Management Chapter 7 Answers

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Decision
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choice made from among available alternatives
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Decision making
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process of identifying and choosing alternative courses of action.
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The stages of Rational Decision Making
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Stage 1. identify the problem or opportunity Stage 2. Think up alternative solutions. Stage 3. evaluate alternatives and select a solution. Stage 4. Implement and evaluate the solution chosen.
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Rational Model of Decision Making
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explains how managers should make decisions, assumes manager will make logical decisions that will be optimum in furthering the organization’s interest. also called the classical model.
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Successful implementation
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plan carefully be sensitive to those affected.
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Evaluation
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what should you do if action is not working? give it more time, change it slightly, try another alternative, start over.
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Assumptions of the rational model
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Complete information, no uncertainty; logical, unemotional analysis; best decision for the organization.
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Non rational models of decision making
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assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions.
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Bounded rationality
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suggests that the ability of decision makers to be rational is limited by numerous constraints, complexity time and money, cognitive capacity.
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Satisficing model
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managers seek alternative until they find one that is satisfactory, not optimal
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incremental model
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managers take small, short-term steps to alleviate a problem.
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Intuition
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making a choice without the use of conscious thought or logical inference, sources are expertise and feelings.
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Implementation Principles of Evidence-Based Decision making
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Treat your organization as an unfinished prototype, no brag, just facts, see yourself and your organization as outsiders do, evidence-based management is not just for senior executives. like everything else, you still need to sell it. If all else fails, slow the spread of bad practice. The best diagnostic question: What happens when people fail?
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What makes it hard to be evidence based?
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1. there is too much evidence. 2. there’s not enough good evidence. 3. the evidence doesn’t quite apply. 4. People are trying to mislead you. 5. you are trying to mislead you. 6. the side effect outweigh the cure. 7. Stories are more persuasive anyway.
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Analytics
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sophisticated forms of business data analysis portfolio analysis, time-series forecast also called business analytics.
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Key attributes among analytics competitors.
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Use of modeling: going beyond simple descriptive statistics Having multiple applications, not just one Support from the top.
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Risk propensity
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the willingness to gamble or to undertake risk for the possibility of gaining an increased payoff
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Decision-making style
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reflects the combination of how an individual perceives and responds to information value orientation tolerance for ambiguity
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Directive decision making style
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people are efficient, logical, practical, and systematic in their approach to solving problems. action-oriented, decisive and likes to focus on facts.
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Analytical
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considers more information and alternatives.
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conceptual
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takes a broad perspective to problem solving like to consider many options and future possibilities
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behavioral
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supportive, receptive to suggestions, show warmth, perfer verbal to written information.
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Knowledge of your decision making style
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helps you of you understand yourself, can increase your ability to influence others, gives you an awareness of how people can take the same information and yet arrive at different decisions.
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Road map to Ethical decision making: A decision tree
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Is the Proposed action legal? if yes, does the proposed action maximize shareholder value? if yes is the proposed action ethical? if no would it be ethical not to take the proposed action.
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Ineffective responses to decision situation
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relaxed avoidance, relaxed change, defensive change, panic.
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Relaxed avoidance
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– manager decides to take no action in the belief there will be no great negative consequences
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Relaxed change
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manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk
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Defensive avoidance
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– manager can’t find a good solution and follows by procrastinating, passing the buck, or denying the risk of any negative consequences
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Panic
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– manager is frantic to get rid of the problem that he can’t deal with the situation realistically
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Three Effective reactions: Deciding to decide
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Importance “How high priority is this situation?” Credibility “How believable is the information about the situation?” Urgency “How quickly must I act on the information about the situation?”
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Common Decision-Making Biases
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Availability bias Confirmation bias Representativeness bias Sunk cost bias Anchoring and adjustment bias Escalation of commitment bias
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Advantages of Group Decision Making
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Greater pool of knowledge Different perspectives Intellectual stimulation Better understanding of decision rationale Deeper commitment to the decision
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Disadvantages of Group Decision Making
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A few people dominate or intimidate Groupthink Satisficing Goal displacement
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Groupthink
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occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation
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What managers need to know about Groups and decision making
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They are less efficient. Their size affects decision quality. They may be too confident. Knowledge counts.
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Participative management
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process of involving employees in setting goals, making decisions, solving problems, and making changes in the organization.
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Consensus
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occurs when members are able to express their opinions and reach agreement to support the final decision
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Brainstorming
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technique used to help groups generate multiple ideas and alternatives for solving problems.
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Chauffeur-driven systems
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ask participants to answer predetermined questions on electronic keypads or dials.
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group-driven systems
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involves a meeting within a room of participants who expresses their ideas anonymously on a computer network, for anonymous networking.

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