a goal or decision too quickly. C. generates as many goals as it can but does not allow criticism of people or ideas. D. disagrees on goals, or the members compete with one another for resources. E. is unsure about goals and is in disagreement about what to do. 28. The three requirements for effective group decision making are an appropriate leadership style, the constructive use of disagreement and conflict, and the enhancement of _____. A. conflict B. groupthink C. satisficing D. creativity E. framing 29. _____ conflict is differences in perspectives or judgments about issues. A. Affective B. Intellectual C. Cognitive D. Emotional E. Judgmental 30. Which of the following statements about brainstorming is true? A. Criticism of ideas during the session produces better results. B. Praise of ideas during the session produces better results. C. The group should generate as many ideas as possible. D. Each person keeps his or her ideas private until the end of the session. E. Participants should avoid building on previous ideas. 31. According to Simon's bounded rationality, which of the following factors prevents decision makers from being truly rational? A. They have complete information about alternatives and consequences. B. The problems they face are too simple. C. Human beings are not exposed to very much information. D. People have too much time on their hands. E. People, including those in the same organization, have conflicting goals. 32. Qing's employees have requested that he switch the office to flextime so that they can better manage their childcare and commuting schedules. Qing is reluctant to make a drastic change all at once, so he agrees to experiment with staggering the starting and ending times of the workday over a 90-minute period for three months. If, at the end of that time, productivity does not decline, he will consider implementing a more extreme version of flextime. What model of decision-making is Qing using? A. Bounded rationality B. Incremental C. Coalitional D. Garbage can E. Crisis 33. The _____ 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. A. bounded rationality B. incremental C. coalitional D. garbage can E. crisis 34. During a crisis that involved a toxic spill, the executives of ABC Industrial were straightforward in sharing the bad news with the public and providing daily updates on the containment and cleanup process. What is the likely long-lasting effect of this communication strategy? A. A loss of respect for the company B. A gain of credibility for the company C. An increase of anger against the company D. A decrease of trust in the company E. An increase in the company's legal liability 35. Which of the following is a new area in which business crises might occur? A. Pollution B. Labor issues C. Natural disasters D. Crime E. Information technology 36. Which of the following is a characteristic of managerial decisions that contributes to the difficulty in making a decision? A. Guaranteed success B. Certainty C. Conflict D. Structure E. Speed 37. Which of the following decisions is likely to be a programmed decision? A. Decisions about diversification into new products and markets B. Decisions with uncertainty regarding cause-and-effect relationships C. Decisions about reorganization of state government agencies D. Decisions regarding periodic reorders of inventory E. Decisions involving the purchase of experimental equipment 38. Which of the following decisions is likely to be a nonprogrammed decision? A. Decisions with certainty regarding cause-and-effect relationship B. Decisions concerning diversification into new products and markets C. Decisions regarding rules and definite procedures D. Decisions concerning merit system for promotion of state employees E. Decisions that depend on numerical computations 39. Important, difficult decisions that require creative approaches tend to be A. vigilant decisions. B. programmed decisions. C. non-vigilant decisions. D. nonprogrammed decisions. E. structured decisions. 40. José is trying to decide how to diversify his company so that it produces a larger variety of products and competes in new markets. This is a(n) example of a _____ decision. A. routine B. programmed C. cognitive D. nonprogrammed E. noncognitive 41. Ari, a federal government employee, works in acquisition and procurement. Federal policies require that in contracting with suppliers, at least three bids must be received and the lowest bid that meets specifications will be accepted. In this case, Ari is dealing with a(n) _____. A. cognitive conflict B. programmed decision C. affective conflict D. nonprogrammed decision E. unstructured problem 42. The state that exists when the probability of success is less than 100 percent and losses may occur is called _____. A. conflict B. probability analysis C. risk D. certainty E. policy formulation 43. Which of the following is the best definition of conflict? A. A situation when there are opposing pressures from different sources B. The state that exists when decision makers have accurate, comprehensive information C. A novel, complex decision with no proven answers D. The state that exists when the probability of success is less than 100 percent and loss may occur E. Ideas that have never been seen or tried before 44. Isaac, a human resources manager, has to layoff either of two department heads, Aisha or Ben, because the downsizing process that's going on in the organization calls for the merging of their two departments. However, Isaac cannot decide whom to layoff, since they are both excellent managers and he doesn't want to dismiss either of them. In this case, Isaac is having a difficult time making a decision due to experiencing _____ conflict. A. interdependence B. organizational C. cognitive D. psychological E. affective 45. In an ideal decision-making process, the initial step is to A. select an alternative. B. evaluate the decision. C. challenge the status quo. D. generate alternatives. E. identify the problem. 46. The manager of the Glitz Hotel noticed a tremendous decrease in the number of convention bookings. He promptly ordered the redecoration of the hotel's meeting rooms. Customer feedback later indicated that the problem had not been the meeting facilities but poor service from the cleaning staff. In this scenario, to try and solve the problem, the manager should have first tried to _____. A. generate alternate solutions B. hire more qualified employees C. identify the problem D. reduce the price of all products E. spend more on marketing and advertisement 47. Once a solution to a problem is chosen, the next phase in the decision-making process involves _____. A. evaluating alternatives B. evaluating consequences C. generating information D. implementing the decision E. generating alternative solutions 48. When a solution is specifically designed for a particular problem or set of problems, it is referred to as _____. A. groupthink B. a programmed decision C. a ready-made solution D. a contingency plan E. a custom-made solution 49. Alternative courses of action that can be implemented based on how the future unfolds are referred to as _____. A. programmed decisions B. contingency plans C. ready-made solutions D. satisficing plans E. maximizing plans 50. Alexia is the manager of Classy Clutches, a store that sells designer purses. Alexia knows that the economy greatly affects her business. Therefore, she is developing alternative courses of action for each of the four possible economic outcomes that may occur over the next four to six years. In this scenario, Alexia is _____. A. implementing a decision B. generating contingency plans C. making a programmed decision D. engaging in satisficing E. following the garbage can model 51. _____ 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. Framing D. Satisficing E. Optimizing 52. Erik needs to hire a new landscaping service to take care of the small garden outside his dental office. He knows what tasks he wants done and how much he is willing to pay per week, and he hires the first service that agrees to his terms. Such an action is referred to as _____. A. optimizing B. satisficing C. maximizing D. minimizing E. framing 53. Greta, an administrative assistant in the print shop of a large company, orders office supplies biweekly; today she needs copier paper and ink cartridges. She looks at the office supply catalog and, because the consequences are not huge, quickly picks a selection for each product that is priced acceptably. In this scenario, Greta is using _____. A. management by exception B. optimizing C. satisficing D. the garbage can model E. maximizing 54. Managers who optimize their decisions will attempt to A. choose the first, minimally acceptable alternative. B. fix on the decision that is fastest to make. C. zero in on the least expensive option available in the market. D. decide on whatever produces the least challenge or conflict. E. achieve the best possible balance among several goals. 55. Rita, a manager at Aldens Department Store, needed to purchase a new secure display case for the jewelry department. She wanted one that was high in quality and security, yet low in price. After evaluating the options, she chooses a case that is neither the highest quality available nor the lowest in price available, but has a good combination of attributes. In this case, Rita's choice best illustrates _____. A. the garbage can model B. satisficing C. optimizing D. the coalitional model E. bounded rationality 56. The final phase 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 57. Negative feedback received during the final evaluation of the decision either means that _____ or the decision was a bad one. A. the problem cannot be solved B. more financing is required to implement the changes C. the manager is not capable of rational decisions D. implementation will require more time E. not enough resources were allocated to the problem 58. Vigilance in decision making means the A. customer realizes increased value as a result of the decision. B. manager has carefully completed all stages in the decision-making process. C. manager has overdone the decision-making process. D. employees have full control over the decision-making process. E. employees have been monitored to see their reactions to the decision. 59. Illusion of control, discounting the future, and framing effects are all examples of _____. A. social realities B. psychological biases C. goal displacement D. vigilance E. time pressures 60. The psychological bias known as "illusion of control" refers to a belief that A. the employees will always agree with the decisions made by the manager. B. one can influence events even when one has no control over what will happen. C. employees do not have confidence in a manager's abilities. D. one has no control and therefore does not put any effort into the decision. E. managers' with wider spans of control tend to perform effectively. 61. Everett believes that as long as he pays good wages and treats his workers fairly, he can keep employee turnover to a minimum even though his store is located in a community that is known for having a transient population. Everett's belief 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 62. Which of the following is a decision bias influenced by the way in which a problem or decision alternative is phrased or presented? A. Groupthink B. Satisficing C. Goal displacement D. Framing effects E. Illusion of control 63. Which of the following involves weighting short-term costs and benefits more heavily than longer-term costs and benefits? A. Framing effects B. Cognitive conflict C. Illusion of control D. Social realities E. Discounting the future 64. Discounting the future refers to A. valuing long-term benefits and costs more heavily than short-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. 65. Which of the following is the best example of a manager discounting the future? A. A manager believing that he or she can control the outcome of any decision B. A manager planning for the long-term stability of a company C. A manager depending on programmed decisions for all issues D. A manager framing the decision alternatives to influence selection E. A manager focusing on quarterly profits instead of the long-term vision 66. Real-time information is information that A. is obtained with little or no delay. B. is based only on past performance. C. focuses on futuristic forecasts. D. is based on adjusted predictions. E. is discounted for the future. 67. Each morning, Complete Office Supply's CEO has a computer-based conference with all store managers. The previous day's data and challenges are discussed so that problems can be quickly and effectively resolved or even avoided. In this case, Complete Office Supply is utilizing _____ to retain a competitive edge. A. social realities B. real-time information C. psychological biases D. framing effects E. nonprogrammed decisions 68. _____ is an advantage of using a group for decision making. A. Intellectual stimulation B. Domination by one member C. Groupthink D. Satisficing E. Goal displacement 69. Guenther's Cherry Orchard and Farm Stand in Door County, Wisconsin, is looking for ways to be more environment-friendly. Guenther interviewed frontline staff to get their opinions and ideas, and he 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 has helped people to _____. A. dominate the discussion and reinforce the organizational structure B. use groupthink to gain buy-in C. please everyone completely D. believe in the illusion of control E. understand the decisions and be more committed to them 70. Which of the following is a disadvantage of group decisions? A. People tend to settle for satisficing. B. There is a smaller pool of information. C. The employees are not intellectually stimulated. D. There are multiple perspectives to the decision. E. There is more transparency among employees. 71. Allowing one person to control a discussion or decision is known as _____. A. groupthink B. devil's advocacy C. individual dominance D. vigilance E. dialectic 72. Randi, a manager at Greener Cleaners Inc., was disappointed with her team's discussion regarding next year's marketing campaign. Kwan, a fellow manager, pushed 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 E. goal displacement 73. 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 74. 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. made an optimizing decision D. exercised vigilance E. participated in goal displacement 75. Groups that are excessively concerned with maintaining a positive team spirit are likely to experience _____. A. individual dominance B. goal displacement C. brainstorming D. groupthink E. maximizing 76. A condition that occurs when a decision-making group loses sight of its original goal and a new, possibly less important, goal emerges is known as _____. A. goal displacement B. groupthink C. a framing effect D. goal alignment E. goal realization 77. _____ occurs when a group member is more interested in winning an argument than solving a problem. A. Framing B. Goal displacement C. Groupthink D. Satisficing E. Synergy 78. Leaders of decision-making groups should _____. A. discourage cognitive conflict B. encourage groupthink C. help the group satisfice D. ask for members' opinions E. dominate the discussion 79. Alana and Robert disagree sharply about a proposed solution because their backgrounds have given them radically different perspectives. This is an example of _____. A. goal displacement B. affective conflict C. cognitive conflict D. bounded rationality E. framing effect 80. Emotional disagreement directed toward other people is known as _____. A. psychological bias B. affective conflict C. cognitive conflict D. bounded rationality E. framing effect 81. Which of the following is the most constructive type of conflict? A. Emotional conflict B. Affective conflict C. Cognitive conflict D. Internal conflict E. External conflict 82. Two employees in an organization constantly disagree with each other. Lately, the arguments have become personal, leading to anger and bitterness, and this has begun to impact the whole work group. Which of the following best describes the given scenario? A. Bounded rationality B. Affective conflict C. Garbage can model D. Individual dominance E. Groupthink 83. Marie, the manager of an advertising agency, realizes that during meetings people feel strong inhibitions about disagreeing, but when conflicts arise, they become personal and emotional. Marie has therefore assigned Scott, a colleague, the task of pointing out problems and criticizing ideas to ensure that their downsides are fully explored. Which of the following best describes the procedure used in this scenario? A. Garbage can model B. Devil's advocacy C. Individual dominance D. Illusion of control E. Discounting the future 84. Which of the following best describes the dialectic method of managing group decision making? A. A group intentionally keeps presenting 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. 85. 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 B. affective conflict C. psychological conflict D. custom-made solutions E. groupthink 86. Which of the following statements about creativity is true? A. The fundamental unit of value in the creative revolution is artistic ability. B. Using something in a new way is a creative trait. C. Creativity and academic excellence are closely linked. D. Employees tend to be more creative if a tight deadline is set. E. Creativity cannot be developed or nurtured, it is an inborn trait. 87. A process in which group members generate as many ideas about a problem as they can is called _____. A. brainstorming B. forecasting C. groupthink D. satisficing E. optimizing 88. In order to be creative, a brainstorming session must A. be free of criticism. B. be among top management. C. be done as fast as possible. D. have 15 people or more. E. involve industry experts. 89. _____ 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. Garbage can model E. Illusion of control 90. The _____ model of decision making occurs when decision makers make small decisions and move in piecemeal fashion toward a bigger solution. A. groupthink B. incremental C. coalitional D. garbage can E. framing effects 91. 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 92. Sylvie leads a research team of engineers. She found herself in the midst of a battle between coalitions, each with its own solution to a challenge the team faced. Which of the following actions is best suited for the given scenario? A. Sylvie should collect information from both sides and decide herself on the best approach. B. Sylvie should ask parties from both sides to solve the problem in whatever way they can. C. Sylvie should pick a solution other than what is offered by the two groups so that no one gets hurt. D. Sylvie should encourage both teams to engage in affective conflict to solve the problem. E. Sylvie should use a collaborative method in which she establishes a goal around which the entire group can rally. 93. The _____ model of organizational decision making depicts a chaotic process and seemingly random decisions. A. garbage can B. contingency plan C. incremental D. coalitional E. bounded rationality 94. 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. An effective plan for crisis management should include communication actions. C. In crises, managers should avoid making decisions under pressure. D. It is not imperative to include crisis management on the management's agenda. E. Crises can never provide benefits to a company. 95. 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 leaked E. A method to quickly distance the company from the crisis Scenario A: Gwen, the manager of Greenways Garden and Gifts, has several decisions 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 following are decisions facing Gwen this week: 1. Giving two sales personnel raises based on the company's policy for wage increases. 2. Determining whether or not to open a facility in a new market to target more customers. 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. 96. In Scenario A, Gwen's decision regarding the raises for two sales personnel can best be classified as a _____ decision. A. vigilant B. programmed C. nonprogrammed D. cognitive E. non-vigilant 97. In Scenario A, decisions 2 and 4 are examples of _____ decisions. A. programmed B. nonprogrammed C. custom-made D. ready-made E. quantitative 98. In Scenario A, Gwen's decision about interviewing applicants for two open part-time positions and hiring them is an example of a _____ decision. A. vigilant B. nonprogrammed C. programmed D. satisficing E. non-vigilant 99. If, in decision 3, Gwen hires the first candidate she sees who 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: Trung works for a new start-up technology firm, which has six highly opinionated but very committed employees. The owner of the firm, Brett, strongly believes that he should make every decision since he is the boss. But Brett often jumps to conclusions and doesn't even take time to diagnose the problem at hand because he does not like to ask any of the employees for suggestions. Moreover, Brett's decisions are usually focused on short-term rather than long-term benefits and costs. 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. 100. Brett'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(n) _____. A. positive way of making good decisions B. mistake that leads to suboptimal decisions C. example of vigilance D. example of satisficing E. example of maximizing 101. Suppose Brett tells Trung 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. optimizing B. discounting the future C. maximizing D. the illusion of control E. the garbage can model 102. The fact that Brett's decisions are usually focused on short-term benefits and costs rather than the long-term is an example of _____. A. maximizing B. illusion of control C. vigilant decision making D. satisficing E. discounting the future Scenario C: Alphonso 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. 103. Alphonso 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 and went on to dismiss any alternatives. Alphonso was practicing _____. A. satisficing B. groupthink C. individual dominance D. goal displacement E. intellectual stimulation 104. Since the first meeting didn't go well, Alphonso 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. maximizing B. satisficing C. goal displacement D. vigilance E. intellectual stimulation 105. Alphonso decided to try another meeting because the project deadline was drawing closer, and he began 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 suggested a new process to use on the project. A second colleague commented favorably on the suggestion. Soon the group was in an animated discussion pointing out all the possible advantages of the process. Alphonso asks for critiques of the idea, but no one offers any. In this meeting, the group was engaged in _____. A. groupthink B. satisficing C. goal displacement D. illusion of control E. discounting the future Scenario D: Masterful Media Group has hired a consultant to help with organizational decision making. The consultant's first meeting is set up to explain to the managers of Masterful Media Group various models of organizational decision processes. Each of the managers seems to prefer one of the models over the others. 106. The chief financial officer (CFO) of Masterful Media Group 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. Which of the following models does the CFO seem to prefer? A. Bounded rationality B. The incremental model C. The garbage can model D. The coalitional model E. The crisis model 107. The vice president of human resources believes that 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. His opinion demonstrates _____. A. bounded rationality B. the incremental model C. the garbage can model D. cognitive dissonance E. rationalization 108. The president of the company tells his team that he has made an observation that the managers do not agree on goals or what actions should be taken. This situation best relates to _____. A. bounded rationality B. the incremental model C. the garbage can model D. the coalitional model E. the crisis model 109. The vice president of production declares that her people disagree on goals and have now formed groups to advocate for their own interests. Her managers are using _____. A. bounded rationality B. the incremental model C. the garbage can model D. the coalitional model E. the crisis model 110. When the management discussed making decisions in a crisis, the consultant suggested an effective plan for crisis management. Which of the following elements would have been included in the plan for crisis management given by the consultant? A. Communication actions B. Operational goals C. SWOT analysis D. BCG matrix E. Domain selection Essay Questions 111. Differentiate between programmed and nonprogrammed decisions. Give an example of each. 112. Discuss the roles that uncertainty and risk play in managerial decision making. 113. List and briefly explain the six phases of the decision-making process. 114. Discuss the various ways to identify and diagnose problems in a decision-making process. 115. Discuss the phase of evaluating alternatives in a decision-making process. 116. Discuss how the concepts of satisficing, maximizing, and optimizing are used in making a decision. 117. Discuss the steps that managers should use when implementing a decision. 118. Define psychological biases and explain how they relate to managerial decision making. 119. Explain the five advantages of using a group to make a decision. 120. Explain the four disadvantages of using a group to make decisions. 121. Explain the three requirements of effectively managing group decision making. 122. Explain the importance of creativity in decision making and how it can be developed. 123. Briefly identify and describe the constraints that you might face if you act as an organizational decision maker. 124. Compare and contrast three models of organizational decision processes thought to occur when bounded rationality conditions hold. 125. Describe the elements of an effective crisis management plan. Chapter 03 Managerial Decision Making Answer Key True / False Questions 1. 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: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager. Topic: Characteristics of Managerial Decisions 2. The manager of a burger restaurant faces conflict when she must decide whether to cut hours for all employees or layoff two 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 layoff anyone. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager. Topic: Characteristics of Managerial Decisions 3. Contingency plans should be developed only after a decision has been made and implemented. 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: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Summarize the steps in making "rational" decisions. Topic: The Phases of Decision Making 4. 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: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions. Topic: The Best Decision 5. When Luke words his suggestions as positively as possible, his managers are more likely to be interested in them because of the bias known as the framing effect. TRUE Framing effects refer to how problems or decision alternatives are phrased or presented and how these subjective influences can override objective facts. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions. Topic: Barriers to Effective Decision Making 6. 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: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-05 Identify procedures to use in leading a decision-making group. Topic: Managing Group Decision Making 7. 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: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-06 Explain how to encourage creative decisions. Topic: Managing Group Decision Making 8. 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: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-06 Explain how to encourage creative decisions. Topic: Managing Group Decision Making 9. 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: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-07 Discuss the processes by which decisions are made in organizations. Topic: Organizational Decision Making 10. All companies should have a crisis management plan. TRUE Although many companies don't concern themselves with crisis management, it is imperative for it to be on management's agenda. Every company should have an effective plan for crisis management. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-08 Describe how to make decisions in a crisis. Topic: Organizational Decision Making Multiple Choice Questions 11. What is the usual state of affairs in managerial decision making? A. Clear-cut procedures B. Routine situations C. Low risk D. Automatic solutions E. Lack of structure 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: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager. Topic: Characteristics of Managerial Decisions 12. Fergie is the owner of a health food shop and must decide on next week's work schedule for his employees. This is an example of a A. nonprogrammed decision. B. programmed decision. C. reprogrammed decision. D. risky decision. E. complex decision. A nonprogrammed decision is a new, novel, complex decision having no proven answers. Making the weekly schedule is a situation Fergie encounters frequently, and he can use proven formulas to accomplish it. Making the schedule is therefore a programmed decision. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager. Topic: Characteristics of Managerial Decisions 13. If a manager faces a programmed decision, that means A. a clear structure or procedure exists for arriving at the right decision. B. the decision maker has no predetermined structure on which to rely. C. there are a variety of possible solutions, each of which has merits or drawbacks. D. the decision maker can be creative in choosing what to do. E. the decision most likely carries substantial risk. If a manager faces a programmed decision, it means a clear procedure or structure exists for arriving at the right decision. Nonprogrammed decisions are used when there is no predetermined structure on which to rely. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager. Topic: Characteristics of Managerial Decisions 14. Risk exists when the probability of an action being successful is less than _____ percent and losses may be higher than gains. A. 20 B. 40 C. 60 D. 80 E. 100 When you can estimate the likelihood of various consequences but still do not know with certainty what will happen, you are facing risk. Risk exists when the probability of an action being successful is less than 100 percent and losses may occur. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager. Topic: Characteristics of Managerial Decisions 15. When a manager must consider opposing pressures from different sources, the manager faces _____. A. risk B. conflict C. certainty D. groupthink E. vigilance Important decisions are more difficult because of the conflict that managers face. Conflict, which exists when a manager must consider opposing pressures from different sources, occurs at two levels—psychological conflict and conflict between people. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager. Topic: Characteristics of Managerial Decisions 16. Angus has been going through a decision-making process. He diagnosed a problem with the shipping service his company used, identified alternative shipping services, evaluated those companies, made a choice, and implemented it. Which of the following statements is an accurate description of Angus's decision-making process? A. Angus has successfully completed the decision-making process. B. Angus now needs to evaluate the decision he made. C. Angus left out the first step of the decision-making process. D. Angus did steps three and four of the decision-making process in reverse order. E. Angus left out the second step of the decision-making process. The ideal decision-making process includes six stages: (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. Angus still needs to perform the last step. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Analyze Difficulty: 3 Hard Learning Objective: 03-02 Summarize the steps in making "rational" decisions. Topic: The Phases of Decision Making 17. Leila has identified a problem that consists of a gap between what her company is doing now and what it can do to create a more profitable future. The "problem" that Leila has identified is also a(n) A. opportunity. B. danger. C. benefit. D. trap. E. secret. 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: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Summarize the steps in making "rational" decisions. Topic: The Phases of Decision Making 18. Eliana, the manager of a retail store, needs a fast solution when an employee asked for a day off during the busiest shopping week of the year. A _____ solution will be most helpful to Eliana in this situation. A. customized B. ready-made C. creative D. personal E. one-time 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, which is designed specifically for the problem at hand. The given scenario illustrates a problem that is likely to recur. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 03-02 Summarize the steps in making "rational" decisions. Topic: The Phases of Decision Making 19. When choosing a phone plan, Max decides on the first option that meets the company's requirements rather than investigating all available options. This is an example of _____. A. maximizing B. compromising C. optimizing D. satisficing E. framing Satisficing is choosing the first option that is minimally acceptable or adequate. When satisficing, individuals compare their choices against their goals, not against other options. The search for alternatives stops at the first alternative that is okay. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-02 Summarize the steps in making "rational" decisions. Topic: The Phases of Decision Making 20. In the decision-making process, _____ means achieving the best possible balance among several goals. A. maximizing B. compromising C. optimizing D. satisficing E. framing Optimizing means that a manager achieves the best possible balance among several goals. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-02 Summarize the steps in making "rational" decisions. Topic: The Phases of Decision Making 21. When decision makers carefully and conscientiously execute all six stages of decision making, the decision makers are said to have exercised ______. A. optimizing B. maximizing C. satisficing D. vigilance E. diligence Vigilance occurs when decision makers carefully and conscientiously execute all six stages of decision making, including making provisions for implementation and evaluation. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions. Topic: The Best Decision 22. Which of the following is a psychological bias that can act as a barrier to good decision making? A. Framing effects B. Affective conflict C. Cognitive conflict D. Groupthink E. Dialectic People have biases that interfere with objective rationality. Illusion of control, discounting the future, and framing effects represent only a few of the many documented subjective psychological biases in decision making. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions. Topic: Barriers to Effective Decision Making 23. David is a small business owner who thinks it is more important to spend money on marketing his current product line than to invest in research to develop new products. Which psychological bias is David displaying? A. Framing effects B. Discounting the future C. Illusion of control D. Affective conflict E. Cognitive conflict 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: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Analyze Difficulty: 3 Hard Learning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions. Topic: Barriers to Effective Decision Making 24. The belief that one can influence events even when one has no power over what will happen is known as _____. A. framing effects B. discounting the future C. illusion of control D. affective conflict E. cognitive conflict The belief that one can influence events even when one has no power over what will happen is known as illusion of control. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions. Topic: Barriers to Effective Decision Making 25. Which of the following statements about group decision making is true? A. Group decisions are always better than individual decisions. B. Individual decisions are always better than group decisions. C. If enough time is available, groups usually make higher-quality decisions than most individuals. D. If enough time is available, most individuals usually make higher-quality decisions than a group. E. There are far more disadvantages than advantages to group decision making. 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: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions. Topic: Decision Making in Groups 26. Which of the following is a disadvantage of group decision making? A. Drawing on more perspectives B. Having a larger pool of information C. Understanding the decision D. Experiencing groupthink E. Being more committed to a decision One potential disadvantage of using a group to make decisions is groupthink. Groupthink is a phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus. AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions. Topic: Decision Making in Groups 27. In goal displacement, a decision-making group A. loses sight of its original goal and a new, less-important goal emerges. B. becomes so eager to avoid conflict that it adopts a goal or decision too quickly. C. generates as many goals as it can but does not allow criticism of people or ideas. D. disagrees on goals, or the members compete with one another for resources. E. is unsure about goals and is in disagreement about what to do. 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: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions. Topic: Decision Making in Groups 28. The three requirements for effective group decision making are an appropriate leadership style, the constructive use of disagreement and conflict, and the enhancement of _____. A. conflict B. groupthink C. satisficing D. creativity E. framing 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 can lead to groupthink. Finally, the group may need to be creative in generating ideas, especially if custom-made solutions to problems are needed. AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-05 Identify procedures to use in leading a decision-making group. Topic: Managing Group Decision Making 29. _____ conflict is differences in perspectives or judgments about issues. A. Affective B. Intellectual C. Cognitive D. Emotional E. Judgmental 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. AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-05 Identify procedures to use in leading a decision-making group. Topic: Managing Group Decision Making 30. Which of the following statements about brainstorming is true? A. Criticism of ideas during the session produces better results. B. Praise of ideas during the session produces better results. C. The group should generate as many ideas as possible. D. Each person keeps his or her ideas private until the end of the session. E. Participants should avoid building on previous ideas. A common technique used to elicit creative ideas is brainstorming. Brainstorming is a process in which group members generate as many ideas about a problem as they can. As the ideas are presented, they are posted so that everyone can read them, and people can use the ideas as building blocks. Criticism of other people or their ideas is not allowed. AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-06 Explain how to encourage creative decisions. Topic: Managing Group Decision Making 31. According to Simon's bounded rationality, which of the following factors prevents decision makers from being truly rational? A. They have complete information about alternatives and consequences. B. The problems they face are too simple. C. Human beings are not exposed to very much information. D. People have too much time on their hands. E. People, including those in the same organization, have conflicting goals. 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: Knowledge Application Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-07 Discuss the processes by which decisions are made in organizations. Topic: Organizational Decision Making 32. Qing's employees have requested that he switch the office to flextime so that they can better manage their childcare and commuting schedules. Qing is reluctant to make a drastic change all at once, so he agrees to experiment with staggering the starting and ending times of the workday over a 90-minute period for three months. If, at the end of that time, productivity does not decline, he will consider implementing a more extreme version of flextime. What model of decision-making is Qing using? A. Bounded rationality B. Incremental C. Coalitional D. Garbage can E. Crisis 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: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Analyze Difficulty: 3 Hard Learning Objective: 03-07 Discuss the processes by which decisions are made in organizations. Topic: Organizational Decision Making 33. The _____ 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. A. bounded rationality B. incremental C. coalitional D. garbage can E. crisis 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 are in disagreement about what to do. This model implies that some decisions