Fundamentals Of Management 8th Edition - Chapter 3 Test Bank

Fundamentals of Management, 7e (Robbins/DeCenzo/Coulter) Chapter 3 Foundations of Decision Making 1) In decision making, a problem can be defined as a discrepancy between what exists and what the problem solver desires to exist. Answer: TRUE Explanation: A problem is a difference between a desired state and an existing state. For example, suppose a person is hungry—the existing state of not having food. The desired state is to obtain food. So the problem is defined as the difference between the no-food state and the food state. Diff: 2 Page Ref: 58 Objective: 3.1 2) The second step in the decision-making process is identifying a problem. Answer: FALSE Explanation: The identification of a problem is the first step in the decision-making process. Once you have identified a problem, you can decide how to solve it. Diff: 1 Page Ref: 59 Objective: 3.1 3) A decision criterion defines factors that are relevant in a decision. Answer: TRUE Explanation: Decision criteria are comprised of factors that will affect a decision. If the decision is between driving or riding a bike to work, criteria might include cost, weather, convenience, ecological considerations, time, clothing, and so on. Diff: 2 Page Ref: 59 Objective: 3.1 4) Managers identify a problem by comparing the current state of affairs to some standard. Answer: TRUE Explanation: The standard for comparison might be a goal that has been set, or comparison with some historical standard or standard set by a competitor. For example, a manager might detect a discrepancy between a goal of 100 units sold and the existing state of only 50 units sold. This discrepancy constitutes a problem that must be solved. Diff: 3 Page Ref: 59 Objective: 3.1 5) All criteria are equally important in the decision-making process. Answer: FALSE Explanation: Criteria have differing values, depending on their importance. The importance of an individual criterion is indicated by how it is weighted. The greater the weight assigned to the criterion, the greater its importance. Diff: 2 Page Ref: 59 AACSB: Analytic Skills Objective: 3.1

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6) Identifying the wrong problem is just as much a failure for a manager as identifying the right problem and failing to solve it. Answer: TRUE Explanation: Problem identification is a critical part of problem solving and decision making. Solving the wrong problem does nothing to further a manager's goals so it is no value. Diff: 2 Page Ref: 59 AACSB: Analytic Skills Objective: 3.1 7) The final step of the decision-making process is to implement the alternative that has been selected. Answer: FALSE Explanation: Implementation of the best alternative is the second-to-last step in the process. The final step of the process is to appraise the result of the decision to see if it solved the problem. Diff: 1 Page Ref: 61 Objective: 3.1 8) A heuristic can simplify the decision-making process. Answer: TRUE Explanation: A heuristic is a rule of thumb that is used to simplify the decision-making process by allowing the decision maker to focus on just a few variables, rather than all variables. When used wisely, heuristics make decision making easier and simpler. Diff: 1 Page Ref: 62 Objective: 3.1 9) Because heuristics simplify the decision-making process, they are unlikely to lead to errors. Answer: FALSE Explanation: By virtue of their simplicity, heuristics can lead to many different kinds of biases and errors. Using heuristics lures decision makers into ignoring critical elements of the situation and oversimplifying the problem. Diff: 1 Page Ref: 62 AACSB: Analytic Skills Objective: 3.1 10) Decision makers who "cherry-pick" information that matches what they already know are guilty of confirmation bias. Answer: TRUE Explanation: Confirmation bias means that the decision maker has already made up his or her mind and is seeking only the information that will confirm that position. Cherry-picking is a way of preferentially selecting information that supports your position and ignoring all other information. Diff: 1 Page Ref: 62 AACSB: Analytic Skills Objective: 3.1

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11) A basketball coach who takes a very good shooter out of a game because she missed her last two shots has availability bias. Answer: TRUE Explanation: Availability bias is the tendency to over-accentuate recent history and discount long-term patterns. This basketball coach is ignoring long-term patterns—the player is a good shooter—in favor of very recent history—two missed shots—so he is displaying availability bias. Diff: 1 Page Ref: 63 AACSB: Analytic Skills Objective: 3.1 12) A rational decision will never fail to provide the best and most successful solution to a problem. Answer: FALSE Explanation: A rational decision is logical, objective and will maximize the likelihood of solving a problem or achieving a goal. That said, a decision can be arrived at through a rational process and still be wrong due to the decision maker lacking complete information about the situation. Diff: 3 Page Ref: 64 AACSB: Analytic Skills Objective: 3.2 13) Maximizing value means a decision will have the best possible outcome for the parties involved. Answer: TRUE Explanation: Maximizing value is a matter of making a decision that results in the ideal, or best possible solution. A baseball manager, for example, wants to make a decision that will not only score runs, a favorable outcome, but win the game, the ideal or maximal outcome. Diff: 2 Page Ref: 65 AACSB: Analytic Skills Objective: 3.2 14) One assumption of bounded rationality is that managers can analyze all relevant information about all alternatives for a situation. Answer: FALSE Explanation: The idea of bounded rationality says that decision makers can never analyze all information for the alternatives involved. So decision makers need to put limits on how much information they will analyze. Diff: 2 Page Ref: 65 AACSB: Analytic Skills Objective: 3.2

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15) A synonym for the word satisfice is maximize. Answer: FALSE Explanation: The words satisfice and maximize are opposites rather than synonyms. When a manager does not have enough information to maximize, or find the best possible solution to a problem, he or she must compromise, or satisfice. When you satisfice you accept not the best solution, but a solution that is "good enough." Diff: 2 Page Ref: 65 AACSB: Analytic Skills Objective: 3.2 16) One assumption of bounded rationality is that managers usually make rational decisions. Answer: TRUE Explanation: Bounded rationality assumes that managers are logical, objective, and fairly rational when they make decisions. However, since managers often don't have access to all of the relevant information for a given situation, they must bound their rationality within the limits of the information they actually have. Diff: 2 Page Ref: 66 AACSB: Analytic Skills Objective: 3.2 17) Intuitive decision making is systematic, logical, and orderly. Answer: FALSE Explanation: Intuitive decisions may be perfectly sound, but they are not arrived at through a systematic analysis of alternatives. Instead, intuitive decisions are quickly made and rely on experience, unconscious reasoning, feelings, and hunches. Diff: 2 Page Ref: 66 AACSB: Analytic Skills Objective: 3.2 18) Intuitive decision making cannot be a part of the rational decision-making process. Answer: FALSE Explanation: Intuitive decisions are not arrived at in a deliberative, systematic manner, but they can be objective and logical, so they are considered rational. Diff: 2 Page Ref: 66 AACSB: Analytic Skills Objective: 3.2 19) The expression "throwing good money after bad" is an example of an escalation of commitment. Answer: TRUE Explanation: Throwing good money after bad typically denotes a situation in which money has already been wasted on an unsuccessful venture—"bad money." Throwing more "good money" into the situation simply because of the "bad money" already committed is a clear example of escalation of commitment. Diff: 2 Page Ref: 66 AACSB: Analytic Skills Objective: 3.2

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20) Emotions should always be strictly ignored in a decision-making process. Answer: FALSE Explanation: Decisions that were accompanied by strong feelings were found to be more reliable than those that did not have an emotional component, according to one study, especially in cases in which decision makers acknowledged their feelings. So emotions should not be ignored during the decision-making process. Diff: 2 Page Ref: 67 AACSB: Analytic Skills Objective: 3.2 21) Programmed decisions tend to be routine. Answer: TRUE Explanation: A programmed decision is a routine decision that works well in solving structured problems that present no ambiguity or unknown elements. Programmed decisions can usually be solved using a systematic procedure, rule, or policy. Diff: 1 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3 22) A rule is simpler than a policy or a procedure to implement. Answer: TRUE Explanation: A rule is a simple statement that can be applied directly to a situation. For example, a broker can easily follow a rule to sell a specific stock when it reaches a specific price point. A procedure or policy may have an identical outcome, but a more complicated series of steps must be taken to arrive at that outcome. Diff: 2 Page Ref: 68-69 AACSB: Analytic Skills Objective: 3.3 23) Implementing a procedure requires more judgment and interpretation than implementing a policy. Answer: FALSE Explanation: A procedure is a series of steps that must be followed to arrive at a decision, each of the steps being clear and straightforward. A policy provides guidelines rather than steps for the decision maker to follow. Each guideline must be interpreted and evaluated for the situation at hand. Therefore a policy requires much more judgment and interpretation than a procedure. Diff: 2 Page Ref: 69 AACSB: Analytic Skills Objective: 3.3 24) A highway speed limit is an example of a policy. Answer: FALSE Explanation: A highway speed limit is an example of a rule, not a policy. Policies require the decision maker to exercise judgment and interpretation. Following a speed limit, on the other hand, involves no interpretation. The driver simply must not exceed the posted speed. Diff: 2 Page Ref: 69 Objective: 3.3

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25) Managerial decisions are likely to become more programmed as managers rise in an organizational hierarchy. Answer: FALSE Explanation: Problems that managers face become more unique, ambiguous, and difficult as the status of a manager rises, not more programmed. Top managers are paid more than lower-level managers specifically because they are expected to make difficult decisions. More routine decisions are made by lower-level managers. Diff: 2 Page Ref: 70 Objective: 3.3 26) Most managerial decisions include an element of risk. Answer: TRUE Explanation: Few situations involve certainty, in which a manager knows all outcomes in a situation and can choose between them. Instead, situations usually involve risk, in which the manager must estimate the probability of different outcomes. Diff: 1 Page Ref: 70 Objective: 3.3 27) Uncertainty involves a situation in which the probability of a certain outcome is known to be small. Answer: FALSE Explanation: In an uncertain situation, the probabilities of specific outcomes are not known and cannot be reasonably estimated. Therefore, the probability that any outcome is high or low cannot be determined. Diff: 3 Page Ref: 70 AACSB: Analytic Skills Objective: 3.3 28) A manager is more confident of his assessment of a situation if it involves risk rather than uncertainty. Answer: TRUE Explanation: With risk, a manager is able to estimate the likelihood of specific outcomes. With uncertainty, not enough is known even to make estimates. So a manager would be more confident of a position involving risk. Diff: 3 Page Ref: 70 AACSB: Analytic Skills Objective: 3.3 29) Group decisions tend to provide more complete information than individual decisions. Answer: TRUE Explanation: Because "two heads are better than one" groups tend to identify more alternatives and consider more information before coming to a decision. Diff: 1 Page Ref: 71 Objective: 3.4

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30) An advantage of group decisions is that they increase the perception of the legitimacy of the solution. Answer: TRUE Explanation: When decisions that affect many people are made without their consent, they tend to be less well accepted than group decisions in which all parties are consulted. A group decision is perceived to be more legitimate because it was made in a more democratic manner. Diff: 1 Page Ref: 71 AACSB: Communication Objective: 3.4 31) A drawback of group decision making is groupthink. Answer: FALSE Explanation: When a group experiences groupthink, members do not freely express their opinions for fear of standing out and having to assume responsibility for their actions. Groupthink often results in bland, unimaginative decisions that fail because they are too timid. Diff: 1 Page Ref: 72 AACSB: Communication Objective: 3.4 32) Groups tend to be more efficient and less effective than individual decision making. Answer: TRUE Explanation: The reverse is usually true. Because achieving consensus within a group takes time, group decision making often takes longer than individual decision making it less efficient. However, groups are typically more thorough than individuals, so group decisions are often more effective at achieving goals than decisions made by individuals. Diff: 2 Page Ref: 73 Objective: 3.4 33) Two major advantages of electronic meetings are anonymity and honesty. Answer: TRUE Explanation: Electronic meetings allow participants to type in comments without needing to identify themselves. This creates an atmosphere in which people feel more free to express their true feelings. Diff: 2 Page Ref: 74 AACSB: Technology Objective: 3.4 34) A country with high uncertainty avoidance and high power distance is more likely to engage in groupthink than a country with low uncertainty avoidance and low power distance. Answer: TRUE Explanation: High uncertainty avoidance makes managers avoid difficult decisions and be overly agreeable and accommodating. High power distance allows high-status individuals to dominate groups. Both of these attributes would contribute to groupthink, the tendency of groups to avoid controversy and conform to conventional positions. Diff: 2 Page Ref: 75 AACSB: Analytic Skills Objective: 3.5

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35) Creative solutions to problems are valued because they are new and different from traditional solutions. Answer: FALSE Explanation: Creative solutions are valued only if they solve problems in ways that are superior to conventional solutions. Often, solving a problem in a creative way can give a company a competitive edge on its competitors. Diff: 1 Page Ref: 71 Objective: 3.5 36) Decision making begins with ________. A) selecting alternatives B) identifying decision criteria C) identifying a problem D) eliminating false alternatives Answer: C Explanation: C) The process of decision making begins with the identification of a problem. Once the problem has been identified the decision maker goes through a series of steps to solve the problem. Selecting alternatives is part of the decision-making process but it is a step that comes much later, after criteria have been identified, weighed against one another, developed into alternatives, and analyzed as alternatives. Eliminating false alternatives, is something that a decision maker might do, but it is not a recognized part of the process. Diff: 2 Page Ref: 58 Objective: 3.1 37) Which of the following defines a problem in the decision-making process? A) a discrepancy between what exists and what the decision maker desires to exist B) a discrepancy between the ideal and the practical C) something that causes irritation D) something that calls for attention Answer: A Explanation: A) Though problems certainly can irritate, and merit attention, these characteristics are not universal enough by themselves to define what a problem is in the decision-making process. In this process, a problem is defined as a discrepancy, or difference between how things are and how the decision maker wants things to be. A problem is not a difference between the ideal and the practical, but rather just a situation in which things are less than satisfactory, and the decision maker intends to take action to make them satisfactory. Diff: 1 Page Ref: 58 Objective: 3.1

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38) The decision-making process consists of a series of eight steps that identify a problem and work toward ultimately ________. A) determining if there is a solution to the problem B) solving the problem C) making a plan to solve the problem D) breaking down the problem into a series of steps Answer: B Explanation: B) The goal of the decision-making process is to solve the problem that has been identified. The process assumes that there is a solution to the problem, so determining if there is a solution to the problem is not correct. The process includes making a plan to solve the problem and breaking the problem down into steps. However, ultimately the decision maker wants to implement the best alternative to solve the problem, then evaluate this alternative to see if it actually resulted in a successful solution. Diff: 1 Page Ref: 58 AACSB: Analytic Skills Objective: 3.1 39) To identify a problem, a manager ________. A) compares one set of standards or goals to a second set of standards or goals B) looks for unhappy customers C) uses intuition to see that things don't look right D) compares the current state of affairs with some standard or goal Answer: D Explanation: D) A manager compares what she has now to some standard or goal to identify a problem. The standard or goal may represent some level of performance from the past, or it could be an as yet unreached level that the manager thinks can be attained. Looking for unhappy customers or using intuition to see when things don't look right may be ways to identify problems but they are not general problem identification methods. Finally, comparing one set of standards or goals to a second set is incorrect because a problem is always identified by comparing an actual state to a standard or goal, not one set of standards or goals to another. Diff: 1 Page Ref: 58 Objective: 3.1 40) A manager can faithfully execute the decision-making process, but still end up with nothing of value if ________. A) he fails to identify the correct problem B) he fails to assign number values to different criteria C) he solves the problem inefficiently D) he fails to correctly identify the steps of the process Answer: A Explanation: A) Assigning number values to decision criteria may often be helpful in the decision-making process, but they are not required for a successful outcome. Solving the problem inefficiently may not be ideal, but it is not without value. Identifying the steps of the process have little to do with the success of the process. That leaves failing to identify the correct problem—it does no good to solve a problem if it is the wrong problem. Solving the wrong problem has no benefit for the organization or its goals. Diff: 2 Page Ref: 59 AACSB: Analytic Skills Objective: 3.1 9 Copyright © 2011 Pearson Education, Inc

41) A manager is considering purchasing new computers for her department. The manager spends time assessing the computers her department now has. Which stage of the decisionmaking process is she going through? A) identification of a problem B) identification of decision criteria C) development of alternatives D) implementation of an alternative Answer: A Explanation: A) The first thing the manager needs to do is identify the problem. More specifically, she needs to determine whether she actually has a problem or not. If the computers her department now has are performing satisfactorily, she may decide that she doesn't have a problem and doesn't need to purchase new computers. The other choicesidentifying criteria, developing alternatives, or implementing an alternativeall come later in the process, after the manager has determined what her problem is. Diff: 2 Page Ref: 58-59 AACSB: Analytic Skills Objective: 3.1 42) A manager is determining what kind of new computers she should purchase for her department. She has made a list of five different computer models for consideration. Which stage of the decision-making process is this? A) selection of an alternative B) identification of decision criteria C) development of alternatives D) analysis of alternatives Answer: C Explanation: C) Having a list of models means that the manager is beyond identifying decision criteria. She has identified a group of possible choices—in other words, she has developed a list of alternatives. Analysis of the alternatives will be the next step in the process, followed by actually selecting one particular alternative. The manager would have identified decision criteria earlier in the process. Diff: 2 Page Ref: 58-59 AACSB: Analytic Skills Objective: 3.1

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43) After purchasing new computers for her department, a manager is now comparing the performance of the new computers to the computers they replaced. Which stage of the decisionmaking process is she carrying out? A) analysis of alternatives B) evaluation of decision effectiveness C) selection of an alternative D) implementation of an alternative Answer: B Explanation: B) The manager is assessing her decision to purchase new computers. Was it worth it? This is the final stage of the decision-making process, evaluation of decision effectiveness. Analyzing alternatives, selecting a single alternative, and implementing that single alternative all come earlier in the decision-making process. Diff: 2 Page Ref: 58-62 AACSB: Analytic Skills Objective: 3.1 44) For a high-tech bicycle buyer, decision criteria would be determined by ________. A) whatever most bike buyers recommend B) expert ratings in bike magazines C) technical specifications D) personal preferences of the buyer Answer: D Explanation: D) Criteria are chosen solely on the basis of the priorities of the buyer. If bike experts consider frame composition a key criterion for choosing a bike but the buyer does not consider it important, then it would be unlikely to be included as a criterion. Similarly, popularity of bike features or technical specifications might enter into the decision-making process, but only if the buyer thought they were important. In other words, the only factors that are important for selection of decision criteria for a bike buyer are the personal preferences of the buyer. Diff: 2 Page Ref: 59 AACSB: Analytic Skills Objective: 3.1 45) Which of the following is LEAST likely to be a decision criterion for a high-tech bicycle buyer who cares primarily about performance? A) warranty B) gear mechanism C) frame composition D) brake assembly Answer: A Explanation: A) A buyer who is looking for performance would care how sturdy and light the frame was, and how efficient the gears and brakes were. The warranty does not directly affect performance so it would be least likely to be a decision criterion for the bike buyer. Diff: 2 Page Ref: 59 AACSB: Analytic Skills Objective: 3.1

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46) Which of the following would be a fairly objective criterion by which a bicycle buyer could assess different bike models? A) handling B) weight C) quality of craftsmanship D) style Answer: B Explanation: B) Of the four choices, only weight can be measured in an objective manner. Handling, craftsmanship, and style all require making subjective judgments about what the buyer likes and doesn't like. Style is largely a matter of taste. Handling and craftsmanship cannot be measured on a simple scale. So weight is the correct choice here. Diff: 2 Page Ref: 60 AACSB: Analytic Skills Objective: 3.1 47) A manager chooses to ignore a rigorous decision-making process and select TV monitor A over monitor B because he "trusts" company A more than company B. If the decision he made was rational, which of the following is true? A) Monitor A is really the better choice. B) The manager should have included "trust" as a criterion. C) Monitor B is really the better choice. D) The manager must have made a mistake in calculating his weighted criteria. Answer: B Explanation: B) There is no way of knowing whether monitor A was really a better choice than B or if the manager made a calculation error. What is true is that the manager should have included "trust" as one of his criteria categories. If trust was an overriding factor, then the manager should have weighted it heavily so it tilted the score toward what his true feelings were. In essence, the manager made a mistake in selecting and weighting criteria. Diff: 3 Page Ref: 60-61 AACSB: Analytic Skills Objective: 3.1 48) In allocating weights to the decision criteria, which of the following is most helpful to remember? A) All weights must be the same. B) The total of the weights must sum to 100. C) The high score should be a 10, and no two criteria should be assigned the same weight. D) Assign the most important criterion a score, and then assign weights against that standard. Answer: D Explanation: D) There are no set rules for weighting criteria. All weights can be the same, but in most cases they will be different. Similarly, there is no total amount that all weights should sum to. The high score may or may not be assigned a 10, and in many cases two or more criteria can be assigned with the same weight. Only assigning the most important criterion a score and assigning weights against that standard offers helpful advice—measuring each criterion against a standard in most cases will result in a reliable representation of values. Diff: 3 Page Ref: 60 AACSB: Analytic Skills Objective: 3.1 12 Copyright © 2011 Pearson Education, Inc

49) What is a heuristic? A) a complicated and systematic method of decision making B) a purely intuitive method of decision making C) a totally unreliable method of decision making D) a shortcut or rule of thumb that is used for decision making Answer: D Explanation: D) A heuristic is a rule of thumb that allows a decision maker to focus on a few key variables in the process. Heuristics can be useful, so they are not totally unreliable. Heuristics is simple, making a complicated and systematic method of decision making incorrect. Heuristics can be partly intuitive, but they can also be highly rational, making a purely intuitive method incorrect. Diff: 2 Page Ref: 62 Objective: 3.1 50) Because they are not systematic or comprehensive, using heuristics in place of an eight-step decision-making process can lead to ________. A) errors and biases B) consistently better decisions C) more imaginative decisions D) decisions that more directly solve problems Answer: A Explanation: A) Though heuristics can be very useful in saving time and effort, they can also lead to mistakes, making "errors and biases" the correct response here. There is no evidence that using heuristics results in more imaginative decisions or decisions that solve problems more directly. Finally, since heuristics are known to lead to errors and biases, they clearly do not lead to better decisions, so "consistently better decisions" is incorrect. Diff: 2 Page Ref: 62 AACSB: Analytic Skills Objective: 3.1 51) Which of the following is NOT a reason why managers often resort to using heuristics? A) They seem to eliminate complexity. B) They seem to eliminate ambiguity. C) They save time. D) They thoroughly explore all alternatives. Answer: D Explanation: D) The one thing that a heuristic does not do is explore all alternatives for solving a problem. Instead, a heuristic looks at only a small part of the problem and uses key features to arrive at a decision and avoid a complete examination of the options. Heuristics often do successfully seem to make complicated, ambiguous situations easier to understand and deal with, so eliminating complexity and ambiguity are eliminated as correct answers. Without a doubt, heuristics save time which eliminates "saving time" as the correct answer. Diff: 2 Page Ref: 62 AACSB: Analytic Skills Objective: 3.1

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52) A banker opts for short-term gain despite indications that his decision might not pay off in the long run. Which error or bias is the banker guilty of? A) overconfidence B) immediate gratification C) selective perception bias D) representation Answer: B Explanation: B) The correct answer here must be an error or bias that deals with short- and longterm gain. Overconfidence is the tendency of a decision maker to assess his own skills in a more positive light than they deserve, so it has nothing to do with short-term gain. When a person organizes events based on faulty perceptions, he is guilty of selective perception bias, again not directly concerned with short-term gain. Representation bias involves drawing parallels to events that aren't really related, so it is not correct here. Only immediate gratification, which is the tendency to go for a "quick score," involves going for short-term rather than long-term gain, so it is the correct response here. Diff: 2 Page Ref: 62-63 AACSB: Analytic Skills Objective: 3.1 53) A scientist cites two studies that show a positive effect for her drug and ignores five other studies that show a negative effect. Which error or bias is she committing? A) hindsight B) anchoring effect C) confirmation bias D) self-serving Answer: C Explanation: C) The scientist is "cherry picking" data that supports her position and ignoring conflicting data. She is guilty of confirmation bias, seeing only what confirms her preconceived notions. Hindsight would require her to look back on events and claim that they were predictable, something that is not relevant here. Neither is self-serving, blaming outcomes on outside factors rather than taking responsibility for your own errors. Finally, the anchoring effect describes an individual who fails to adjust to incoming information, again not something that the scientist is doing in this situation. Diff: 2 Page Ref: 62 AACSB: Analytic Skills Objective: 3.1

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54) One legislator sees decreased tax revenue as the key problem in the budget. A second legislator sees increased spending as the problem. Each of these legislators has a(n) ________. A) representation bias B) self-serving bias C) availability bias D) framing bias Answer: D Explanation: D) A representation bias is a false parallel of current events to other events, something that is not occurring here. A self-serving bias, blaming the situation on outside influences, is also not relevant to this situation. Availability bias occurs when decision makers value only the most recent events that are relevant to the situation, also not occurring here. What is occurring is that the legislators are framing the problem in different ways. This framing results in them coming to very different conclusions about how to solve the problem. Diff: 2 Page Ref: 63 AACSB: Analytic Skills Objective: 3.1 55) Which of the following is NOT a common decision-making error or bias? A) sunk costs B) randomness C) forest for the trees D) overconfidence bias Answer: C Explanation: C) All of the choices are listed as common decision-making errors and biases except "forest for the trees." Sunk costs refers to managers who fixate on past costs rather than future consequences. Randomness occurs when managers see patterns and trends that do not exist. Overconfidence bias occurs when managers overestimate their own strengths and skills. Diff: 2 Page Ref: 62-63 Objective: 3.1 56) The three main models that managers use to make decisions are ________. A) rational, bounded rational, and intuitive B) rational, irrational, bounded rational C) intuitive, unintuitive, rational D) bounded rational, intuitive, systematic Answer: A Explanation: A) Models that managers use to make decisions include the rational model, the bounded rational model, and the intuitive model. The rational model focuses on being logical and objective. The bounded rational model assumes limitations on the rational model and makes "good enough" decisions. The intuitive model employs emotions and subconscious modes of thinking within a rational context. The other three choices are all incorrect because they include categories that do not identify decision-making methods: irrational, unintuitive, and systematic. Diff: 1 Page Ref: 64-66 Objective: 3.2

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57) It is assumed that a rational decision maker ________. A) would never make a wrong choice B) would be subjective and impractical C) would face only difficult decisions D) would be objective and logical Answer: D Explanation: D) A perfectly rational decision maker would always make a "good" decision based on sound reasoning, but he or she could still make the wrong choice in a given situation. A rational decision maker would face both easy and difficult problems. Subjectivity and impracticality are not characteristics of a rational decision maker. The important characteristics of a rational decision maker are that he or she is rational and logical, meaning that being objective and logical is the correct response. Diff: 2 Page Ref: 64 AACSB: Analytic Skills Objective: 3.2 58) What does it mean for a decision maker to maximize value? A) to make the decision to be as clear and logical as possible B) to make the achievement of goals as likely as possible C) to waste as little time and energy as possible D) to make decision making as simple as possible Answer: B Explanation: B) Maximizing value is a question of achieving goals. When a decision maker maximizes value, he or she makes the decision that is most likely to achieve his or her goal. Being clear and logical, efficient, or simple are worthy goals for a decision maker, but they do not define maximizing value so they are incorrect responses for this question. Diff: 2 Page Ref: 64 AACSB: Analytic Skills Objective: 3.2 59) Maximizing value for an organization means making sure that ________. A) the organization makes money B) the best interests of the organization are addressed C) the decision made is as rational as possible D) the decision is as simple as possible Answer: B Explanation: B) Managerial decisions for an organization must always take the organization's best interests into account. This is how decisions for organizations differ from those for individuals. As an individual a manager looks out only for him- or herself. As a manager the same person must put the interests of the organization first. Making money, or making highly rational or simple decisions does not maximize value for an organization. Diff: 2 Page Ref: 64 AACSB: Analytic Skills Objective: 3.2

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60) Which of the following is NOT assumed in a rational decision? A) a clear and specific goal B) a clear and unambiguous problem C) many alternatives and consequences are known D) value is maximized Answer: C Explanation: C) The ideal rational decision will feature a clear and specific goal, a problem that is clear and unambiguous, and value is maximized. This ideal decision would also require that all, not just many alternatives and consequences, would be known. Diff: 2 Page Ref: 64 AACSB: Analytic Skills Objective: 3.2 61) It is assumed that in most cases, the decisions of all managers are limited by ________. A) greed and short-sightedness B) having too much information C) not being able to analyze all information for all alternatives D) not being able to act rationally or in the best interests of their organization Answer: C Explanation: C) Greed and short-sightedness may affect the decisions of some, but clearly not all managers. Most managers are rational in that they are reasonable, logical, and have the best interests of their organization in mind. What limits the decisions of managers most of the time is not having too much information but having too little, and not having the time or resources to be able to analyze all of the information that is relevant to all of the alternatives in a given situation. Diff: 2 Page Ref: 65 AACSB: Analytic Skills Objective: 3.2 62) Which term best characterizes a decision that has bounded rationality? A) virtually perfect B) rigorous and comprehensive C) not good enough D) good enough Answer: D Explanation: D) Rather than thought to be perfect or rigorous and thorough, a bounded rationality decision is considered to be just "good enough." Diff: 2 Page Ref: 65 AACSB: Analytic Skills Objective: 3.2

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63) Software programs that use a series of questions to aid humans in decision making are called ________. A) text reading software B) expert systems C) group systems D) support software Answer: B Explanation: B) Systems that use sequential question-asking systems to aid decision makers such as doctors to diagnose illnesses are called expert systems. Text reading software is used simply to decipher text. Support software is generic software for any application. Group systems are not used for decision making. Diff: 2 Page Ref: 65 AACSB: Technology Objective: 3.2 64) Expert systems are primarily used to help what kinds of decision makers? A) lower-level managers B) top managers C) senior managers D) experts Answer: A Explanation: A) Expert systems are primarily used by non-experts to make high quality decisions. These non-experts are typically lower-level managers. Top managers, senior managers, or experts may all use expert systems from time to time, but the systems are designed specifically to guide non-experts in making useful decisions. Diff: 2 Page Ref: 65 AACSB: Technology Objective: 3.2 65) Neural networks are able to outdo the performance of humans by ________. A) analyzing symbols B) handling up to three variables at once C) handling hundreds of variables at once D) reading facial expressions Answer: C Explanation: C) Humans typically can only process two or three variables at once when problem solving. Neural networks can handle hundreds of variables, outdoing human performance. Analyzing symbols is incorrect because both computers and humans can analyze symbols. As yet, no computers are proficient at extracting important information by reading facial expressions. Diff: 2 Page Ref: 65 AACSB: Technology Objective: 3.2

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66) Neural networks differ from expert systems in that they can ________. A) draw conclusions from data B) ask questions to the decision maker C) perform sophisticated calculations D) learn from experience Answer: D Explanation: D) Neural networks are special because they can learn from experience. Situations are shown to the network and the network learns to recognize keys to these situations so that it can recognize them and employ what was learned to make decisions in the future. Drawing conclusions, asking questions, or performing complicated calculations are all normal functions for a software program and not special to neural networks. Diff: 2 Page Ref: 65 AACSB: Technology Objective: 3.2 67) Neural networks outperfom expert systems in uncovering ________. A) credit card fraud B) false positives for pregnancy C) potential credit card customers D) credit problems in bank mortgages Answer: A Explanation: A) Expert systems were flawed in dealing with credit card fraud in that they kept giving false positives—finding fraud where it didn't exist. Neural networks proved to be much better at discovering credit card fraud without many false positives. Neural networks were not used for pregnancy tests, finding new credit card customers, or finding credit problems in mortgages. Diff: 2 Page Ref: 65 AACSB: Technology Objective: 3.2 68) Herbert Simon won the Nobel Prize in economics for his work in describing ________. A) how people spend money B) how most people are perfectly rational C) how people make decisions D) how people avoid decisions Answer: C Explanation: C) Rather than study how people spend money, Simon studied how people made decisions. He found that people were limited in their ability to use logic and were not perfectly rational in their decision making. Simon did not investigate how people avoid decisions. Diff: 2 Page Ref: 65 Objective: 3.2

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69) Which of the following is the best definition for the word satisfice? A) very satisfying B) not sufficient C) accepts a less than perfect solution D) requires a perfect solution Answer: C Explanation: C) When you satisfice you are accepting a "good enough" or less than perfect solution to a problem. Not sufficient is incorrect because satisficing is often sufficient to solve a problem. Very satisfying is wrong because though satisfice sounds like satisfy, it has nothing to with that word. Finally, requires a perfect solution is incorrect because the term does not require the perfect solution, but rather a compromise on perfection. Diff: 2 Page Ref: 66 Objective: 3.2 70) Simon found that in making decisions, most people satisficed because they had limited ability to ________. A) be truthful and honest in situations that deal with other people B) think independently C) deal with difficult situations D) grasp present conditions and anticipate future conditions Answer: D Explanation: D) Simon found that people were limited in fully understanding their current situation. Without understanding the present, they also had trouble planning for the future. Though people may have trouble being honest, dealing with difficult situations, and thinking independently, none of these items were involved in Simon's work. Diff: 2 Page Ref: 66 Objective: 3.2 71) A person who satisfices fails to ________. A) maximize his or her decision B) understand his or her position C) accept the truth of a situation D) make any kind of decision Answer: A Explanation: A) Satisficing is accepting a "good enough" position, rather than maximizing a decision. When a decision is maximized, goals are reached and the best possible solution is found. Satisficing does not entail failing to: understand one's position, accept the truth, or make a decision to begin with. Instead, satisficing involves going with a less than thorough examination of all outcomes to find a "good enough" solution. Diff: 2 Page Ref: 66 Objective: 3.2

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72) Sticking to a decision despite evidence that it is a mistake is called ________. A) escalation of commitment B) escalation of rationality C) satisficing commitment D) error enhancement Answer: A Explanation: A) In some cases, people feel committed to a decision even when evidence shows that it was faulty. This tendency of failing to let go of a decision is called escalation of commitment. Escalation of rationality is incorrect because it does not refer to commitment. Sticking with a poor decision is not satisficing so that choice is incorrect. Error enhancement may describe this situation somewhat, but it is not a recognized term. Diff: 2 Page Ref: 66 Objective: 3.2 73) Escalation of commitment can occur when people don't ________. A) want to make a decision B) want to admit that an earlier decision was flawed C) accept current conditions D) understand that conditions have changed Answer: B Explanation: B) Escalation of commitment can occur when people cling to an earlier decision. Rather than admit it was wrong and that they should start over, they stick with their original decision. Failing to make a decision in the first place, accepting current conditions, or understanding that conditions have changed are not situations in which escalation of commitment occurs. Diff: 2 Page Ref: 66 Objective: 3.2 74) Which model of decision making takes advantage of unconscious reasoning? A) rational B) non-rational C) intuitive D) factual Answer: C Explanation: C) Intuitive decision making uses feelings, memories, experiences, and unconscious reasoning to arrive at decisions. Unlike strictly rational decision making, intuitive decision making is not a systematic approach. Intuitive decision making is rational to a degree, making non-rational an incorrect choice. Factual is not a correct choice because it is not recognized as a decision making model. Diff: 2 Page Ref: 66 AACSB: Analytic Skills Objective: 3.2

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75) Compared to fully rational decision making, what is a major advantage of intuitive decision making? A) total reliability B) fully quantified C) thoroughness D) speed Answer: D Explanation: D) Intuitive decision making is somewhat reliable, but definitely not totally reliable, eliminating that choice. Intuitive decision making is not at all thorough. In fact, it is often employed as a short-cut in decision making. Since the process is never spelled out on paper in terms of numbers and values, intuitive decision making is almost never quantified. Intuitive reasoning is fast, often because decision makers are using years of experience to make a single judgment. Diff: 2 Page Ref: 66 AACSB: Analytic Skills Objective: 3.2 76) How often do managers typically use intuitive decision making? A) 100 percent of the time B) almost never C) almost all of the time D) more than half of the time Answer: D Explanation: D) Studies show that intuitive decision making is used more frequently than formal analysis, meaning that managers use it more than half of the time. No managers claim to use the method all or almost all of the time. Almost never can be eliminated because managers say they use intuitive decision making frequently. Diff: 2 Page Ref: 66 AACSB: Analytic Skills Objective: 3.2 77) Intuitive decision making can complement ________. A) rational decision making only B) bounded rationality only C) both rationality and bounded rationality D) neither rationality nor bounded rationality Answer: C Explanation: C) Intuitive decision making does not conflict with a rational mode of thinking. Instead, intuitive decision making uses experience and feelings to provide shortcuts to rational decision making. For these reasons, it is clear that both formal rationality and bounded rationality can have intuitive elements. Diff: 2 Page Ref: 67 AACSB: Analytic Skills Objective: 3.2

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78) Which of the following is NOT a way in which intuition guides people who are making decisions? A) Intuition provides ethics and values guidelines. B) Intuition provides a formal analysis method. C) Intuition provides experiences to draw from. D) Intuition draws on knowledge, skills, and training. Answer: B Explanation: B) Intuition can give people insight into questions that involve ethics and values, past experience, or knowledge and training. What intuition cannot provide is any kind of formal or mathematical analysis, so providing a formal analysis method is the correct choice here. Diff: 2 Page Ref: 67 AACSB: Analytic Skills Objective: 3.2 79) Emotions and feelings ________ decision making. A) have no effect on B) can improve C) decrease performance in D) are more important than facts and logic in Answer: B Explanation: B) Studies show that emotions and feelings do affect decision making in a positive way, improving performance. That said, emotions and feelings do not replace facts and logic in decision making. Diff: 2 Page Ref: 67 AACSB: Analytic Skills Objective: 3.2 80) Structured problems are ________. A) ambiguous B) undefined and vague C) clear and straightforward D) incomplete Answer: C Explanation: C) A structured problem involves a clear, unambiguous, well-defined situation in which all information is provided. The essence of a structured problem is that it is straightforward and complete. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3

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81) Unstructured problems are ________. A) perfectly rational B) clear and straightforward C) situations in which all options are known D) situations in which all options are not known Answer: D Explanation: D) The essence of an unstructured problem is that information is missing. All alternatives are not known. The problem solver must analyze the situation based on assumptions that may or may not be true. This means that situations in which all options are not known is the correct answer. The situation is not perfectly rational or straightforward. Information in an unstructured problem is incomplete, so all options are not known. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3 82) Which of the following is an example of a structured problem? A) designing a new MP3 player B) hiring a lawyer C) deciding shipping options for a vacuum cleaner D) drafting a quarterback for a pro football team Answer: C Explanation: C) A structured problem should be straightforward and clear-cut. Of the four choices, only "determining shipping options" requires a simple analysis of choices and priorities. The other optionsdesigning a new product, hiring a person to represent you in the legal system, and choosing a football player to lead your teamall are much less defined and more open ambiguity than the correct choice; in other words they are unstructured problems. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3 83) Which of the following is an example of an unstructured problem? A) finding the list price of different copy machines B) choosing the best wardrobe for an executive C) comparing gas mileage for different car models D) measuring pollution levels in a power plant Answer: B Explanation: B) An unstructured problem requires judgment and discrimination among options in a situation in which not all information is available. Only "choosing the best wardrobe for an executive" fits this description, as choosing a wardrobe is a subjective act that can be accomplished in many different ways. The other choicesfinding prices, comparing mileage, or measuring pollutionare straightforward and do not include this ambiguous, subjective element, so they are incorrect responses. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3

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84) Structured problems typically have ________ while unstructured problems typically have ________. A) only one solution; many solutions B) many solutions; one solution C) many solutions; fewer solutions D) two solutions; three solutions Answer: A Explanation: A) Structured problems, being straightforward, typically have one solution while unstructured problems, being more ambiguous, can have many solutions. Two solutions and three solutions stands out here as plausible but it is clearly incorrect since there is no way to quantify the number of solutions to problems in such a definite way. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3 85) Programmed decisions work well for solving ________. A) structured problems B) unstructured problems C) both structured and unstructured problems D) poorly defined problems Answer: A Explanation: A) Programmed decisions are straightforward, routinized ways of making decisions so they are best at solving structured problems, which themselves are routine and straightforward. The remaining choice gets eliminated because poorly defined problems fall into the "unstructured" category and would not be served with a programmed decision-making process. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3 86) Programmed decisions draw heavily on which of the following? A) mistakes made in the past B) past solutions that were successful C) past solutions that were unsuccessful D) innovative new solutions Answer: B Explanation: B) Though programmed decisions draw on the past, they do not focus on mistakes but rather emulate prior solutions that worked and were successful. Innovative new solutions is incorrect because programmed decisions are not at all innovative but instead rely on tried and true methods of problem solving. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3

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87) Which of the following is NOT a type of programmed decision? A) systematic procedure B) policy C) brainstorm D) rule Answer: C Explanation: C) Brainstorming is a method of drumming up new ideas for problem solving, not a way to make a programmed decision. The other three choicessystematic procedure, policy, and ruleare all recognized as the classic ways to make a programmed decision so they are incorrect responses here. Diff: 2 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3 88) Following the directions to put together an elliptical exercise machine is an example of which way to solve a problem? A) procedure B) rule C) general practice D) policy Answer: A Explanation: A) If you could put together the machine with a single action you would be following a rule. However, assembly is an entire process of following individual instructions, so it is a procedure, not a rule. A policy would require much more interpretation of the situation than simply following instructions. Diff: 1 Page Ref: 68 AACSB: Analytic Skills Objective: 3.3 89) A football coach makes the decision to punt or not to punt on fourth down based on whether or not he is past his own 50-yard line. Which decision-making method does the coach use? A) a policy B) a hunch C) a procedure D) a rule Answer: D Explanation: D) The coach's decision is based on a single criterion: is he beyond the 50-yard line? Decision making that relies on a single parameter is rule-following. A policy or a procedure are not correct because they involve multiple steps and parameters. A hunch is not correct because it is not a recognized method of solving structured problems. Diff: 2 Page Ref: 68-69 AACSB: Analytic Skills Objective: 3.3

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90) Which pair or pairs of terms is true? (This question can have more than one correct answer.) A) structured problem, programmed decision B) structured problem, structured decision C) unstructured problem, programmed decision D) unstructured problem, nonprogrammed decision Answer: A, D Explanation: A, D) Structured problem, programmed decision and unstructured problem, nonprogrammed decision are both correct. Structured problems that are straightforward and unambiguous are best solved by routine programmed decisions. Unstructured problems, on the other hand, require a more creative nonroutine, nonprogrammed decision-making process. Unstructured problem, programmed decision gives pairs that do not match—unstructured problems are not successfully solved by programmed decision making. Finally, structured problem, structured decision is wrong because "structured decisions" are not a recognized category of decision. Diff: 1 Page Ref: 68-69 AACSB: Analytic Skills Objective: 3.3 91) A judge consults guidelines before handing down an award for damages in a legal case. What kind of decision making is she doing? A) following a policy B) following a rule C) programmed D) following a procedure Answer: A Explanation: A) The judge needs to interpret the situation, so she is following a policy. A rule is much too simple and confined for this kind of decision. The decision is clearly unprogrammed. Finally, the judge must take all kinds of subjective and human elements into account for the case, so a procedure is an incorrect choice. Diff: 2 Page Ref: 69 AACSB: Analytic Skills Objective: 3.3 92) Top managers in an organization tend to ________. A) make programmed decisions B) solve structured problems C) make nonprogrammed decisions D) solve well-defined problems Answer: C Explanation: C) The higher a manager is in an organization, the more likely it is that he or she will be asked to solve high-level problems. High-level problems are almost always solved by nonprogrammed decision making, so making nonprogrammed decisions is the correct answer. The other choices all involve structured problems, so they are not correct responses here. Diff: 2 Page Ref: 69 AACSB: Analytic Skills Objective: 3.3

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93) Which three conditions do decision makers face? A) certainty, risk, uncertainty B) certainty, uncertainty, confidence C) risk, high risk, low risk D) certainty, risk, high risk Answer: A Explanation: A) The choice indicating certainty, risk, and uncertainty represents the correct choice, citing the three recognized conditions that decision makers face. Certainty, uncertainty, confidence is eliminated because confidence is not a recognized decision-making condition. Similarly, the other two choices are wrong because "risk" is the only recognized decision-making category"high risk" and "low risk" are not recognized. Diff: 2 Page Ref: 70 AACSB: Analytic Skills Objective: 3.3 94) In a condition of certainty, ________. A) most outcomes are known B) the decision is already made C) all outcomes of all alternatives are known D) some alternatives are not known Answer: C Explanation: C) Certainty requires that all alternatives are known, and all outcomes for those alternatives are also known. This makes the choice indicating "all outcomes of all alternatives are known" the correct choice and the other choices incorrect because they all limit the number of outcomes or alternatives that are known. Diff: 2 Page Ref: 70 AACSB: Analytic Skills Objective: 3.3 95) If a car buyer knows the inventory dealer price of the same car at different dealerships, he or she is operating under what type of decision-making condition? A) risk B) uncertainty C) certainty D) factual Answer: C Explanation: C) The situation described is one of certainty because all outcomes and alternatives are known. Risk would require that the individual needs to make estimates, while uncertainty would mean that the individual would have no confidence in his or her estimation ability for the situation. Factual is not a correct choice because it is not a recognized decision-making condition. Diff: 2 Page Ref: 70 AACSB: Analytic Skills Objective: 3.3

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96) A retail clothing store manager who estimates how much to order for the current spring season based on last spring's outcomes is operating under what kind of decision-making condition? A) seasonal B) risk C) uncertainty D) certainty Answer: B Explanation: B) The ability to make accurate estimates is the critical element in this question. If the manager can make good estimates, he is operating under risk. If all outcomes are known, then certainty would apply, while if the situation is too vague for good estimates, uncertainty would apply. Seasonal is not a recognized decision-making condition so it is incorrect. Diff: 2 Page Ref: 70 AACSB: Analytic Skills Objective: 3.3 97) ________ is a situation in which a decision maker has only incomplete information about outcomes and does not have ability to reasonably estimate outcomes that are not known. A) Certainty B) Risk C) Uncertainty D) High certainty Answer: C Explanation: C) Since the decision maker does not know all outcomes, certainty can be eliminated here. Risk can be eliminated because the decision maker is not able to make good estimates. That means uncertainty is the correct response. High certainty is not a recognized category, so it is incorrect. Diff: 2 Page Ref: 70 Objective: 3.3 98) A low-level manager is most likely to solve problems under which condition? A) certainty B) low risk C) uncertainty D) low certainty Answer: A Explanation: A) A low-level manager solves structured problems primarily so he or she will deal with situations of certainty. Low risk and low certainty are not recognized terms so they are incorrect responses. Uncertainty would apply to decisions made by top managers rather than low-level managers. Diff: 2 Page Ref: 70 Objective: 3.3

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99) A top manager is most likely to solve problems under which condition? A) certainty B) risk C) uncertainty D) high certainty Answer: C Explanation: C) A top-level manager primarily solves unstructured problems primarily so he or she will deal with situations of uncertainty. Conditions of certainty and risk would be less common for a top manager so these responses are incorrect. High uncertainty is not a recognized term so it is an incorrect response. Diff: 2 Page Ref: 70 Objective: 3.3 100) A manager has a choice of three investment funds. To assess them, he looks at their past investment records over the previous five years. The manager is operating under which condition? A) certainty B) probability C) uncertainty D) risk Answer: D Explanation: D) The manager can use the investment records over previous years to assign probabilities to each fund. That means she is operating under a condition of risk. Certainty would require that she would know precisely how funds would perform, while uncertainty would mean she would have no way to predict performance. "Probability" is not a recognized decisionmaking condition. Diff: 2 Page Ref: 70 Objective: 3.3 101) A manager has a choice of three bank CDs that pay different amounts of interest over different time periods. The manager is operating under which condition? A) jeopardy B) certainty C) uncertainty D) risk Answer: B Explanation: B) The manager knows the exact amounts of interest that the CDs will pay over each time period, so he is operating under a condition of certainty. Risk would require the manager to need to estimate the interest that the funds would generate. Uncertainty would be a condition in which the manager could not even make good estimates for each fund. "Jeopardy" is not a recognized decision-making condition. Diff: 2 Page Ref: 70 Objective: 3.3

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102) A manager wants to invest in one of three start-up companies. All three of the companies seem to have a good business plan. None of the companies has a track record. The manager is operating under which condition? A) uncertainty B) certainty C) low certainty D) risk Answer: A Explanation: A) None of the start-ups has a track record, so the manager cannot reasonably assign probable chances of success for any of them. This means that he is operating under a condition of uncertainty. Risk would require that the manager could make reasonable estimates of success for each company. Certainty would mean that the manager would know how each company would fare. "Low certainty" is not a recognized decision-making condition. Diff: 2 Page Ref: 70 Objective: 3.3 103) A key to what is commonly used to assess risk is for a decision maker to examine the ________ an investment. A) the promises made by a company for B) the ads posted by a company for C) historical data for D) the minor details of Answer: C Explanation: C) Of the four choices listed, historical data is most important by far. Promises made or ads posted by a company are of little value in assessing risk. Similarly, minor details are usually minor, that is, unimportant, so that choice is incorrect. Diff: 3 Page Ref: 70 Objective: 3.3 104) Managers in organizations make group decisions ________. A) frequently B) never C) almost never D) rarely Answer: A Explanation: A) Group decisions are very common in most organizations so "frequently" is the correct response. Group decisions allow the people who will be affected by the decision to take part in the decision. The other choices are all incorrect because they do not reflect how common group decision making is. Diff: 1 Page Ref: 70 AACSB: Communication Objective: 3.3

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105) The eight steps of decision making ________. A) can only be employed by individuals B) can only be employed in very small groups C) can be employed by individuals and groups D) can only be employed by groups Answer: C Explanation: C) The eight steps of decision making can be used by individuals or groups of any size. All of the other choices for this question limit the scope of eight-step decision making somehow, so they are incorrect. Diff: 2 Page Ref: 71 AACSB: Communication Objective: 3.4 106) One advantage of group decision making is that it usually provides ________ than individual decision making. A) faster decisions B) more ethical decisions C) less confusion D) more information Answer: D Explanation: D) Group decisions are rarely faster, more ethical, or less confusing than individual decisions. In fact, group decisions usually take more time and can involve more confusion than individual decisions. One thing that group decisions consistently provide is more information for decisions. Having more people take part in a decision allows for more points of view and more sources of information to be included—therefore more information is the correct response. Diff: 2 Page Ref: 71 AACSB: Communication Objective: 3.4 107) Group decisions generally feature ________ acceptance than decisions made by an individual. A) greater B) less C) neither greater or less D) more enthusiastic Answer: A Explanation: A) Group decisions are generally better accepted than individual decisions, primarily because more people feel a part of the decision-making process. This eliminates "less" and "neither greater nor less" as correct responses. There is no data to indicate one way or another how enthusiastically decisions are accepted, so "more enthusiastic" is incorrect. Diff: 2 Page Ref: 71 AACSB: Communication Objective: 3.4

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108) Group decision making typically increases the legitimacy of a decision because the decision was made ________. A) over a long period of time B) democratically C) by experts D) primarily by the group leader Answer: B Explanation: B) It is hard to argue that a decision that was decided in a democratic manner is not legitimate, making "democratically" the correct response. The period of time in which a decision was made does not increase its legitimacy. Group decisions are not likely to be made by experts, so that is not a correct response. Finally, a group decision from a group in which all members were not equally empowered would tend to have less, rather than more legitimacy. Diff: 2 Page Ref: 71 AACSB: Communication Objective: 3.4 109) Decisions made by individuals typically suffer from suspicions that the decision maker ________. A) is dishonest B) is not rational C) did not try to analyze the situation D) did not consult all interested parties Answer: D Explanation: D) Most organization members trust decision makers to a degree, so individual decisions do not usually suffer from feelings that the decision maker is not honest or rational. Similarly, it is assumed that the decision maker applied some kind of analytical skill to the situation. The primary worry for most organization members is that the decision maker did not get diverse enough viewpoints to make the decision. Diff: 2 Page Ref: 71 AACSB: Communication Objective: 3.4 110) Seeking the views of a diverse group of people can provide a decision maker with ________ on issues. A) fresh perspectives B) conventional wisdom C) universal agreement D) a foolproof way to get the perfect answer Answer: A Explanation: A) Seeking diverse views provides no guarantee of a perfect answer for a problem. A decision maker seeking an easy way out will also not find agreement among diverse opinions, so universal agreement is also wrong. People with very different perspectives are highly unlikely to supply conventional wisdom in a situation, so that choice can be eliminated as a correct response. That leaves the fresh perspectives supplied by a diversity of viewpoints that can be surprising and very instructive to a decision maker, providing ideas that she would never have been able to come up with on her own. Diff: 2 Page Ref: 71 AACSB: Communication Objective: 3.4 33 Copyright © 2011 Pearson Education, Inc

111) Which of the following is a drawback to seeking diverse views in decision making? A) less reliable decision B) easier decision-making process C) more time consuming D) less time consuming Answer: C Explanation: C) A major drawback to seeking diverse views is that it takes time to reconcile these views and hammer out a decision that takes all of their best points into account. Since seeking diverse views is more time-consuming, it does not make for an easier decision-making process, eliminating that choice. Less reliable decision can be ruled out because there is no evidence that seeking diverse views in any way compromises the quality of the decision itself. Diff: 2 Page Ref: 71 AACSB: Communication Objective: 3.4 112) Which phrase best summarizes the drawbacks of group decisions? A) A camel is a racehorse put together by a manager. B) A camel is a racehorse put together by a committee. C) A camel is a no racehorse when it comes to speed. D) A camel beats a racehorse in a long race. Answer: B Explanation: B) The choice indicating a camel is a racehorse put together by a committee expresses the idea that committees can combine many good ideas into a single not-so-good idea by failing to appropriate a single point of view that focuses on a single goal. A racehorse put together by a manager might reflect a strength, rather than drawback, of a group decision. The other two choices are both true to some extent, but neither identifies a drawback of group decisions, so both choices are incorrect. Diff: 2 Page Ref: 72 AACSB: Communication Objective: 3.4 113) Groups decisions are usually ________ individual decisions. A) more efficient than B) less efficient than C) equal in efficiency to D) more efficient but less effective Answer: B Explanation: B) Because it takes time to put groups together, and it also takes time to get a group to reach agreement, group decisions are almost always more time consuming than individual decisions. This means that group decisions are less rather than more efficient than individual decisions. More efficient but less effective is also incorrect because it states that group decisions are less effective than individual decisions, a conclusion for which there is no valid evidence. Diff: 2 Page Ref: 72 AACSB: Communication Objective: 3.4

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114) Since all members of a group are rarely equal in status, most groups suffer from ________. A) minority domination B) majority domination C) too much diversity D) gridlock Answer: A Explanation: A) Minority domination is the result of one, or a few group members asserting their will and opinions over other members of the group, distorting the decision-making process. Minority domination can diminish the legitimacy of a decision, causing observers to feel that the decision does not reflect a true group consensus. The other choices here do not match the description. Majority domination would have a large faction of a group taking over, while too much diversity would be the opposite of minority domination, and might result in gridlock. Diff: 2 Page Ref: 72 AACSB: Communication Objective: 3.4 115) ________ can cause people in a group to fail to express their true opinions. A) Ambiguous responsibility B) Group imbalance C) Pressure to conform D) Years of experience Answer: C Explanation: C) Individuals often don't want to be the "squeaky wheel" in a group, so rather than speak up, they feel pressure to conform and go along with the prevailing group views. Ambiguous responsibility might encourage, rather than discourage, people to speak up, since it would allow them to escape consequences for their views. Years of experience also might encourage people to express their views, since experience might make them feel more comfortable in the group. Finally, a group that lacks balance would not predictably affect how eagerly people in a group speak up. Diff: 2 Page Ref: 72 AACSB: Communication Objective: 3.4 116) Which of the following is a primary characteristic of groupthink? A) conflict among group members B) failure to reach consensus within a group C) complete conformity among group members D) a group that is candid and open Answer: C Explanation: C) Groupthink is the tendency of group members to conceal their real views and conform to avoid controversy, so it is best described by the choice that highlights conformity. Conflict or candidness among group members would not be evident in groupthink—in fact the opposite of these conditions would be likely to prevail: total accord and a lack of openness. Finally, a group that suffered from groupthink would likely reach consensus easier than other groups, making failure to reach consensus within a group an incorrect response. Diff: 3 Page Ref: 72 AACSB: Communication Objective: 3.4 35 Copyright © 2011 Pearson Education, Inc

117) Which of the following is NOT a factor that can increase the probability of groupthink? A) Influential group members dominate the discussion and the decision-making process. B) Group leaders stress the importance of consensus above all other concerns. C) The group has more than 40 group members. D) Group leaders solicit ideas from all group members without passing judgment on their ideas. Answer: D Explanation: D) Groupthink, the tendency of group members to conform in an artificial way, can be the result of overly dominant group leaders, a group that is too large, or too much emphasis put on being agreeable. Groupthink would not be likely to result from leaders who solicit ideas from members in a noncritical way, as this would make group members comfortable in expressing themselves. This makes group leaders soliciting ideas from all members without passing judgment the correct response. Diff: 3 Page Ref: 72 AACSB: Communication Objective: 3.4 118) Which of the following is the most effective number of people to have in a group? A) 5-7 B) 2-4 C) 10-15 D) 16-25 Answer: A Explanation: A) Research has shown that free expression within a group can be inhibited when a group is either too small or too large. Studies have shown that the ideal group size has about 5 to 7 participants, making that the correct response. Diff: 2 Page Ref: 73 AACSB: Communication Objective: 3.4 119) Which of the following is used to exclusively generate creative ideas in a group setting? A) brainstorming B) nominal group technique C) groupthink D) electronic meetings Answer: A Explanation: A) Nominal group technique and electronic meetings are meetings in which groups cannot only generate ideas, but also come to decisions, so neither is exclusively an ideagenerating technique. Brainstorming is used exclusively for generating ideas, so it is the correct response here. Groupthink is a negative condition that afflicts groups so it is an incorrect response. Diff: 1 Page Ref: 73 AACSB: Communication Objective: 3.4

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120) Which of the following is NOT allowed in a brainstorming session? A) clear definition of the problem B) criticism or dismissal of poor ideas C) large number of alternatives D) recording of all alternatives Answer: B Explanation: B) The essence of brainstorming requires that all ideas be treated in roughly equal ways. The important thing for brainstorming is simply to generate ideas, not to stand in judgment of ideas, which makes criticism or dismissal of poor ideas the correct response. A brainstorming session would definitely feature a clear definition of the issue, generation of a large number of alternatives, and the recording of those alternatives for later analysis, so all three of these choices are incorrect. Diff: 2 Page Ref: 73 AACSB: Communication Objective: 3.4 121) Which of the following group techniques allows group members to meet together, but at the same time facilitates independent decision making? A) brainstorming B) nominal group technique C) large meetings of over 50 individuals D) small meetings of less than 10 individuals Answer: B Explanation: B) Neither large or small meetings can ensure independent thought—both meeting forms can fall victim to groupthink or domination by a few individuals. Nominal group technique can generate independent thought, as it allows group members to express opinions secretly so they can be assessed on their own merits. Brainstorming is an idea-generating technique only, so it cannot result in independent decision making. Diff: 2 Page Ref: 73 AACSB: Communication Objective: 3.4 122) The ________ blends the nominal group technique with sophisticated computer technology. A) personal meeting B) electronic meeting C) virtual meeting D) preliminary meeting Answer: B Explanation: B) Of the choices, only the electronic meeting combines the anonymous aspect of nominal group technique with computer technology. In an electronic meeting, participants type in comments without identifying themselves, thus ensuring that all comments will be taken on an equal basis. A personal meeting, virtual meeting, or preliminary meeting cannot supply the anonymity of an electronic meeting, so all three choices are incorrect. Diff: 2 Page Ref: 74 AACSB: Communication Objective: 3.4

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123) What advantages does videoconferencing provide for group decision making? A) anonymous expression of opinions B) less groupthink C) less minority domination D) savings on travel and time Answer: D Explanation: D) Videoconferencing is a face-to-face encounter so it does not provide anonymous expression of opinions, reduce groupthink, or reduce minority domination. What videoconferencing does do is save on travel and time. Individuals thousands of miles away can meet face-to-face without the expenditure of money and time it would take to meet in person. This makes savings on travel and time the correct response. Diff: 2 Page Ref: 74 AACSB: Communication Objective: 3.4 124) Mid-level managers in a country with high power distance are ________ than managers from a low power distance country. A) more likely to make risky decisions B) less likely to make risky decisions C) less likely to make safe, conservative decisions D) more likely to disagree with their leaders' decisions Answer: B Explanation: B) High power distance means that leaders have a disproportionate amount of power when compared to subordinates—usually resulting in mid-level managers making inordinately safe decisions to avoid disapproval from their superiors. This makes "less likely to make risky decisions" the correct response. Similarly, high power distance would decrease, rather than increase, the likelihood of mid-level managers disagreeing with leaders. Diff: 1 Page Ref: 74-75 AACSB: Communication Objective: 3.5 125) Mid-level managers in a country with low uncertainty avoidance are ________ than managers from a high uncertainty avoidance country. A) more likely to make risky decisions B) less likely to make risky decisions C) less likely to make foolish decisions D) more likely to avoid making decisions Answer: A Explanation: A) Low uncertainty avoidance means that managers tend not to shy away from uncertainty—usually resulting in them being more likely to make risky decisions. Managers seeking to avoid risk might avoid making any kind of decision. Foolish decisions might be risky so being less likely to make a foolish decision would also be incorrect. Diff: 1 Page Ref: 74 AACSB: Communication Objective: 3.5

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126) Individualistic countries like the United States tend to have ________ than group-oriented countries like Japan. A) more conformity and more cooperation B) more conformity and less cooperation C) less conformity and more cooperation D) less conformity and less cooperation Answer: D Explanation: D) An individualistic country has its strengths and weaknesses. It would tend to feature less cooperativeness (an overall weakness) and less conformity (an overall strength) than a more group-oriented culture. This makes less conformity and less cooperation the correct choice. Diff: 1 Page Ref: 74-75 AACSB: Communication Objective: 3.5 127) The use of ringisei in Japanese organizations reflects which of the following values in Japanese culture? A) tradition-following B) consensus-seeking C) risk taking D) go-it-alone Answer: B Explanation: B) Ringisei is a reflection of how Japanese culture values form a consensus so all participants share the responsibility of a decision. This makes consensus-seeking the correct choice. Ringisei does not specifically reflect tradition, though Japanese cultures do place great value on tradition. Ringisei is more or less the opposite of both risk taking and go-it-alone so both of those responses are incorrect. Diff: 2 Page Ref: 75 AACSB: Diversity Objective: 3.5 128) French management style tends to be ________ in style. A) permissive B) group oriented C) rule following D) autocratic Answer: D Explanation: D) French managers tend to be domineering in style, highlighting the absolute authority of the superior manager. This makes "autocratic" the correct response and rules out "permissive" as this is somewhat the opposite of autocratic. Group oriented or rule following management does not fit the French style as closely as the correct choice. Diff: 2 Page Ref: 75 AACSB: Communication Objective: 3.5

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129) When dealing with international organizations, managers must be ________ in order to accommodate the managing styles of different cultures. A) as flexible as possible B) as inflexible as possible C) as strict as possible D) as thorough Answer: A Explanation: A) Flexibility is the key when dealing with managers from different cultures who may have very different ideas about decision making than domestic managers. This rules out both inflexible and strict because both choices identify a less-flexible approach. Thoroughness can be helpful, but it would not help avoid misunderstanding as much as flexibility in dealing with foreign management. Diff: 2 Page Ref: 75 AACSB: Communication Objective: 3.5 130) ________ helps people find better solutions to problems using innovative problem-solving methods. A) Planning B) Creativity C) Organization D) Structure Answer: B Explanation: B) Creativity focuses on using innovation to solve problems using novel approaches and methods. While planning, organization, and structure can all aid in problem solving, none of those choices specifically employs innovation—so they are incorrect choices. Diff: 2 Page Ref: 75 AACSB: Communication Objective: 3.5 131) According to one study, about ________ of men and women were somewhat creative. A) 1 percent B) 10 percent C) 30 percent D) 60 percent Answer: D Explanation: D) The study of 461 men and women found that only about 1 percent of them could be categorized as "highly creative," but a full 60 percent were at least "somewhat creative." This means that 60 percent is the correct response for this question. Diff: 2 Page Ref: 75 Objective: 3.5

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132) One well-accepted model states that individual creativity requires ________, or a commanding understanding of a subject matter. A) expertise B) task motivation C) high interest D) intuition Answer: A Explanation: A) A complete understanding of a subject matter or expertise is a necessary component of creativity, according to the model. Task motivation, high interest, and intuition are all required for creativity, but none of them describe a thorough understanding of a subject. Diff: 2 Page Ref: 75 Objective: 3.5 133) Which of the following is NOT a characteristic of a creative problem solver? A) self confidence B) tolerance for ambiguity C) frustrates easily D) accepts risks readily Answer: C Explanation: C) A creative person has faith in his or her ability to solve problems, can hold conflicting ideas without abandoning them, and will take intellectual risks. A trait that a creative person cannot have is to be easily frustrated as the creative process usually requires finding countless "wrong" answers to a question before a "right" answer emerges. Diff: 2 Page Ref: 76 AACSB: Analytic Skills Objective: 3.5 134) Which of the following traits do all creative people seem to share? A) They like to save time. B) They get along well with others. C) They love their work. D) They don't like to work hard. Answer: C Explanation: C) A large part of creativity is perseverance, so individuals who do not truly love what they do usually do not have the stamina to solve the problems they are faced with. Getting along well with others and saving time do not help individuals persevere or aid in the creative process in some other way, so they are incorrect responses. Not liking to work hard is the opposite of the case for creative people, as they typically work much harder than other people in pursuit of their goals. Diff: 2 Page Ref: 76 AACSB: Analytic Skills Objective: 3.5

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135) Which of the following tends to impede a person's creativity? A) providing time and resources B) clearly defined goals C) being watched while you work D) internal motivation Answer: C Explanation: C) Internal motivation, clearly defined goals, time and resources all serve to increase, rather than decrease creativity. The only item listed that impedes creativity is surveillance—being watched—as it puts undue pressure on the problem solver and distracts him or her from the goal. That makes being watched while you work the correct response. Diff: 2 Page Ref: 76 AACSB: Analytic Skills Objective: 3.5 Decisions, Decisions (Scenario) Sondra needed help. Her insurance company's rapid growth was necessitating making some IT changes, but what changes? Should they modify the servers that they currently used, or purchase an entirely new system? Sondra was confused and needed help in making the correct decision. 136) According to the decision-making process, the first step Sondra should take is to ________. A) analyze alternative solutions B) identify decision criteria C) evaluate her decision's effectiveness D) identify the problem Answer: D Explanation: D) The first step in any problem-solving situation is to identify the problem. Sondra's problem appears to be: should she buy a new system or fix the old system? Identifying decision criteria, analyzing possible solutions, and evaluating the process will come later in the process. Diff: 1 Page Ref: 58 AACSB: Analytic Skills Objective: 3.1 137) Sondra has decided to collect information about the features the company needs for its system. Which stage of the decision-making process is she carrying out? A) identify alternative solutions B) identify decision criteria C) evaluate her decision's effectiveness D) allocate weights to the criteria Answer: B Explanation: B) In collecting information Sondra is identifying the key points, or criteria, that are important to her company. After these criteria are analyzed, she will go on to identify a list of solutions and assign weights to those solutions. Diff: 2 Page Ref: 58-59 AACSB: Analytic Skills Objective: 3.1

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138) Sondra has determined that the speed of the system she settles on is twice as important as the capacity of the system. Which stage of the decision-making process is she carrying out? A) allocation of weights to criteria B) selecting an alternative C) implementing the alternative D) identifying the problem Answer: A Explanation: A) In determining that one criterion is more important than another, Sondra is weighting the criteria. Before doing that she needed to identify her problem. After assigning weights she will develop and analyze alternatives, then select an alternative, and finally implement that alternative. Diff: 2 Page Ref: 58-60 AACSB: Analytic Skills Objective: 3.1 139) Sondra has decided to purchase a new system. After obtaining permission, she has ordered the system from a reputable company. Which stage of the decision-making process is she carrying out in making the order? A) analyzing alternative solutions B) selecting an alternative C) implementing the alternative D) identifying the problem Answer: C Explanation: C) In deciding on a new system, Sondra selected an alternative. Prior to that she first identified the problem and after identifying criteria, weighting the criteria, and developing alternatives, she analyzed those alternatives. Note that selecting an alternative is not the correct response, because in ordering the new system Sondra was going beyond merely selecting an alternative and actually implementing the selected alternative, making implementing the alternative the correct response. Diff: 3 Page Ref: 58-60 AACSB: Analytic Skills Objective: 3.1 140) The very last step Sondra should take, according to the decision-making process, is to ________. A) analyze alternative solutions B) select alternatives C) implement the alternative D) evaluate the decision's effectiveness Answer: D Explanation: D) Without evaluating the decision, the problem solver is not able to assess whether or not the problem was actually solved or the situation was actually improved. Evaluating the effectiveness of the decision also allows the decision maker to determine whether or not the correct problem was identified in the first place. All of the other answer choices identify steps that come earlier in the decision-making process. Diff: 1 Page Ref: 61 AACSB: Analytic Skills Objective: 3.1 43 Copyright © 2011 Pearson Education, Inc

141) In a short essay, list and discuss the first four steps in the decision-making process. Give an example of each step. Answer: Step 1: Identification of a problem The decision-making process begins with a discrepancy between an existing and a desired state of affairs. An example of identifying a problem is choosing a new car. Step 2: Identification of decision criteria Once the manager has identified a problem that needs attention, the decision criteria important to resolving the problem must be identified. That is, managers must determine what factors are relevant in making a decision. An example of identifying decision criteria is deciding what features you need in a new car. Step 3: Allocation of weights to the criteria At this step, the decision maker must compare the items in order to give them the correct priority in the decision. The most important criterion is assigned the heaviest weight. Other criteria are assigned weights in comparison with that standard. Weights can be quantitative—with number values—or determined on a qualitative scale. An example of weighting decision criteria is ranking the features of a new car in order of their importance. Step 4: Development of alternatives The fourth step requires the decision maker to use the criteria to develop a list of possible alternatives that may solve the problem. An example of developing alternatives is making a list of possible new cars. Diff: 2 Page Ref: 58-62 AACSB: Analytic Skills Objective: 3.1

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142) In a short essay, list and discuss the final four steps in the decision-making process. Give an example of each step. Answer: Step 5: Analysis of alternatives Once the alternatives have been identified, the decision maker must critically analyze each alternative. From this comparison, the strengths and weaknesses of each alternative become evident. An example of analyzing alternatives is to make a table of weighted scores for possible new cars. Step 6: Selection of an alternative The sixth step is the important act of choosing the best alternative from among those considered. All the pertinent factors should be considered here, both objective and subjective. Then a choice of a single alternative—or group of alternatives—should be selected. An example of selecting an alternative is to choose a single new car from a list of alternatives. Step 7: Implementation of the alternative Implementation involves carrying out the decision that was made. In the car example, it involves purchasing the car that was selected. Step 8: Evaluation of decision effectiveness The last step in the decision-making process involves appraising the outcome of the decision to see if the problem has been resolved. Did the alternative chosen and implemented accomplish the desired result? If not, the decision maker may consider returning to a previous step or may even consider starting the whole decision process over. An example of this final step would be to assess the success of the car-buying decision. Was the right car selected? Did it have all of the features and characteristics that were needed? Did it perform all of the functions that were needed? Diff: 2 Page Ref: 58-62 AACSB: Analytic Skills Objective: 3.1

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143) In a short essay, discuss why creativity is important to decision making. Describe a situation in which a creative solution is used to solve a problem. Answer: Creativity is important to decision making because it allows managers to solve problems in more efficient, effective, and innovative ways. Innovation is valuable because it can open up new paths of exploration for an organization, sometimes exposing needs that weren't known about and possible opportunities that weren't suspected. An example of a creative solution to a problem is the recent development of a software bowling game for senior citizens. Rather than try to develop a new game for children or young adults— two fairly saturated markets—the company turned its attention to a neglected market, senior citizens. Could the company get seniors—who typically don't use computers—to play video games? They could if they created the right game. The company worked hard to develop a program that was "friendly" to its typical user—a senior citizen who had no computer skills or knowledge. The result was a huge hit. Seniors all over the United States now rave about this fun new game. Leagues have formed. Tournaments have been organized. Seniors especially enjoy the fact that they can play the game at home, and that physical disabilities don't prevent them from playing. The success of the game is a good example of how being creative can solve a problem. Diff: 3 Page Ref: 75 AACSB: Analytic Skills Objective: 3.5 144) In a short essay, discuss bounded rationality and satisficing. Answer: Perfect rationality requires that the decision maker face a clear and unambiguous problem with a clear and specific goal and have knowledge of all possible alternatives for his or her decision, and all outcomes and consequences that result from choosing each one of those alternatives. In the real world, these conditions are almost never met. Rather than address the virtually impossible chore of identifying all alternatives and outcomes of the decision, the decision maker chooses to apply bounded rationality, which limits the scope of the decision to just some, rather than all alternatives and consequences. Bounded rationality requires the decision maker to satisfice, or choose a "good enough" solution to the problem rather than maximize his or her decision by identifying the perfect rational solution. Diff: 3 Page Ref: 64-65 AACSB: Analytic Skills Objective: 3.2

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145) In a short essay, discuss the differences among a procedure, a rule, and a policy. Include specific examples of each to support your answer. Answer: A procedure is a series of sequential steps that a manager can use for responding to a well-structured problem. An example of a procedure are instructions for how to install a new thermostat for your home heating system. You follow the instructions in a step-by-step manner to remove the old thermostat and install the new one. A rule is an explicit statement that tells a manager what he or she can or cannot do. Managers frequently use rules when they confront a well-structured problem because rules are simple to follow and ensure consistency. For example, a rule at a local tennis club might dictate that if the courts are full, players can play no longer than one hour. When their hour is up they can get bumped from their court. A policy provides guidelines to channel a manager's thinking in a specific direction. In contrast to a rule, a policy establishes parameters for the decision maker rather than specifically stating what should or should not be done. Policies differ from procedures in that they typically leave quite a bit of interpretation up to the decision maker. An example of a policy is guidelines that require scientists at a research lab have an advanced degree in their field, at least three years of post-doctoral work, and at least five published scientific papers to their credit. These requirements are guidelines—candidates who lack all of the qualifications but have other strengths may also be considered for the job. It would be up to the decision maker to determine how rigorously the policy would be followed. Diff: 2 Page Ref: 68-69 Objective: 3.3

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146) In a short essay, identify and explain the advantages and disadvantages to group decision making. Answer: Group decisions provide more complete information than do individual ones, as a group will bring a diversity of experiences and perspectives to the decision process that an individual acting alone cannot. In addition, because groups have a greater quantity and diversity of information, they can identify more alternatives than can an individual. Furthermore, group decision making increases acceptance of a solution. Finally, the group decision-making process is consistent with democratic ideals; therefore, decisions made by groups may be perceived as more legitimate than decisions made by a single person. Group decisions are not without their drawbacks. It takes time to assemble a group and the interaction that takes place once the group is in place is frequently inefficient. Groups almost always take more time to reach a solution than an individual would take to make the decision alone. Groups may also be subject to minority domination, in which one or a few group members compel others to adhere to their agenda. Another problem is the pressure to conform in groups. In groupthink, a form of conformity, group members withhold their views in order to avoid controversy, avoid taking responsibility for their actions, and give the appearance of agreement. As a result, groupthink undermines critical thinking in the group and eventually harms the quality of the final decision. And, finally, ambiguous responsibility can become a problem. Group members share responsibility, so the responsibility of any single member is watered down and no one ends up taking "ownership" of the group's final decision. Diff: 2 Page Ref: 71-72 AACSB: Communication Objective: 3.4 147) In a short essay, describe how brainstorming can help avoid groupthink and enhance creativity in group decision making. Answer: Brainstorming is a relatively simple technique for overcoming the pressures for conformity that retard the development of creative alternatives. Brainstorming utilizes an ideagenerating process that specifically encourages any and all alternatives while withholding any criticism of those alternatives. In a typical brainstorming session, participants "freewheel" as many alternatives as they can in a given time. No criticism is allowed, and all the alternatives are recorded for later discussion and analysis. Diff: 2 Page Ref: 73 AACSB: Communication Objective: 3.4

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148) In a short essay, describe how nominal group technique can help avoid groupthink and enhance creativity in group decision making. Answer: Nominal group technique helps groups arrive at a satisfactory solution to a problem. The technique restricts discussion during the decision-making process. Group members must be present, as in a traditional committee meeting, but they are required to operate independently. They secretly write a list of general problem areas or potential solutions to a problem. The chief advantage of this technique is that it permits the group to meet formally but does not restrict independent thinking, as so often happens in the traditional interacting group. Since opinions are expressed anonymously, participants are more candid, honest, creative, and ambitious with their comments and suggestions. Diff: 2 Page Ref: 73 AACSB: Analytic Skills Objective: 3.4 149) In a short essay, describe how electronic meetings can help avoid groupthink and enhance creativity in group decision making. Answer: The most recent approach to group decision making blends the nominal group technique with sophisticated computer technology. It is called the electronic meeting. Once the technology for the meeting is in place, the concept is simple. Participants sit around a horseshoeshaped table that is empty except for a series of computer terminals. Issues are presented to the participants, who type their responses onto their computer screens. Individual comments, as well as aggregate votes, are displayed on a projection screen in the room. The major advantages of electronic meetings are anonymity, honesty, and speed. Diff: 2 Page Ref: 73-74 AACSB: Technology Objective: 3.4 150) In a short essay, discuss the assumptions of rationality and the validity of those assumptions. Answer: A decision maker who was perfectly rational would be fully objective and logical. He or she would carefully define a problem and would have a clear and specific goal. Moreover, making decisions using rationality would consistently lead toward selecting the alternative that maximizes the likelihood of achieving that goal. The assumptions of rationality apply to any decision. Rational managerial decision making assumes that decisions are made in the best economic interests of the organization. That is, the decision maker is assumed to be maximizing the organization's interests, not his or her own interests. Managerial decision making can follow rational assumptions if the following conditions are met: the manager is faced with a simple problem in which the goals are clear and the alternatives limited; the time pressures are minimal; and the cost of seeking out and evaluating alternatives is low. However, most decisions that managers face in the real world don't meet all of those tests. Diff: 2 Page Ref: 64 AACSB: Analytic Skills Objective: 3.2

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