Chapter 9--Managerial Decision Making

Student: ___________________________________________________________________________

1.

Making a choice is the most significant part of the decision-making process. True False

2.

A decision is a choice made from availa le alternatives. True False

!.

"rogrammed decisions are decisions that are made for situations that have occurred often in the past and allo# decision rules to e developed to guide future decisions. True False

$.

T#o emplo%ees in &tace%'s department (uit #hich is normal for her department. &he is faced #ith the decision to fill these positions. This #ould e considered a nonprogrammed decision. True False

).

*erald's *roceries and Mart%'s Market decided to merge their operations+ something neither compan% has tried efore. This #ould e considered a nonprogrammed decision. True False

,.

-n the real #orld+ fe# decisions are certain. True False

..

The main difference et#een risk and uncertaint% is that #ith risk %ou kno# the pro a ilities of the outcomes. True False

/.

0ncertaint% means that a decision has clear-cut goals+ and that good information is availa le+ ut the future outcomes associated #ith each alternative are su 1ect to chance. True False

9.

.A situation #here the goals to e achieved or the pro lem to e solved is unclear+ alternatives are difficult to define+ and information a out outcomes is unavaila le refers to am iguit%. True False

12 The classical decision making model assumes that the decision-maker is rational+ and makes the . optimal decision each time. True False 1

11 The approach that managers use to make decisions usuall% falls into one of three t%pes 3 the classical . model+ the administrative model+ and the political model. True False 12 The gro#th of (uantitative decision techni(ues that use computers has reduced the use of the classical . approach. True False 1! The administrative model of decision making descri es ho# managers actuall% make decisions in . difficult situations. True False 1$ 4ormative decision theor% recogni5es that managers have onl% limited time and cognitive a ilit% and . therefore their decisions are characteri5ed % ounded rationalit%. True False 1) The classical model of decision-making #orks est in organi5ations that are made up of groups #ith . diverse interests+ goals+ and values. True False 1, According to the classical model of decision making+ managers6 searches for alternatives are limited . ecause of human+ information+ and resource constraints. True False 1. According to the administrative model of decision making+ managers' searches for alternatives are . limited ecause of human+ information+ and resource constraints. True False 1/ &atisficing ehavior occurs #hen #e choose the first solution alternative that satisfies minimal . decision criteria regardless of #hether etter solutions are e7pected to e7ist. True False 19 -ntuition is a (uick apprehension of a decision situation ased on past e7perience ut #ithout . conscious thought. True False 22 According to oth research and managerial e7perience+ intuitive decisions are est and al#a%s #ork . out. True False 21 The process of forming alliances among managers is called coalition uilding. . True False 2

22 The political model consists of vague pro lems and goals+ limited information a out alternatives and . their outcomes+ and a satisficing choice for resolving pro lems using intuition. True False 2! *ood intuitive decision making is ased on an a ilit% to recogni5e patterns at lightning speed. . True False 2$ Administrative and political decision making procedures and intuition have een associated #ith high . performance in unsta le environments in #hich decisions must e made rapidl% and under more difficult conditions. True False 2) Managers confront a decision re(uirement in the form of either a pro lem or an opportunit%. . True False 2, 4onprogrammed decisions re(uire si7 steps+ ho#ever+ programmed decisions eing structured and . #ell understood re(uire onl% one step. True False 2. &tep one in the managerial decision-making process is recognition of decision re(uirement. . True False For a non-programmed decision+ feasi le alternatives are hard to identif% and in fact are alread% availa le #ithin the organi5ation's rules and procedures. True False The est alternative is the one in #hich the solution est fits the overall goals and values of the organi5ation and achieves the desired results using the fe#est resources. True False The formulation stage involves the use of managerial+ administrative+ and persuasive a ilities to ensure that the chosen alternative is carried out. True False 8isk propensit% refers to the #illingness to undertake risk #ith the opportunit% of gaining an increased pa%off. True False -n the implementation stage+ decision makers gather information that tells them ho# #ell the decision #as implemented and #hether it #as effective in achieving its goals. True False !

Feed ack is the part of monitoring that assesses #hether a ne# decision needs to made. True False "eople #ho prefer simple+ clear-cut solutions to pro lems use the directive st%le. True False Managers #ith an anal%tical decision st%le like to consider comple7 solutions ased on as much data as the% can gather. True False The ehavioral st%le is often adopted % managers #ho like to consider comple7 solutions ased on as much data as the% can gather. True False -ndividuals #ith a conceptual decision-making st%le are more sociall% oriented than those #ith an anal%tical st%le. True False The most effective managers are consistent in using their o#n decision st%le rather than shifting among st%les. True False Most ad decisions are errors in 1udgment that originate in the human mind's limited capacit% and in the natural iases of the manager. True False 9ustif%ing past decisions is a common ias of managers. True False Managers #ill fre(uentl% look for ne# information that contradicts thier instincts or original point of vie#.. True False Most people underestimate their a ilit% to predict uncertain outcomes. True False :rainstorming uses a face-to-face interactive group to spontaneousl% suggest a #ide range of alternatives for decision making. True False

:rain#riting refers to the tendenc% of people in groups to suppress contrar% opinions. True False *roupthink refers to the tendenc% of people in groups to suppress contrar% opinions. True False Devil's advocate techni(ue is similar to rainstorming in that oth techni(ues prevent individuals from challenging other group mem er's assumptions. True False "oint-counterpoint is a decision-making techni(ue in #hich people are assigned to e7press competing points of vie#. True False Managers are often referred to as; A. decision makers. : peace makers. . C conflict . creators. Dan unnecessar% la%er of emplo%ees. < profit . suppressor. ===== is a vital part of good management ecause decisions determine ho# the organi5ation solves its pro lems+ allocates resources+ and accomplishes its goals. A. >rga ni5in g : Competiti ve visioning C "roper . alignment D*ood decision making < ?eadersh . ip )

@hich of the follo#ing is a choice made from availa le alternativesA A. :. C. D . < . De cisi on "lan *oal Tacti c &trate g%

Mark+ a production manager at Ba%lie's Book#are+ recentl% chose to schedule his #orkers to #ork overtime. Cis alternative #as to hire more #orkers. Ce is no# monitoring the conse(uences of his choice. This is an e7ample of =====. A. pla nni ng : decisi onmakin g C organ . i5ing D contr . olling < leadi . ng

===== refers to the process of identif%ing pro lems and then resolving them. A. >r gan i5in g : Contro . lling C Decisio nmaking D "lanni . ng < ?eadi . ng ===== decisions are associated #ith decision rules. A. 4 on pr og ra m m ed : 0ni . (ue C "rogr amm ed D -llstruct ured < 4ov . el

"rogrammed decisions are made in response to ===== organi5ational pro lems. A. un us ual : recur . ring C signif . icant D . < . min or uni( ue

:ierderlack has a polic% that states that more than three a sences in a si7-month period shall result in a suspension. Colleen+ the manager+ has 1ust decided to suspend one of her shift emplo%ees for violating this polic%. This is an e7ample of; A. a progra mmed decisio n.

:a . nonprogramme d decision. C an insignificant . decision. D . < . poor management. personal grudge.

4ordstrom Department store's D4o (uestions asked 8eturn's "olic%D is an e7ample of aEnF; A. programm ed decision. : nonprogrammed . decision. C. novel decision. D poor management. . < unstructured . decision. -f %our instructor has an attendance polic%+ sheGhe is using aEnF; A. progra mmed decisi on. : uni(ue . approach. C condition of . am iguit%. D nonprogram med decision. < none of . these. 4onprogrammed decisions are made in response to situations that are; A. uni(ue. :. unstructured. C. important to the organi5ation. D. all of these < uni(ue and important to the . organi5ation.

<7amples of nonprogrammed decisions #ould include the decision to; A. reorde r suppli es. :develop a ne# product or service. perform routine maintenance on one of the machines in manufacturing . terminate an emplo%ee for violation of compan% rules. < fill a . position. *ood e7amples of ===== decisions are strategic decisions. A. non prog ram med program med insignifi cant recurri ng structur ed

: . C . D . < .

12

@hen a small communit% hospital decides to add a radiation therap% unit+ it is considered a; A. program med decision . structured decision. nonprogrammed decision.

: . C .

D poor . management decision. < certaint% . decision. T#o area anks+ :ank A and :ank :+ decided to merge their operations. This is an e7ample of a; A. programme d decision. : nonprogrammed . decision. C. decision rule. D structured decision. . < ad communit% . decision. At the start of ever% shift+ Carl+ a deliver% truck driver+ plans out his route ased on the addresses that he #ill e visiting to drop off packages. This can est e descri ed as #hat kind of decisionA A. "ro gra mm ed : 4onpro gramm ed C @ick . ed D Admini . strative < -ntuiti . ve 11

Associated #ith the condition of ===== is the lo#est possi ilit% of failure. A. : . C . D. < . am i guit% uncertai nt% certaint % risk all of these

@hich of the follo#ing means that all the information the decision-maker needs is full% availa leA A. Certai nt% :. 8isk C 0ncertaint . % D Am iguit% . < 4one of . these :o %+ a product manager+ #ants to increase the market share of his product. Ce is unsure a out ho# to go a out it+ not kno#ing for sure ho# costs+ price+ the competition+ and the (ualit% of his product #ill interact to influence market share. :o % is operating under a condition of =====. A. : . C. D . < . risk am iguit% certaint% uncertaint% rainstormi ng

12

0nder conditions of =====+ statistical anal%ses are useful. A. cer tai nt% : am ig . uit% C. risk D uncert . aint% < confli . ct @hich of the follo#ing means that a decision has clear-cut goals and that good information is availa le+ ut the future outcomes associated #ith each alternative are su 1ect to chanceA A. Certai nt% :. 8isk C 0ncertaint% . D Am iguit% . < :rainstormi . ng ===== means that managers kno# #hich goals the% #ish to achieve+ ut information a out alternatives and future events is incomplete. A. :. C . D . < . Cert aint % 8isk 0ncerta int% Am igu it% Advoca c%

1!

@hen managers kno# #hich goals the% #ish to achieve+ ut information a out alternatives and future events is incomplete+ the condition of ===== e7ists. A. : . C . D . < . risk uncertain t% am iguit % certaint% pro lemat ic

@hich of the follo#ing has the highest possi ilit% of failureA A. The cond ition of certa int%

:The condition of am iguit% CThe condition of uncertaint% D The condition of risk < All of . these

1$

The four positions on the possi ilit% of failure scale include certaint%+ risk+ am iguit%+ and =====. A. : . C . D . < . unce rtain t% conflict necessit % indecisi on possi ili t%

===== is % far the most difficult situation for a decision-maker. A. Certai nt% :. 8isk C 0ncertaint% . D Am iguit% . < :rainstormi . ng @hich of the follo#ing means that the goals to e achieved or the pro lem to e solved is unclear+ alternatives are difficult to define+ and information a out outcomes is unavaila leA A. Certai nt% :. 8isk C 0ncertaint% . D Am iguit% . < :rainstormi . ng

1)

The condition under #hich am iguit% occurs is #hen; A. alternatives are difficult to define. : o 1ectives are #ell . defined. C information a out outcomes is readil% availa le. D all the alternatives are . kno#n. < decisions are alread% . made. ===== decisions are associated #ith conflicts over goals and decision alternatives+ rapidl% changing circumstances+ fu55% information+ and unclear links among decision elements. A. 4on pro gra mm ed : "rogra . mmed C . D . @icke d Conven tional

< -rration . al

1,

During the fallout of the glo al financial crisis of the late 2222s+ finance companies had to make important decisions in a highl% am iguous environment. The decision to u%out failed anks could est e descri ed as #hat t%pe of decisionA A. :ounde d :. "rogrammed C Conventional . D @icked decision . pro lem < -rrational . decision The classical model of decision making is ased on ===== assumptions. A. philos ophic al :. irrational C economic . D uncertaint . % < technologic . al 8ile% is a manager at the Tinker Tools. &he is e7pected to make decisions that are in the organi5ation's est economic interests. Cer decisions should e ased on #hich of the follo#ing modelsA A. : . C . The administrative model of decision making The gar age can model of decision making The scientific management model of decision making

D The classical model of decision making . < The humanistic model of decision . making

1.

@hich of these assumptions are included in the classical model of decision makingA A. "ro lems are unstructured and ill defined. : The decision-maker strives for . conditions of certaint%. C Criteria for evaluating . alternatives are unkno#n. D The decision-maker selects the alternatives that #ill minimi5e the economic return to the organi5ation. < The situation is al#a%s . uncertain. @hich approach defines ho# a decision-maker should make decisionsA A. : . C . D . < . 4or mati ve &cientifi c Descripti ve 8eflectiv e Cumanist ic

===== is the approach that defines ho# a decision maker should make decisions and provides guidelines for reaching an ideal outcome for the organi5ation. A. Admi nistrat ive : Descriptiv . e C 4ormative . D :ounded . rationalit% < 4one of . these 1/

All of the follo#ing are characteristics of the classical decision making model e7cept; A. :. C . D . < . clear-cut pro lems and goals. conditions of certaint%. rational choice % individual for ma7imi5ing outcomes. limited information a out alternatives and their outcomes. all of these are characteristics of classical decision making model.

The ===== model of decision making is most valua le #hen applied to =====. A. administrativeH programmed decisions : classicalH nonprogrammed . decisions C classicalH programmed decisions . D classicalH am iguous decisions . < administrativeH structured . decisions ===== approach descri es ho# managers actuall% make decisions+ #here as ===== approach defines ho# a decision-maker should make decisions. A. : . C . D . < . 4ormativeH descriptive 4ormativeH classical DescriptiveH normative DescriptiveH administrative 4ormativeH administrative

19

@hich model of decision making is associated #ith satisficing+ ounded rationalit%+ and uncertaint%A A. Cla ssic al Admin istrativ e C Iuanti . tative D . < . 8atio nal "oliti cal

The gro#th of (uantitative decision techni(ues that use computers has e7panded the use of #hich decision-making approachA A. : . C. D. < . Admi nistra tive Classical -ntuitive "olitical :ureaucrat ic

The ===== model of decision making descri es ho# managers actuall% makes decisions in situations characteri5ed % nonprogrammed decisions+ uncertaint%+ and am iguit%. A. : . C . nor mat ive classic al adminis trative

Dscientifi c manage ment < o 1ecti . ve 22

The concept that people have the time and cognitive a ilit% to process onl% a limited amount of information on #hich to ase decisions is kno#n as; A. satisficin g. : ounded . rationalit%. C classical model of decision making. D normative . approach. < scientific . approach. Melissa is a manager at -n&t%le5 Clothing. Cer 1o is ver% comple7 and she feels that she does not have enough time to identif% andGor process all the information she needs to make decisions. Melissa's situation is most consistent #ith #hich of the follo#ing conceptsA A. :ounded rationalit% : The classical model of decision making C. &atisficing D. :rainstorming < &cientific . management The essence of ===== is to choose the first solution availa le. A. ounded rationalit%

:. creativit% C. decision ma7imi5ation D. satisficing < the classical model of decision . making

21

8odne% doesn6t al#a%s reali5e that #ithin his role as an air traffic controller+ he must continuousl% perceive and process information ased on kno#ledge and e7perience that he is not consciousl% a#are of. This descri es #hat t%pe of decisionmakingA A. Ad min istr ativ e : 8ight. rained C . D . < . &atisfi cing 8atio nal -ntuiti ve

-ntuition is ased on =====+ ut lacking in =====. A. conscious thoughtH practicalit % e7perienceH applica ilit% a solid anal%sisH applica ilit%

: . C .

D e7perienceH . conscious thought < thought-processH . guts

22

Most managers settle for a ===== rather than a ===== solution. A. minimi5i ngH ma7imi5i ng satisficingH ma7imi5ing top-levelH ottomline ma7imi5ingH satisficing challengingH simple

: . C . D . < .

All of the follo#ing are characteristics of the administrative decision making model e7cept;

A. vague pro lem and goals. :. conditions of certaint%. C limited information a out alternatives and their outcomes. . D. satisf%ing choice. < all of these are characteristics of administrative decision maki . model. @hich of the follo#ing is the process of forming alliances among managers during the decision making processA A. :. C . D. < . 4et#or king &ociali5ing Coalition uilding &atisficing "assing the uck

2!

The ===== model of decision-making is useful for making nonprogrammed decisions #hen conditions are uncertain+ information is limited+ and there are managerial conflicts a out #hat goals to pursue or #hat course of action to take. A. classic al functional

: . C ureaucrati . c D. political < administrati . ve

The ===== model closel% resem les the real environment in #hich most managers and decisionmakers operate. A. nor mat ive : admini . strative C descri . ptive D . < . classi cal politic al

9efferson -nc. is an information technolog% consulting firm located in @ashington D.C. Decisions at 9efferson are comple7 and involve man% people+ #ith a significant amount of disagreement and conflict. @hich decision-making model fits est for this organi5ationA A. "oliti cal : Functiona . l C Classical . D Administra . tive < :ureaucrat . ic 2$

All of these are asic assumptions of the political model e7cept; A. organi5ations are made up of groups #ith diverse interests+ goals+ and values. :. information is clear and complete. C managers do not have the time+ resources+ or mental capacit% to identif% all dimensions of the pro lem. D managers engage in the push and pull of de ate to . decide goals and discuss alternatives. < all of these are asic assumptions of the political . model. &hirle% #orks in the human resource department at Turtle &hells+ -nc. &he elieves she is seeing an increase in drinking pro lems among the #orkforce. &he thinks she needs to investigate further. &he is at #hat stage of the managerial decision making processA A. Diagnosis and anal%sis of causes : Development of alternatives . C 8ecognition of decision . re(uirement D <valuation and feed ack . < &election of desired . alternatives AEnF ===== occurs #hen the organi5ational accomplishment is less than esta lished goals. A. : . C . D . stre ngt h threa t diagn osis opport unit%

< pro le . m 2)

===== is the step in the decision-making process in #hich managers anal%5e underl%ing causal factors associated #ith the decision situation. A. : . C . D . < . Anal% sis Diagnosis 8ecognitio n 9udgment -dentificati on

@hich of the follo#ing is the first step in the managerial decision making processA A. <valuation and feed ack : Development of alternatives . C 8ecognition of decision . re(uirement D Diagnosis and anal%sis of . causes < &election of desired . alternatives ===== is the last step in the decision making process. A. : . C . D . < . <valuation and feed ack Development of alternatives -mplementation of chosen alternative &election of desired re(uirement 8ecognition of decision re(uirement

2,

The recognition of the decision re(uirement step in the managerial decision making process re(uires managers to; A. : . C . develop alternative solutions. integrate information in novel #a%s. use the classical model of decision making.

D focus on generating ideas. . < select undesira le . alternatives. D@hen did it occurD and Dho# did it occurD are (uestions associated #ith #hich step of the decision making processA A. Diagn osis and anal%s is of causes :8ecognition of decision re(uirement C Development of alternatives D&election of desired alternative < 4one of . these

2.

@hen managers ask (uestions such as J@hat is the state of dise(uili rium affecting usAK+ the% are in #hich stage of the managerial decision-making processA A. : . C . &election of a desired alternative Development of alternatives Diagnosis and anal%sis of causes

D 8ecognition of . decision re(uirement < <valuation and . feed ack @hen (ualit% control measures at the local tire plant #ere found to e inade(uate+ managers #ere asking themselves+ JCo# did this occurAK and J@hat is the resultAK The compan% is in #hich stage of the managerial decision-making processA A. : . C . &election of a desired alternative Development of alternatives Diagnosis and anal%sis of causes

D 8ecognition of . decision re(uirement < <valuation and . feed ack

2/

The decision-maker must ===== once the pro lem has een recogni5ed and anal%5ed. A. evaluate and provide feed ack choose among alternatives generate alternatives prioriti5e the alternatives reanal%5e the pro lem

: . C . D . < .

For a programmed decision; A. alternatives are usuall% difficult to identif%. : alternatives are usuall% . eas% to identif%. C there are usuall% fe# . alternatives. Dthere are usuall% fe# alternatives and the% are difficult to identif%. < there are no . alternatives.

29

8%an is a manager at Dream Catchers. Dream Catchers is currentl% operating in an environment of high uncertaint%. As a result+ 8%an #ill; A. most likel% e making programmed decisions. : pro a l% have an eas% time generating . alternatives. C pro a l% have a difficult time . generating alternatives. D most likel% rel% on the classical model . of decision making. < #ait until environment ecomes . certain. >nce the desired alternative is developed+ it should e =====. A. : . C . D . < . anal %5e d evaluat ed selecte d recogni 5ed identifi ed

@hich of the follo#ing refers to the #illingness to undertake risk #ith the opportunit% to increase one's returnA A. Tunnel vision :. 8isk propensit% C. 8isk averse D. Thrill seeking < -neffective investment . philosoph%

!2

The ===== step in the decision making process involves using managerial+ administrative+ and persuasive a ilities to translate the chosen alternative into action. A. rec ogn itio n : anal%s . is C evaluat . ion D implem . entation < feed a . ck

!1

Feed ack is important ecause; A. decis ion maki ng is a conti nuou s proc ess. it provides decisionmakers #ith ne# information . it helps determine if a ne# decision needs to e made. it provides decisionmakers #ith ne# information and it helps determine if a ne# decision needs to e made. < all of . these.

!2

*enna is collecting data on ho# #ell the organi5ation has done since their ne# strateg% #as implemented. &he is in #hat stage of the managerial decision making processA A. The generation of alternatives : -mplementation of the chosen . alternative C <valuation and feed ack . D 8ecognition of the decision . re(uirement < &election of desired . alternative @hich st%le is used % people #ho prefer simple+ clear-cut solutions to pro lemsA A. : . C . D . < . :eh avi oral Concep tual Directi ve Anal%t ical Classic al

"ersonal ===== st%le refers to differences among people #ith respect to ho# the% perceives pro lems and make decisions. A. ris k tak ing ehav ior decisi on strate gic anal% sis

: . C . D . < .

!!

8esearch has identified four ma1or decision st%les. These include all of the follo#ing e7cept =====. A. : . C . D . eh avi oral concep tual anal%ti cal authori tative

< directi . ve Managers are considered to have aEnF ===== st%le #hen the% prefer to consider comple7 solutions ased on as much data as the% can gather. A. : . C . D . < . eh avi oral concep tual directi ve anal%ti cal classic al

@hich of these st%les is adopted % managers #ho have a deep concern for others as individualsA A. :eha viora l : Classica . l C Anal%tic . D ?ogical . < Conceptu . al

!$

"eople #ith aEnF ===== st%le usuall% are concerned #ith the personal development of others and ma% make decisions that help others achieve their goals. A. : . C. D . < . class ical anal%tic logical ehavior al concept ual

Finance managers at :ig :end -nc. made a financial lunder #hen the% solel% looked at the previous %ear6s sales to estimate sales for the coming %ear. >f #hich management ias is this an e7ampleA A. :. C. D. < . :eing influenced % emotions "erpetuating the status (uo &eeing #hat %ou #ant to see 9ustif%ing past actions :eing influenced % initial impressions

All of the follo#ing are cognitive iases that can affect manager's 1udgment e7cept; A. eing influen ced % initial impres sions. : 1ustif%ing past . decisions. Cseeing #hat %ou don't #ant to see. D perpetuating the status (uo. < overconfiden . ce.

!)

@hen managers ase decisions on #hat has #orked in the past and fail to e7plore ne# options+ the% are; A. perpetuating the status (uo. : eing influenced % . emotions. C. eing overconfident. D 1ustif%ing past actions. . < seeing #hat the% #ant to . see. The a ilit% to make ===== decisions is a critical skill in toda%'s fast-moving organi5ations. A. fast : #idel% . supported C . D . < . high(ualit% fre(uen t all of these

As a top manager+ 9oanna #orks #ith others #ithin her team ever% da% in making important corporate decisions. Cer preferred decision-making approach is to generate as man% alternatives to pro lems as possi le in a short amount of time. This approach is referred to as =====. A. : . C . groupt hink devil6s advocac% pointcounterpoint

D escalating . commitment < rainstormi . ng

!,

@hich of the follo#ing defines a techni(ue that uses a face-to-face group to spontaneousl% suggest a road range of alternatives for decision makingA A. :rainst orming :. *roupthink C "oint. counterpoint D :rain#riting . < Devil's . advocate The ===== is the individual #ho is assigned the role of challenging assumptions made % the group. A. group gadfl% : multiple . advocate C devil's . advocate D rainstormer . < inferior . mem er @hich of the follo#ing is a decision-making techni(ue in #hich people are assigned to e7press competing points of vie#A A. "oint count erpoi nt : Devil's . advocate C. D . < . De ate *roupthin k :rain#riti ng

!.

===== refers to the tendenc% of people in groups to suppress contrar% opinions. A. "ointcounte rpoint : *roupthink . C Devil6s . advocac% D <scalating . commitment < :rainstormi . ng The tendenc% of organi5ations to invest time and mone% in a solution despite strong evidence that is not appropriate is referred to as; A. technologi cal decisions. collective intuition.

: . C decision learning. . D. team dela%. < escalating . commitment.

!/

Scenario - Vaughn Bately Laughn :atel% manages a group of eight electrical engineers at Defiance Designs. Cis team is highl% trained and #ell respected % e7perts oth inside and outside the compan%. 8ecentl% one of Laughn's engineers suggested a ne# techni(ue for the development and use of an argon laser. There appeared to e rich potential for this technolog%+ ut Laughn #asn't certain that developing this technolog% #as the est use of his limited resources. Laughn #as facing a significant decision. -f Laughn uses the classical model of decision making+ #hich of these assumptions #ould he re1ectA
a. . c. d. e.

The decision ma and evaluating a The desired decision #ill ma7imi5e attainment of organi5ational o 1ectives. The decision-maker strives for complete certaint%+ gathering complete informat "ro lems are precisel% formulated and defined. All of these are accepted.

!9

Scenario - Vaughn Bately Laughn :atel% manages a group of eight electrical engineers at Defiance Designs. Cis team is highl% trained and #ell respected % e7perts oth inside and outside the compan%. 8ecentl% one of Laughn's engineers suggested a ne# techni(ue for the development and use of an argon laser. There appeared to e rich potential for this technolog%+ ut Laughn #asn't certain that developing this technolog% #as the est use of his limited resources. Laughn #as facing a significant decision. -f Laughn uses the administrative model of decision making+ #hich of these assumptions #ould he re1ectA
a. . c. d. e.

Decision-maker solution. The search for alternatives is limited ecause of information+ human and resour 8ational procedures #ill normall% lead to the est solution in a comple7 organi Decision o 1ectives are often vague+ conflicting+ and lack consensus among ma All of these are accepted.

$2

Scenario - Vaughn Bately Laughn :atel% manages a group of eight electrical engineers at Defiance Designs. Cis team is highl% trained and #ell respected % e7perts oth inside and outside the compan%. 8ecentl% one of Laughn's engineers suggested a ne# techni(ue for the development and use of an argon laser. There appeared to e rich potential for this technolog%+ ut Laughn #asn't certain that developing this technolog% #as the est use of his limited resources. Laughn #as facing a significant decision. @hich of the follo#ing steps #ould Laughn not take in making his decisionA
a. . c. d. e. -mplement the chosen alternative. Create a set of alternatives Diagnose and anal%5e pro lem causes. All of these #ould e included.

&ense and recog

AEnF ===== is a choice made from availa le alternatives. ======================================== ===== is the process of identif%ing pro lems and opportunities and then resolving them. ======================================== ===== decisions involve situations that have occurred often enough to ena le decision rules to e developed and applied in the future. ======================================== ===== decisions are made in response to situations that are uni(ue+ are poorl% defined and largel% unstructured+ and have important conse(uences for the organi5ation. ======================================== ===== means that all the information the decision-maker needs is full% availa le. ======================================== $1

===== means that a decision has clear-cut goals and that good information is availa le+ ut the future outcomes associated #ith each alternative are su 1ect to chance. ======================================== 0nder conditions of =====+ managers kno# #hat goal the% #ish to achieve+ ut information a out alternatives and future events is incomplete. ======================================== ===== means that the goals to e achieved or the pro lem to e solved is unclear+ alternatives are difficult to define+ and information a out outcomes is unavaila le. ======================================== The ===== model of decision making is ased on economic assumptions. ======================================== A normative decision making model defines ho# a manager ===== make decisions. ======================================== -n man% respects+ the ===== model represents an DidealD model decision-making and can't usuall% e attained % real people in real organi5ations. ======================================== The ===== model of decision making descri es ho# managers actuall% make decisions in difficult situations+ such as those characteri5ed % nonprogrammed decision+ uncertaint%+ and am iguit%. ======================================== AEnF ===== approach descri es ho# managers actuall% make decisions+ not ho# the% should. ======================================== The recognition that people have limits on ho# rational the% can e is kno#n as =====. ======================================== ====== means that decision-makers choose the first solution alternative that satisfies minimal decision criteria. ======================================== ===== represents a (uick apprehension of a decision situation ased on past e7perience ut #ithout conscious thought. ========================================

$2

===== is the process of forming alliances among managers. ======================================== AEnF ===== occurs #hen organi5ational accomplishment is less than esta lished goals. ======================================== ===== e7ists #hen managers see potential of enhancing performance e%ond current levels. ======================================== The step in the decision making process in #hich managers anal%5e the underl%ing causal factors associated #ith the situation is called =====. ======================================== ===== is the #illingness to undertake risk #ith the opportunit% of gaining an increased pa%off. ======================================== The ===== stage involves the use of managerial+ administrative+ and persuasive a ilities to ensure that the chosen alternative is carried out. ======================================== ===== is important ecause decision making is a continuous+ never ending process. ======================================== Differences among people #ith respect to ho# the% perceive pro lems and make decisions is called =====. ======================================== The ===== st%le is often the st%le adopted % managers having a deep concern for others as individuals. ======================================== "eople #ith aEnF ===== st%le usuall% are concerned #ith the personal development of others and ma% make decisions that help others achieve their goals. ======================================== AEnF ===== is assigned the role of challenging the assumptions and assertions made % the group. ========================================

$!

?ist four of the eight (uestions Bepner and Tregoe recommend that managers ask #hen diagnosing and anal%5ing causes.

?ist the three guidelines of innovative group decision-making in toda%'s usinesses.

<7plain the difference et#een programmed and nonprogrammed decisions and give an e7ample of each.

Compare decision conditions of certaint%+ risk+ uncertaint%+ and am iguit%.

$$

:riefl% descri e the assumptions underl%ing the classical model of decision making.

<7plain the four underl%ing assumptions of the administrative model.

?ist and descri e the four asic assumptions of the political model.

@hat are the si7 steps in the managerial decision making processA

<7plain ho# a manager selects the desired decision in the managerial decision making process.

$)

:riefl% descri e the four ma1or personal decision st%les.

$,

Chapter 9--Managerial Decision Making Be%

1. FA?&< 2. T80< !. T80< $. FA?&< ). T80< ,. T80< .. T80< /. FA?&< 9. T80< 12. T80< 11. T80< 12. FA?&< 1!. T80< 1$. FA?&< 1). FA?&< 1,. FA?&< 1.. T80< 1/. T80< 19. T80< 22. FA?&< 21. T80< 22. FA?&< 2!. T80< 2$. T80< 2). T80< 2,. FA?&< 2.. T80< FA?&< T80< FA?&<

$.

T80< FA?&< T80< T80< T80< FA?&< T80< FA?&< T80< T80< FA?&< FA?&< T80< FA?&< T80< FA?&< T80< A D A : C C : A A A D : A C : A C

$/

A D C : C : : A D D A C D C D : A C D C C : : C : A D < D : : C D <

$9

A : C < : C A : A C C C : C C : D < C C C D D A D < C A < < A C A :

)2

< e c e decision Decision making "rogrammed 4onprogrammed Certaint% 8isk uncertaint% Am iguit% classical should classical administrative descriptive ounded rationalit% &atisficing -ntuition Coalition uilding pro lem >pportunit% diagnosis 8isk propensit% implementation Feed ack decision st%le ehavioral ehavioral devil's advocate &tudents can ans#er #ith an% four of the follo#ing (uestions; E1F @hat is the state of dise(uili rium affecting usA E2F @hen did it occurA E!F @here did it occurA E$F Co# did it occurA E)F To #hom did it occurA E,F @hat is the urgenc% of the pro lemA E.F @hat is the interconnectedness of eventsA E/F @hat result came from #hich activit%A &tart #ith rainstorming+ Bno# #hen to ail+ Avoid groupthink+ <ngage in rigorous de ate

)1

"rogrammed decisions involve situations that have occurred enough to ena le decision rules to e developed and applied in the future. <7amples include 1o skills re(uired to fill certain positions+ the reorder point for manufacturing inventor%+ and selection of freight routes for product deliveries. 4onprogrammed decisions are made in response to situations that are uni(ue+ are poorl% defined and largel% unstructured+ and have important conse(uences for the organi5ation. <7amples are decisions to uild a ne# factor%+ develop a ne# product or service+ and enter a ne# geographical market. Decisions made under the condition of certaint% have a high possi ilit% of success. All of the information that the decision-maker needs is availa le. The decision-maker kno#s the alternatives+ the o 1ectives+ and the outcomes. 8isk is a situation #here the decision-maker kno#s the alternatives and the o 1ectives. Co#ever+ the outcomes are not kno#n #ith certaint%+ ut the pro a ilities of the outcomes are kno#n. 0nder conditions of uncertaint%+ the decision-maker does not kno# the pro a ilities of the outcomes+ #hile she kno#s some of the alternatives and the o 1ectives. @ith am iguit%+ the o 1ectives are unclear+ alternatives are difficult to define+ and information a out outcomes is incomplete or unavaila le. The classical model of decision making is ased on four assumptions. First+ the decision-maker attempts to accomplish goals that are kno#n and agreed upon. -n addition+ pro lems are specified and defined precisel%. &econd+ the decision-maker attempts to gather complete information+ going for a condition of certaint%. Third+ the criteria for evaluating the alternatives are kno#n and the decision-maker #ill select the alternative that ma7imi5es the economic return to the organi5ation. Fourth+ the decision-maker is rational and relies upon logic to make sense of the information availa le. E1F The decision maker operates to accomplish goals that are vague and conflicting. E2F All alternatives and the potential results are ased on simplistic vie#s of organi5ational events. E!F Alternatives are limited ased on human constraints. E$F Managers settle for satisficing. E1F >rgani5ations are made up of groups #ith diverse interests+ goals+ and values. Managers disagree a out pro lem priorities and ma% not understand or share the goals and interests of other managers. E2F -nformation is am iguous and incomplete. The attempt to e rational is limited % the comple7it% of man% pro lems as #ell as personal and organi5ational constraints. E!F Managers do not have the time+ resources+ or mental capacit% to identif% all dimensions of the pro lem and process all relevant information. Managers talk to each other and e7change vie#points to gather information and reduce am iguit%. E$F Managers engage in the push and pull of de ate to decide goals and discuss alternatives. Decisions are the result of argaining and discussion among coalition mem ers. The si7 steps are E1F recogni5e the decision re(uirementH E2F diagnose and anal%5e the causesH E!F develop alternativesH E$F select the desired alternativeH E)F implement the chosen alternativeH and E,F evaluate and determine feed ack. The manager tries to select the choice #ith the least amount of risk and uncertaint%. :ecause some risk is inherent for most nonprogrammed decisions+ managers tr% to gauge prospects for success. 0nder conditions of uncertaint%+ the% might have to rel% on their intuition and e7perience to estimate #hether a given course of action is likel% to succeed. :asing choices on overall goals and values can also effectivel% guide selection of alternatives. Decision a out ho# to cope should e selected % rel%ing on the compan%'s values and goals of treatment of emplo%ees and uilding long-term relationships. Making choices depends on managers' personalit% factors and #illingness to accept risk and uncertaint%. Directive+ anal%tical+ conceptual+ and ehavioral st%le.

)2