Chapter 7: Decision making: The essence of a manger’s job

Question 1

Identify the eight steps in the decision-making process

Answer 1

1. Identifying a problem
2. Identifying decision criteria
3. Allocating weights to the criteria
4. Developing alternatives
5. Analyzing alternatives
6. Selecting an alternative
7. Implementing the alternative.
8. Evaluate decision effectiveness

Question 2

Explain the two types of problems and decisions

Answer 2

Structured problems
- straightforward, familiar, and easily defined problems

Unstructured problems
- problems that are new or unusual and for which information is ambiguous or incomplete.

Programmed Decision
- a repetitive decision that can be handled by a routine approach.

Non-programmed Decisions
- unique and nonrecurring decisions that require a custom-made solution.

Question 3

What are the types of programmed decisions?

Answer 3

• Procedure - a series of interrelated sequential
steps that a manager can use to respond to a
structured problem.
• Rule - an explicit statement that limits what a
manager or employee can or cannot do.
• Policy - a general guideline for making a
decision about a structured problem.

Question 4

Identify some common decision-making errors and biases.

Answer 4

Overconfidence Bias
- Holding unrealistically positive views of oneself and one’s performance

Immediate Gratification Bias
- Choosing alternatives that offer immediate rewards and avoid immediate costs

Anchoring Effect
- Fixating on initial information and ignoring subsequent information

Self serving bias
- Taking quick credit for successes and blaming outside factors for failures

Randomness bias
- Creating unfounded meaning out of random events.

Question 5

What is the definition of decision?

Answer 5

Making a choice from two or more alternatives.

Question 6

What is the definition of problem?

Answer 6

An obstacle that makes it difficult to achieve a desired goal or purpose.