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Chapter 6 Decision Making: The Essence of the Managers Job TRUE/FALSE QUESTIONS THE DECISION-MAKING PROCESS 1. Problem identification is purely objective. 2. The second step in the decision-making process is identifying a problem. 3. A decision criterion defines what is relevant in a decision. 4. The fourth step of the decision-making process requires the decision maker to list viable alternatives that could resolve the problem. 5. Once the alternatives have been identified, a decision maker must analyze each one. 6. The step in the decision-making process that involves choosing a best alternative is termed implementation. THE MANAGER AS DECISION MAKER 7. Making decisions is with the essence of management. 8. Managerial decision making is assumed to be rational. 9. One assumption of rationality is that we cannot know all of the alternatives. 10. Managers tend to operate under assumptions of bounded rationality. 11. Studies of the events leading up to the Challenger space shuttle disaster point to an escalation of commitment by decision makers. 12. Managers regularly use their intuition in decision making. 13. Rational analysis and intuitive decision making are complementary. 14. Programmed decisions tend to be repetitive and routine. 15. Rules and policies are basically the same. 16. A policy is an explicit statement that tells a manager what he or she ought or ought not to do. 17. The solution to nonprogrammed decision making relies on procedures, rules, and policies. 18. Most managerial decisions in the real world are fully nonprogrammed. 19. The ideal situation for making decisions is low risk. 20. Risk is the condition in which the decision maker is able to estimate the likelihood of certain outcomes. 21. Risk is a situation in which a decision maker has neither certainty nor reasonable probability estimates. 22. People who have a low tolerance for ambiguity and are rational in their way of thinking are said to have a directive style. 23. Decision makers with an analytic style have a much lower tolerance for ambiguity than do directive types. 24. Individuals with a conceptual style tend to be very broad in their outlook and will look at many alternatives. 25. Behavioral-style decision makers work well with others. 26. Most managers have characteristics of analytic decision makers. 27. According to the boxed feature, “Managing Workforce Diversity,” diverse employees tend to make decisions faster than a homogeneous group of employees. 28. The anchoring effect describes when decision makers fixate on initial information as a starting point and then, once set, they fail to adequately adjust for subsequent information. 29. The availability bias describes when decision makers try to create meaning out of random events. 30. The sunk cost error is when decision makers forget that current choices cannot correct the past. DECISION MAKING FOR TODAYS WORLD 31. Todays business world revolves around making decisions, usually with complete or adequate information, and under minimal time pressure. 32. Managers need to understand cultural differences to make effective decisions in todays fast-moving world. 33. According to the boxed feature, “Focus on Leadership,” when identifying problems, managers might be from a culture that is focused on problem solving, or their culture might be one of situation acceptance. 34. According to the boxed feature, “Focus on Leadership,” findings from studies by Geert Hofstede and from GLOBE researchers show that in high uncertainty avoidance countries, decision making tends to be based more on intuition than on formal analysis. 35. Highly reliable organizations (HROs) are easily tricked by their success. MULTIPLE-CHOICE QUESTIONS For each of the following choose the answer that most completely answers the question. THE DECISION-MAKING PROCESS 36. Decision making is typically described as _, which is a view that is too simplistic. a. deciding what is correct b. putting preferences on paper c. choosing among alternatives d. processing information to completion 37. A series of eight steps that begins with identifying a problem and concludes with evaluating the decisions effectiveness is the _. a. decision-making process b. managerial process c. maximin style d. bounded rationality approach 38. _ is the existence of a discrepancy between an existing and a desired state of affairs. a. An opportunity b. A solution c. A weakness d. A problem 39. In identifying the problem, a manager _. a. compares the current state of affairs with where they would like to be b. expects problems to be defined by neon lights c. looks for discrepancies that can be postponed d. will not act when there is pressure to make a decision 40. Which of the following statements is true concerning problem identification? a. Problems are generally obvious. b. A symptom and a problem are basically the same. c. Well-trained managers generally agree on what is considered a problem. d. The problem must be such that it exerts some type of pressure on the manager to act. 41. What is the second step in the decision-making process? a. identifying decision criteria b. allocating weights to the criteria c. analyzing alternatives d. identifying a problem 42. To determine the _, a manager must determine what is relevant or important to resolving the problem. a. geocentric behavior needed b. number of allowable alternatives c. weighting of decision criteria d. decision criteria 43. What is the third step in the decision-making process? a. allocating weights to the criteria b. analyzing the alternatives c. selecting the best alternative d. implementing the alternative 44. If all criteria in the decision making are equal, weighting the criteria _. a. improves decision making when large numbers of criteria are involved b. is not needed c. produces excellent decisions d. improves the criteria 45. In allocating weights to the decision criteria, which of the following is helpful to remember? a. All weights must be the same. b. The total of the weights should sum to 1.0. c. Every factor criterion considered, regardless of its importance, must receive some weighting. d. Assign the most important criterion a score, and then assign weights against that standard. 46. What is the step where a decision maker wants to be creative in coming up with possible alternative? a. allocating weights to the criteria b. analyzing alternatives c. developing alternatives d. identifying decision criteria 47. When analyzing alternatives, what becomes evident? a. the strengths and weaknesses of each alternative b. the weighting of alternatives c. the list of alternatives d. the problem 48. When developing alternatives in the decision-making process, what must a manager do? a. list alternatives b. evaluate alternatives c. weight alternatives d. implement alternatives 49. Selecting an alternative in the decision-making process is accomplished by _. a. choosing the alternative with the highest score b. choosing the one you like best c. selecting the alternative that has the lowest price d. selecting the alternative that is the most reliable 50. In Step 6 of the decision-making process, each alternative is evaluated by appraising it against the _. a. subjective goals of the decision maker b. criteria c. assessed values d. implementation strategy 51. _ includes conveying a decision to those affected and getting their commitment to it. a. Selecting an alternative b. Evaluating the decision effectiveness c. Implementing the alternatives d. Analyzing alternatives 52. Which of the following is important in effectively implementing the chosen alternative in the decision-making process? a. getting upper-management support b. double-checking your analysis for potential errors c. allowing those impacted by the outcome to participate in the process d. ignoring criticism concerning your chosen alternative 53. The final step in the decision-making process is to _. a. pick the criteria for the next decision b. reevaluate the weightings of the criteria until they indicate the correct outcome c. evaluate the outcome of the decision d. reassign the ratings on the criteria to find different outcomes 54. Which of the following is important to remember in evaluating the effectiveness of the decision- making process? a. You should ignore criticism concerning the decision-making process. b. You may have to start the whole decision process over. c. You will have to restart the decision-making process if the decision is less than 50 percent effective. d. Ninety percent of problems with decision making occur in the implementation step. THE MANAGER AS DECISION MAKER 55. Managers are assumed to be _; they make consistent, value-maximizing choices within specified constraints. a. rational b. leaders c. organized d. satisficers 56. It is assumed that a perfectly rational decision maker _. a. does not follow rational assumptions b. does not consider value maximizing as an objective c. offers inconsistent decisions d. would be objective and logical 57. Managers can make rational decisions if _. a. the problem is ambiguous b. the goals are unclear c. the alternatives are limited d. time constraints exist 58. Which of the following is not a valid assumption about rationality? a. The problem is clear and unambiguous. b. A single, well-defined goal is to be achieved. c. Preferences are clear. d. Preferences are constantly changing. 59. When managers circumvent the rational decision-making model and find ways to satisfice, they are following the concept of _. a. jurisprudence b. bounded rationality c. least-squared exemptions d. self-motivated decisions 60. Because managers cant possibly analyze all information on all alternatives, managers _, rather than _. a. maximize; satisfice b. maximize; minimize c. satisfice; minimize d. satisfice; maximize 61. The type of decision making in which the solution is considered “good enough” is known as _. a. intuition b. satisfying c. maximizing d. satisficing 62. When a decision maker chooses an alternative under perfect rationality, she _ her decision, whereas under bounded rationality she chooses a _ decision. a. minimizes; satisficing b. satisfices; maximizing c. maximizes; satisficing d. maximizes; minimizing 63. An increased commitment to a previous decision despite evidence that it may have been wrong is referred to as _. a. economies of commitment b. escalation of commitment c. dimensional commitment d. expansion of commitment 64. Intuitive decision making is _. a. not utilized in organizations b. a conscious process based on accumulated judgment c. making decisions based on experience, feelings, and accumulated judgment d. important in supporting escalation of commitment 65. In studying intuitive decision making, researchers have found that _. a. managers do not make decisions based on feelings or emotions b. managers use data from their subconscious mind to help make their decisions c. rational thinking always works better than intuitive d. accumulated experience does not support intuitive decisions 66. All of the following are aspects of intuition except _. a. experienced-based decisions b. affect-initiated decisions c. cognitive-based decisions d. programmed decisions 67. _ are straightforward, familiar, and easily defined. a. Unstructured problems b. Structured problems c. Unique problems d. Nonprogrammed problems 68. Structured problems align well with which type of decision making? a. programmed b. satisficing c. intuition d. gut feeling 69. _ decision making is relatively simple and tends to rely heavily on previous solutions. a. Nonprogrammed b. Linear c. Satisficing d. Programmed 70. A procedure _. a. is an explicit statement detailing exactly how to deal with a decision b. is a series of interrelated sequential steps to respond to a structured problem c. is a set of guidelines that channel a managers thinking in dealing with a problem d. allows a manager to use broad decision-making authority 71. A _ is an explicit statement that tells a manager what he or she can or cannot do. a. procedure b. policy c. rule d. solution 72. A policy _. a. typically contains an ambiguous term b. is used frequently when a manager faces a structured problem c. allows little discretion on the part of the manager d. offers strict rules as to how a problem should be solved 73. What is a difference between a policy and a rule? a. A policy establishes parameters. b. A rule establishes parameters. c. A policy is more explicit. d. A rule is more ambiguous. 74. A _ typically contains an ambiguous term that leaves interpretation up to the decision maker. a. system b. rule c. solution d. policy 75. A business schools statement that it “strives for productive relationships with local organizations” is an example of a _. a. rule b. policy c. procedure d. commitment 76. Unstructured problems _. a. are easily solved b. present familiar circumstances c. force managers to deal with incomplete or ambiguous information d. are routine 77. Nonprogrammed decisions are best described as _. a. recurring, but difficult to make b. very similar to problems in other areas of the organization c. requiring more aggressive action on the decision makers thought processes d. unique and nonrecurring 78. When problems are _, managers must rely on _ in order to develop unique solutions. a. structured; nonprogrammed decision making b. structured; pure intuition c. unstructured; nonprogrammed decision making d. unstructured; programmed decision making 79. Lower-level managers typically confront what type of decision making? a. unique b. nonroutine c. programmed d. nonprogrammed 80. Which of the following is likely to make the most programmed decisions? a. the CEO of PepsiCo. b. the vice president of General Motors Cadillac Division. c. the head of the Minute Maid Division at Coca-Cola. d. the manager of the local McDonalds. 81. _ is a situation in which a manager can make accurate decisions because the outcome of every alternative is known. a. Certainty b. Risk c. Uncertainty d. Maximax e. Maximin 82. If an individual knows the price of three similar cars at different dealerships, he or she is operating under what type of decision-making condition? a. risk b. uncertainty c. certainty d. factual 83. A retail clothing store manager who estimates how much to order for the current spring season based on last springs outcomes is operating under what kind of decision-making condition? a. seasonal b. risk c. uncertainty d. certainty 84. _ is a situation in which a decision maker has neither certainty nor reasonable probability estimates available. a. Certainty b. Risk c. Uncertainty d. Maximax 85. Nonprogrammed decisions are typically made under a condition of _. a. certainty b. low levels of risk c. uncertainty d. reliability 86. A person at a horse racetrack who bets all of his or her money on the odds-based long shot to “win” (rather than “place” or “show”) is making what kind of choice? a. maximax b. maximin c. minimax d. minimin 87. What best describes the psychological orientation of an individual making a “maximax” choice? a. optimist b. realist c. pessimist d. satisficer 88. Optimistic managers could be expected to utilize their maximax orientation when they _. a. maximize the maximum payoff b. maximize the minimum payoff c. minimize the maximum regret d. minimize the minimum regret 89. What is the psychological orientation of a decision maker who makes a “maximin” choice? a. optimist b. realist c. pessimist d. satisficer 90. Which of the following best describes “maximizing the minimum possible payoff”? a. maximax b. maximin c. minimax d. minimin 91. A manager who desires to minimize his or her maximim “regret” will opt for a _ choice. a. maximax b. maximin c. minimax d. minimin 92. Decision makers using what decision-making style make fast decisions and focus on the short run? a. directive b. behavioral c. analytic d. conceptual 93. What types are characterized as careful decision makers with the ability to adapt or cope with unique situations? a. directive decision makers b. behavioral decision makers c. analytic decision makers d. conceptual decision makers 94. Who are concerned about the achievements of those around them and are receptive to suggestions from others? a. directive decision makers b. behavioral decision makers c. analytic decision makers d. conceptual decision makers 95. Many managers use _ or rules of thumb to simplify their decision making. a. heuristics b. biases c. errors d. habits 96. When decision makers tend to think they know more than they do or hold unrealistically positive views of themselves and their performance, they are exhibiting _. a. self-serving bias b. the anchoring effect c. immediate gratification bias d. overconfidence bias 97. When decision makers seek out information that reaffirms their past choices and discount information that contradicts past judgments, they are exhibiting _. a. availability bias b. the anchoring effect c. self-serving bias d. confirmation bias 98. When decision makers assess the likelihood of an event based on how closely it resembles other events or sets of events, they are using _. a. availability bias b. framing bias c. selective perception bias d. representation bias 99. What is the tendency for decision makers to falsely believe that they would have accurately predicted the outcome of an event once that outcome is actually known? a. the hindsight bias b. the sunk costs error c. the randomness bias d. the selective perception bias DECISION MAKING FOR TODAYS WORLD 100. According to the boxed feature, “Focus on Leadership,” when _, managers might come from a culture that gathers facts or from a culture that is more intuitive in gathering ideas and possibilities. a. developing alternatives b. implementing alternatives c. searching for information d. identifying problems 101. To make effective decisions in todays fast-moving world, managers need to _. a. use the five-stage decision-making process b. know when it is time to call it quits c. ignore cultural differences d. identify their style of decision making 102. What is a characteristic that the experts say an effective decision-making process has? a. It is inconsistent. b. It acknowledges only objective thinking. c. It focuses on all factorseven those that do not seem important. d. It requires only as much information and analysis as is necessary. 103. What term is used by Navy aviators to describe a gut feeling that something isnt right? a. leemers b. the creeps c. uneasiness d. regret 104. Managers of highly reliable organizations (HROs) get the input of _ and let them make decisions. a. CEOs b. frontline workers c. customers d. suppliers 105. When highly reliable organizations (HROs) face complexity, they _. a. try to simplify data b. aim for deeper understanding of the situation c. defer to the experts d. act, then think SCENARIOS AND QUESTIONS For each of the following choose the answer that most completely answers the question. THE DECISION-MAKING PROCESS Decisions, Decisions (Scenario) Sondra needed help. Her insurance companys rapid growth was necessitating making some changes, but what changes? Should they add to the existing information system or should they buy a new system? She was given the responsibility of analyzing the companys present info
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