Chapter 6

Question 1

Name the 3 types of decision-making that managers utilize to make decisions

Answer 1

Classical, Administrative, Political

Question 2

What is the classical model of decision-making?

Answer 2

• based on rational, clear assumptions of what decision-making should be
• normative; how a decision maker should make decisions
• clear-cut problems/solved with certainty
• rational choices for maximized outcomes

Question 3

What is the administrative model of decision-making?

Answer 3

• describes how managers actually make complex decisions
• vague problem and goals/resolving problems using intuition
• limited knowledge on alternatives

Question 4

What is the political model of decision-making?

Answer 4

• nonprogrammed decisions when
  conditions are uncertain
• information is limited, and
  there are manager conflicts about what course of action to take (bargaining among members)

Question 5

What is the difference between program and non-programmed decisions?

Answer 5

programmed decisions - involve situations that have occurred enough to enable decision rules to be developed and applied in the future
non-programmed decisions - are made in response
to situations that are unique, poorly defined and
unstructured, and have important
consequences for the organization

Question 6

Decision

Answer 6

a choice made from available alternatives

Question 7

Satisficing

Answer 7

means that decision-makers choose the first solution alternative that satisfies minimal decision criteria

Question 8

uncertainty/certainty

Answer 8

• uncertainty > Managers know which goals they
  wish to achieve, but information about alternatives
  and future events is incomplete
• certainty > All the information the decision maker
  needs is fully available

Question 9

bounded rationality

Answer 9

means that people have limits, or boundaries, on how rational they can be.

Question 10

Brainstorming

Answer 10

uses a face-to-face interactive group to spontaneously suggest as many ideas as possible for solving a problem

Question 11

risk

Answer 11

A decision has clear-cut goals and good
information is available, but future outcomes
associated with each alternative are subject to
some chance of loss or failure

Question 12

Coalition

Answer 12

is an informal alliance among managers who support a specific goal

Question 13

Groupthink

Answer 13

the tendency of people in groups to suppress contrary opinions

Question 14

Name the 6 steps in the managerial decision-making process

Answer 14

1) Recognition of decision requirement
2) Diagnosis and analysis of causes
3) development of alternatives
4) selection of the desired alternative
5) implementation of the chosen alternative
6) evaluation and feedback

Question 15

Recognition of decision requirement

Answer 15

• problem occurs when organizational
  accomplishment is less than established goals
• opportunity exists when managers see a
  a potential accomplishment that exceeds specified
  current goals

Question 16

Diagnosis and Analysis

Answer 16

• Diagnosis = managers analyze
  underlying causal factors associated with the
  decision situation
• 5 Whys is a question-asking method used to
  explore the root cause underlying a particular
  problem

Question 17

Development of alternatives

Answer 17

• For a programmed decision, feasible alternatives
  are easy to identify & Nonprogrammed decisions require developing new courses of action that will meet the company’s needs

Question 18

Selection of the desired alternative

Answer 18

• best alternative solution = best fits
  the overall goals and values of the organization and
  achieves the desired results using the fewest
  resources

Question 19

Implementation of the chosen alternative

Answer 19

involves the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out

Question 20

Evaluation and feedback

Answer 20

gather information that tells them how well the decision was implemented and whether it was effective in achieving its goals

Question 21

Define and understand the 4 personal decision styles managers go about making decisions

Answer 21

Directive style - used by people who prefer
simple, clear cut solutions to problems
Analytical style - like to consider complex solutions based on as much data as they can gather
Conceptual style - like to consider a broad amount of information but are more socially oriented and like to talk to others about the problem/alternatives for solving
Behavioral style - often adopted by managers
who have a deep concern for others as individuals
and involves one-on-one discussions

Question 22

Why do managers make bad decisions?

Answer 22

• influenced by initial impressions (anchoring bias = letting initial impressions act as judgment for decisions)
• justifying past decisions (sunk cost effect = managers who often stick with a decision because they’ve invested a lot of even though they’d be better off forgetting it
• seeing what they want to see (confirmation bias = manager puts too much value on evidence that is consistent with a favored belief or viewpoint)
• being influenced by emotions
• being overly confident