Chap 003

Chapter 03
Managerial Decision Making
True / False Questions

1. Managers often avoid taking action when faced with challenges.
True
False
2. Managers typically face structured problems they have seen before,

which makes the decision process easier because there is a procedure
to follow already.
True
False
3. Reggie is the owner of a new bike shop and must decide how much to
withhold from employee paychecks as income tax. This is an example
of a nonprogrammed decision.
True
False
4. Programmed decisions are useful when there is no predetermined

structure on which to rely.
True
False
5. Important, difficult decisions tend to be nonprogrammed, and they

demand creative approaches.
True
False
6. During and after the BP oil spill, which devastated large areas in the
Gulf of Mexico, the decisions made by government officials and BP were
mostly programmed.
True
False
7. Managers prefer uncertainty to certainty because it makes the job more

challenging and interesting.
True
False
8. Risk is a fact of life in nonprogrammed management decisions.

True
False
9. Another way of referring to "risk" is "taking a risk."

True
False
10 Conflict exists when the manager must consider opposing pressures

. from different sources.
True
False
11 A school principal faces conflict when she must decide whether to give
. all staff an 8 percent pay cut or lay off four full-time employees.
True
False
12 The first stage of decision making requires the decision maker to

. generate alternatives.
True
False
13 The "problem" in decision making may actually be an opportunity that

. needs to be exploited.
True
False
14 Sara, a warehouse manager, needed a fast solution when an employee

. asked for a day off for the following week when the whole crew was
supposed to be doing inventory. For her, a ready-made alternative will
be quicker than designing a custom-made solution.
True
False
15 Ideas that have been seen or tried before are known as ready-made
. solutions.
True
False
16 Fundamental to choosing an alternative is predicting the consequences

. that will occur if the various options are put into effect.
True
False
17 After a decision is made and implemented, only then should

. contingency plans be developed.
True
False
18 Managers use satisficing to achieve the best possible outcome.

.
True False
19 When you satisfice, you compare your choice against your goal, not
. against other options.
True
False
20 Maximizing means that you achieve the best possible balance among
. several goals.
True
False
21 Decision makers should presume that with a carefully made decision,

. things will go smoothly during implementation.
True
False
22 Evaluating the decision is always useful, whether the outcome has been
. positive or negative.
True
False
23 To exhibit vigilance, a decision maker must evaluate every decision he

. or she makes.
True
False
24 Following all six stages of the decision making process guarantees

. successful decisions.
True
False
25 Barriers to effective decision making include psychological biases, time

. pressures, and social realities.
True
False
26 Patrick was disappointed when the marketing research team reported

. that a new product was not received well by customers in a focus
group. He felt the company should go ahead with its release, convinced
it was a revolutionary idea that he could make successful. Patrick could
be suffering from the illusion of control.
True
False
27 Framing effects refer to a decision bias influenced by the way in which a

. problem or decision alternative is phrased or presented.
True
False
28 Governmental budget deficits, environmental destruction, and decaying

. urban infrastructure can be partially explained by the bias known as
discounting the future.
True
False
29 In almost every business situation, the quality of the decision is far

. more important than the speed at which the decision is made.
True
False
30 Many organizational decisions are the result of intensive social

. interactions, bargaining, and politicking.
True
False
31 If enough time is available, groups typically make better decisions than

. most individuals acting alone.
True
False
32 One advantage of using a group for decision making is groupthink.

.
True False
33 One potential advantage of a group for decision making is that people
. are likely to be more committed to the decision.
True
False
34 A condition that occurs when a decision-making group loses sight of its

. original goal and a new, less important goal emerges is called goal
displacement.
True
False
35 The three requirements for effective group decision making are an

. appropriate leadership style, the constructive use of disagreement and
conflict, and the enhancement of creativity.
True
False
36 The most constructive type of conflict is affective conflict.

.
True False
37 Cognitive conflict is differences in perspectives or judgments about
. issues, whereas abject conflict is emotional and directed at other
people.
True
False
38 The job of a "devil's advocate" is to add a personal or emotional

. element to the conflict.
True
False
39 The most fundamental unit of value in the creativity revolution is ideas.

.
True False
40 In brainstorming, group members generate as many ideas about a
. problem as they can while simultaneously critiquing them.
True
False
41 Complimenting one another and telling stories are examples of

. behaviors that can make brainstorming less effective.
True
False
42 Bounded rationality is a less-than-perfect form of rationality in which

. decision makers cannot be perfectly rational because decisions are
complex and complete information is unavailable or cannot be fully
processed.
True
False
43 The incremental model of decision making occurs when managers

. make small decisions and move cautiously toward a bigger solution.
True
False
44 The confrontational model of decision making arises when people

. disagree on goals or compete with one another for resources.
True
False
45 The kitchen sink model of decision making occurs when people aren't
. sure of their goals, or disagree about the goals, and likewise are unsure
of or in disagreement about what to do.
True
False
46 Decision making under crisis conditions will inevitably result in poor

. decisions and negative publicity.
True
False
Multiple Choice Questions

47 Managers often ignore challenges for which of the following reasons?
.
A.
They don't agree with the outcome.
B. It's not the managers' job to solve problems, so they typically refer
issues to HR.
C. Getting involved won't impress their bosses.
D. Employees actually prefer a hands-off boss who lets them handle
conflict on their own.
E. Managers cannot be sure how much time, energy, or trouble lie
ahead once they start working on a problem.
48 Characteristics of managerial decisions include which of the following?
.
A.
B.
C.
D.
E.
Guaranteed success.
Certainty.
Conflict.
Structure.
Speed.
49 __________ are those decisions encountered and made before, having

. objectively correct answers, and solvable by using simple rules,
policies, or numerical computations.
A.
B.
C.
D.
E.
Structured decisions
Unstructured decisions
Restructured decisions
Nonprogrammed decisions
Programmed decisions
50 Important, difficult decisions that require creative approaches tend to

. be
A.
B.
C.
D.
E.
Qualitative decisions.
Programmed decisions.
Noneconomic decisions.
Nonprogrammed decisions.
Policy decisions.
51 New, novel, complex decisions having no proven answers are

.
A.
B.
C.
D.
E.
Standing decisions.
Single-use decisions.
Corporate objectives.
52 Gemma, who owns the tutorial service Math Machine, is contemplating

. whether to let one of her experienced tutors open a second location in
an adjacent town. She is facing a _______ decision.
A.
B.
C.
D.
E.
routine
programmed
nonroutine
nonprogrammed
satisficing
53 Ari works for the federal government in acquisitions. Policy requires that
. in contracting with suppliers, at least three bids must be received and
the lowest bid that meets specifications will be accepted. Ari's decisions
regarding the contracts with suppliers would be classified as
A.
B.
C.
D.
E.
Minimized.
Programmed.
Structured.
Logical.
Maximized.
54 The state that exists when decision makers have incomplete

. information is known as
A.
B.
C.
D.
E.
Uncertainty.
Probability analysis.
Ambiguity.
Policy formulation.
Risk.
55 ________ regarding the strength and timing of the economic recovery in

. 2010 and 2011 made businesses slow to start hiring.
A.
B.
C.
D.
E.
Uncertainty
Improbability
Conflict
Policy formulation
Risk
56 Uncertainty exists when the manager

.
A.
B.
C.
D.
E.
Faces two conflicting issues.

Knows the risk involved in making the decision.
Has accurate and comprehensive information to make the decision.
Has insufficient information to make the decision.
Knows that the probability of success is less than 100 percent.
57 The state that exists when the probability of success is less than 100
. percent and losses may occur is
A.
B.
C.
D.
E.
Uncertainty.
Risk.
Certainty.
Policy formulation.
58 A manager is dealing with ________ if she is considering opposing

. pressures from different sources.
A.
B.
C.
D.
E.
conflict
cooptation
collusion
cohesiveness
groupthink
59 Marisol has received two job offers. One is from a firm in Seattle, where
. she would like to live, but the other offer in Kansas City is near her
family and friends. Marisol is having a difficult time making a decision
due to experiencing
A.
B.
C.
D.
E.
Internal conflict.
Organizational conflict.
Physiological conflict.
Psychological conflict.
Individual conflict.
60 Casey, a middle manager at a cosmetics company, is encountering an

. issue between two of her departments because both want a new copier
to be located in their areas. This would best be described as
A.
B.
C.
D.
E.
Emotional conflict.
Conflict between groups.
Identificational conflict.
External conflict.
61 The initial step in the decision making process is to

.
A.
B.
C.
D.
E.
Select an alternative.
Evaluate the decision.
Challenge the status quo.
Generate alternatives.
Identify the problem.
62 A manager may discover that a problem exists with current company

. performance by comparing it with
A.
Past performance.
B. The performance of other organizations.
C.
Future performance forecasts.
D. Desired performance based on the business plan for the year.
E.
All of these.
63 The manager of the Capitol Restaurant noted that the restaurant had
. experienced a decreased number of evening customers. The manager
promptly ordered the chef to rewrite the evening menu. Customer
feedback later indicated that the problem had not been the menu but
poor service from the wait staff. The manager's decision to have the
menu revised suggests that he failed to
A.
B.
C.
D.
E.

Evaluate the alternatives and consequences.
Properly diagnose the cause of the problem.
Evaluate the decision and its consequences.
Identify a solution.
64 Once a problem is identified and properly diagnosed, the next stage in

. the decision making process involves
A.
B.
C.
D.
E.
Evaluating alternatives.
Evaluating consequences.
Evaluating information.
Evaluating the decision.
Generating alternative solutions.
65 When a solution is specifically designed for a particular problem or set

. of problems, it is called a
A.
B.
C.
D.
E.
Designer-enhanced solution.
Dynamic solution.
Ready-made solution.
User-generated solution.
Custom-made solution.
66 Custom-made decisions most often require

.
A.
B.
C.
D.
E.
A consultant.
In-depth computations.
Top management approval.
Creativity.
Brainstorming.
67 Alternative courses of action that can be implemented based on how

. the future unfolds are called
A.
B.
C.
D.
E.
Single-use plans.
Contingency plans.
Standing plans.
Shadow plans.
68 Irena, the manager of Kiddy Couture, knows that the economy greatly
. affects her business. She has developed a plan of action for each of
four possible economic outcomes may occur in her geographic area
over the next four to six years. Here Irena is
A.
B.
C.
D.
E.
Facing a stable environment.

Utilizing contingency planning.
Focusing on efficient decisions.
Engaging in satisficing.
An irrational decision maker.
69 __________ requires searching thoroughly for a complete range of

. alternatives, carefully assessing each alternative, comparing one to
another, and then choosing or creating the very best.
A.
B.
C.
D.
E.
Benchmarking
Maximizing
Minimizing
Satisficing
Optimizing
70 Making a decision by accepting the first option that meets your goal is
. referred to as
A.
B.
C.
D.
E.
Optimizing.
Satisficing.
Maximizing.
Minimizing.
Accepting.
71 Victor, an administrative assistant in accounting, orders office supplies

. biweekly; today he needs pens, sticky notes, and staples. He looks at
the office supply catalog and quickly picks a selection for each that is
priced acceptably. Here Victor is using
A.
B.
C.
D.
E.
Minimizing.
Optimizing.
Satisficing.
Management by exception.
Maximizing.
72 To maximize a decision is to
.
A. Realize the largest possible production benefit.
B. Involve as many people affected by the decision as possible in its
design.
C.
Achieve the best possible outcome.
D. Utilize groupthink for individual decisions.
E. Generate many alternatives for evaluation.
73 Managers who optimize their decisions will attempt to choose

.
A. The first minimally acceptable alternative.
B. Among those alternatives with most predictable results.
C.
The least expensive alternative.
D. That alternative that produces the least conflict.
E. An alternative that achieves the best possible balance among several
goals.
74 Nigel, a manager at Montlucon Eyewear, needed to purchase a new
. secure display case for his most expensive sunglasses. He wanted one
that was high in quality and security, yet low in price. The case he
chose was neither the highest quality available, nor the lowest in price
available, yet it had a good combination of attributes. Nigel's choice
illustrates
A.
B.
C.
D.
E.
Maximizing.
Satisficing.
Optimizing.
Minimizing.
Programming.
75 Implementing a decision must be planned carefully. Adequate planning

. most often requires which of the following steps?
A. Determine how things will turn out before the decision is made.
B. List the resources and activities required.
C. Be sure the CEO agrees with the implementation decision.
D. Allow employees to take on responsibility once the implementation
has begun.
E.
Encourage vigilance.
76 The final stage in the decision-making process is

.
A.
B.
C.
D.
E.
Anticipating the results.

Implementing the solution.
Diagnosing remaining issues.
Criteria analysis.
77 Negative feedback received during the final evaluation of the decision

. indicates that either the implementation will require more time or that
A.
The problem cannot be solved.
B. The implementation has used too many resources.
C. The manager is not capable of rational decisions.
D.
The decision was a bad one.
E. The scenarios were labeled incorrectly.
78 Vigilance in decision making means
.
A. The customer realizes increased value as a result of the decision.
B. The manager has carefully and conscientiously completed all stages
in the decision-making process.
C. The manager has been monitored during the decision making
process.
D. The employees monitor the implementation of the decision carefully.
E. The employees have been monitored to see their reactions to the
decision.
79 Psychological bias in decision making is best described as

.
A. The effect that people's psychological capabilities have upon the
decisions they must make under pressure.
B. What happens when a decision maker must balance the preferences
of many interested parties, diluting effectiveness.
C. The conflict that results from too many people involved with making
a decision.
D. The inability to be objective when gathering, evaluating, and
applying information for decision making.
E. The fact that people are motivated by a need for power that clouds
their decision making capabilities.
80 Illusion of control, discounting the future, and framing effects are all
. examples of
A.
B.
C.
D.
E.
Social realities.
Psychological biases.
Rationality.
Vigilance.
Time pressures.
81 The psychological bias known as "illusion of control" refers to a

.
A. Belief that you have ultimate control and no one can take it from
you.
B. Belief that you can influence events even when you have no control
over what will happen.
C. Lack of confidence in your ability to control your employees.
D. Belief that you have no control and so you don't put any effort into
the decision.
E. Belief that some unknown person actually has the control and is
waiting for you to make a poor decision.
82 When business managers ignore risks and fail to objectively evaluate

. the odds of success for their decisions, it is an example of which of the
following psychological biases?
A.
B.
C.
D.
E.
Illusion of control.
Framing effects.
Discounting the future.
Time pressure.
Social realities.
83 Which of the following is an example of subjective bias that many

. corporate executives exhibit?
A.
B.
C.
D.
E.
Groupthink.
Satisficing.
Goal displacement.
Framing effects.
Minimizing.
84 The way in which the alternatives to a decision are stated or phrased

. may have an impact on which alternative is chosen. Varying
alternatives can be presented in a more favorable or less favorable
way, affecting the decision. This is referred to as
A.
B.
C.
D.
E.
Framing effects.
Phrasing effects.
Biasing effects.
Illusional effects.
Discounting effects.
85 Discounting the future refers to

.
A. Valuing longer-term benefits and costs more heavily than shorterterm benefits and costs.
B. Overestimating the long-term effects of the decision.
C. Underestimating the short-term effects of the decision.
D. Valuing short-term benefits and costs more heavily than longer-term
benefits and costs.
E. Making quick decisions with whatever information is at hand.
86 Which of the following is the best example of a manager discounting
. the future?
A. "I must consult others in order to make good decisions."

B. "It is important to plan for the long-term health of the company."
C. "Even if it is becoming popular, e-commerce is expensive and
difficult."
D. "We must make a profit in order to survive."
E. "I must focus more on quarterly profits now than long-term
profitability."
87 The band Pearl Jam decided not to book any concerts through
. Ticketmaster as an objection to the virtual monopoly Ticketmaster had
on the industry. Initial strong public support was followed by fewer
concerts, lower revenues, reduced exposure, and more hassles for the
band. In retrospect, the band's decision seems to have
A.
B.
C.
D.
E.
Been improperly framed.

Been socially irresponsible.
Discounted the future.
Used psychological conflict.
Involved too many conflicting groups.
88 People who avoid regular dental checkups, students who don't study,
. and dieters who sneak dessert are all examples of which psychological
bias?
A.
B.
C.
D.
E.
Framing effects.
Time pressures.
Social realities.
89 Tactics that are used to make decisions quickly while maintaining the
. high quality of such decisions include
A.
Taking a realistic view of the conflict.
B. Involving people in the decision who are experts and can be trusted.
C.
Focusing on real-time information.
D. Involving people more effectively and efficiently.
E.
Doing all of these.
90 Real-time information is information that
.
A.
B.
C.
D.
E.
Is obtained with little or no delay.

Is based on past performance.
Represents a realistic forecast.
Is based on adjusted predictions.
Is discounted for the future.
91 Each morning OfficeMax's CEO has a computer-based conference with

. all store managers. The previous day's challenges are discussed so that
problems can be quickly and effectively resolved or even avoided.
OfficeMax is utilizing __________ to retain a competitive edge.
A.
B.
C.
D.
E.
social realities
real-time information
psychological biases
framing effects
quality initiatives
92 Omar dreaded annual performance reviews. His company had few

. performance standards, and worse still, if his employees did not like
their reviews, they went over his head, and Omar's boss often
overturned decisions! These interpersonal factors that decrease the
effectiveness of the organization's decisions are best described as
A.
B.
C.
D.
E.
Time pressures.
Gut feelings.
The illusion of control.
A lack of control.
Social realities.
93 The basic philosophy behind group decision making is that "two heads
. are better than one." But does this statement hold true in an
organizational setting?
A.
B.
C.
D.
E.
Yes, always.
Yes, potentially.
No, two does not constitute a group.
No, never.
No evidence exists to determine this.
94 Advantages in using a group for decision making include

.
A.
Intellectual stimulation.
B. Domination of the discussion by one member.
C.
Groupthink.
D.
Satisficing.
E.
Goal displacement.
95 Andersen Tree Farm in Kansas is looking for ways to be more

. environmentally friendly. Managers interviewed frontline staff to get
their opinions and ideas, and invited everyone to participate in deciding
which ideas to advance. Staff members were then aware of the various
options and recognized the benefits and costs of each. In this scenario,
involving the staff most likely helped them to
A. Dominate the discussion and reinforce the organizational structure.

B.
Use groupthink to gain buy-in.
C.
Please everyone completely.
D. Displace obsolete goals in favor of new ones.
E. Understand the decisions and be more committed to them.
96 Which of the following is a potential disadvantage of group decisions?
.
A.
Satisficing.
B. A larger pool of information, which causes confusion.
C. Intellectual stimulation, which takes up much more time and delays
the decision.
D. Too many approaches and perspectives on the problem.
E. People understand the decision details and are highly critical.
97 Which of the following statements about group decision making
. improves the chances that the decision will be implemented
successfully?
A. More information is available when several people are making the

decision.
B. Different approaches to solving the problem are available.
C. People who participate in a group discussion are more likely to
understand why the decision was made.
D. Group discussion provides an opportunity for intellectual stimulation.
E. A single group member can dominates the discussion.
98 Allowing one person to control a discussion or decision would best be

. described as
A.
B.
C.
D.
E.
Groupthink.
Satisficing.
Individual dominance.
Goal displacement.
Esprit de corps.
99 Nicole was disappointed with her team's discussion regarding next

. year's marketing campaign. Adam rammed all his ideas through; they
were good, but nobody else got a word in or had the opportunity to
share. This group experienced
A.
B.
C.
D.
E.
Vigilance.
Satisficing.
Goal displacement.
100 A phenomenon that occurs in decision making when group members

.
avoid disagreement as they strive for consensus is known as
A.
B.
C.
D.
E.
Goal displacement.
Domination.
Intuition.
Groupthink.
Satisficing.
101 When a group accepts an alternative that seems to please the

.
members of the group, but the group has not taken the time or effort
to explore many options, the group has
A.
B.
C.
D.
E.
Exercised groupthink.
Stimulated the intellects of its members.
Optimized.
Exercised vigilance.
Participated in goal displacement.
102 Groupthink is
.
A. Avoiding disagreement while striving for consensus.
B. Accomplished by obtaining all members' input.
C.
The result of high levels of creativity.
D. Typically superior to individual decision making.
E.
An extreme form of satisficing.
103 Groups that operate under a condition known as groupthink are most
.
likely to be
A.
Creative.
B. Lacking in confidence about their abilities.
C.
Overcritical.
D. Concerned with maintaining a positive team spirit.
E.
Unclear about the decision at hand.
104 A condition that occurs when a decision-making group loses sight of its
.
original goal and a new, possibly less important, goal emerges is
A.
B.
C.
D.
E.
Goal displacement.
Groupthink.
Conflict.
Domination.
Group alternatives.
105 When a group member is more interested in winning an argument than

.
solving a problem, __________ has occurred.
A.
B.
C.
D.
E.
domination
goal displacement
groupthink
satisficing
synergy
106 Leaders of decision-making groups should

.
A.
B.
C.
D.
E.
Discourage conflict.
Encourage groupthink.
Help the group satisfice.
Pay close attention to the group process.
Dominate the discussion.
107 Issue-based differences in perspectives or judgments are

.
A.
B.
C.
D.
E.
Compromises.
Affective conflicts.
Cognitive conflicts.
Satisfactory conflicts.
Dialectic conflicts.
108 Emotional disagreements directed toward other people are known as

.
A.
B.
C.
D.
E.
Compromises.
109 Of the possibilities here, the most constructive type of conflict is

.
__________ conflict.
A.
B.
C.
D.
E.
the absence of
emotional
cognitive
affective
dialectic
110 Two of your employees consistently disagree with each other; but
.
lately the arguments have become personal, leading to anger and
bitterness, and this has begun to impact the whole work group. This
situation is best described as
A.
B.
C.
D.
E.
Cognitive conflict.
Affective conflict.
Dialectic conflict.
Alliant conflict.
Comprehensive conflict.
111 There seemed to be complacence in the group, so in an effort to

.
combat groupthink and an overall lack of creativity, the group leader
Tim assigned Trisha the task of pointing out problems throughout the
meeting. In this example, Trisha was playing the role of
A.
B.
C.
D.
E.
Conflict manager.
Devil's advocate.
Dialectic leader.
Antagonist.
Affective leader.
112 Which of the following best describes the requirements of the dialectic
.
method?
A. Someone intentionally presents negative arguments to force further

investigation of the alternative under consideration.
B. A structured debate between two conflicting courses of action is
held.
C. Conflict generated within the group is minimized by enforcing group
unity.
D. Conflict generated within the group is maximized by including not
only factual counterarguments but also personal attacks.
E. The leader performs the role of peacekeeper when attacks are
directed at individuals.
113 In trying to make a conflict between two employees less personal and
.
emotional, their manager asks each of them to approach the problem
from a different viewpoint than their original one. This is an example of
encouraging the use of
A.
B.
C.
D.
E.
Cognitive conflict.
Affective conflict.
A devil's advocate.
Vigilance.
Groupthink.
114 Which of the following statements about encouraging creativity is

.
true?
A. The fundamental unit of value in the creative revolution is artistic

ability.
B. You are being creative if you join two previously unrelated things.
C. To be creative you need to be a top student.
D. Your employees will be more creative if you set a tight deadline for
them.
E. People are much more likely to be creative if they work alone.
115 A process in which group members generate as many ideas about a
.
problem as they can and criticism is withheld until all ideas have been
proposed is called
A.
B.
C.
D.
E.
Brainstorming.
Forecasting.
Groupthink.
Cooperation.
Innovation.
116 In order to be creative, a brainstorming session must

.
A.
B.
C.
D.
E.
Be free of criticism.
Be held in private.
Be done quickly.
Be done face-to-face.
Involve industry experts.
117 ____________ is the concept that decision makers cannot be truly

.
rational because decisions are complex and complete information is
unavailable.
A.
B.
C.
D.
E.
Bounded rationality
Incremental decision making
Cognitive rationality
Coalitional decision making
Affective rationality
118 The _______ model of decision making occurs when decision makers
.
make small decisions and move in piecemeal fashion toward a bigger
solution.
A.
B.
C.
D.
E.
stepped
incremental
coalitional
garbage can
staged
119 The ___________ model of decision making arises when two or more
.
groups form, each representing a different preference, and each tries
to use power and negotiation to sway the decision.
A.
B.
C.
D.
E.
bounded rationality
incremental
garbage can
coalitional
affective rationality
120 Sasha leads a research team of engineers and found herself in the
.
midst of a battle between coalitions, each with its own solution to a
challenge the team faced. Sasha would be best served by following
which of these courses of action?
A. Sasha should collect information both sides and decide herself which
is the best approach.
B. Sasha should ask parties from both sides to solve the problem in
whatever way they can.
C. Sasha should find a mediator to solve the problem.
D. Sasha should encourage both teams to engage in affective conflict
to solve the problem.
E. Sasha should use a collaborative method in which she establishes a
goal around which the entire group can rally.
121 Which of the following statements about decision making in a crisis is
.
true?
A. In crises, managers should make decisions only after taking all of

the details into account.
B. Crisis management can be best handled as the crisis occurs.
C. Early warning signals of crisis are unavailable, so bounded
rationality must be used.
D. An effective plan for crisis management is essential to include on
the management agenda.
E. Crises can never provide benefits to a company.
122 Which of the following is an element of an effective plan for crisis
.
management?
A. A communication plan that indicates that the company is in

complete control.
B. Competitive actions to bounce back immediately.
C. Psychological and cultural actions for the human and emotional toll.
D. A template for a press statement, to be released before details are
learned.
E. A method to quickly distance the company from the crisis.
Scenario A
The local Ace Hardware Store manager has several decisions she has to
make as the week begins. She always comes in early on Mondays to sift
through the paperwork on her desk and decide what needs to be done
for the week and in which order. The decisions facing her this week are:
1. Determining which sales representatives to see this week to place
orders.
2. Providing a report to the owner detailing her opinion of whether or
not she should purchase several more Ace locations that are for sale in
the area.
3. Interviewing applicants for two open part-time positions and hiring
them.
4. Providing input to the owner on a possible upgrade to the checkout
technology currently in use.
123 The decisions in Scenario A can best be classified as either
.
A.
B.
C.
D.
E.
Risky or nonrisky.
Programmed or nonprogrammed.
Simple or complex.
Necessary or unnecessary.
Certain or uncertain.
124 Decision 4 is an example of which type of decision?

.
A.
B.
C.
D.
E.
Programmed.
Nonprogrammed.
Simple.
Complex.
Necessary.
125 Decisions 1 and 3 are both __________ decisions because

.
______________.
A. necessary; they are novel and complex

B. nonprogrammed; they are novel and complex
C. programmed; they are can be solved using rules, procedures, and
structures
D.
risky; they are novel and complex
E. simple; there is a clear and precise correct answer
126 If, in decision 3, the manager takes the first candidate she sees that
.
meets the minimum requirements, without going through every
candidate's file to see if anyone else is better, she is
A.
B.
C.
D.
E.
Maximizing.
Satisficing.
Optimizing.
Experiencing internal conflict.
Experiencing external conflict.
Scenario B
You work for a new start-up marketing consulting firm. There are five
highly opinionated but very committed employees in your group. The
owner firmly believes that he should make every decision since he is,
as he often says, "the one who signs the checks." While this is true, he
often jumps to conclusions, and doesn't even take time to diagnose the
problem at hand because he does not like to ask you and your
colleagues for your opinions. It has become a very emotional and
personal issue for all of you. At this point, most people in the firm agree
that the decision making of the owner is going to destroy the young
firm before it really gets started.
127 The owner's belief that he should make every decision himself by
.
diagnosing the problem as he sees it and then immediately
implementing a solution is
A.
Correct.
B. A mistake that often leads to suboptimal decisions.
C.
An example of vigilance.
D.
An example of satisficing.
E.
An example of maximizing.
128 Suppose the owner tells you that the reason he makes every decision
.
himself is because he believes that he will be able to influence
everything that happens in the business. This unrealistic view is called
A.
B.
C.
D.
E.
Framing effects.
Time pressures.
Disillusionment.
129 If, in the beginning of your work with the company, your differences
.
with the owner were purely based on differences in judgment, but
have now deteriorated to the point that your differences are more
emotional and directed personally toward one another, it can be said
that you initially experienced ___________ but now are experiencing
___________.
A.
B.
C.
D.
E.
satisficing; maximizing
cognitive conflict; affective conflict
affective conflict; cognitive conflict
maximizing, satisficing
uncertainty; certainty
Scenario C
Jeremy is the lead on a new project at work, and it is essential that he
make a good impression on top management. He recently had his first
staff meeting to solve a fairly large problem with the project, and it
didn't go well. The whole staff of 10 was there, which he thought would
lead to buy-in from the group. Instead the group didn't get much done
in that meeting.
130 Jeremy opened the meeting by suggesting to the group that he had
.
put a lot of thought into the problem and that perhaps they should use
his ideas to solve the problem. He spent the meeting explaining why
this should occur. Jeremy was practicing
A.
B.
C.
D.
E.
Satisficing.
Groupthink.
Goal displacement.
131 Since the first meeting didn't go well, Jeremy read several
.
management books on working with groups and thought perhaps a
longer meeting would allow time to explore several points of view. He
chose a Friday afternoon so everyone could go home afterward and
not have to rush off to other work appointments. To his surprise, the
first idea he suggested was accepted by the group, and the meeting
was over in no time! The group was most likely engaging in __________
so they could end the meeting and go home early.
A.
B.
C.
D.
E.
groupthink
satisficing
goal displacement
domination
intellectual stimulation
132 Jeremy decided to try another meeting because the project deadline
.
was drawing closer and he was beginning to feel pressure to get
something done with his group. He put the agenda out early and felt
he was ready to lead the meeting. Shortly after the meeting began,
one of his colleagues asked a question that didn't seem to relate to the
issue at hand. Nonetheless, trying to be a good leader, Jeremy began
to discuss the issues around this new question. Soon the group was in
a heated discussion with each side seeming to stop at nothing to "win"
the argument. In this meeting the group was engaged in
A.
B.
C.
D.
E.
Groupthink.
Satisficing.
Goal displacement.
Domination.
Scenario D
Effectively Organized Inc. has hired a consultant to help with
organizational decision making. The consultant's first meeting is set up
to describe to the managers of Effectively Organized Inc. the models of
organizational decision processes. Each of the managers seems to
prefer one of the models over the others.
133 The president of Effectively Organized Inc. responds most positively to
.
the model that is the most cautious. She explains that the budget
process is the easiest decision for her because she breaks it into
smaller pieces and builds the decisions as she goes. The president
seems to prefer which model?
A.
B.
C.
D.
E.
Bounded rationality.
The incremental model.
The garbage can model.
The coalitional model.
The crisis model.
134 The vice president of human resources believes decision makers

.
cannot be truly rational in their decisions. He tells the group that he
sees many situations with managers who don't have enough time to
process all the relevant information and who regularly face very
complex problems. He seems to expect which decision process?
A.
B.
C.
D.
E.
The crisis model.
135 The vice president of production tells the group that in his area of the
.
company, many managers don't even agree about what their goals are
and certainly cannot agree on what action to take. His managers are
using which model of decision making?
A.
B.
C.
D.
E.
The crisis model.
136 The vice president of marketing declares that her people disagree on
.
goals and have now formed groups to advocate for their own interests.
Her managers are using
A.
B.
C.
D.
E.
The crisis model.
Essay Questions
137 Differentiate between programmed and nonprogrammed decisions.

.
Give an example of each.
138 List and explain the six steps of the decision making process.
.
139 Define psychological biases and explain how they relates to

.
managerial decision making.
140 Explain the four disadvantages of using a group to make decisions.

.
141 Explain the three requirements of effectively managing group decision

.
making.
142 Briefly describe the brainstorming process using an example.

.
143 Compare and contrast three models of organizational decision

.
processes thought to occur when bounded rationality conditions hold.
144 Describe the elements of an effective crisis management plan.

.
Chapter 03 Managerial Decision Making Answer Key
True / False Questions

1.
Managers often avoid taking action when faced with challenges.

TRUE
Managers often avoid taking action when faced with challenges for a
number of reasons. They may not be sure how much time, energy, or
trouble lies ahead, getting involved is risky, and problems can be
perplexing.
AACSB: Analytic
Blooms: Understand
Learning Objective: 03-01 Describe the kinds of decisions you will face as a manager.
Level of Difficulty: 2 Medium
Topic: Characteristics of Managerial Decisions
2.
Managers typically face structured problems they have seen before,

which makes the decision process easier because there is a
procedure to follow already.
FALSE
Lack of structure is the usual state of affairs in managerial decision
making. Although some decisions are routine and clear-cut, for most
there is no automatic procedure to follow. Problems are novel and
unstructured, leaving the decision maker uncertain about how to
proceed.
AACSB: Analytic
Blooms: Understand
3.
Reggie is the owner of a new bike shop and must decide how much to
withhold from employee paychecks as income tax. This is an example
of a nonprogrammed decision.
FALSE
A nonprogrammed decision is a new, novel, complex decision having
no proven answers. How much money Reggie must withhold from
employee paychecks has an objectively correct answer and is thus a
programmed decision.
AACSB: Analytic
Blooms: Understand
4.
Programmed decisions are useful when there is no predetermined

structure on which to rely.
FALSE
If you face a programmed decision, a clear procedure or structure
exists for arriving at the right decision.
AACSB: Analytic
Blooms: Understand
5.
Important, difficult decisions tend to be nonprogrammed, and they

demand creative approaches.
TRUE
Important, difficult decisions tend to be nonprogrammed, and they
demand creative approaches. There are a variety of possible
solutions, all of which have merits and drawbacks. The decision
maker must create or impose a method for making the decision;
there is no predetermined structure on which to rely.
AACSB: Analytic
Blooms: Understand
6.
During and after the BP oil spill, which devastated large areas in the
Gulf of Mexico, the decisions made by government officials and BP
were mostly programmed.
FALSE
Programmed decisions are those that have been made before, having
objectively correct answers and solvable by using simple rules,
policies, or numerical computations. The decisions made during and
after the oil spill were nonprogrammed decisions in that they were
complex decisions having no proven answers.
AACSB: Analytic
Blooms: Understand
7.
Managers prefer uncertainty to certainty because it makes the job

more challenging and interesting.
FALSE
Managers are expressing their preference for certainty when they are
not satisfied hearing about what might have happened or may
happen, and insist on hearing what did or will happen.
AACSB: Analytic
Blooms: Understand
8.
Risk is a fact of life in nonprogrammed management decisions.

TRUE
For important, nonprogrammed managerial decisions, uncertainty is
the rule. When you can estimate the likelihood of various
consequences but still do not know with certainty what will happen,
you are facing risk.
AACSB: Analytic
Blooms: Understand
9.
Another way of referring to "risk" is "taking a risk."

FALSE
Risk, like uncertainty, is a fact of life in managerial decision making.
But this is not the same as taking a risk. Good decision makers prefer
to manage risk rather than thrive on taking risks.
AACSB: Analytic
Blooms: Understand
10.
Conflict exists when the manager must consider opposing pressures

from different sources.
TRUE
Conflict results from opposing pressures from different sources,
occurring on the level of psychological conflict or of conflict between
individuals or groups.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
11.
A school principal faces conflict when she must decide whether to

give all staff an 8 percent pay cut or lay off four full-time employees.
TRUE
Individual decision makers experience psychological conflict when
several options are attractive, or when none of the options is
attractive. For instance, a manager may have to decide whom to lay
off when she doesn't want to lay off anyone.
AACSB: Analytic
Blooms: Apply
Level of Difficulty: 3 Hard
12.
The first stage of decision making requires the decision maker to

generate alternatives.
FALSE
The ideal decision making process includes six stages, as Figure 3.2
illustrates: (1) identify and diagnose the problem, (2) generate
alternative solutions, (3) evaluate alternatives, (4) make the choice,
(5) implement the decision, and (6) evaluate the decision.
Refer To: Figure 3.2
AACSB: Analytic
Blooms: Remember
Learning Objective: 03-02 Summarize the steps in making "rational" decisions.
Topic: The Stages of Decision Making
13.
The "problem" in decision making may actually be an opportunity

that needs to be exploited.
TRUE
The "problem" may actually be an opportunity that needs to be
exploited: a gap between what the organization is doing now and
what it can do to create a more positive future. In that case,
decisions involve choosing how to seize the opportunity.
AACSB: Analytic
Blooms: Understand
14.
Sara, a warehouse manager, needed a fast solution when an

employee asked for a day off for the following week when the whole
crew was supposed to be doing inventory. For her, a ready-made
alternative will be quicker than designing a custom-made solution.
TRUE
Because a ready-made solution is an idea that has been seen or tried
before, it is likely to be implemented more quickly than a custommade solution that is designed specifically for the problem at hand.
AACSB: Analytic
Blooms: Apply
15.
Ideas that have been seen or tried before are known as ready-made
solutions.
TRUE
Decision makers who search for ready-made solutions use ideas they
have tried before or follow the advice of others who have faced
similar problems.
AACSB: Analytic
Blooms: Remember
16.
Fundamental to choosing an alternative is predicting the

consequences that will occur if the various options are put into
effect.
TRUE
Fundamental to the alternative evaluation process is predicting the
consequences that will occur if the various options are put into effect.
Managers should consider several types of consequences, including
quantifiable measures of success, such as lower costs, higher sales,
lower employee turnover, and higher profits.
AACSB: Analytic
Blooms: Understand
17.
After a decision is made and implemented, only then should

contingency plans be developed.
FALSE
While a manager is evaluating alternatives, he or she should predict
the consequences that will occur if the various options are put into
effect; that is, the best time to imagine scenarios and develop
contingency plans is during the alternative evaluation process.
AACSB: Analytic
Blooms: Understand
18.
Managers use satisficing to achieve the best possible outcome.

FALSE
Satisficing is choosing the first option that is minimally acceptable or
adequate.
AACSB: Analytic
Blooms: Remember

19.
When you satisfice, you compare your choice against your goal, not
against other options.
TRUE
adequate. When you satisfice, you compare your choice against your
goal, not against other options. The search for alternatives stops at
the first one that is okay.
AACSB: Analytic
Blooms: Understand
20.
Maximizing means that you achieve the best possible balance among
several goals.
FALSE
Maximizing is achieving the best possible outcome. Optimizing
means that you achieve the best possible balance among several
goals, like good quality at a reasonable price.
AACSB: Analytic
Blooms: Remember
21.
Decision makers should presume that with a carefully made decision,

things will go smoothly during implementation.
FALSE
Decision makers should presume that things will NOT go smoothly
during implementation. It is useful to take a little extra time to
identify potential problems and opportunities associated with
implementation.
AACSB: Analytic
Blooms: Understand
22.
Evaluating the decision is always useful, whether the outcome has

been positive or negative.
TRUE
Decision evaluation is useful whether the conclusion is positive or
negative. Feedback that suggests the decision is working implies that
the decision should be continued and perhaps applied elsewhere in
the organization. Negative feedback means that either (1)
implementation will require more time, resources, effort, or thought
or (2) the decision was a bad one.
AACSB: Analytic
Blooms: Understand
23.
To exhibit vigilance, a decision maker must evaluate every decision

he or she makes.
TRUE
Vigilance occurs when decision makers carefully and conscientiously
execute all six stages of decision making, including making provisions
for implementation and evaluation.
AACSB: Analytic
Blooms: Remember
Learning Objective: 03-03 Recognize the pitfalls you should avoid when making decisions.
Topic: The Best Decision
24.
Following all six stages of the decision making process guarantees

successful decisions.
FALSE
Even if managers reflect on their decision-making activities and
conclude that they executed each step conscientiously, they still will
not know whether the decision will work; after all, nothing guarantees
a good outcome.
AACSB: Analytic
Blooms: Understand
25.
Barriers to effective decision making include psychological biases,

time pressures, and social realities.
TRUE
There are many reasons why people do not use rational decisionmaking processes. Decisions are influenced by subjective
psychological biases, time pressures, and social realities, for
example.
AACSB: Analytic
Blooms: Understand
Topic: Barriers to Effective Decision Making
26.
Patrick was disappointed when the marketing research team reported

that a new product was not received well by customers in a focus
group. He felt the company should go ahead with its release,
convinced it was a revolutionary idea that he could make successful.
Patrick could be suffering from the illusion of control.
TRUE
The illusion of control is a belief that one can influence events even
when one has no control over what will happen. In business, such
overconfidence can lead to failure because decision makers ignore
risks and fail to objectively evaluate the odds of success.
AACSB: Analytic
Blooms: Apply
27.
Framing effects refer to a decision bias influenced by the way in

which a problem or decision alternative is phrased or presented.
TRUE
Framing effects refer to how problems or decision alternatives are
phrased or presented and how these subjective influences can
override objective facts.
AACSB: Analytic
Blooms: Remember
28.
Governmental budget deficits, environmental destruction, and

decaying urban infrastructure can be partially explained by the bias
known as discounting the future.
TRUE
Discounting the future is a bias weighting short-term costs and
benefits more heavily than longer-term costs and benefits.
Discounting the future is said to partly explain governmental budget
deficits, environmental destruction, and decaying urban
infrastructure.
AACSB: Analytic
Blooms: Understand
29.
In almost every business situation, the quality of the decision is far

more important than the speed at which the decision is made.
FALSE
In today's rapidly changing business environment, the premium is on
acting quickly and keeping pace. The most conscientiously made
business decisions can become irrelevant and even disastrous if
managers take too long to make them.
AACSB: Analytic
Blooms: Understand
30.
Many organizational decisions are the result of intensive social

interactions, bargaining, and politicking.
TRUE
Important managerial decisions are marked by conflict among
interested parties. Therefore, many decisions are the result of
intensive social interactions, bargaining, and politicking.
AACSB: Analytic
Blooms: Understand
31.
If enough time is available, groups typically make better decisions

than most individuals acting alone.
TRUE
If enough time is available, groups usually make higher-quality
decisions than most individuals acting alone. However, groups are
often inferior to the best individual in decision making.
AACSB: Analytic
Blooms: Understand
Learning Objective: 03-04 Evaluate the pros and cons of using a group to make decisions.
Topic: Decision Making in Groups
32.
One advantage of using a group for decision making is groupthink.

FALSE
According to Table 3.2, one potential disadvantage of using a group
to make decisions is groupthink.
Refer To: Table 3.2
AACSB: Analytic
Blooms: Understand
33.
One potential advantage of a group for decision making is that

people are likely to be more committed to the decision.
TRUE
Group discussion typically leads to a higher level of commitment to
the decision. Buying into the proposed solution translates into high
motivation to ensure that it is executed well.
Refer To: Table 3.2
AACSB: Analytic
Blooms: Understand
34.
A condition that occurs when a decision-making group loses sight of

its original goal and a new, less important goal emerges is called goal
displacement.
TRUE
The goal of group members should be to come up with the best
possible solution to the problem. But when goal displacement occurs,
new goals emerge to replace the original ones. Sometimes saving
face and defeating the other person's idea become more important
than solving the problem.
AACSB: Analytic
Blooms: Remember
35.
The three requirements for effective group decision making are an

appropriate leadership style, the constructive use of disagreement
and conflict, and the enhancement of creativity.
TRUE
The leader of a decision-making body must attempt to minimize
process-related problems. Furthermore, total and consistent
agreement among group members can be destructive and lead to
groupthink. Finally, the group may need to be creative in generating
ideas, especially if custom-made solutions to problems are needed.
AACSB: Analytic
Blooms: Understand
Learning Objective: 03-05 Identify procedures to use in leading a decision-making group.
Topic: Managing Group Decision Making
36.
The most constructive type of conflict is affective conflict.

FALSE
The most constructive type of conflict is cognitive conflict, or
differences in perspectives or judgments about issues. In contrast,
affective conflict is emotional and directed at other people. Affective
conflict is likely to be destructive to the group because it can lead to
anger, bitterness, goal displacement, and lower-quality decisions.
AACSB: Analytic
Blooms: Understand
37.
Cognitive conflict is differences in perspectives or judgments about

issues, whereas abject conflict is emotional and directed at other
people.
FALSE
differences in perspectives or judgments about issues. In contrast,
affective conflict is emotional and directed at other people. Affective
AACSB: Analytic
Blooms: Remember
38.
The job of a "devil's advocate" is to add a personal or emotional

element to the conflict.
FALSE
A devil's advocate has the job of criticizing ideas. The group leader
can formally assign people to play this role. Requiring people to point
out problems can lessen inhibitions about disagreeing and make the
conflict less personal and emotional.
AACSB: Analytic
Blooms: Remember
39.
The most fundamental unit of value in the creativity revolution is

ideas.
TRUE
Some have said we are in the midst of the next great business
revolution: the "creative revolution." Said to transcend the
agricultural, industrial, and information revolutions, the most
fundamental unit of value in the creativity revolution is ideas.
AACSB: Analytic
Blooms: Understand
Learning Objective: 03-06 Explain how to encourage creative decisions.
40.
In brainstorming, group members generate as many ideas about a

problem as they can while simultaneously critiquing them.
FALSE
Brainstorming is a process in which group members generate as
many ideas about a problem as they can but criticism is withheld
until all ideas have been proposed.
AACSB: Analytic
Blooms: Understand
41.
Complimenting one another and telling stories are examples of

behaviors that can make brainstorming less effective.
TRUE
Brainstorming isn't necessarily as effective as some people think.
Sometimes in a brainstorming session people engage in noncreative
behaviors, including cocktail party-type conversations
(complimenting one another, repeating ideas, telling stories) that are
nice but don't promote creativity.
AACSB: Analytic
Blooms: Understand
42.
Bounded rationality is a less-than-perfect form of rationality in which

decision makers cannot be perfectly rational because decisions are
processed.
TRUE
According to Simon's bounded rationality, decision makers cannot be
truly rational because (1) they have imperfect, incomplete
information about alternatives and consequences; (2) the problems
they face are so complex; (3) human beings simply cannot process all
the information to which they are exposed; (4) there is not enough
time to process all relevant information fully; and (5) people,
including managers within the same firm, have conflicting goals.
AACSB: Analytic
Blooms: Remember
Learning Objective: 03-07 Discuss the processes by which decisions are made in organizations.
Topic: Organizational Decision Making
43.
The incremental model of decision making occurs when managers

make small decisions and move cautiously toward a bigger solution.
TRUE
The incremental model of decision making occurs when decision
makers make small decisions, take little steps, and move cautiously
in piecemeal fashion toward a bigger solution.
AACSB: Analytic
Blooms: Remember
44.
The confrontational model of decision making arises when people

disagree on goals or compete with one another for resources.
FALSE
The coalitional model of decision making arises when people disagree
on goals or compete with one another for resources. The decision
process becomes political as groups of individuals band together and
try collectively to influence the decision.
AACSB: Analytic
Blooms: Remember
45.
The kitchen sink model of decision making occurs when people aren't
sure of their goals, or disagree about the goals, and likewise are
unsure of or in disagreement about what to do.
FALSE
The garbage can model of decision making occurs when people
aren't sure of their goals, or disagree about the goals, and likewise
are unsure of or in disagreement about what to do. This model
implies that some decisions are chaotic and almost random.
AACSB: Analytic
Blooms: Remember
46.
Decision making under crisis conditions will inevitably result in poor

decisions and negative publicity.
FALSE
A crisis, managed effectively, can have benefits, such as
strengthened bonds with those that are assisted during the crisis.
AACSB: Analytic
Blooms: Understand
Learning Objective: 03-08 Describe how to make decisions in a crisis.
Multiple Choice Questions
47.
Managers often ignore challenges for which of the following reasons?
A.
They don't agree with the outcome.
B. It's not the managers' job to solve problems, so they typically refer
issues to HR.
C. Getting involved won't impress their bosses.
D. Employees actually prefer a hands-off boss who lets them handle
conflict on their own.
E. Managers cannot be sure how much time, energy, or trouble lie
ahead once they start working on a problem.
Managers often ignore problems for several reasons: they can't be
sure how much time, energy, or trouble lie ahead once they start
working on a problem; getting involved is risky; and it is easier to
procrastinate or to get busy with less demanding activities.
AACSB: Analytic
Blooms: Understand
48.
Characteristics of managerial decisions include which of the

following?
A.
B.
C.
D.
E.
Guaranteed success.
Certainty.
Conflict.
Structure.
Speed.
Figure 3.1 illustrates the four characteristics of managerial decisions:

risk, uncertainty, conflict, and lack of structure.
AACSB: Analytic
Blooms: Understand
49.
__________ are those decisions encountered and made before, having

objectively correct answers, and solvable by using simple rules,
policies, or numerical computations.
A.
B.
C.
D.
E.
Structured decisions
Unstructured decisions
Restructured decisions
Nonprogrammed decisions
Programmed decisions
Programmed decisions have been encountered and made before.

They have objectively correct answers and can be solved by using
simple rules, policies, or numerical computations. If you face a
programmed decision, a clear procedure or structure exists for
arriving at the right decision.
AACSB: Analytic
Blooms: Remember
50.
Important, difficult decisions that require creative approaches tend to

be
A.
B.
C.
D.
E.
Qualitative decisions.
Noneconomic decisions.
Policy decisions.
Nonprogrammed decisions are new, novel, complex decisions having

no certain outcomes. Important, difficult decisions tend to be
nonprogrammed, and they demand creative approaches.
AACSB: Analytic
Blooms: Understand
51.
New, novel, complex decisions having no proven answers are
A.
B.
C.
D.
E.
Standing decisions.
Single-use decisions.

no certain outcomes. Important, difficult decisions tend to be
nonprogrammed, and they demand creative approaches.
AACSB: Analytic
Blooms: Remember
52.
Gemma, who owns the tutorial service Math Machine, is

contemplating whether to let one of her experienced tutors open a
second location in an adjacent town. She is facing a _______ decision.
A.
B.
C.
D.
E.
routine
programmed
nonroutine
nonprogrammed
satisficing
Gemma is facing a nonprogrammed decision; that is, it is a new,

novel, complex decision having no certain outcomes.
AACSB: Analytic
Blooms: Apply
53.
Ari works for the federal government in acquisitions. Policy requires

that in contracting with suppliers, at least three bids must be
received and the lowest bid that meets specifications will be
accepted. Ari's decisions regarding the contracts with suppliers would
be classified as
A.
B.
C.
D.
E.
Minimized.
Programmed.
Structured.
Logical.
Maximized.
Programmed decisions have been encountered and made before. Ari

faces a programmed decision because a clear procedure or structure
exists for arriving at the right decision.
AACSB: Analytic
Blooms: Apply
54.
The state that exists when decision makers have incomplete

information is known as
A.
B.
C.
D.
E.
Uncertainty.
Ambiguity.
Policy formulation.
Risk.
Uncertainty means the manager has insufficient information to know

the consequences of different actions.
AACSB: Analytic
Blooms: Remember
55.
________ regarding the strength and timing of the economic recovery

in 2010 and 2011 made businesses slow to start hiring.
A.
B.
C.
D.
E.
Uncertainty
Improbability
Conflict
Policy formulation
Risk

the consequences of different actions. Businesspeople do not like
uncertainty; it can hold them back from taking action. For example,
uncertainty about the strength and timing of the economic recovery
in 2010 and 2011 made businesses slow to start hiring.
AACSB: Analytic
Blooms: Understand
56.
Uncertainty exists when the manager
A.
Faces two conflicting issues.
B. Knows the risk involved in making the decision.
C. Has accurate and comprehensive information to make the
decision.
D. Has insufficient information to make the decision.
E. Knows that the probability of success is less than 100 percent.
the consequences of different actions.
AACSB: Analytic
Blooms: Understand
57.
The state that exists when the probability of success is less than 100
percent and losses may occur is
A.
B.
C.
D.
E.
Uncertainty.
Risk.
Certainty.
Policy formulation.
Risk exists when the probability of an action being successful is less

than 100 percent and losses may occur. If the decision is the wrong
one, you may lose money, time, reputation, or other important
assets.
AACSB: Analytic
Blooms: Remember
58.
A manager is dealing with ________ if she is considering opposing

pressures from different sources.
A.
B.
C.
D.
E.
conflict
cooptation
collusion
cohesiveness
groupthink
Conflict occurs when there are opposing pressures from different

sources, occurring on the level of psychological conflict or of conflict
between individuals or groups.
AACSB: Analytic
Blooms: Remember
59.
Marisol has received two job offers. One is from a firm in Seattle,
where she would like to live, but the other offer in Kansas City is near
her family and friends. Marisol is having a difficult time making a
decision due to experiencing
A.
B.
C.
D.
E.
Internal conflict.
Organizational conflict.
Physiological conflict.
Individual conflict.

between individuals or groups. Marisol's conflict is psychological
since both opportunities are attractive to her in some way.
AACSB: Analytic
Blooms: Apply
60.
Casey, a middle manager at a cosmetics company, is encountering

an issue between two of her departments because both want a new
copier to be located in their areas. This would best be described as
A.
B.
C.
D.
E.
Emotional conflict.
Conflict between groups.
Identificational conflict.
External conflict.

between individuals or groups. This conflict is between groups, the
two departments.
AACSB: Analytic
Blooms: Apply
61.
The initial step in the decision making process is to
A.
B.
C.
D.
E.
Select an alternative.
Evaluate the decision.
Generate alternatives.
Identify the problem.
As Figure 3.2 illustrates, decision makers should (1) identify and

diagnose the problem, (2) generate alternative solutions, (3) evaluate
alternatives, (4) make the choice, (5) implement the decision, and (6)
evaluate the decision.
AACSB: Analytic
Blooms: Remember
62.
A manager may discover that a problem exists with current company

performance by comparing it with
A.
Past performance.
B. The performance of other organizations.
C.
Future performance forecasts.
D. Desired performance based on the business plan for the year.
E.
All of these.
The first stage in the decision-making process is to recognize that a
problem exists and must be solved. Typically a manager realizes
some discrepancy between the current state (the way things are) and
a desired state (the way things ought to be). Here all are
comparisons a manager might make.
AACSB: Analytic
Blooms: Understand

63.
The manager of the Capitol Restaurant noted that the restaurant had
experienced a decreased number of evening customers. The
manager promptly ordered the chef to rewrite the evening menu.
Customer feedback later indicated that the problem had not been the
menu but poor service from the wait staff. The manager's decision to
have the menu revised suggests that he failed to
A.
B.
C.
D.
E.

Evaluate the alternatives and consequences.
Properly diagnose the cause of the problem.
Evaluate the decision and its consequences.
Identify a solution.
The manager must dig in deeper and attempt to diagnose the

situation of decreased customers rather than promptly changing the
menu without considering the true cause of the drop in customers; he
must identify the real problem.
AACSB: Analytic
Blooms: Apply
64.
Once a problem is identified and properly diagnosed, the next stage

in the decision making process involves
A.
B.
C.
D.
E.
Evaluating alternatives.
Evaluating consequences.
Evaluating information.
Generating alternative solutions.
The second stage of decision making links problem diagnosis to the

development of alternative courses of action aimed at solving the
problem.
AACSB: Analytic
Blooms: Remember
65.
When a solution is specifically designed for a particular problem or

set of problems, it is called a
A.
B.
C.
D.
E.
Designer-enhanced solution.
Dynamic solution.
Ready-made solution.
User-generated solution.
Custom-made solution.
Custom-made solutions must be designed for specific problems. This

technique often combines ideas into new, creative solutions.
AACSB: Analytic
Blooms: Remember
66.
Custom-made decisions most often require
A.
B.
C.
D.
E.
A consultant.
In-depth computations.
Top management approval.
Creativity.
Brainstorming.
Custom-made solutions must be designed for specific problems. This

technique often combines ideas into new, creative solutions.
AACSB: Analytic
Blooms: Understand
67.
Alternative courses of action that can be implemented based on how

the future unfolds are called
A.
B.
C.
D.
E.
Single-use plans.
Contingency plans.
Standing plans.
Shadow plans.
Sometimes decision makers can build in safeguards against an

uncertain future by considering the potential consequences of
several different scenarios. Then they generate contingency plans,
alternative courses of action that can be implemented depending on
how the future unfolds.
AACSB: Analytic
Blooms: Remember
68.
Irena, the manager of Kiddy Couture, knows that the economy

greatly affects her business. She has developed a plan of action for
each of four possible economic outcomes may occur in her
geographic area over the next four to six years. Here Irena is
A.
B.
C.
D.
E.
Facing a stable environment.

Utilizing contingency planning.
Focusing on efficient decisions.
Engaging in satisficing.
An irrational decision maker.
Sometimes decision makers can build in safeguards against an

uncertain future by considering the potential consequences of
several different scenarios. Then they generate contingency plans,
alternative courses of action that can be implemented depending on
how the future unfolds.
AACSB: Analytic
Blooms: Remember

69.
__________ requires searching thoroughly for a complete range of

alternatives, carefully assessing each alternative, comparing one to
another, and then choosing or creating the very best.
A.
B.
C.
D.
E.
Benchmarking
Maximizing
Minimizing
Satisficing
Optimizing
The maximizing decision realizes the greatest positive consequences

and the fewest negative consequences. Maximizing requires
searching thoroughly for a complete range of alternatives, carefully
assessing each alternative, comparing one to another, and then
choosing or creating the very best.
AACSB: Analytic
Blooms: Understand
70.
Making a decision by accepting the first option that meets your goal
is referred to as
A.
B.
C.
D.
E.
Optimizing.
Satisficing.
Maximizing.
Minimizing.
Accepting.
against other options. Satisficing is choosing the first option that is
minimally acceptable or adequate.
AACSB: Analytic
Blooms: Understand

71.
Victor, an administrative assistant in accounting, orders office

supplies biweekly; today he needs pens, sticky notes, and staples. He
looks at the office supply catalog and quickly picks a selection for
each that is priced acceptably. Here Victor is using
A.
B.
C.
D.
E.
Minimizing.
Optimizing.
Satisficing.
Management by exception.
Maximizing.
against other options. Satisficing is choosing an option that is
acceptable (the first items Victor saw that were priced acceptably),
although not necessarily the best or perfect.
AACSB: Analytic
Blooms: Understand
72.
To maximize a decision is to
A. Realize the largest possible production benefit.

B. Involve as many people affected by the decision as possible in its
design.
C.
Achieve the best possible outcome.
D. Utilize groupthink for individual decisions.
E. Generate many alternatives for evaluation.
Maximizing is achieving the best possible outcome. The maximizing
decision realizes the greatest positive consequences and the fewest
negative consequences.
AACSB: Analytic
Blooms: Remember
73.
Managers who optimize their decisions will attempt to choose
A. The first minimally acceptable alternative.

B. Among those alternatives with most predictable results.
C.
The least expensive alternative.
D. That alternative that produces the least conflict.
E. An alternative that achieves the best possible balance among
several goals.
Optimizing means that you achieve the best possible balance among
several goals.
AACSB: Analytic
Blooms: Remember
74.
Nigel, a manager at Montlucon Eyewear, needed to purchase a new

secure display case for his most expensive sunglasses. He wanted
one that was high in quality and security, yet low in price. The case
he chose was neither the highest quality available, nor the lowest in
price available, yet it had a good combination of attributes. Nigel's
choice illustrates
A.
B.
C.
D.
E.
Maximizing.
Satisficing.
Optimizing.
Minimizing.
Programming.
Optimizing is achieving the best possible balance among several

goals. Nigel balanced goals of high quality, security, and low price.
AACSB: Analytic
Blooms: Apply
75.
Implementing a decision must be planned carefully. Adequate

planning most often requires which of the following steps?
A. Determine how things will turn out before the decision is made.
B. List the resources and activities required.
C. Be sure the CEO agrees with the implementation decision.
D. Allow employees to take on responsibility once the implementation
has begun.
E.
Encourage vigilance.
Adequate planning for implementing a decision requires several
steps, including listing the resources and activities required.
AACSB: Analytic
Blooms: Understand
76.
The final stage in the decision-making process is
A.
B.
C.
D.
E.
Anticipating the results.

Implementing the solution.
Diagnosing remaining issues.
Criteria analysis.
The final stage in the decision-making process is evaluating the

decision. It involves collecting information on how well the decision is
working.
AACSB: Analytic
Blooms: Remember
77.
Negative feedback received during the final evaluation of the

decision indicates that either the implementation will require more
time or that
A.
The problem cannot be solved.
B. The implementation has used too many resources.
C. The manager is not capable of rational decisions.
D.
The decision was a bad one.
E. The scenarios were labeled incorrectly.
Negative feedback means that either (1) implementation will require
more time, resources, effort, or thought or (2) the decision was a bad
one.
AACSB: Analytic
Blooms: Understand
78.
Vigilance in decision making means
A. The customer realizes increased value as a result of the decision.

B. The manager has carefully and conscientiously completed all
stages in the decision-making process.
C. The manager has been monitored during the decision making
process.
D. The employees monitor the implementation of the decision
carefully.
E. The employees have been monitored to see their reactions to the
decision.
Vigilance occurs when the decision makers carefully and
conscientiously execute all six stages of decision making, including
making provisions for implementation and evaluation.
AACSB: Analytic
Blooms: Remember
79.
Psychological bias in decision making is best described as
A. The effect that people's psychological capabilities have upon the

decisions they must make under pressure.
B. What happens when a decision maker must balance the
preferences of many interested parties, diluting effectiveness.
C. The conflict that results from too many people involved with
making a decision.
D. The inability to be objective when gathering, evaluating, and
applying information for decision making.
E. The fact that people are motivated by a need for power that clouds
their decision making capabilities.
Decision makers are far from objective in the way they gather,
evaluate, and apply information in making their choices. People have
biases that interfere with objective rationality.
AACSB: Analytic
Blooms: Remember
80.
Illusion of control, discounting the future, and framing effects are all
examples of
A.
B.
C.
D.
E.
Social realities.
Psychological biases.
Rationality.
Vigilance.
Time pressures.
Illusion of control, discounting the future, and framing effects

represent only a few of the many documented subjective
psychological biases in decision making.
AACSB: Analytic
Blooms: Understand
81.
The psychological bias known as "illusion of control" refers to a
A. Belief that you have ultimate control and no one can take it from
you.
B. Belief that you can influence events even when you have no
control over what will happen.
C. Lack of confidence in your ability to control your employees.
D. Belief that you have no control and so you don't put any effort into
the decision.
E. Belief that some unknown person actually has the control and is
waiting for you to make a poor decision.
when one has no control over what will happen.
AACSB: Analytic
Blooms: Remember
82.
When business managers ignore risks and fail to objectively evaluate

the odds of success for their decisions, it is an example of which of
the following psychological biases?
A.
B.
C.
D.
E.
Framing effects.
Time pressure.
Social realities.
when one has no control over what will happen. In business, such
overconfidence can lead to failure because decision makers ignore
risks and fail to objectively evaluate the odds of success.
AACSB: Analytic
Blooms: Remember

83.
Which of the following is an example of subjective bias that many

corporate executives exhibit?
A.
B.
C.
D.
E.
Groupthink.
Satisficing.
Goal displacement.
Framing effects.
Minimizing.
Subjective biases that managers hold often interfere with objective

rationality. One type of subjective bias is framing effects; that is, a
decision bias influenced by the way in which a problem or decision
alternative is phrased or presented.
AACSB: Analytic
Blooms: Understand
84.
The way in which the alternatives to a decision are stated or phrased

may have an impact on which alternative is chosen. Varying
alternatives can be presented in a more favorable or less favorable
way, affecting the decision. This is referred to as
A.
B.
C.
D.
E.
Framing effects.
Phrasing effects.
Biasing effects.
Illusional effects.
Discounting effects.
Framing effects refer to how problems or decision alternatives are

phrased or presented and how these subjective influences can
override objective facts.
AACSB: Analytic
Blooms: Remember
85.
Discounting the future refers to
A. Valuing longer-term benefits and costs more heavily than shorterterm benefits and costs.
B. Overestimating the long-term effects of the decision.
C. Underestimating the short-term effects of the decision.
D. Valuing short-term benefits and costs more heavily than longerterm benefits and costs.
E. Making quick decisions with whatever information is at hand.
Often decision makers discount the future. That is, in their evaluation
of alternatives, they weigh short-term costs and benefits more
heavily than longer-term costs and benefits.
AACSB: Analytic
Blooms: Remember
86.
Which of the following is the best example of a manager discounting

the future?
A. "I must consult others in order to make good decisions."

B. "It is important to plan for the long-term health of the company."
C. "Even if it is becoming popular, e-commerce is expensive and
difficult."
D. "We must make a profit in order to survive."
E. "I must focus more on quarterly profits now than long-term
profitability."
Often decision makers discount the future. That is, in their evaluation
of alternatives, they weigh short-term costs and benefits more
heavily than longer-term costs and benefits.
AACSB: Analytic
Blooms: Understand
87.
The band Pearl Jam decided not to book any concerts through
Ticketmaster as an objection to the virtual monopoly Ticketmaster
had on the industry. Initial strong public support was followed by
fewer concerts, lower revenues, reduced exposure, and more hassles
for the band. In retrospect, the band's decision seems to have
A.
B.
C.
D.
E.
Been improperly framed.

Been socially irresponsible.
Discounted the future.
Used psychological conflict.
Involved too many conflicting groups.

benefits more heavily than longer-term costs and benefits. Here the
band made short-term headlines and had strong public support, but
this was followed by long-term difficulties because of realities in the
market.
AACSB: Analytic
Blooms: Apply
88.
People who avoid regular dental checkups, students who don't study,
and dieters who sneak dessert are all examples of which
psychological bias?
A.
B.
C.
D.
E.
Framing effects.
Time pressures.
Social realities.

benefits more heavily than longer-term costs and benefits. Many
people decide to avoid the short-term costs of studying, eating
healthfully, or dental care, and they pay for their actions in the longer
term.
AACSB: Analytic
Blooms: Understand
89.
Tactics that are used to make decisions quickly while maintaining the
high quality of such decisions include
A.
Taking a realistic view of the conflict.
B. Involving people in the decision who are experts and can be
trusted.
C.
Focusing on real-time information.
D. Involving people more effectively and efficiently.
E.
Doing all of these.
Managers under time pressure can make decisions that are timely
and of high quality by using real-time information, involving people
more effectively and efficiently in the decision-making process,
relying heavily on trusted experts, and taking a realistic view of
conflict.
AACSB: Analytic
Blooms: Understand
90.
Real-time information is information that
A.
B.
C.
D.
E.
Is obtained with little or no delay.

Is based on past performance.
Represents a realistic forecast.
Is based on adjusted predictions.
Is discounted for the future.
Instead of relying on old data, long-range planning, and futuristic

forecasts, managers should focus on real-time information: current
information obtained with little or no time delay.
AACSB: Analytic
Blooms: Remember
91.
Each morning OfficeMax's CEO has a computer-based conference

with all store managers. The previous day's challenges are discussed
so that problems can be quickly and effectively resolved or even
avoided. OfficeMax is utilizing __________ to retain a competitive
edge.
A.
B.
C.
D.
E.
social realities
real-time information
psychological biases
framing effects
quality initiatives
Managers under time pressure can make decisions that are timely
and of high quality in part by using real-time information. The CEO of
Office Max is relying on frontline managers for real-time information
to stay competitive.
AACSB: Analytic
Blooms: Apply

92.
Omar dreaded annual performance reviews. His company had few

performance standards, and worse still, if his employees did not like
their reviews, they went over his head, and Omar's boss often
overturned decisions! These interpersonal factors that decrease the
effectiveness of the organization's decisions are best described as
A.
B.
C.
D.
E.
Time pressures.
Gut feelings.
A lack of control.
Social realities.
Social realities of a firm dictate that even the manager acting alone is
accountable to the boss and to others and must consider the
preferences and reactions of many people. Important managerial
decisions are marked by conflict among interested parties. Therefore,
many decisions are the result of intensive social interactions,
bargaining, and politicking.
AACSB: Analytic
Blooms: Apply
93.
The basic philosophy behind group decision making is that "two

heads are better than one." But does this statement hold true in an
organizational setting?
A.
B.
C.
D.
E.
Yes, always.
Yes, potentially.
No, two does not constitute a group.
No, never.
No evidence exists to determine this.
If enough time is available, groups usually make higher-quality

decisions than most individuals acting alone. However, groups often
are inferior to the best individual in decision making.
AACSB: Analytic
Blooms: Understand
94.
Advantages in using a group for decision making include
A.
B. Domination of the discussion by one member.
C.
Groupthink.
D.
Satisficing.
E.
Goal displacement.
All are disadvantages to group decision making except intellectual
stimulation. Group discussion provides an opportunity for this, and it
can get people thinking and unleash their creativity to a far greater
extent than would be possible with individual decision making.
AACSB: Analytic
Blooms: Understand
95.
Andersen Tree Farm in Kansas is looking for ways to be more

environmentally friendly. Managers interviewed frontline staff to get
their opinions and ideas, and invited everyone to participate in
deciding which ideas to advance. Staff members were then aware of
the various options and recognized the benefits and costs of each. In
this scenario, involving the staff most likely helped them to
A. Dominate the discussion and reinforce the organizational

structure.
B.
Use groupthink to gain buy-in.
C.
Please everyone completely.
D. Displace obsolete goals in favor of new ones.
E. Understand the decisions and be more committed to them.
People who participate in a group discussion are more likely to
understand why the decision was made. They will have heard the
relevant arguments both for the chosen alternative and against the
rejected alternatives.
AACSB: Analytic
Blooms: Apply
96.
Which of the following is a potential disadvantage of group

decisions?
A.
Satisficing.
B. A larger pool of information, which causes confusion.
C. Intellectual stimulation, which takes up much more time and
delays the decision.
D. Too many approaches and perspectives on the problem.
E. People understand the decision details and are highly critical.
Satisficing is more likely with groups. Most people don't like meetings
and will do what they can to end them. This may include criticizing
members who want to continue exploring new and better
alternatives. The result is a satisficing rather than an optimizing or
maximizing decision.
AACSB: Analytic
Blooms: Understand
97.
Which of the following statements about group decision making

improves the chances that the decision will be implemented
successfully?
A. More information is available when several people are making the

decision.
B. Different approaches to solving the problem are available.
C. People who participate in a group discussion are more likely to
understand why the decision was made.
D. Group discussion provides an opportunity for intellectual
stimulation.
E. A single group member can dominates the discussion.
People who participate in a group discussion are more likely to
understand why the decision was made, thus improving the chances
that the decision will be implemented successfully.
AACSB: Analytic
Blooms: Understand
98.
Allowing one person to control a discussion or decision would best be

described as
A.
B.
C.
D.
E.
Groupthink.
Satisficing.
Goal displacement.
Esprit de corps.
Sometimes one group member dominates the discussion. When this

occurs, such as when a strong leader makes his or her preferences
clear, the result is the same as it would be if the dominant individual
made the decision alone.
AACSB: Analytic
Blooms: Remember
99.
Nicole was disappointed with her team's discussion regarding next

year's marketing campaign. Adam rammed all his ideas through; they
were good, but nobody else got a word in or had the opportunity to
share. This group experienced
A.
B.
C.
D.
E.
Vigilance.
Satisficing.
Goal displacement.
Individual dominance refers to a strong group member who makes

his or her preferences clear as Adam did, with the result being the
same as it would be if Adam made the decision alone.
AACSB: Analytic
Blooms: Apply
100. A phenomenon that occurs in decision making when group members

avoid disagreement as they strive for consensus is known as
A.
B.
C.
D.
E.
Goal displacement.
Domination.
Intuition.
Groupthink.
Satisficing.
Pressure to avoid disagreement can lead to a phenomenon called

groupthink. It occurs when people choose not to disagree or raise
objections because they don't want to break up a positive team spirit.
They want to think as one, tolerate no dissent, and strive to remain
cordial.
AACSB: Analytic
Blooms: Remember
101. When a group accepts an alternative that seems to please the

members of the group, but the group has not taken the time or effort
to explore many options, the group has
A.
B.
C.
D.
E.
Exercised groupthink.
Stimulated the intellects of its members.
Optimized.
Exercised vigilance.
Participated in goal displacement.

cordial.
AACSB: Analytic
Blooms: Remember
102. Groupthink is
A. Avoiding disagreement while striving for consensus.

B. Accomplished by obtaining all members' input.
C.
The result of high levels of creativity.
D. Typically superior to individual decision making.
E.
An extreme form of satisficing.
cordial.
AACSB: Analytic
Blooms: Remember
103. Groups that operate under a condition known as groupthink are most
likely to be
A.
Creative.
B. Lacking in confidence about their abilities.
C.
Overcritical.
D. Concerned with maintaining a positive team spirit.
E.
Unclear about the decision at hand.
cordial.
AACSB: Analytic
Blooms: Understand
104. A condition that occurs when a decision-making group loses sight of

its original goal and a new, possibly less important, goal emerges is
A.
B.
C.
D.
E.
Goal displacement.
Groupthink.
Conflict.
Domination.
Group alternatives.

new goals emerge to replace the original ones. Winning an argument
becomes the new goal.
AACSB: Analytic
Blooms: Remember
105. When a group member is more interested in winning an argument

than solving a problem, __________ has occurred.
A.
B.
C.
D.
E.
domination
goal displacement
groupthink
satisficing
synergy

new goals emerge to replace the original ones. Winning an argument
becomes the new goal.
AACSB: Analytic
Blooms: Remember
106. Leaders of decision-making groups should
A.
B.
C.
D.
E.
Discourage conflict.
Encourage groupthink.
Help the group satisfice.
Pay close attention to the group process.
Dominate the discussion.
Effective managers pay close attention to the group process; they

manage it carefully.
AACSB: Analytic
Blooms: Understand
107. Issue-based differences in perspectives or judgments are
A.
B.
C.
D.
E.
Compromises.

differences in perspectives or judgments about issues.
AACSB: Analytic
Blooms: Remember
108. Emotional disagreements directed toward other people are known as
A.
B.
C.
D.
E.
Compromises.
Affective conflict is emotional and directed at other people. Affective

AACSB: Analytic
Blooms: Remember
109. Of the possibilities here, the most constructive type of conflict is

__________ conflict.
A.
B.
C.
D.
E.
the absence of
emotional
cognitive
affective
dialectic

differences in perspectives or judgments about issues. Cognitive
conflict can air legitimate differences of opinion and develop better
ideas and problem solutions.
AACSB: Analytic
Blooms: Understand
110. Two of your employees consistently disagree with each other; but
lately the arguments have become personal, leading to anger and
bitterness, and this has begun to impact the whole work group. This
situation is best described as
A.
B.
C.
D.
E.
Cognitive conflict.
Affective conflict.
Dialectic conflict.
Alliant conflict.
Comprehensive conflict.
Affective conflict is emotional and directed at other people. Affective

AACSB: Analytic
Blooms: Understand
111. There seemed to be complacence in the group, so in an effort to

combat groupthink and an overall lack of creativity, the group leader
Tim assigned Trisha the task of pointing out problems throughout the
meeting. In this example, Trisha was playing the role of
A.
B.
C.
D.
E.
Conflict manager.
Devil's advocate.
Dialectic leader.
Antagonist.
Affective leader.
A devil's advocate has the job of criticizing ideas such as was

assigned to Trisha.
AACSB: Analytic
Blooms: Understand
112. Which of the following best describes the requirements of the

dialectic method?
A. Someone intentionally presents negative arguments to force

further investigation of the alternative under consideration.
B. A structured debate between two conflicting courses of action is
held.
C. Conflict generated within the group is minimized by enforcing
group unity.
D. Conflict generated within the group is maximized by including not
only factual counterarguments but also personal attacks.
E. The leader performs the role of peacekeeper when attacks are
directed at individuals.
The dialectic goes a step beyond devil's advocacy by requiring a
structured debate between two conflicting courses of action.
AACSB: Analytic
Blooms: Understand
113. In trying to make a conflict between two employees less personal and
emotional, their manager asks each of them to approach the problem
from a different viewpoint than their original one. This is an example
of encouraging the use of
A.
B.
C.
D.
E.
Cognitive conflict.
Affective conflict.
A devil's advocate.
Vigilance.
Groupthink.
Cognitive conflict refers to issue-based differences in perspectives or

judgments. In this case the manager is trying to help the employees
see the other side of the conflict by requiring them to approach the
problem from the other's view.
AACSB: Analytic
Blooms: Understand
114. Which of the following statements about encouraging creativity is

true?
A. The fundamental unit of value in the creative revolution is artistic

ability.
B. You are being creative if you join two previously unrelated things.
C. To be creative you need to be a top student.
D. Your employees will be more creative if you set a tight deadline for
them.
E. People are much more likely to be creative if they work alone.
Creativity can occur when new things are brought into being
(creation), two previously unrelated things are joined (synthesis), or
something is improved or given a new application (modification).
AACSB: Analytic
Blooms: Understand

115. A process in which group members generate as many ideas about a

problem as they can and criticism is withheld until all ideas have
been proposed is called
A.
B.
C.
D.
E.
Brainstorming.
Forecasting.
Groupthink.
Cooperation.
Innovation.
Brainstorming is a process in which group members generate as

many ideas about a problem as they can and criticism is withheld
until all ideas have been proposed.
AACSB: Analytic
Blooms: Remember
116. In order to be creative, a brainstorming session must
A.
B.
C.
D.
E.
Be free of criticism.
Be held in private.
Be done quickly.
Be done face-to-face.
Involve industry experts.
When brainstorming, the group is encouraged to say anything that

comes to mind, with one exception: no criticism of other people or
their ideas is allowed.
AACSB: Analytic
Blooms: Understand
117. ____________ is the concept that decision makers cannot be truly

rational because decisions are complex and complete information is
unavailable.
A.
B.
C.
D.
E.
Bounded rationality
Incremental decision making
Cognitive rationality
Coalitional decision making
Affective rationality

processed.
AACSB: Analytic
Blooms: Remember
118. The _______ model of decision making occurs when decision makers
make small decisions and move in piecemeal fashion toward a bigger
solution.
A.
B.
C.
D.
E.
stepped
incremental
coalitional
garbage can
staged
The incremental model of decision making occurs when decision

makers make small decisions, take little steps, move cautiously, and
move in piecemeal fashion toward a bigger solution.
AACSB: Analytic
Blooms: Remember
119. The ___________ model of decision making arises when two or more
groups form, each representing a different preference, and each tries
to use power and negotiation to sway the decision.
A.
B.
C.
D.
E.
bounded rationality
incremental
garbage can
coalitional
affective rationality
The coalitional model of decision making arises when people disagree

on goals or compete with one another for resources. The process
becomes political as groups of individuals band together in coalitions,
each representing a different preference, and each tries to use power
and negotiations to sway the decision.
AACSB: Analytic
Blooms: Understand
120. Sasha leads a research team of engineers and found herself in the
midst of a battle between coalitions, each with its own solution to a
challenge the team faced. Sasha would be best served by following
which of these courses of action?
A. Sasha should collect information both sides and decide herself

which is the best approach.
B. Sasha should ask parties from both sides to solve the problem in
whatever way they can.
C. Sasha should find a mediator to solve the problem.
D. Sasha should encourage both teams to engage in affective conflict
to solve the problem.
E. Sasha should use a collaborative method in which she establishes
a goal around which the entire group can rally.
One of the best ways to reduce organizational politics, and to make
sure that constructive cognitive conflict does not degenerate into
affective conflict, is to create common goals for members of the
team; that is, make it a collaborative rather than a competitive
exercise.
AACSB: Analytic
Blooms: Apply
121. Which of the following statements about decision making in a crisis is

true?
A. In crises, managers should make decisions only after taking all of

the details into account.
B. Crisis management can be best handled as the crisis occurs.
C. Early warning signals of crisis are unavailable, so bounded
rationality must be used.
D. An effective plan for crisis management is essential to include on
the management agenda.
E. Crises can never provide benefits to a company.
Although many companies don't concern themselves with crisis
management, it is imperative that it be on management's agenda.
With it, old and new problems can be resolved, new strategies and
competitive advantages may appear, and positive change can
emerge.
AACSB: Analytic
Blooms: Understand
122. Which of the following is an element of an effective plan for crisis

management?
A. A communication plan that indicates that the company is in

complete control.
B. Competitive actions to bounce back immediately.
C. Psychological and cultural actions for the human and emotional
toll.
D. A template for a press statement, to be released before details are
learned.
E. A method to quickly distance the company from the crisis.
An effective plan for crisis management should include the following
elements: (1) strategic actions, (2) technical and structural actions,
(3) evaluation and diagnostic actions, (4) communication actions, (5)
psychological and cultural actions.
AACSB: Analytic
Blooms: Understand
Scenario A
The local Ace Hardware Store manager has several decisions she has
to make as the week begins. She always comes in early on Mondays
to sift through the paperwork on her desk and decide what needs to
be done for the week and in which order. The decisions facing her
this week are:
1. Determining which sales representatives to see this week to place
orders.
2. Providing a report to the owner detailing her opinion of whether or
not she should purchase several more Ace locations that are for sale
in the area.
3. Interviewing applicants for two open part-time positions and hiring
them.
4. Providing input to the owner on a possible upgrade to the checkout
technology currently in use.
123. The decisions in Scenario A can best be classified as either
A.
B.
C.
D.
E.
Risky or nonrisky.
Programmed or nonprogrammed.
Simple or complex.
Necessary or unnecessary.
Certain or uncertain.
Programmed decisions have been encountered and made before,

such as those in two of the choices. Nonprogrammed decisions are
new, novel, complex decisions having no proven answers, such as
those in the remaining choices.
AACSB: Analytic
Blooms: Understand
124. Decision 4 is an example of which type of decision?
A.
B.
C.
D.
E.
Programmed.
Nonprogrammed.
Simple.
Complex.
Necessary.

no proven answers, such as those in decisions 2 and 4.
AACSB: Analytic
Blooms: Understand
125. Decisions 1 and 3 are both __________ decisions because

______________.
A. necessary; they are novel and complex

B. nonprogrammed; they are novel and complex
C. programmed; they are can be solved using rules, procedures, and
structures
D.
risky; they are novel and complex
E. simple; there is a clear and precise correct answer
Programmed decisions have been encountered and made before,
such as those in decisions 1 and 3.
AACSB: Analytic
Blooms: Understand
126. If, in decision 3, the manager takes the first candidate she sees that
meets the minimum requirements, without going through every
candidate's file to see if anyone else is better, she is
A.
B.
C.
D.
E.
Maximizing.
Satisficing.
Optimizing.
Experiencing internal conflict.
Experiencing external conflict.

adequate.
AACSB: Analytic
Blooms: Understand
Scenario B
You work for a new start-up marketing consulting firm. There are five
highly opinionated but very committed employees in your group. The
owner firmly believes that he should make every decision since he is,
as he often says, "the one who signs the checks." While this is true,
he often jumps to conclusions, and doesn't even take time to
diagnose the problem at hand because he does not like to ask you
and your colleagues for your opinions. It has become a very
emotional and personal issue for all of you. At this point, most people
in the firm agree that the decision making of the owner is going to
destroy the young firm before it really gets started.
127. The owner's belief that he should make every decision himself by
diagnosing the problem as he sees it and then immediately
implementing a solution is
A.
Correct.
B. A mistake that often leads to suboptimal decisions.
C.
An example of vigilance.
D.
An example of satisficing.
E.
An example of maximizing.
Managers can tell whether they made the best decision possible if
they follow the proper procedures that will yield the best possible
decision under the circumstances by being vigilant.
AACSB: Analytic
Blooms: Apply
128. Suppose the owner tells you that the reason he makes every decision
himself is because he believes that he will be able to influence
everything that happens in the business. This unrealistic view is
called
A.
B.
C.
D.
E.
Framing effects.
Time pressures.
Disillusionment.
when one has no control over what will happen.
AACSB: Analytic
Blooms: Apply
129. If, in the beginning of your work with the company, your differences
with the owner were purely based on differences in judgment, but
have now deteriorated to the point that your differences are more
emotional and directed personally toward one another, it can be said
that you initially experienced ___________ but now are experiencing
___________.
A.
B.
C.
D.
E.
satisficing; maximizing
cognitive conflict; affective conflict
affective conflict; cognitive conflict
maximizing, satisficing
uncertainty; certainty
Cognitive conflict arises from issue-based differences in perspectives

or judgments, whereas affective conflict is emotional and directed
toward other people.
AACSB: Analytic
Blooms: Apply
Scenario C
Jeremy is the lead on a new project at work, and it is essential that he
make a good impression on top management. He recently had his
first staff meeting to solve a fairly large problem with the project, and
it didn't go well. The whole staff of 10 was there, which he thought
would lead to buy-in from the group. Instead the group didn't get
much done in that meeting.
130. Jeremy opened the meeting by suggesting to the group that he had
put a lot of thought into the problem and that perhaps they should
use his ideas to solve the problem. He spent the meeting explaining
why this should occur. Jeremy was practicing
A.
B.
C.
D.
E.
Satisficing.
Groupthink.
Goal displacement.
Sometimes one member like Jeremy dominates the discussion. When

this occurs the result is the same as it would be if the dominant
individual made the decision alone.
AACSB: Analytic
Blooms: Apply
131. Since the first meeting didn't go well, Jeremy read several
management books on working with groups and thought perhaps a
longer meeting would allow time to explore several points of view. He
chose a Friday afternoon so everyone could go home afterward and
not have to rush off to other work appointments. To his surprise, the
first idea he suggested was accepted by the group, and the meeting
was over in no time! The group was most likely engaging in
__________ so they could end the meeting and go home early.
A.
B.
C.
D.
E.
groupthink
satisficing
goal displacement
domination
intellectual stimulation
Satisficing is more likely with groups. Most people don't like meetings
and will do what they can to end them. The result is a satisficing
rather than an optimizing or maximizing decision.
AACSB: Analytic
Blooms: Apply
132. Jeremy decided to try another meeting because the project deadline
was drawing closer and he was beginning to feel pressure to get
something done with his group. He put the agenda out early and felt
he was ready to lead the meeting. Shortly after the meeting began,
one of his colleagues asked a question that didn't seem to relate to
the issue at hand. Nonetheless, trying to be a good leader, Jeremy
began to discuss the issues around this new question. Soon the group
was in a heated discussion with each side seeming to stop at nothing
to "win" the argument. In this meeting the group was engaged in
A.
B.
C.
D.
E.
Groupthink.
Satisficing.
Goal displacement.
Domination.
Goal displacement is a condition that occurs when a decision-making

group loses sight of its original goal and a new, less important goal
emerges.
AACSB: Analytic
Blooms: Apply
Scenario D
Effectively Organized Inc. has hired a consultant to help with
organizational decision making. The consultant's first meeting is set
up to describe to the managers of Effectively Organized Inc. the
models of organizational decision processes. Each of the managers
seems to prefer one of the models over the others.
133. The president of Effectively Organized Inc. responds most positively

to the model that is the most cautious. She explains that the budget
process is the easiest decision for her because she breaks it into
smaller pieces and builds the decisions as she goes. The president
seems to prefer which model?
A.
B.
C.
D.
E.
The crisis model.
The incremental model is a model of organizational decision making

in which major solutions arise through a series of smaller decisions.
AACSB: Analytic
Blooms: Apply
134. The vice president of human resources believes decision makers

cannot be truly rational in their decisions. He tells the group that he
sees many situations with managers who don't have enough time to
process all the relevant information and who regularly face very
complex problems. He seems to expect which decision process?
A.
B.
C.
D.
E.
The crisis model.

processed.
AACSB: Analytic
Blooms: Apply
135. The vice president of production tells the group that in his area of the
company, many managers don't even agree about what their goals
are and certainly cannot agree on what action to take. His managers
are using which model of decision making?
A.
B.
C.
D.
E.
The crisis model.
The garbage can model of organizational decision making depicts a

chaotic process and seemingly random decisions.
AACSB: Analytic
Blooms: Apply
136. The vice president of marketing declares that her people disagree on
goals and have now formed groups to advocate for their own
interests. Her managers are using
A.
B.
C.
D.
E.
The crisis model.
The coalitional model of organizational decision making is one in

which groups with differing preferences use power and negotiation to
influence decisions.
AACSB: Analytic
Blooms: Apply
Essay Questions
137. Differentiate between programmed and nonprogrammed decisions.
Give an example of each.
Answers will vary.

AACSB: Analytic
Blooms: Understand
138. List and explain the six steps of the decision making process.
Answers will vary.

AACSB: Analytic
Blooms: Understand
139. Define psychological biases and explain how they relates to

managerial decision making.
Answers will vary.

AACSB: Analytic
Blooms: Understand
140. Explain the four disadvantages of using a group to make decisions.
Answers will vary.

AACSB: Analytic
Blooms: Understand
141. Explain the three requirements of effectively managing group

decision making.
Answers will vary.

AACSB: Analytic
Blooms: Understand
142. Briefly describe the brainstorming process using an example.
Answers will vary.

AACSB: Analytic
Blooms: Apply
143. Compare and contrast three models of organizational decision

processes thought to occur when bounded rationality conditions
hold.
Answers will vary.

AACSB: Analytic
Blooms: Apply
144. Describe the elements of an effective crisis management plan.
Answers will vary.

AACSB: Analytic
Blooms: Understand

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Chapter 03

Managerial Decision Making

True / False Questions

2. Managers typically face structured problems they have seen before,

4. Programmed decisions are useful when there is no predetermined

5. Important, difficult decisions tend to be nonprogrammed, and they

7. Managers prefer uncertainty to certainty because it makes the job more

8. Risk is a fact of life in nonprogrammed management decisions.

9. Another way of referring to "risk" is "taking a risk."

10 Conflict exists when the manager must consider opposing pressures

12 The first stage of decision making requires the decision maker to

13 The "problem" in decision making may actually be an opportunity that

14 Sara, a warehouse manager, needed a fast solution when an employee

16 Fundamental to choosing an alternative is predicting the consequences

17 After a decision is made and implemented, only then should

18 Managers use satisficing to achieve the best possible outcome.

21 Decision makers should presume that with a carefully made decision,

23 To exhibit vigilance, a decision maker must evaluate every decision he

24 Following all six stages of the decision making process guarantees

25 Barriers to effective decision making include psychological biases, time

26 Patrick was disappointed when the marketing research team reported

27 Framing effects refer to a decision bias influenced by the way in which a

28 Governmental budget deficits, environmental destruction, and decaying

29 In almost every business situation, the quality of the decision is far

30 Many organizational decisions are the result of intensive social

31 If enough time is available, groups typically make better decisions than

32 One advantage of using a group for decision making is groupthink.

34 A condition that occurs when a decision-making group loses sight of its

35 The three requirements for effective group decision making are an

36 The most constructive type of conflict is affective conflict.

38 The job of a "devil's advocate" is to add a personal or emotional

39 The most fundamental unit of value in the creativity revolution is ideas.

41 Complimenting one another and telling stories are examples of

42 Bounded rationality is a less-than-perfect form of rationality in which

43 The incremental model of decision making occurs when managers

44 The confrontational model of decision making arises when people

46 Decision making under crisis conditions will inevitably result in poor

Multiple Choice Questions

49 __________ are those decisions encountered and made before, having

50 Important, difficult decisions that require creative approaches tend to

51 New, novel, complex decisions having no proven answers are

52 Gemma, who owns the tutorial service Math Machine, is contemplating

54 The state that exists when decision makers have incomplete

55 ________ regarding the strength and timing of the economic recovery in

56 Uncertainty exists when the manager

Faces two conflicting issues.

58 A manager is dealing with ________ if she is considering opposing

60 Casey, a middle manager at a cosmetics company, is encountering an

61 The initial step in the decision making process is to

62 A manager may discover that a problem exists with current company

Challenge the status quo.

64 Once a problem is identified and properly diagnosed, the next stage in

65 When a solution is specifically designed for a particular problem or set

66 Custom-made decisions most often require

67 Alternative courses of action that can be implemented based on how

Facing a stable environment.

69 __________ requires searching thoroughly for a complete range of

71 Victor, an administrative assistant in accounting, orders office supplies