Chapter 2: Making Business Decisions

Question 1

What are the six-steps in the decision-making process?

Answer 1

1) Problem identification
2) Data collection
3) Solution generation
4) Solution test
5) Solution selection
6) Solution implementation

Question 2

1) Problem identification

Answer 2

Define the problem as clearly and precisely as possible.

Question 3

2) Data Collection

Answer 3

Gather problem-related data, including the 5 W’s. Be sure to gather facts, not rumors or opinions about the problem.

Question 4

3) Solution Generation

Answer 4

Detail every solution possible, including ideas that seem farfetched.

Question 5

4) Solution Test

Answer 5

Evaluate solutions in terms of feasibility, suitability, and acceptability.

Question 6

5) Solution Selection

Answer 6

Select the solution that best solves the problem and meets the needs of the business.

Question 7

6) Solution Implementation

Answer 7

If the solution solves the problem, then the decisions made were correct. If not, then the decisions were incorrect and the process begins again.

Question 8

Name three managerial decision making challenges

Answer 8

1) Managers need to analyze large amounts of information.
2) Managers must make decisions quickly.
3) Managers must apply sophisticated analysis techniques.

Question 9

What are the three levels of a company’s structure?

Answer 9

1) Strategic Level (Unstructured Decisions)
2) Managerial Level (Semi-structured Decisions)
3) Operational (Structured Decisions)

Question 10

1) Strategic Level

Answer 10

Managers develop overall business strategies, goals, and objectives as part of the company’s strategic plan.

Question 11

2) Managerial Level

Answer 11

Employees are continuously evaluating company operations to hone the firm’s abilities to identify, adapt to, and leverage change.

Question 12

3) Operational Level

Answer 12

Employees develop, control, and maintain core business activities required to run the day-to-day operations.

Question 13

Structured Decisions

Answer 13

Situations where established processes offer potential solutions

Question 14

Semi-structured Decisions

Answer 14

Occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision

Question 15

Unstructured Decisions

Answer 15

Occurs in situations in which no procedures or rules exist to guide decision makers toward the correct choice