Management 13th Edition Schermerhorn Test Bank

Management 13th Edition Schermerhorn Test Bank
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Schermerhorn & Bachrach / Management, 13th edition Test Bank
Chapter 07: Information and Decision Making
True/False
1. The raw facts and observations made useful and meaningful for decision making is
called information.
Answer: True
Learning Objective: 7.1
Difficulty: Easy
AACSB: Analytical thinking
Bloom’s Taxonomy: Knowledge
2. Analytical competency is the ability to understand new technologies and to use

them to their best advantage.
Answer: False
Difficulty: Easy
3. Public information is the information gathered from stakeholders and the external
environment.
Answer: False
Difficulty: Easy
Copyright © 2015 John Wiley & Sons, Inc. 7-1

4. A performance threat occurs when the actual performance is less than desired or is
moving in an unfavorable direction.
Answer: True
Difficulty: Easy
5. A performance opportunity offers a chance for a better future if the right steps are
taken.
Answer: True
Difficulty: Easy
6. Problem avoiders deal reasonably well with performance threats but miss many
performance opportunities.
Answer: False
Difficulty: Easy
7. Problem solvers actively process information and constantly look for problems to
solve.
Answer: False
Difficulty: Easy


8. Intuitive thinking tends to work best in situations where facts are limited and few
decision precedents exist.
Answer: True
Difficulty: Easy
9. Sensation thinkers are comfortable with abstraction and unstructured situations.
Answer: False
Difficulty: Easy
10. Intuitive feelers prefer broad and global issues, and they value flexibility and human
relations.
Answer: True
Difficulty: Easy
11. Structured problems can be dealt with through programmed decisions as they are
routine and occur over and over again.

Answer: True
Difficulty: Easy
12. Decision making in a certain environment requires the use of probabilities to

estimate the likelihood that a particular outcome will occur.
Answer: False
Difficulty: Easy
13. A risk environment is a decision situation in which factual information is available

about the possible alternative courses of action and their outcomes.
Answer: False
Difficulty: Easy
14. Uncertain environments force managers to rely heavily on intuition, judgment,

informed guessing, and hunches.
Answer: True
Difficulty: Easy

15. A classical decision model describes decision making within the constraints of
limited information and alternatives.
Answer: False
Difficulty: Easy
16. A manager who is choosing the first acceptable alternative that comes to his or her
attention while solving a problem is making an optimizing decision.
Answer: False
Difficulty: Easy
Bloom’s Taxonomy: Comprehension
17. A satisficing decision chooses the alternative that gives the best possible solution to
a problem.
Answer: False
Difficulty: Easy
18. The decision-making process is not complete until results are evaluated.
Answer: True
Difficulty: Easy

19. A spotlight question tests the ethics of a decision by exposing it to scrutiny through
the eyes of family and community members.
Answer: True
Difficulty: Easy
20. Heuristics are strategies that help in dealing with complex and ambiguous
situations.
Answer: True
Difficulty: Easy
21. The availability bias bases a decision on similarity to other situations.
Answer: False
Difficulty: Easy
22. A person decides that a group is aggressive after finding out that some members of
that group are aggressive. This is an example of representativeness bias.
Answer: True


Difficulty: Easy
AACSB: Application of knowledge
Bloom’s Taxonomy: Application
23. Availability bias occurs when decisions are influenced by inappropriate allegiance
to a previously existing value or starting point.
Answer: False
Difficulty: Easy
24. When a problem is evaluated and resolved in the positive or negative context in
which it is perceived, it is likely to result in a framing error.
Answer: True
Difficulty: Easy
25. A confirmation error occurs when focusing only on information that is consistent
with a decision already made.
Answer: True
Difficulty: Easy

26. The confirmation error is also known as the sunk-cost fallacy.
Answer: False
Difficulty: Easy
27. Big-C creativity occurs when average people come up with unique ways to deal
with daily events and situations.
Answer: False
Difficulty: Easy
28. The first step in design thinking is visualizing and brainstorming potential solutions
in collaboration with others.
Answer: False
Difficulty: Easy
29. Creative people are good at making connections among seemingly unrelated facts
or events.
Answer: True
Difficulty: Easy

30. Creativity potential blossoms best when it has management support and the right
organizational culture.
Answer: True
Difficulty: Easy
Multiple Choice
31. _____ competency is the ability to locate, gather, and organize meaningful data for
use in decision making.
A. Technological
B. Interpersonal
C. Information
D. Innovation
E. Analytical
Answer: C
Difficulty: Easy
32. The ability to evaluate and examine information to make actual decisions and solve
real problems is known as _____ competency.
A. innovation
B. analytical
C. technological
D. interpersonal

E. information
Answer: B
Difficulty: Easy
33. The term _____ describes the systematic evaluation and analysis of information to
make decisions.
A. tactics
B. assay
C. heuristics
D. analytics
E. strategy
Answer: D
Difficulty: Easy
34. _____ is the process of tapping information systems to extract and report data in
organized ways that are helpful to decision makers.
A. Analytics
B. Strategic opportunism
C. Satisficing
D. Heuristics
E. Business intelligence
Answer: E
Difficulty: Easy

35. _____ is the process of identifying a discrepancy between an actual and a desired
state of affairs, and then taking action to resolve it.
A. Error mapping
B. Scenario planning
C. Problem solving
D. Risk taking
E. Opportunity seeking
Answer: C
Difficulty: Easy
36. Managers who are passive in gathering information and are unwilling to make
decisions and deal with problems are referred to as problem _____.
A. seekers
B. creators
C. defenders
D. avoiders
E. claimers
Answer: D
Difficulty: Easy
37. An IT program manager realizes that there are certain defects in a product
delivered. However, he assumes that the users will not use the application that is
defective but does not make efforts to rectify it. This manager is most likely a
problem _____.
A. seeker
B. creator

C. defender
D. avoider
E. claimer
Answer: D
Difficulty: Moderate
38. The managers who are regarded as problem solvers:

A. try to solve problems only when they are forced by the situation.
B. unwillingly gather information, not wanting to make decisions or deal with
problems.
C. anticipate performance threats and opportunities and take action to gain an
advantage.
D. ignore information that would otherwise signal the presence of a performance
threat.
E. actively process information and constantly look for problems to solve.
Answer: A
Difficulty: Easy
39. The marketing manager of a firm receives a lot of complaints from customers
regarding late delivery of products. After he receives the complaints, he takes
appropriate measures to rectify the issues in the supply chain. He is most likely a
_____.
A. problem defender
B. problem avoider
C. problem claimer
D. problem seeker
E. problem solver

Answer: E
40. Which of the following traits is associated with problem seekers?

A. They are passive in information gathering, not wanting to make decisions or deal
with problems.
B. They are willing to make decisions and try to solve problems, but only when forced
by the situation.
C. They ignore information that would otherwise signal the presence of a performance
opportunity or threat.
D. They are reactive in gathering information to solve problems after, but not before,
they occur.
E. They anticipate performance threats and opportunities, and take action to gain an
advantage.
Answer: E
Difficulty: Easy
41. A medical officer in a multispecialty hospital proactively finds customer service

deficiencies and takes remedial measures in advance. This trait of the medical
officer shows that he is a _____.
A. problem defender
B. problem avoider
C. problem claimer
D. problem seeker
E. problem solver
Answer: D


42. Problem solvers differ from problem seekers as problem solvers:

A. actively process information and constantly look for problems to solve.
B. are willing to make decisions and try to solve problems, but only when forced by
the situation.
C. anticipate performance threats and opportunities and take action to gain advantage.
D. are passive in information gathering, making decisions or dealing with problems.
E. ignore information that would otherwise signal the presence of a performance
opportunity threat.
Answer: B
Difficulty: Easy
43. Which of the following is true about systematic thinking?

A. It is often imaginative and works best in situations where facts are limited and few
decision precedents exist.
B. It uses a quick and broad evaluation of the situation and the possible alternative
courses of action.
C. It makes managers deal with many aspects of a problem at once and consider
hunches based on past experience.
D. It makes a person approach a problem in a rational, step-by-step, analytical fashion.
E. It is always possible for the firm’s top managers to make systematic fact-based
decisions.
Answer: D
Difficulty: Easy

44. Dr. Morales initially conducts basic medical tests for her patients. Once she
examines the reports of these tests, she suggests more specific tests to the patients.
She also examines all the reports in detail before suggesting any treatment. This
type of problem solving in a step-by-step fashion is known as _____ thinking.
A. heuristic
B. systematic
C. intuitive
D. spontaneous
E. flexible
Answer: B
45. Managers who are _____ make a plan before taking action and carefully search for
information to facilitate problem solving in a step-by-step fashion.
A. flexible
B. systematic
C. intuitive
D. spontaneous
E. instinctive
Answer: B
Difficulty: Easy
46. A manager using _____ thinking is flexible and spontaneous in problem fixing.
A. systemic
B. lateral
C. systematic
D. design

E. intuitive
Answer: E
Difficulty: Easy
47. Maria, a manager at a mining firm, is good at handling crisis situations. She is
spontaneous in problem solving, has a flexible approach, and provides quick
alternative courses of action. This type of problem-solving approach by Maria
shows that she is a(n) _____ thinker.
A. systematic
B. analytical
C. intuitive
D. systemic
E. lateral
Answer: C
48. _____ thinking is an ability to address many problems at once.

A. Lateral
B. Intuitive
C. Systematic
D. Critical
E. Multidimensional
Answer: E
Difficulty: Easy

49. Yousuf, a manager at a restaurant, has the ability to deal with numerous problems at
once and provide effective solutions. He has the ability to map many problems into
one network, and he makes decisions that benefit the organization in the short and
the long run. Yousuf’s effectiveness reveals that he most likely uses _____
thinking.
A. critical
B. multidimensional
C. lateral
D. intuitive
E. heuristic
Answer: B
50. Which of the following skills refers to the ability to remain focused on long-term
objectives while being flexible enough to resolve short-term problems and
opportunities in a timely manner?
A. Information competency
B. Strategic opportunism
C. Systematic thinking
D. Management analytics
E. Performance planning
Answer: B
Difficulty: Easy

51. Martha has succeeded as a manager due to her ability to remain focused on long-
term objectives. She is flexible in her approach and provides effective and timely
solutions for most of the problems, maintaining focus on the long-term goals. This
skill of Martha is known as _____.
A. technological competency
B. strategic opportunism
C. systematic thinking
D. information competency
E. intuitive thinking
Answer: B
52. _____ tend to emphasize the impersonal rather than the personal and take a realistic
approach to problem solving.
A. Intuitive feelers
B. Intuitive thinkers
C. Sensation feelers
D. Intuitive seekers
E. Sensation thinkers
Answer: E
Difficulty: Easy
53. Salma emphasizes the impersonal, tends to take a realistic approach to problem
solving, and prefers facts and clear goals. She likes to be in situations of high
control and prefers problem solving in a certain environment. Salma can be
regarded as a(n) _____.
A. sensation feeler
B. idealistic thinker

C. sensation thinker
D. intuitive feeler
E. intuitive thinker
Answer: C
54. The _____ are comfortable with unstructured situations, and they tend to be
idealistic and prone toward intellectual and theoretical positions.
A. intuitive feelers
B. intuitive thinkers
C. sensation feelers
D. sensation seekers
E. sensation thinkers
Answer: B
Difficulty: Easy
55. Deepak tends to emphasize the impersonal and takes a logical approach to problem
solving, but he usually avoids details. He is prone to intellectual and theoretical
positions and is comfortable with unstructured situations. These traits show that
Deepak is a(n) _____.
A. sensation feeler
D. intuitive feeler
Answer: E

56. _____ are insightful, comfortable with intangibles, and value flexibility and human
relationships.
A. Sensation feelers
C. Sensation seekers
D. Sensation thinkers
E. Intuitive feelers
Answer: E
Difficulty: Easy
57. Dmitri values flexibility and human relations while making decisions. He prefers
broad and global issues, tends to avoid details during problem solving, and is
comfortable with intangibles. Dmitri is most likely a(n) _____.
A. sensation feeler
D. intuitive feeler
Answer: D

58. _____ are open communicators, tend to be realistic, and emphasize both analysis
and human relations.
A. Intuitive feelers
C. Sensation feelers
D. Intuitive seekers
E. Sensation thinkers
Answer: C
Difficulty: Easy
59. Bao focuses on facts and tends to take a realistic approach to problem solving. She
emphasizes analysis. She is an open communicator, is responsive to feelings, and
values human relations. These characteristics show that Bao is a(n) _____.
A. sensation thinker
B. intuitive feeler
C. intuitive thinker
D. sensation feeler
E. idealistic thinker
Answer: D
60. Sensation thinkers differ from intuitive thinkers as intuitive thinkers:

A. are insightful and prefer broad and global issues.
B. are comfortable with abstraction and unstructured situations.
C. like hard facts, clear goals, certainty, and situations of high control.
D. tend to emphasize the impersonal rather than the personal and take a realistic
approach to problem solving.
E. are open communicators and sensitive to feelings and values.

Answer: B
61. The problems that are familiar, straight forward, and clear with respect to
information needs are called _____ problems.
A. ambiguous
B. undefined
C. structured
D. framing
E. uncertain
Answer: C
Difficulty: Easy
62. Judith has been asked to prepare a report comparing the profits the company earned
in the current financial year in its domestic market and compare it with the previous
year’s report for the same market. The type of problem faced by Judith in the above
scenario is a(n) _____ problem.
A. unstructured
B. structured
C. ambiguous
D. framing
E. uncertain
Answer: B

63. Which of the following is true of unstructured problems?

A. They are clear with respect to information needs.
B. They can be resolved using readily available solutions from past experiences.
C. They can be resolved with a high degree of certainty.
D. They are ambiguous and contain information deficiencies.
E. They are routine and occur over and over again.
Answer: D
Difficulty: Easy
64. Sumaira has been asked to prepare a report on the best advertising campaign for the
new product her company is launching in a new market. The type of problem being
faced by Sumaira in the above situation is a(n) _____ problem.
A. integrated
B. anticipated
C. computational
D. certain
E. unstructured
Answer: E
65. A _____ decision applies a solution from past experience to a routine problem.
A. unique
B. nonprogrammed
C. tactical
D. nonrecurring

E. programmed
Answer: E
Difficulty: Easy
66. Melissa, a manager in the customer service division of a company, usually makes
decisions to resolve customer complaints based on her previous experiences and the
standard procedures set by the company. The type of decision being made by
Melissa is known as a _____ decision.
A. unstructured
B. tactical
C. nonrecurring
D. programmed
E. unique
Answer: D
67. A decision that applies a specific solution crafted for a unique problem is referred to
as a _____ decision.
A. repetitive
B. nonprogrammed
C. satisficing
D. programmed
E. standard
Answer: B
Difficulty: Easy

68. Julio is devising a marketing plan for introducing his company’s products into a
new market. Julio comes up with customized marketing strategies that cater to the
unique needs of the new market. All his decisions involve risk and uncertainty as he
is unaware of the conditions in the new market. The type of decision being made by
Julio in the above situation is called a _____ decision.
A. repetitive
B. programmed
C. standard
D. nonprogrammed
E. satisficing
Answer: D
69. A _____ decision occurs when an unexpected problem arises that can lead to
disaster if not resolved quickly and appropriately.
A. nonprogrammed
B. strategic
C. crisis
D. programmed
E. standard
Answer: C
Difficulty: Easy

70. A(n) _____ environment offers complete information on possible action alternatives
and their consequences.
A. uncertain
B. speculative
C. risk
D. certain
E. unanticipated
Answer: D
Difficulty: Easy
71. To assist in their promotions and appraisals, Ho Sook analyzed and graded the
performance of her team members in the previous year. She is sure of her decisions
and its possible outcomes as she had all the factual information. This type of
environment that is ideal for decision making is known as a(n) _____.
A. uncertain environment
B. risk environment
C. certain environment
D. threat environment
E. unanticipated environment
Answer: C
72. A(n) _____ environment lacks complete information but offers “probabilities” of
the likely outcomes for possible action alternatives.
A. uncertain
B. secure
C. risk
D. certain

E. definite
Answer: C
Difficulty: Easy
73. Chikashi, a manager at a hotel, decided to launch a new type of cuisine in his
restaurant because the restaurant was incurring losses due to negative feedback on
its existing cuisine. He had to make a decision immediately to improve the situation
and was aware of the possible consequences of his actions. Chikashi had to make
the decision in a(n) _____ environment.
A. uncertain
B. risk
C. certain
D. secure
E. anticipated
Answer: B
74. A(n) _____ environment lacks so much information that it is difficult to assign
probabilities to the likely outcomes of alternatives.
A. anticipated
B. risk
C. certain
D. threat
E. uncertain
Answer: E
Difficulty: Easy


75. Nikolai and his team have been asked to make a decision on implementing a new
technology that might help to decrease the production time at their firm. They do
not have any factual information about the performance of the new technology, and
it is difficult to predict the outcome of their decision. They are forced to rely
heavily on their intuition to make the decision. This represents a(n) _____
environment.
A. anticipated
B. secure
C. certain
D. precise
E. uncertain
Answer: E
76. Which of the following is the first step in a decision-making process?

A. Generating alternative solutions
B. Evaluating results
C. Evaluating alternative solutions
D. Identifying and defining a problem
E. Choosing a preferred course of action
Answer: D
Difficulty: Easy

77. Nicole is trying to solve a problem that has resulted in defective products. She has
understood that the problem is due to a technical failure and has realized that it has
to be corrected immediately to avoid further loss. The next step in Nicole’s
decision-making process after collecting all the details regarding the problem is to:
A. choose a preferred course of action.
B. evaluate the implemented solution.
C. implement the decision.
D. define the problem.
E. generate and evaluate alternative solutions.
Answer: E
78. A decision-making process ends with the:

A. choice of a preferred course of action.
B. evaluation of implemented solutions.
C. implementation of the decision.
D. evaluation of alternative solutions.
E. generation of alternative solutions.
Answer: B
Difficulty: Easy
79. Which of the following is a common mistake that can occur in the first step of
decision making?
A. Choosing the first alternative that gives a satisfactory solution
B. Abandoning the search for alternatives too quickly
C. Lack-of-participation error
D. Focusing on symptoms instead of causes
E. Not measuring the performance results

Answer: D
Difficulty: Easy
80. A classical decision model differs from a behavior decision model as the classical
model:
A. assumes that people act with only partial knowledge about the available action
alternatives and their consequences.
B. describes decision making with limited information and alternatives.
C. recognizes cognitive limitations to our human information-processing capabilities.
D. describes how many decisions get made in the ambiguous and fast-paced problem
situations.
E. assumes that the choice of preferred course of action is made by a decision maker
who is fully informed about all possible alternatives.
Answer: E
81. Which of the following describes decision making with complete information?
A. Classical decision model
B. Satisficing decision
C. Bounded rationality
D. Behavioral decision model
E. Cognitive limitation
Answer: A
Difficulty: Easy

82. A(n) _____ decision chooses the alternative that gives the absolute best solution to
a problem.
A. satisficing
B. intuitive
C. optimizing
D. experimental
E. heuristic
Answer: C
Difficulty: Easy
83. Priya, a manager at an IT firm, likes to focus on facts when making decisions.
When she faces a well-defined problem and has all the information regarding the
possible action alternatives as well as their consequences, she is most likely to make
a(n) _____ decision that gives the best possible solution for a problem.
A. intuitive
B. optimizing
C. satisficing
D. heuristic
E. experimental
Answer: B
84. Which of the following describes making decisions within the constraints of limited
information and alternatives?
A. Decision optimization

B. Management analytics
D. Classical decision model
E. Business intelligence
Answer: C
Difficulty: Easy
85. Which of the following describes decision making with limited information and
bounded rationality?
A. Classical decision model
B. Certain environment
C. Optimizing decision
D. Behavioral decision model
E. Unstructured environment
Answer: D
Difficulty: Easy
86. A decision that chooses the first acceptable alternative that comes to one’s attention
is called a(n) _____ decision.
A. optimizing
B. fully informed
C. influential
D. satisficing
E. absolute best
Answer: D
Difficulty: Easy


87. Adriana is not keen on collecting facts and information while solving problems. She
is spontaneous in decision making and usually chooses the first possible alternative
that comes to her attention, and she provides an acceptable solution to a given
problem. The type of decision being made by Adriana in such situations is known
as a(n) _____ decision.
A. absolute best
B. satisficing
C. conditional
D. optimizing
E. fully informed
Answer: B
88. _____ is failure to involve in a decision the persons whose support is needed to
implement it.
A. Framing error
B. Lack-of-participation error
D. Confirmation error
E. Strategic opportunism
Answer: B
Difficulty: Easy

89. Strategies, such as framing, that are used for simplifying decision making are
known as _____.
A. algorithmics
B. statistics
C. data mining
D. optimizing strategies
E. heuristics
Answer: E
Difficulty: Easy
90. The _____ bases a decision on recent information or events.

A. framing error
B. availability bias
C. representativeness bias
D. confirmation error
E. anchoring bias
Answer: B
Difficulty: Easy
91. Based on his recollection of a recent product failure, Abdul, the manager of a
company, decides not to invest in a new product, even though the readily available
information is infallible and irrelevant. This is an example of _____.
A. confirmation error
B. framing error
C. availability bias
D. escalating commitment
E. anchoring bias

Answer: C
92. The _____ occurs when people assess likelihood of something happening based on
its similarity to a stereotyped set of occurrences.
A. availability bias
B. lack-of-participation error
D. confirmation error
E. adjustment bias
Answer: C
Difficulty: Easy
93. Rupert, who leads the design team in an automobile firm, decides not to invest in a
particular technology that helps to improve the fuel efficiency of cars, as other
automobile companies who had invested in similar technologies had not achieved
much success. The type of decision-making error made by Rupert is known as
_____.
B. confirmation error
C. adjustment bias
D. lack-of-participation error
E. representativeness bias
Answer: E

94. The _____ occurs when decisions are influenced by inappropriate allegiance to a
previously existing value or starting point.
D. anchoring and adjustment bias
E. availability bias
Answer: D
Difficulty: Easy
95. Rajiv was asked to prepare a report on the estimated costs of introducing a new
product into the market. He estimated the costs by slightly increasing the costs the
company had incurred while introducing a product into the market the previous
year. This might not be accurate, because a number of other factors should also
have been considered while calculating the estimated costs for the current year. This
type of decision-making error is known as _____.
E. lack-of-participation error
Answer: D

96. A(n) _____ occurs when a problem is evaluated and resolved in the context in
which it is perceived.
A. escalating commitment
C. confirmation error
D. availability bias
E. framing error
Answer: E
Difficulty: Easy
97. Catalina, the manager of a law firm, makes a decision about the pay raise of her
interns based only on their current salaries. This type of decision making can lead to
_____.
A. lack-of-participation error
B. availability bias
D. framing error
E. confirmation error
Answer: D
98. A(n) _____ occurs when focusing only on information that validates a decision
already made.
B. escalating commitment
C. lack-of-participation error
E. framing error

Answer: A
Difficulty: Easy
99. Julie is a manager who completely trusts one of her employee’s decisions due to his
previous good performances. She always looks for positives in his decisions rather
than analyzing the employee’s decisions in a rational manner. She generally tends
to neglect the drawbacks in his decision making. This type of error in decision
making is called _____.
A. anchoring and adjustment bias
B. framing error
C. confirmation error
D. representativeness bias
Answer: C
100. _____ is the continuation of a course of action even though it is not working.
A. Confirmation error
B. Escalating commitment
C. Lack-of-participation error
D. Framing error
Answer: B
Difficulty: Easy

101. Ryan, the marketing manager at a company, decides to invest more money to
promote a technology that has earlier failed at the market due to its technical
incompetency. Ryan is unwilling to accept that the product lacks the competitive
edge to survive in the market. He is not ready to admit his mistakes and applies
more resources to pursue a course of action that is not working. This type of
decision-making trap is known as _____.
B. escalating commitment
C. framing error
D. strategic opportunism
Answer: B
102. _____ unlocks creativity in decision making through a process of experiencing,

ideation, and prototyping.
A. Problem solving
B. Escalating commitment
C. Business Intelligence
D. Design thinking
Answer: D
Difficulty: Easy
103. The ideation step in design thinking involves:

A. accepting problems as they are delivered.

B. defining problems by research and observation.
C. visualizing and brainstorming potential solutions in collaboration with others.
D. looking for
E. Answers to assigned problems through standard procedures.
F. testing and modifying the potential solution over and over to achieve the best
outcome.
Answer: C
Difficulty: Easy
104. Roberto is good with electronic devices. He learns their functions fast and can
operate new gadgets well. Which of the following can best describe Roberto’s
ability?
A. Technological competency
B. Business competency
C. Information competency
D. Entrepreneurial competency
E. Analytical competency
Answer: A
105. Ayesha, an assistant manager of a retail chain, is always inspecting areas for
possible issues that could hinder smooth functioning of the business. She always
anticipates a problem or an opportunity and takes appropriate actions in advance.
Ayesha can be referred to as a _____.
A. problem solver
B. problem maker
C. problem avoider

D. problem creator
E. problem seeker
Answer: E
Difficulty: Hard
106. Henry takes time to examine problems and breaks them down into segments to see
where the actual problems lie and how they can be solved. He divides the problems
into smaller components and then addresses them in a logical and integrated
fashion. Henry’s approach to problem solving is an example of _____.
A. problem seeking
B. systematic thinking
C. multidimensional thinking
D. intuitive thinking
E. strategic opportunism
Answer: B
Difficulty: Hard
107. Priya, a manager at an IT firm, has to make a decision on the amount of money to
be allocated for purchasing five new laptops for her team members. She is aware of
the current price of the laptops and has the information about the amount of money
spent on purchasing new laptops the previous year. This type of environment that is
ideal for decision-making is known as a(n) _____.
A. structured environment
B. risk environment

Answer: C
108. Aara does not seem to be as productive as she usually is. Afreen, her manager, is
concerned about her performance. Afreen wants to talk to Aara and solve the
problem. Which of the following is the first step Afreen should take in the decision-
making process?
A. Generate and evaluate alternative solutions to improve her performance
B. Choose a preferred course of action for performance improvement
C. Identify and define the problem that is causing the productivity issues
D. Talk to Aara’s family
E. Evaluate solutions before consulting Aara
Answer: C
Difficulty: Hard
109. “We cannot rely on Stephen. He also worked for the same company Anna did. And
we all know how little we could rely on her.” This statement is an example of a(n)
_____.
B. conjunction fallacy
D. anchoring bias
E. framing error
Answer: C
Difficulty: Hard

110. Alejandro is assigned the task of marketing a new experimental drug to consumers
in a developing country. He is not aware of the potential side-effects of the drug.
Moreover, Alejandro does not know if there is a demand for this drug in that
developing country. He is unable to even assign probabilities to the likely outcomes
of his marketing strategies to sell this drug. The decision-making environment of
Alejandro can be referred to as a(n) _____.
A. uncertain environment
B. risk environment
Answer: A
111. Jiao is the assistant manager in a bank. She notices that few of her team members
have become very complacent and they no longer follow quality control procedures.
However, Jiao ignores this information and does not take any action to rectify this
threat to performance. Usually, she passively gathers information and is unwilling
to deal with problems. In this scenario, Jiao can be regarded as a _____.
A. problem defender
B. problem avoider
C. problem claimer
D. problem seeker
E. problem solver
Answer: B

112. Vikram is a very successful car salesman who generates a lot of revenue for his
firm. His manager is impressed with his performance and hires his younger brother
as a car salesman in the firm, assuming that he will be as successful as Vikram in
selling cars. However, Vikram’s brother fails to live up to the expectations. The
type of decision-making error made by Vikram’s manager in this scenario is known
as _____.
C. adjustment bias
D. lack-of-participation error
E. representativeness bias
Answer: E
113. Melissa has been assigned to implement performance improvement procedures in

her organization. She is in the final stage of the decision-making process. In order
to make sure that the performance improvement procedures she implemented have
been effective, she should _____.
A. analyze the performance improvement procedures
B. identify and define the factors affecting performance
C. generate and evaluate alternative course of action
D. choose a preferred course of action
E. evaluate the results
Answer: E

Essay
114. What is the use of internal and external information in organizations?
Answer: At the organization’s boundaries, information in the external environment is

accessed. Managers use intelligence information to deal with customers,
competitors, and other stakeholders such as government agencies, creditors,
suppliers, and stockholders. Organizations also send vast amounts of public
information to stakeholders and the external environment. This often takes the form
of advertising, public relations messages, and financial reports that serve a variety
of purposes, ranging from image-building to product promotion to financial
documentation to damage control.
Within organizations, people need vast amounts of internal information to make decisions
and solve problems in their daily work. They need information from their
immediate work setting and from other parts of the organization. Internal
information flows downward in such forms as goals, instructions, and feedback; it
flows horizontally in ways that assist in cross-functional coordination and problem
solving; and it flows upward in such forms as performance reports, suggestions for
improvement, and even disputes. The ability of technology to gather and move
information quickly within an organization can be a great asset to decision making.
It helps top levels stay informed while freeing lower levels to make speedy
decisions and take the actions they need to best perform their jobs.
115. What are the five criteria that help in testing if available data is useful and
meaningful for decision making?
Answer: Data are raw facts and observations. In contrast, information is data made useful
and meaningful for decision making. We all have lots of access to data, but we
don’t always gather and use this data to create useful information that meets the test
of these five criteria:
1. Timely—The information is available when needed; it meets deadlines for decision
making and action.

2. High quality—The information is accurate, and it is reliable; it can be used with

confidence.
3. Complete—The information is complete and sufficient for the task at hand; it is as
current and up to date as possible.
4. Relevant—The information is appropriate for the task at hand; it is free from
extraneous or irrelevant material.
5. Understandable—The information is clear and easily understood by the user; it is free
from unnecessary detail.
116. Differentiate between programmed and nonprogrammed decisions.
Answer: Programmed decisions use solutions or decision rules already available from
past experience. They are used to solve structured problems that are routine and
occur over and over again. As these problems are routine, they allow for decisions
to be programmed in advance and then put into use as needed.
Nonprogrammed decisions craft novel solutions to meet the demands of the unique
situation at hand. Managers use nonprogrammed decisions to deal with unstructured
problems that are new or unusual situations full of ambiguities and information
deficiencies. They often involve choice of strategies and objectives in some
situations of uncertainty.
117. What is the role of ethical reasoning in the decision-making process? How can
ethical reasoning be checked in decision making?
Answer: Each step in the decision-making process can and should be linked with ethical
reasoning. The choices made often have moral dimensions that might easily be
overlooked.

We sometimes have to take special care to stay tuned into virtues—things like fairness,
kindness, compassion, and generosity—and guard against vices—things like greed,
anger, ignorance, and lust. One way to check ethical reasoning in decision making
is to ask and
Answer pointed questions that bring critical thinking into the process. Gerald Cavanagh
and his associates, for example, suggest that a decision should test positive on these
four ethics criteria.
1. Utility—Does the decision satisfy all constituents or stakeholders?
2. Rights—Does the decision respect the rights and duties of everyone?
3. Justice—Is the decision consistent with the canons of justice?
4. Caring—Is the decision consistent with my responsibilities to care?
118. How does design thinking help in making creative decisions?
Answer: Design thinking unlocks creativity in decision making through a process of

experiencing, ideation, and prototyping.
• Experiencing involves defining problems by research and observation and not
simply accepting them as delivered.
• Ideation involves visualizing and brainstorming potential solutions in collaboration
with others.
• Prototyping involves testing and modifying the potential solution over and over to
achieve the best outcome.
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Chapter 07: Information and Decision Making

2. Analytical competency is the ability to understand new technologies and to use

Copyright © 2015 John Wiley & Sons, Inc. 7-1

Copyright © 2015 John Wiley & Sons, Inc. 7-2

AACSB: Analytical thinking

9. Sensation thinkers are comfortable with abstraction and unstructured situations.

Copyright © 2015 John Wiley & Sons, Inc. 7-3

12. Decision making in a certain environment requires the use of probabilities to

13. A risk environment is a decision situation in which factual information is available

14. Uncertain environments force managers to rely heavily on intuition, judgment,

Copyright © 2015 John Wiley & Sons, Inc. 7-4

Copyright © 2015 John Wiley & Sons, Inc. 7-5

Bloom’s Taxonomy: Knowledge

21. The availability bias bases a decision on similarity to other situations.

Copyright © 2015 John Wiley & Sons, Inc. 7-6

Learning Objective: 7.4

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26. The confirmation error is also known as the sunk-cost fallacy.

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38. The managers who are regarded as problem solvers:

Copyright © 2015 John Wiley & Sons, Inc. 7-12

40. Which of the following traits is associated with problem seekers?

41. A medical officer in a multispecialty hospital proactively finds customer service

Copyright © 2015 John Wiley & Sons, Inc. 7-13

AACSB: Application of knowledge

42. Problem solvers differ from problem seekers as problem solvers:

43. Which of the following is true about systematic thinking?

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48. _____ thinking is an ability to address many problems at once.

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60. Sensation thinkers differ from intuitive thinkers as intuitive thinkers:

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63. Which of the following is true of unstructured problems?

Copyright © 2015 John Wiley & Sons, Inc. 7-23

Copyright © 2015 John Wiley & Sons, Inc. 7-24

Bloom’s Taxonomy: Knowledge

Copyright © 2015 John Wiley & Sons, Inc. 7-25

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AACSB: Analytical thinking

76. Which of the following is the first step in a decision-making process?

Copyright © 2015 John Wiley & Sons, Inc. 7-28

78. A decision-making process ends with the:

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