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Organization Theory and Design Daft
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Management, 12e (Robbins/Coulter) Chapter 6 Managers as Decision Makers 1) A decision criterion defines what is important or relevant to resolving a problem. Answer: TRUE 2) Implementing an alternative refers to the process of choosing the best alternative. Answer: FALSE 3) Decision making is a part of the planning, organizing, leading, and controlling functions and thus, the essence of management. Answer: TRUE 4) One assumption of rational decision making is that the decision maker is not aware of all possible alternatives and consequences. Answer: FALSE 5) According to the concept of bounded rationality, managers make decisions rationally, but are limited by their ability to process information. Answer: TRUE 6) The phenomenon of escalation of commitment refers to an increased commitment to a previous decision despite evidence that it may have been wrong. Answer: TRUE 7) Intuitive decision making complements rational decision making but not bounded rational decision making. Answer: FALSE 8) A programmed decision is a repetitive decision that can be handled by a routine approach. Answer: TRUE 9) Nonprogrammed decision making relies on procedures, rules, and policies. Answer: FALSE 10) Risk is the condition in which a decision maker is able to estimate the likelihood of certain outcomes. Answer: TRUE 11) The sunk costs error occurs when decision makers forget that current choices cannot correct the past. Answer: TRUE 12) Highly reliable organizations (HROs) are easily tricked by their success. Answer: FALSE 13) Which of the following statements is true concerning problem identification? A) Problems are generally obvious. B) A symptom and a problem are one and the same. C) Generally, what is a problem for one manager is a problem for all other managers. D) Effectively identifying problems is not easy. Answer: D 14) To determine the ________, a manager must determine what is relevant or important to resolving a problem. A) bounded rationality of a decision B) escalation of commitment C) weight of the decision criteria D) decision criteria Answer: D 15) Creativity is most essential in which of the following steps of the decision-making process? A) analyzing alternatives B) allocating weights to the decision criteria C) developing alternatives D) identifying decision criteria Answer: C 16) In the decision-making process, while ________, the decision maker puts the decision into action by conveying it to those affected by it and getting their commitment to it. A) selecting an alternative B) evaluating a decision's effectiveness C) implementing an alternative D) analyzing alternatives Answer: C 17) It is assumed that a rational decision maker ________. A) faces unclear and ambiguous problems B) is limited by his or her ability to process information C) is unaware of all the possible alternatives and consequences D) is fully objective and logical Answer: D 18) When managers make decisions that are rational but limited by their ability to process the information, they are following the concept of ________. A) cognitive decision making B) bounded rationality C) escalation of commitment D) intuitive decision making Answer: B 19) Toby is hunting for a new apartment. He is specifically looking for one that is located in the heart of the city and should be available for $600 per month. However, Toby is also willing to pay up to $850 per month for a place that is situated slighted away from the city center. According to him, the second option "will also do." This is an example of ________. A) rational decision making B) bounded rationality C) intuitive decision making D) non linear thinking Answer: B 20) In intuitive decision making, managers ________. A) often tend to ignore their feelings or emotions B) use data from their subconscious mind to help make their decisions C) use available evidence to improve their decision making skills D) do not depend on their past experiences to make decisions Answer: B 21) Structured problems align well with which type of decisions? A) programmed B) analogous C) organic D) nonlinear Answer: A 22) What is a difference between a policy and a rule? A) A policy establishes general parameters for the decision maker. B) A policy specifies what should or should not be done. C) A policy is more explicit. D) A rule typically contains an ambiguous term. Answer: A 23) Unstructured problems ________. A) refer to the usual problems faced by organizations B) are generally solved using procedures, rules, and policies C) are accompanied by ambiguous or incomplete information D) do not require the decision maker to go through an involved decision process Answer: C 24) When problems are ________, managers must rely on ________ in order to develop unique solutions. A) structured; nonprogrammed decision making B) structured; pure intuition C) unstructured; nonprogrammed decision making D) unstructured; programmed decision making Answer: C 25) If an individual knows the price of three similar cars at different dealerships, he is operating under which of the following decision-making conditions? A) risk B) supposition C) certainty D) speculation Answer: C 26) Optimistic managers follow a maximax choice when they ________. A) maximize the maximum possible payoff B) maximize the minimum possible payoff C) minimize the maximum regret D) minimize the minimum regret Answer: A 27) The ________ thinking style is characterized by a preference for internal sources of information and processing this information with internal insights, feelings, and hunches to guide decisions and actions. A) active experimentation B) nonlinear C) linear D) organic Answer: B 28) Rules of thumb that managers use to simplify decision making are known as ________. A) heuristics B) folksonomies C) algorithms D) sophisms Answer: A 29) The ________ describes how decision makers fixate on initial information as a starting point and then, once set, fail to adequately adjust for subsequent information. A) anchoring effect B) selective perception effect C) confirmation bias D) framing bias Answer: A
A) build organizations that shun complexity B) know when it is time to call it quits C) ignore cultural differences D) build organizations that rely on their past successes Answer: B Is the Picture Clear? (Scenario) Sharon was the regional manager of a large cable television company. She faced many problems and decisions daily, such as how to price each market, whom to hire, what kind of technology to purchase, and how to handle the increasing customer complaints. She needed some help sorting these issues out. 31) When a customer calls and requests a refund for a partial month's usage of the cable service, the fact that such situations are routine and most likely have a standard response would make the response a ________ decision. A) unstructured B) nonprogrammed C) speculative D) programmed Answer: D 32) Usually Sharon follows a ________, a series of interrelated sequential steps for responding to a structured problem. A) rule B) policy C) procedure D) code Answer: C Decision Making Biases and Errors (Scenario) Newcastle United, a soccer club, was relegated from the top flight two seasons ago. Following relegation, the club's board sacked the manager and hired a new manager to replace him. The club won back promotion to the league and enjoyed a good season. Andy Carroll, the star player for Newcastle, was the top scorer in the league for that season. However, the club, needing to strengthen the team by buying new players, sold Andy Carroll to Liverpool soccer club to buy three average players. The club is presently experiencing a dip in form and is in danger of being relegated again. 33) Which of the following statements, if true, would indicate the presence of self-serving bias on the part of the manager? A) The manager assumes moral responsibility for the club's disappointing performance and offers to resign from his position. B) The manager buys Andy Carroll back from Liverpool at a much higher price to revive the team's fortunes. C) The manager blames the board for selling the top scorer and replacing him with below-par players. D) The manager threatens to quit if the board refuses to buy back Andy Carroll from Liverpool immediately. Answer: C 34) Which of the following statements, if true, best reflects sunk cost error on the part of the board? A) The board buys, a now out-of-form, Andy Carroll back from Liverpool at a much higher price in the hopes of reversing the team's form. B) The board admits that it underestimated Andy Carroll's real market value while selling him to Liverpool. C) The board blames the manager for buying three under-par players instead of one good replacement for Andy Carroll. D) The board backs the manager–who is confident that the team will be back in form–to improve the team's performance with its current players. Answer: A 35) List and discuss the eight steps in the decision-making process. Answer: Step 1: Identifying a problem The decision-making process begins with the existence of a problem or a discrepancy between an existing and a desired state of affairs. However, a discrepancy without pressure to take action becomes a problem that can be postponed. Step 2: Identify 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 is relevant in making a decision. Step 3: Allocating weights to the criteria - The decision maker must weigh the items in order to give them the correct priority in the decision. A simple approach of doing this is to give the most important criterion a weight of 10 and then assign weights to the rest against that standard. Step 4: Developing alternatives - The fourth step requires the decision maker to list the viable alternatives that could resolve the problem. No attempt is made in this step to evaluate the alternative, only to list them. Step 5: Analyzing alternatives - Once the alternatives have been identified, the decision maker must critically analyze each one. From this comparison, the strengths and weaknesses of each alternative become evident. Step 6: Selecting an alternative - The sixth step involves choosing the best alternative from among those considered. Step 7: Implementing the alternative - Implementation involves conveying the decision to those affected by it and getting their commitment to it. If the people who must carry out a decision participate in the process, they are more likely to enthusiastically support the outcome than if they are just told what to do. Step 8: Evaluating 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. If the desired result has not been achieved, the manager may consider returning to a previous step or may even consider starting the whole decision process over. 36) Briefly discuss the assumptions of rationality and the validity of those assumptions. Answer: A decision maker who is perfectly rational is fully objective and logical. The problem faced is clear and unambiguous. The decision maker has a clear and specific goal. He is aware of all possible alternatives and consequences. Making decisions consistently leads to selecting the alternative that maximizes the likelihood of achieving that goal. These assumptions apply to any decision - personal or managerial. For managerial decision making, an additional assumption is that decisions are made in the best interests of the organization. However, most of these assumptions of rationality are not very realistic. 37) What is meant by bounded rationality and satisficing? Answer: Despite the unrealistic assumptions of perfect rationality, managers are expected to be rational when making decisions. It is understood that "good" decision makers are supposed to do certain things and exhibit good decision-making behaviors as they identify problems, consider alternatives, gather information, and act decisively but prudently. When they do so, they show others that they are competent and that their decisions are the result of intelligent deliberation. However, a more realistic approach to describing how managers make decisions is the concept of "bounded rationality." According to this concept, managers make decisions rationally, but are limited by their ability to process information. Because they cannot possibly analyze all information on all alternatives, managers "satisfice," rather than maximize. That is, they accept solutions that are "good enough." Thus, they become rational within the limits of their ability to process information. 38) Define intuitive decision making and identify the five different aspects of intuition. Answer: Intuitive decision making is the process of making decisions on the basis of experience, feelings, and accumulated judgment. Intuitive decision making can complement both rational and bounded rational decision making. A manager who has had experience with a similar type of problem or situation often acts quickly with limited information because of that past experience. The five different aspects of intuition are: a. Affect-initiated decisions - Managers make decisions based on feelings or emotions. b. Cognitive-based decisions - Managers make decisions based on skills, knowledge, and training. c. Experience-based decisions - Managers make decisions based on their past experiences. d. Subconscious mental processing - Managers use data from their subconscious to help them make decisions. e. Values or ethics-based decisions - Managers make decisions based on ethical values or culture. 39) Discuss structured problems, programmed decisions, unstructured problems, and nonprogrammed decisions. Answer: Some problems are straightforward. The decision maker's goal is clear, the problem is familiar, and information about the problem is easily defined and complete. Hence, these are called structured problems. For instance, when a server spills a drink on a customer's coat the customer is upset and the manager needs to do something. Because it is not an unusual occurrence, there is some standardized routine for handling it. For example, the manager offers to have the coat cleaned at the restaurant's expense. This is called a programmed decision, a repetitive decision that can be handled by a routine approach. Because the problem is structured, the manager does not have to go to the trouble and expense of going through an involved decision process. Not all the problems managers face can be solved using programmed decisions. Many organizational situations involve unstructured problems, which are problems that are new or unusual and for which information is ambiguous or incomplete. Whether to build a new manufacturing facility in China is an example of an unstructured problem. When problems are unstructured, managers rely on nonprogrammed decision making in order to develop unique solutions. Nonprogrammed decisions are unique and nonrecurring and involve custom-made solutions. Lower-level managers mostly rely on programmed decisions because they confront familiar and repetitive problems. As managers move up the organizational hierarchy, the problems they confront become more unstructured. However, few managerial decisions in the real world are either fully programmed or nonprogrammed. Most fall somewhere in between. 40) Discuss the three types of programmed decisions that a manager depends on to resolve structured problems. Answer: Usually a manager relies on one of three types of programmed decisions to counter structured problems: procedure, rule, or policy. A procedure is a series of sequential steps a manager uses to respond to a structured problem. Identifying the problem is a bit difficult. Once it is clear, so is the procedure. For instance, a purchasing manager receives a request from a warehouse manager for 15 PDA handhelds for the inventory clerks. The purchasing manager knows how to make this decision by following the established purchasing procedure. A rule is an explicit statement that tells a manager what can or cannot be done. Rules are frequently used because they are simple to follow and ensure consistency. For example, rules about lateness and absenteeism permit supervisors to make disciplinary decisions rapidly and fairly. The third type of programmed decisions is a policy, which is a guideline for making a decision. In contrast to a rule, a policy establishes general parameters for the decision maker rather than specifically stating what should or should not be done. Policies typically contain an ambiguous term that leaves interpretation up to the decision maker. 41) Discuss the three different decision-making conditions that managers usually face. Answer: When making decisions, managers usually face three different conditions: certainty, risk, and uncertainty. a. Certainty - The ideal situation for making decisions is one of certainty, which is a situation where a manager can make accurate decisions because the outcome of every alternative is known. b. Risk - These are conditions in which the decision maker is able to estimate the likelihood of certain outcomes. Under risk, managers have historical data from past personal experiences or secondary information that lets them assign probabilities to different alternatives. c. Uncertainty - This is a situation in which a decision maker has neither certainty nor reasonable probability estimates available. Under these conditions, the choice of alternative is influenced by the limited amount of available information and by the psychological orientation of the decision maker. An optimistic manager follows a maximax choice (maximizing the maximum possible payoff); a pessimist follows a maximin choice (maximizing the minimum possible payoff); and a manager who desires to minimize his maximum "regret" opts for a minimax choice. |
What do you call a series of interrelated sequential steps used to respond to a structured problem?
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