Chapter 5 Ans

Student name:__________
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) The classical decision-making model assumes that managers have all of the information they
need in order to make the optimum decision.
⊚ true
⊚ false
2) The managers felt the company should hire an HR manager to help with its growing number
of employees, but the CEO felt they could get by handling HR issues themselves. Why spend
the money? The CEO chose an acceptable alternative instead of the optimum alternative.
This is known as a satisficing decision.
⊚ true
⊚ false
3) The first step in decision making is to generate a set of feasible alternative courses of action
in response to the opportunity or threat.
⊚ true
⊚ false
4) While assessing the practicality of alternatives, managers must decide whether they have the
capabilities and resources required to implement the alternative, and they must be sure that
the alternative will not threaten the attainment of other organizational goals.
⊚ true
⊚ false
5) In the decision-making process, the step that compares what actually happened to what was
expected to happen as a result of the decision is the process of choosing among alternatives.
⊚ true
⊚ false
6) Fred hated interviewing job candidates, so he hired the first person he interviewed. It had
always worked for him before, so he was surprised when the new employee didn’t work out.
Fred’s mistake was that he used a heuristic to simplify the decision-making process.
⊚ true
⊚ false
7) Susan always hires women for her sales positions because she believes men are too
aggressive and scare off customers. Susan demonstrates the source of bias called illusion of
control.
⊚ true
⊚ false
8) Joe decided to expand his business by buying a competitor that was going bankrupt.
Unfortunately, the company had gone too far to be salvaged, but Joe continued to invest
money in it because he felt responsible for the decision to buy it and didn’t want to give up.
This illustrates the concept of escalating commitment.
⊚ true
⊚ false
9) Group decision making becomes less important when managers demonstrate biases in their
decision making.
⊚ true
⊚ false
10) Most of the team agreed that hiring a consultant was the best option, but Geno pointed out
that consultants are expensive, might not know their industry well, and might waste a lot of
their time. Geno was demonstrating rationalization.
⊚ true
⊚ false
11) Perry is a valued member of the team. They rely on him to come up with novel ideas to solve
problems. Perry’s skill is creativity.
⊚ true
⊚ false
12) Personal mastery involves being better than anyone else at your particular skill.
⊚ true
⊚ false
13) The nominal group technique is especially useful when an issue is not controversial and
when different managers are expected to champion a similar course of action.
⊚ true
⊚ false
14) Padma was asked to oversee the new laundry detergent product, from the original idea for the
detergent through the marketing of it. Padma is an entrepreneur.
⊚ true
⊚ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
15) Decisions that have been made many times in the past and for which managers have rules
and guidelines about how to make similar decisions in the future are known as ________
decisions.
A) nonprogrammed
B) judgment
C) programmed
D) optimum
16) When an organization's accounting department decides to send out a bill to a new customer,
this represents a(n) _____ decision.
A) programmed
B) nonprogrammed
C) intuitive
D) groupthink
17) Rekha, a buyer, orders raw materials when the raw materials inventory reaches a certain
point. This is an example of which type of decision?
A) intuition
B) satisficing
C) nonprogrammed
D) programmed
18) The manager of a charity asks the board of directors for permission to hire temporary help
when the regular secretary goes on vacation. This is an example of which type of decision?
A) programmed
B) groupthink
C) nonprogrammed
D) intuition
19) Maurice, a plant foreman, hires an additional worker whenever overtime hours for the
previous month increase by more than 25 percent. This is an example of which type of
decision?
A) intuition
B) groupthink
C) satisficing
D) programmed
20) Nathaniel, the accountant for a small firm, always pays the real estate taxes seven days
before they are due. This represents which type of decision?
A) satisficing
B) programmed
C) intuition
D) nonprogrammed
21) What do managers do to regulate routine activities?

A) They create a mission statement.
B) They establish rules and guidelines.
C) They create cross-functional teams.
D) They facilitate a strong organizational culture.
22) An organization's finance department decides to go to the company's usual bank and take out
a loan whenever the company's revenues for the month are projected to be less than its
expenses. What type of decision does this represent?
A) optimum
B) satisficing
C) programmed
D) risk
23) You are a manager who wants to give some of your programmed decisions to your assistant
to leave you more time to devote to nonprogrammed decisions. Considering this, which
action would you delegate to your assistant?
A) how much to invest in a new product
B) whether to expand into a new market
C) when to time a new advertising campaign
D) billing customers
24) Nonroutine decisions made in response to novel situations in business are known as
________ decisions.
A) devil's advocacy
B) ambiguous
C) groupthink
D) nonprogrammed
25) A floral company is trying to decide whether or not to launch a new product nationally. This
represents a(n) ________ decision.
A) programmed
B) intuitive
C) groupthink
D) nonprogrammed
26) Widgets, Incorporated is deciding whether or not it should change its manufacturing process
to a new type of technology. This represents a(n) ________ decision.
A) programmed
B) nonprogrammed
C) groupthink
D) intuitive
27) A lingerie company is attempting to decide whether or not to launch a new $10 million
advertising campaign for a product whose sales have been lagging well below its projected
sales. This represents which type of decision for the organization?
A) optimum
B) intuitive
C) nonprogrammed
D) satisficing
28) An organization that has been focusing on a target market located in the eastern part of the
United States is deciding whether to expand its sales to the West Coast of the United States.
Which type of decision is being made by the organization?
A) intuition
B) nonprogrammed
C) groupthink
D) satisficing
29) When fire chiefs manage firefighters battling hazardous, out-of-control fires, they frequently
have to make on-the-spot decisions that will protect the lives of the firefighters, save the lives
of others, control the fires, and preserve property—decisions made in emergency situations
involving high ambiguity and rapidly changing conditions. This is an example of which type
of decision making?
A) programmed
B) routine
C) groupthink
D) intuition
30) The classical model of decision making specifies how decisions should be made by
managers. This is a way of saying that this model of decision making is
A) heuristic.
B) prescriptive.
C) incomplete.
D) intuitive.
31) The classical model of decision making assumes that

A) the number of alternatives is so great that a manager could never come close to
evaluating them all.
B) managers have little information to use in making a decision.
C) managers have access to all the information they need to make the optimum decision.
D) managers have neither the time nor the money to search for all possible alternative
solutions.
32) The most appropriate decision in light of what managers believe to be the most desirable
consequences for the organization is called the ______ decision.
A) tactical
B) optimum
C) rational
D) operational
33) Which model explains the reasons for the inherently uncertain and risky nature of decision
making and the making of satisfactory rather than optimum decisions by managers?
A) logical model
B) administrative model
C) perspective model
D) rational model
34) In the administrative model of decision making, when the number of possible alternatives to
a decision is so large that the manager cannot possibly evaluate all of them before making a
decision, which of the following has occurred?
A) satisficing
B) bounded rationality
C) brainstorming
D) devil's advocacy
35) Managers in the field of biotechnology know that new drugs have a 10 percent chance of
passing advanced clinical trials and always assign probabilities to the results of clinical trials.
This is an example of
A) risk.
B) uncertainty.
C) bounded rationality.
D) incomplete information.
36) When managers know the possible outcomes of a decision and can assign probabilities to
each of these outcomes in terms of their likelihood of occurrence in the future, this is known
as
A) uncertainty.
B) certainty.
C) risk.
D) bounded rationality.
37) A software firm is considering introducing a new product on the market. However, managers
cannot estimate the probability of success for the new product. Which term best describes the
situation?
A) risk
B) uncertainty
C) bounded rationality
D) incomplete information
38) When managers cannot assign probabilities of future occurrence to possible alternatives with
a decision, this is known as
A) certainty.
B) risk.
C) bounded rationality.
D) uncertainty.
39) When the meaning of the information available to a manager is unclear and can be
interpreted in several ways, the information is
A) certain.
B) ambiguous.
C) bounded.
D) irrational.
40) A manager considers a limited sample of the potential alternative solutions for a problem and
selects one that is acceptable instead of attempting to select the optimum solution. This
strategy is called
A) programmed.
B) intuition.
C) certainty.
D) satisficing.
41) You are a manager in an organization that needs to advertise a product. To do this, you
decide to use satisficing. Considering this, which action would you take?
A) review all the advertising media available in the area
B) consider every advertising technique that can be used for your product
C) select three advertising agencies to pitch a proposal
D) ask all the advertising agencies in the area to make a pitch
42) Instead of calling a hundred possible windshield suppliers, the purchasing manager for an
auto parts store decides to call three suppliers of automobile windshields for a bid on an order
for 100 windshields. What strategy does this represent?
A) nonprogrammed
B) illusion of control
C) satisficing
D) programmed
43) Ferdinand is considering opening a theater in a mid-size city. However, before he does this,
he wants to lower the risk of such an endeavor. Many theaters have opened before but have
failed because of financial difficulties. Ferdinand has some experience as an actor and as a
stage manager, but this will be his first real foray into the business side of things. To best
increase his chances of achieving his goal, Ferdinand should
A) plan the slate of theater productions for the first year based on his intuition of what
will be successful in this particular community.
B) conduct a survey to determine local cultural tastes, evaluate other cities as options,
and search for a central location with a reasonable rent.
C) contact well-known actors who he feels certain will be a big draw in his city’s
theater-going community.
D) talk to a friend who works for a successful theater in another state and take his advice
on what shows to choose and how much to charge.
44) To use a programmed decision in dealing with occasional company overspending, a manager
would
A) have a brainstorming session to gather possible solutions to the overspending.
B) listen to the opinions of various employees about why the company overspends.
C) conduct an analysis to determine the possible causes for overspending.
D) devise procedures to take every month to manage spending.
45) Based on the work of March and Simon's administrative model of decision making, the first
step in the managerial decision-making process is to
A) choose among alternatives.
B) assess alternatives.
C) implement the chosen alternative.
D) recognize the need for a decision.
46) Which step of the decision-making process requires managers to be sure all the information
available is brought to bear on the problem or issue at hand while ranking the options?
A) assess alternatives
B) choose among alternatives
C) recognize the need for a decision
D) generate alternatives
47) Levona, a production manager, was engaged in the development of a core component of a
machine. She realized that the component would not be ready for QC testing as per the fixed
deadline and suggested allotting two more weeks for its complete development or sending
only a part of it for testing in the first cycle. Which two decision-making steps does this
represent?
A) choose among alternatives and assess alternatives
B) generate alternatives and choose among alternatives
C) recognize the need for a decision and generate alternatives
D) recognize the need for a decision and choose among alternatives
48) Adora, a marketing manager, is creating the advertising budget for a new product launch. She
is trying to determine the amount of money that her company can afford to spend on
advertising this new product. In the context of decision making, which criterion for
evaluating alternative courses of action is Adora implementing?
A) legality
B) ethicalness
C) economic feasibility
D) practicality
49) When managers decide that they have the capabilities and resources required to implement
an alternative, and they are sure that the alternative will not threaten the attainment of other
organizational goals, they are focusing on which criterion for evaluating alternative courses
of action?
A) legality
B) ethicalness
C) economic feasibility
D) practicality
50) Emilio, a manager, performs a financial analysis of several investment alternatives in order to
determine which alternative is most likely to impact the organization's profitability. Emilio is
focusing on
A) bounded rationality.
B) ethical intention.
C) economic feasibility.
D) dialectical inquiry.
51) Bri, a manager, is attempting to determine whether her company has the capability and the
resources to produce one of several possible new products. In the context of decision making,
on which criterion for evaluating alternative courses of action is Bri focusing?
A) practicality
B) ethicalness
C) legality
D) economic feasibility
52) You are a manager assessing possible alternatives for the solution of a problem. To do this,
you have to determine the net financial payoff of each alternative. Which criterion for
evaluating alternative courses of action do you have to implement to accomplish this?
A) economic feasibility
B) practicality
C) ethicalness
D) legality
53) A plant manager wants to initiate a diversity training program in his plant. He is considering
whether his department has enough extra people to cover for the time his employees will be
engaged in the classes. Which criterion for evaluating alternative courses of action is the
manager implementing?
A) legality
B) practicality
C) devil's advocacy
54) You are a manager assessing possible alternatives for the solution of a quality problem in his
department. As part of this process, you want to determine if a possible alternative will
threaten other company projects. To accomplish this, which criterion for evaluating
alternative courses of action will you implement?
A) economic feasibility
B) practicality
C) legality
D) ethicalness
55) A chemical company was considering where to dump potentially dangerous chemicals, and
decided that they were not toxic enough to cause much damage, so they used a nearby
stream. Which criterion for evaluating alternative courses of action did the company fail to
consider?
A) ethicalness
B) practicality
C) legality
56) An office supply company has received a poor rating from customers for one of its newly
launched products. Qiao, a top manager at the company wants to find out why this product
performed poorly. To accomplish this, which decision-making step should Qiao implement?
A) generate alternatives
B) learn from feedback
D) implement the chosen alternative
57) What is the final step in the managerial decision-making process?

A) generate alternatives
B) learn from feedback
D) implement the chosen alternative
58) Ali is the new owner of a major league baseball team. Over the last several years, the team
has consistently had a losing record and, as a result, attendance is slumping. Ali is currently
evaluating potential solutions, including revamping the affiliated minor league team, moving
the team to a new city, and hiring all new coaching staff. Ali’s next step is to
A) make a list of the alternatives.
B) choose one of the alternatives.
C) define the problem.
D) learn from feedback.
59) To access the ethicalness of an alternative for a restaurant, the manager would
A) decide if the cost of advertising on both TV and radio is affordable.
B) decide if serving alcoholic beverages would be legal in a city.
C) determine if the lower-priced beef source used inhumane methods to slaughter the
livestock.
D) determine if profits are high enough to open an additional restaurant location in
another city.
60) Every time Mario does payroll, he underpays the state taxes and believes he has more money
than he does for other projects. For Mario, this is a(n) ________ error.
A) illusion of control
B) representativeness bias
C) confirmation bias
D) systematic
61) Pascal is convinced that his salesforce is the reason sales are down, so he fires half of them.
When sales don’t improve, he fires the other half, even though his sales manager told him
that the reason sales are down is that their main competitor came out with a product that is
better than theirs. Pascal is demonstrating
A) illusion of control.
B) representativeness bias.
C) confirmation bias.
D) escalating commitment.
62) A source of cognitive bias that results from the tendency to generalize inappropriately from a
small sample or from a single vivid event or episode is
A) illusion of control.
B) representativeness bias.
C) confirmation bias.
D) escalating commitment.
63) Marlin had a small construction company that couldn’t take all the business that came to it,
so Marlin hired more workers and expanded his business rapidly. Then a recession hit and
business dropped off, but Marlin decided to keep all of his workers on payroll and even hire a
few more until it picked up again. When it didn’t, Marlin went out of business due to his high
costs. Which source of cognitive bias did Marlin exhibit?
A) illusion of control
B) representativeness bias
C) confirmation bias
D) escalating commitment
64) The pattern of faulty and biased decision making that occurs in groups whose members strive
for agreement at the expense of good decision making is called
A) brainstorming.
B) groupthink.
C) devil's advocacy.
65) Albert believed that the team’s decision to move ahead with the product launch was
influenced by the group leader’s strong position on the subject. Although he has strong
reservations, Albert decided not to voice them and go along with the decision. Albert’s
decision was influenced by
A) confirmation bias.
B) groupthink.
C) devil's advocacy.
66) The marketing managers of Compliant, Ltd., are so determined to agree on an important
decision to launch a product that they ignore information that a similar product already exists
in the market and that the barriers to entry into the market are high. This refers to which
decision-making process?
A) dialectical inquiry
B) devil's advocacy
C) groupthink
D) intuition
67) Why is group decision making considered beneficial?

A) It takes less time than individual decision making.
B) It is easy to get two or more managers to agree to the same solution.
C) It allows more information processing and correction of errors.
D) It cannot be undermined by biases.
68) A critical analysis of a preferred alternative to ascertain its strengths and weaknesses before it
is implemented, with the purpose of identifying all the reasons that might make the preferred
alternative unacceptable, is
A) dialectical inquiry.
B) devil's advocacy.
C) groupthink.
D) the Delphi technique.
69) Nancy is a manager involved in group decision making with other managers. She wants to
make sure that the group avoids groupthink. Which action should she take to ensure that the
group makes the best possible decision?
A) Encourage the group to agree with one of the alternatives to support esprit de corps
and to facilitate a quick resolution.
B) Challenge the way the group evaluates alternatives and point out some reasons why
the alternative preferred by the group is not acceptable.
C) Make sure the group has a healthy mix of women and men and that various ethnic
backgrounds are represented.
D) Staunchly support one of the alternatives, providing detailed data to back her position.
70) To counteract groupthink on a merchandising team, a manager may decide to bring in two
A) female coworkers because five of the nine current members are women.
B) coworkers of Mexican descent because none of the current members have a Latino
background.
C) coworkers who agree with the ideas of most of the current members.
D) male coworkers who agree with the ideas of four current female members in order to
create a majority.
71) Managers can increase their ability to make nonprogrammed decisions that will allow them
to adapt to, modify, and alter their task environments so that they can continually increase
organizational performance through organizational
A) learning.
B) satisficing.
C) group thinking.
D) diversity.
72) In managerial decision making, the ability of a manager to discover novel ideas that lead to
alternative courses of action for the organization to use for solving a particular problem is
known as
A) groupthink.
B) satisficing.
C) innovation.
D) creativity.
73) To create a learning organization, managers must empower employees and allow them to
experiment, create, and explore what they want through developing a sense of
A) personal mastery.
B) mental models.
C) team learning.
D) shared vision.
74) Jamaica, a manager, wants to promote creativity in his company. To do this, which action
would she take?
A) Allow a subordinate to proceed on a work project even though she does not agree
with how the subordinate wants to do the work.
B) Keep a close eye on subordinates to make sure they are working steadily and
efficiently to find a solution to a problem.
C) Set a strict deadline on a subordinate, thereby using this pressure to motivate the
subordinate to think of novel solutions to a problem.
D) Inform a subordinate not to think of outlandish ideas to solve a problem, but rather
think of ideas that seem practical.
75) Franchesca, a manager of the research and development team of an organization, challenges
her subordinates to "think outside the box" to improve the way the unit does its work.
Franchesca is focusing on
A) personal mastery.
B) mental models.
C) team learning.
D) shared vision.
76) A sales manager wants to promote a shared vision among the staff. Considering this, the
manager should
A) emphasize how using creativity can enhance the development of a learning
organization.
B) have some of the sales staff try one sales method and have others try another
approach.
C) encourage his sales staff to think of different methods to sell a product.
D) talk with his sales staff about the way they should all treat customers.
77) The idea that one level of learning affects other levels is part of the ________ principle of
creating a learning organization.
A) systems thinking
B) mental models
C) team learning
D) shared vision
78) In Senge’s principles for creating a learning organization, he posits that mental models
should be
A) basic and understandable.
B) complex and challenging.
C) shared and accepted.
D) fixed and unchanging.
79) According to Senge, who makes the most important decisions within an organization, which
also increases organizational learning?
A) top managers, like the CEO
B) teams or groups of employees
C) individuals
D) entry-level managers
80) A group of managers meets face-to-face and generates and debates a wide variety of
alternatives from which to make a decision. What is this process of decision making called?
A) Delphi technique
B) dialectical inquiry
C) brainstorming
D) nominal group technique
81) After one person shares an idea, the next thing that should happen in a brainstorming session
is
A) criticism of the idea.
B) sharing of other ideas.
C) acceptance and implementation of the idea.
D) ranking of the idea.
82) The main reason for the loss of productivity in brainstorming is
A) complex mental models.
B) groupthink.
C) production blocking.
83) Sometimes in a brainstorming session, group members cannot simultaneously make sense of
all the alternatives being generated, think up additional alternatives, or remember what they
were thinking. This problem is known as
A) production blocking.
B) groupthink.
C) nominal group problem.
84) When an issue is controversial and when different managers might be expected to champion
different courses of action, what is a proven technique for encouraging creativity?
A) production blocking technique
B) brainstorming technique
C) team learning technique
85) In a meeting, after hearing a member describe a problem to be addressed, all other members
of the group first wrote down ideas and solutions. After this, everyone shared those
suggestions without criticism. The group, one by one, clarified, critiqued, and then discussed
the alternatives in the sequence in which they were first proposed. Finally, each member
ranked all the alternatives, and the highest-ranking alternative was chosen. Which decision-
making technique did the group implement?
A) Delphi technique
C) brainstorming
86) What is a written approach to creative problem solving that brings distant managers together
to brainstorm?
A) brainstorming
C) Delphi technique
87) Which action is a part of the Delphi technique of group decision making?
A) Group members write down, read their suggestions, discuss, and then rank the
alternatives.
B) Group members engage in videoconferencing and present their ideas.
C) Group members respond in writing to questions posed by the group leader.
D) Five to fifteen managers meet in a closed-door session and decide for the group.
88) Typically, when using the nominal group technique, managers meet
A) in a closed-door session.
B) with their direct reports.
C) via video conference.
D) after an exchange of ideas via email.
89) Pat is the manager of the tennis division of a large sporting goods company. An employee
named Aretha shows great promise but seems to lack the confidence to share her creative
ideas. Based on what you know about promoting creativity, which action should Pat take?
A) Share Aretha’s idea for a square-shaped tennis racquet with the company's CEO, even
though the idea might not be practical.
B) Share Aretha’s idea for a square-shaped tennis racquet in a group session, in which
members are encouraged to criticize the idea.
C) Point out to Aretha the drawbacks of her idea for a square-shaped tennis racquet and
supervise her more closely as she thinks of other ideas.
D) Praise Aretha for her square-shaped tennis racquet idea and allow her to think of more
ideas without any hands-on supervision.
90) To enhance the interaction between members of a brainstorming group, a manager should
A) allow members to present an unlimited number of ideas with no time constraints.
B) encourage members to "piggyback."
C) refuse to let members debate the ideas presented.
D) present to members an outline about the problem being faced.
91) A manager who takes "ownership" of a project and provides the leadership and vision that
takes a commodity from the idea stage to the final customer is a product
A) innovator.
B) advocate.
C) champion.
D) satisficer.
92) If you want to develop a skunkworks, which action would you take?
A) Separate a group from the normal operations of an organization.
B) Combine people from various departments to form a group.
C) Take "ownership" of a project and form a group that supports your ownership.
D) Include people who have similar ideas about an organization into a group.
93) A group of intrapreneurs who are separated from the normal operation of an organization in
order to develop new products with a relatively brief development time is known as a(n)
A) product champion.
B) innovator.
C) skunkworks.
D) satisficer.
94) Corrine is a manager for a fragrance company that is starting a line of organic perfumes. Her
employees have mixed feelings about this idea. Some criticize it as being impractical, but
others are enthusiastic about it, despite the costs involved in producing perfumes with
organic ingredients. Which action should Corrine take to efficiently and effectively ensure
that the company’s organic perfume line reaches the end consumer?
A) Recognize that one employee is the staunchest advocate for organic perfume and
encourage her to take charge of the project.
B) Form a group of employees to come up with ideas to implement the product and
constantly check in with them to monitor their progress.
C) Offer bonuses for employees who think of good ideas for implementing organic
perfume and spend money on advertising their ideas.
D) Tell employees who support the idea of organic perfume that they should start their
own company if the idea is rejected.
95) A human resource manager for a large company wants to hire people who show strong
potential to become intrapreneurs. Considering this, the manager would most likely hire the
applicant who
A) achieved success with a project in his previous job, but downplays his contribution to
the project.
B) achieved success with a safe project in her previous job and opposed riskier projects.
C) took responsibility for the failure of a project in his previous job and is confident he
will correct his mistakes.
D) took responsibility for the successes in her previous job, but blamed others for the
failures.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
96) Compare and contrast programmed and nonprogrammed decision making in organizations.
Give an example of each.
Student examples will vary. Programmed decision making is routine and automatic. It arises in
situations that an organization has faced many times before, and for which it can develop rules
and guidelines to be applied. For example, setting up procedures on how to order office supplies
is a programmed decision. Nonprogrammed decision making is nonroutine. It arises in situations
that are new, ambiguous, and/or complex. No ready-made decision rules have been set down.
The likelihood of error is much greater in nonprogrammed decision making than in programmed
decision making. For example, deciding which areas of the United States are best for opening a
new chain restaurant is a nonprogrammed decision.
97) What is intuition? Give an example to support your definition. Should managers use intuition
in decision making? Why or why not?
Student examples will vary. Intuition is the set of feelings, beliefs, and hunches that come readily
to mind, require little effort and information gathering, and result in on-the-spot decisions.
Sometimes managers have to make rapid decisions and do not have time to carefully consider the
issues involved. They must rely on their intuition to quickly respond to a pressing concern.
For example, when fire chiefs, captains, and lieutenants manage firefighters battling dangerous,
out-of-control fires, they often need to rely on their expert intuition to make on-the-spot
decisions that will protect the lives of the firefighters, save the lives of others, contain the fires,
and preserve property—decisions made in emergency situations entailing high uncertainty, high
risk, and rapidly changing conditions. In other cases, managers do have time to make reasoned
judgments, but there are no established rules to guide their decisions. Regardless of the
circumstances, making nonprogrammed decisions can result in effective or ineffective decision
making.
98) March and Simon developed three important concepts in their administrative model of
decision making. Discuss these three concepts.
Student examples will vary. The following is a sample answer. The three important concepts in
this model are bounded rationality, incomplete information, and satisficing decisions. March and
Simon believed that managers do not have the mental ability to absorb and evaluate all of the
possible relevant information for a complex decision.
 March and Simon coined the term "bounded rationality" to describe the situation in
which the number of alternatives a manager must identify is so great and the amount of
information so vast that it is difficult for the manager to even come close to evaluating it
all before making a decision. For example, to determine whether to start a new product
line, a manager could be swamped with data from various surveys and research reports,
opinions of experts and fellow co-workers, and economic indicators from the stock
market. As a result, the manager would have difficulty evaluating all this information to
make a decision.
 Information is incomplete because the full range of decision-making alternatives is
unknowable in most situations, and the consequences associated with known alternatives
are uncertain. Information is incomplete because of risk and uncertainty, ambiguity, and
time constraints. For example, a manager might want to find out why a certain product
sold below expectations. The data the manager receives could indicate some of the
reasons. However, other reasons might not show up in the data. As a result, the action
needed to improve the product's performance is uncertain.
 Satisficing is exploring a limited sample of all potential alternatives. When managers
satisfice, they search for and choose acceptable, or satisfactory, ways to respond to
problems and opportunities rather than trying to make the optimal decision. For example,
the managers of the clothing company might realize that an overhaul of their product is
required to significantly increase profits. However, such action is expensive and risky
because there is a chance that the overhaul will not have the desired outcome. As a result,
the managers choose a safer option, namely changing one type of clothing, such as shirts,
which helps with profitability but does not have the significant outcome needed.
99) In assessing alternatives, explain the four criteria to evaluate the pros and cons of alternative
courses of action.
Student examples will vary. The following is a sample answer. Once managers have generated a
set of alternatives, they must evaluate the advantages and disadvantages of each one. The key to
a good assessment of the alternatives is to define the opportunity or threat exactly and then
specify the criteria that should influence the selection of alternatives for responding to the
problem or opportunity. One reason for bad decisions is that managers often fail to specify the
criteria that are important in reaching a decision. Successful managers use four criteria to
evaluate the pros and cons of alternative courses of action:
 Legality: Managers must ensure that a possible course of action will not violate any
domestic or international laws or government regulations. For example, if a credit card
company wants to implement new debt-collection practices and late-fee charges, it must
make sure that in doing so it does not violate any laws or government regulations.
 Ethicalness: Managers must ensure that a possible course of action is ethical and will not
unnecessarily harm any stakeholder group. Many decisions managers make may help
some organizational stakeholders and harm others. When examining alternative courses
of action, managers need to be clear about the potential effects of their decisions. For
example, before staring the production of a new product, a company should examine the
environmental footprint it would leave behind if this product were produced. The
company must make sure it does not cause permanent ecological damage and threaten the
health and safety of people living in an area.
 Economic feasibility: Managers must decide whether the alternatives are economically
feasible, that is, whether they can be accomplished, given the organization's performance
goals. Typically managers perform a cost-benefit analysis of the various alternatives to
determine which one will have the best net financial payoff. For example, if a company
wants to expand by opening 100 new restaurants, it must make sure that the cost of
opening these restaurants does not exceed the money obtained from them.
 Practicality: Managers must decide whether they have the capabilities and resources
required to implement the alternative, and they must be sure the alternative will not
threaten the attainment of other organizational goals. At first glance, an alternative might
seem economically superior to other alternatives, but if managers realize it is likely to
threaten other important projects, they might decide it is not practical after all. For
example, if a company is considering opening an online store, it must make sure that
doing this will threaten its brick-and-mortar stores.
100) Researchers have identified a six-step model that can be used by managers who are faced
with an important decision. Define and discuss these six steps.
Using the work of March and Simon as a basis, researchers have developed a step-by-step model
of the decision-making process and the issues and problems that managers confront at each step.
The six steps are (1) recognize the need for a decision; (2) generate alternatives; (3) assess
alternatives; (4) choose among alternatives; (5) implement the chosen alternative; (6) learn from
feedback.
Students can give any two of the following explanations.
 Recognize the need for a decision: Some stimuli usually spark the realization that a
decision must be made. These stimuli often become apparent because changes in the
organizational environment result in new kinds of opportunities and threats.
 Generate alternatives: Having recognized the need to make a decision, a manager must
generate a set of feasible alternative courses of action to take in response to the
opportunity or threat. Management experts cite failure to properly generate and consider
different alternatives as one reason why managers sometimes make bad decisions.
 Assess alternatives: The key to a good assessment of the alternatives is to define the
opportunity or threat exactly and then specify the criteria that should influence the
selection of alternatives for responding to the problem or opportunity. In general,
successful managers use four criteria to evaluate the pros and cons of alternative courses
of action: legality, ethicalness, economic feasibility, and practicality.
 Choose among the alternatives: Once the set of alternative solutions has been carefully
evaluated, the next task is to rank the various alternatives and make a decision.
 Implement the chosen alternative: Once a decision has been made and an alternative has
been selected, it must be implemented, and many subsequent and related decisions must
be made.
 Learning from feedback: Effective managers always conduct a retrospective analysis to
see what they can learn from past successes or failures. The procedure should include
these steps:
 Compare what actually happened to what was expected to happen as a result of the
decision.
 Explore why any expectations for the decision were not met.
Derive guidelines that will help in future decision making.
101) What are the four sources of bias at the individual and group levels? Give an example of
each.
tudent examples will vary.

Confirmation bias is a source of cognitive bias that results from the tendency to base decisions
on one’s existing beliefs even if evidence shows that those beliefs are wrong.
Representativeness bias is a source of cognitive bias that results from the tendency to generalize
inappropriately from a small sample or from a single vivid event or episode.
Illusion of control is a source of cognitive bias that results from the tendency to overestimate
one’s own ability to control activities and events.
Escalating commitment is a source of cognitive bias that results from the tendency to commit
additional resources to a project even if the evidence shows that the project is failing.
102) Identify the advantages and disadvantages of group decision making.
The advantages of group decision making include

 It is less likely to be biased and make judgment errors.
 It can draw on the combined knowledge and skills of all group members.
 It can process more information.
 It allows members to correct one another's errors.
 It increases the probability of successful implementation.
 It generally takes longer.
 In group decision making, gaining agreement may be difficult.
 It can be undermined by biases. A major source of group bias is groupthink.
103) Define groupthink. Explain a technique that counteracts groupthink.
Groupthink is a pattern of faulty and biased decision making that occurs in groups whose
members strive for agreement among themselves at the expense of accurately assessing
information relevant to a decision.
The existence of groupthink raises the question of how to improve the quality of group and
individual decision making so managers make decisions that are realistic and are based on
thorough evaluation of alternatives. One technique known to counteract groupthink is devil's
advocacy. Devil's advocacy is a critical analysis of a preferred alternative to ascertain its
strengths and weaknesses before it is implemented. The devil's advocate critiques and challenges
the way the group evaluated alternatives and chose one over the others. The purpose of devil's
advocacy is to identify all the reasons that might make the preferred alternative unacceptable. In
this way, decision makers can be made aware of the possible perils of recommended courses of
action. Devil's advocacy can thus help counter the effects of groupthink.
104) Managers can use a variety of techniques in group decision-making situations to
counteract situations in which the group is suffering from groupthink or cognitive biases.
Two such techniques have been shown to be especially useful in such situations. Discuss
these two techniques and give an example of each.
Student examples will vary. The following is a sample answer. The two techniques that have
been found to be most useful in groups suffering from groupthink or cognitive biases are devil's
advocacy and diversity.
Devil's advocacy is a critical analysis of a preferred alternative to ascertain its strengths and
weaknesses before it is implemented. Typically one member of the decision-making group plays
the role of devil's advocate. The devil's advocate critiques and challenges the way the group
evaluated alternatives and chose one over the others. The purpose of devil's advocacy is to
identify all the reasons that might make the preferred alternative unacceptable. In this way,
decision makers can be made aware of the possible perils of recommended courses of action. For
example, a group might come to an easy conclusion that a certain resource should be used to
produce a product because it is inexpensive to obtain. However, a devil's advocate in the group
could point out that the country producing most of this resource is having political problems that
might hamper production. Also, this country uses sweatshop labor that is unethical.
Another way to improve group decision making is to promote diversity in decision-making
groups. Bringing together managers of both genders from various ethnic, national, and functional
backgrounds broadens the range of life experiences and opinions that group members can draw
on as they generate, assess, and choose among alternatives. Moreover, diverse groups are
sometimes less prone to groupthink because group members already differ from each other and
thus are less subject to pressures for uniformity. For example, if a company wants to sell more
products to female consumers, they should make sure their decision-making groups have a
significant number of women, who can provide insight in choosing various alternatives.
105) Peter Senge has identified five principles that can be used by an organization to create "a
learning organization." Discuss any three of these principles.
Peter Senge’s five principles for creating a learning organization are personal mastery, complex
mental models, team learning, building a shared vision, and systems thinking.
Students can discuss any three of the following principles.
 For organizational learning to occur, top managers must allow every person in the
organization to develop a sense of personal mastery. Managers must empower employees
and allow them to experiment and create and explore what they want.
 As part of attaining personal mastery, organizations need to encourage employees to
develop and use complex mental models that are sophisticated ways of thinking that
challenge them to find new or better ways of performing a task to deepen their
understanding of what is involved in a particular activity.
 Managers must do everything they can to promote group creativity. Team learning
(learning that takes place in a group or team) is more important than individual learning
in increasing organizational learning.
 Managers must emphasize the importance of building a shared vision: a common mental
model that all organizational members use to frame problems or opportunities.
 Managers must encourage systems thinking—the effects of one level of learning on
another.
106) There are three important techniques that managers can use to promote creativity in
group decision-making situations. Discuss any two of these techniques.
To encourage creativity at the group level, organizations can use group problem-solving
techniques that promote creative ideas and innovative solutions. These techniques can also
prevent groupthink and help managers uncover biases. The two techniques discussed here are
brainstorming and nominal group technique.
Brainstorming is a group problem-solving technique in which managers meet face-to-face to
generate and debate a wide variety of alternatives from which to make a decision. Generally,
from 5 to 15 managers meet in a closed-door session and proceed like this:
 One manager describes in broad outline the problem the group is to address.
 Group members share their ideas and generate alternative courses of action.
 As each alternative is described, group members are not allowed to criticize it; everyone
withholds judgment until all alternatives have been heard. One member of the group
records the alternatives on a flip chart.
 Group members are encouraged to be as innovative and radical as possible. Anything
goes; and the greater the number of ideas put forth, the better. Moreover, group members
are encouraged to build on each other's suggestions.
 When all alternatives have been generated, group members debate the pros and cons of
each and develop a short list of the best alternatives.
 One manager outlines the problem to be addressed, and 30 or 40 minutes are allocated for
group members, working individually, to write down their ideas and solutions. Group
members are encouraged to be innovative.
 Managers take turns reading their suggestions to the group. One manager writes all the
alternatives on a flip chart. No criticism or evaluation of alternatives is allowed until all
alternatives have been read.
 The alternatives are then discussed, one by one, in the sequence in which they were
proposed. Group members can ask for clarifying information and critique each alternative
to identify its pros and cons.
 When all alternatives have been discussed, each group member ranks all the alternatives
from most preferred to least preferred, and the alternative that receives the highest
ranking is chosen.
107) You are a manager who works with managers employed in different cities. All of you are
working on developing the same new product. These managers encounter problems to the
ones you face. Even so, you are unable to meet face-to-face with them for any discussion.
Explain two ways you can solve this problem.
Answers will vary, but should include discussion of videoconferencing and the Delphi technique.
The following is a potential student answer.
Videoconferencing is one way to bring distant managers together to brainstorm. I could set up a
meeting in which the managers and I would interact via video, thereby allowing for the sharing
of ideas, problems, and possible solutions.
Also, I could use the Delphi technique, which is a written approach to creative problem solving.
As the group leader, I would write a statement of the problem and a series of questions to which
participating managers are to respond. After this, I would send the questionnaire to the managers,
asking them to generate solutions and mail the questionnaire back to me. Once I receive the
questionnaires, I would record and summarize the responses. I would then send the results back
to the participants, with additional questions to be answered before a decision can be made. The
process would be repeated until a consensus was reached and the most suitable course of action
was apparent.
108) Explain the different ways by which organizations can promote intrapreneurship.
Student examples will vary. The intensity of competition today, particularly from agile, small
companies, has made it increasingly important for large, established organizations to promote
and encourage intrapreneurship to raise their level of creativity and organizational learning. The
higher the level of intrapreneurship, the higher will be the level of learning and innovation.
Organizations can promote intrapreneurship in many ways.
 Product champions: One way to promote intrapreneurship is to encourage individuals to
assume the role of product champion, a manager who takes "ownership" of a project and
provides the leadership and vision that take a product from the idea stage to the final
customer. For instance, a breakfast cereal company could encourage a manager to take
ownership of a new organic cereal and thereby guide the development of this product
from the idea stage to the final customer.
 Skunkworks: A skunkworks is a group of intrapreneurs who are deliberately separated
from the normal operation of an organization. The idea is that if these people are isolated,
they will become so intensely involved in a project that development time will be
relatively brief and the quality of the final product will be enhanced. For example, a
telecommunications company that focuses on producing cell phones could develop a
skunkworks group to come up with ideas for a wide variety of products. The skunkworks
might think of creating a portable GPS device, a product that the company does not
currently produce. Because the skunkworks devotes a lot of time on this product, its
development will probably be carefully and fully considered, thereby enhancing its
quality and easing its implementation by the company.
 Rewards for creativity: To encourage managers to bear the uncertainty and risk
associated with the hard work of entrepreneurship, it is necessary to link performance to
rewards. Organizations must reward intrapreneurs equitably if they wish to prevent them
from leaving and becoming outside entrepreneurs who might form a competitive new
venture. For example, a company could provide bonuses to intrapreneurs based on their
contributions to the organization.
Answer Key
Test name: chapter 5
1) TRUE
2) TRUE
3) FALSE
4) TRUE
5) FALSE
6) TRUE
Heuristics are rules based on an individual’s experience that simplify the process of decision
making. They can lead to systematic errors in decision making.
7) FALSE
8) TRUE
Feelings of personal responsibility for a project apparently bias the analysis of decision makers
and may lead to escalating commitment. The managers decide to increase their investment of
time and money in a course of action and even ignore evidence that it is illegal, unethical,
uneconomical, or impractical.
9) FALSE
Many individual managers are likely to have difficulty identifying their own biases, so it is often
advisable for managers to scrutinize their own assumptions by working with other managers to
help expose weaknesses in their decision-making style. In this context, the issue of group
decision making becomes important.
10) FALSE
Geno was using the technique of devil’s advocacy. Devil's advocacy is a critical analysis of a
preferred alternative to ascertain its strengths and weaknesses before it is implemented.
11) TRUE
At the heart of organizational learning is creativity, which is the ability of a decision maker to
discover original and novel ideas that lead to feasible alternative courses of action.
12) FALSE
13) FALSE
14) FALSE
15) C
Programmed decision making is a routine, virtually automatic process. Programmed decisions
are decisions that have been made so many times in the past that managers have developed rules
or guidelines to be applied when certain situations inevitably occur.
16) A
17) D
18) A
or guidelines to be applied when certain situations inevitably occur. This is a programmed
decision because a rule has been established to be applied when a certain situation occurs.
19) D
20) B
or guidelines to be applied when certain situations inevitably occur. This is a programmed
decision because a rule has been established to be applied when a certain situation occurs.
21) B
Managers develop rules and guidelines to regulate all routine organizational activities.
22) C
Programmed decision making occurs when managers have the information they need to create
rules that will guide decision making.
23) D
Examples of programmed decisions include deciding how much inventory to hold, when to pay
bills, when to bill customers, and when to order materials and supplies. Therefore, you would
delegate billing customers to your assistant. All the other distracters are examples of
nonprogrammed decisions.
24) D
Nonprogrammed decisions are made in response to unusual or novel opportunities and threats.
Nonprogrammed decision making occurs when there are no ready-made decision rules that
managers can apply to a situation.
25) D
Examples of nonprogrammed decision making include decisions to invest in a new technology,
develop a new kind of product, launch a new promotional campaign, enter a new market, expand
internationally, or start a new business.
26) B
27) C
In nonprogrammed decision making, rules do not exist because the situation is unexpected or
uncertain and managers lack the information they would need to develop rules to cover it.
28) B
In nonprogrammed decision making, rules do not exist because the situation is unexpected or
uncertain and managers lack the information they would need to develop rules to cover it.
29) D
Managers may rely on their intuition—feelings, beliefs, and hunches that come readily to mind,
require little effort and information gathering, and result in on-the-spot decisions. Intuitive
decisions are made when managers have to make nonprogrammed decisions.
30) B
The classical model is prescriptive, which means that it specifies how decisions should be made.
Managers using the classical model make a series of simplifying assumptions about the nature of
the decision-making process.
31) C
The classical model assumes managers have access to all the information they need to make the
optimum decision, which is the most appropriate decision possible in light of what they believe
to be the most desirable consequences for the organization.
32) B
The classical model assumes managers have access to all the information they need to make the
optimum decision, which is the most appropriate decision possible in light of what they believe
to be the most desirable consequences for the organization.
33) B
The administrative model is an approach to decision making that explains why decision making
is inherently uncertain and risky and why managers usually make satisfactory rather than
optimum decisions.
34) B
March and Simon coined the term "bounded rationality" to describe the situation in which the
number of alternatives a manager must identify is so great and the amount of information so vast
that it is difficult for the manager to even come close to evaluating it all before making a
decision.
35) A
Risk is present when managers know the possible outcomes of a particular course of action and
can assign probabilities to them.
36) C
Risk is present when managers know the possible outcomes of a particular course of action and
can assign probabilities to them.
37) B
When uncertainty exists, the probabilities of alternative outcomes cannot be determined and
future outcomes are unknown. Managers are working blind. Because the probability of a given
outcome occurring is not known, managers have little information to use in making a decision.
38) D
When uncertainty exists, the probabilities of alternative outcomes cannot be determined and
future outcomes are unknown. Managers are working blind. Because the probability of a given
outcome occurring is not known, managers have little information to use in making a decision.
39) B
A reason as to why information is incomplete is that much of the information managers have at
their disposal is ambiguous information. Its meaning is not clear; it can be interpreted in multiple
and often conflicting ways. In a similar fashion, managers often interpret the same piece of
information differently and make decisions based on their own interpretations.
40) D
Satisficing is exploring a limited sample of all potential alternatives. When managers satisfice,
they search for and choose acceptable, or satisfactory, ways to respond to problems and
opportunities rather than trying to make the optimal decision.
41) C
When managers satisfice, they consider only a limited number of alternatives, and make an
acceptable choice among them, rather than considering every possible alternative. As a result,
you would ask three advertising agencies to pitch a proposal instead of all the agencies in the
area. When managers satisfice, they search for and choose acceptable, or satisfactory, ways to
respond to problems and opportunities rather than trying to make the optimal decision.
42) C
When managers satisfice, they consider only a limited number of alternatives, and make an
acceptable choice among them, rather than considering every possible alternative. When
managers satisfice, they search for and choose acceptable, or satisfactory, ways to respond to
problems and opportunities rather than trying to make the optimal decision.
43) B
Because Ferdinand’s experience is limited, it is probably not a good idea for him to rely on his
intuition. Instead, a reasoned judgment will give him the information he needs to make an
informed decision. Reasoned judgments are decisions that require time and effort and result from
careful information gathering, generation of alternatives, and evaluation of alternatives. By
conducting a survey, evaluating other cities as options, and searching for a good location,
Ferdinand would be making a reasoned judgment.
44) D
Programmed decision making is a routine, virtually automatic process. If a company
occasionally overspends, establishing procedures to take when this happens would be a
programmed decision.
45) D
The first step in the decision-making process is to recognize the need for a decision.
46) B
Choose among alternatives is the fourth step of the decision-making process. Once the set of
alternative solutions has been carefully evaluated, the next task is to rank the various alternatives
and make a decision. When ranking alternatives, managers must be sure all the information
available is brought to bear on the problem or issue at hand.
47) C
Having recognized the need to make a decision, a manager must generate a set of feasible
alternative courses of action to take in response to the opportunity or threat.
48) C
Managers must decide whether the alternatives are economically feasible—that is, whether they
can be accomplished given the organization's performance goals.
49) D
Managers must decide whether they have the capabilities and resources required to implement
the alternative, and they must be sure the alternative will not threaten the attainment of other
organizational goals. At first glance an alternative might seem economically superior to other
alternatives; but if managers realize it is likely to threaten other important projects, they might
decide it is not practical after all.
50) C
Managers must decide whether the alternatives are economically feasible—that is, whether they
can be accomplished given the organization's performance goals.
51) A
While focusing on practicality, managers must decide whether they have the capabilities and
resources required to implement the alternative, and they must be sure that the alternative will
not threaten the attainment of other organizational goals.
52) A
While focusing on economic feasibility, managers perform a cost-benefit analysis of the various
alternatives to determine which one will have the best net financial payoff. Managers must
decide whether the alternatives are economically feasible.
53) B
resources required to implement the alternative and they must be sure the alternative will not
threaten the attainment of other organizational goals.
54) B
resources required to implement the alternative, and they must be sure that the alternative will
not threaten the attainment of other organizational goals.
55) A
In this case, the company potentially endangered other stakeholders with their decision.
Managers must ensure that a possible course of action is ethical and will not unnecessarily harm
any stakeholder group.
56) B
The final step in the decision-making process is learning from feedback. Effective managers
always conduct a retrospective analysis to see what they can learn from past successes or
failures. To avoid the mistakes again, managers must establish a formal procedure with which
they can learn from the results of past decisions.
57) B
The final step in the decision-making process is learning from feedback. Managers who always
strive to learn from past mistakes and successes are likely to continuously improve the decisions
they make. A significant amount of learning can take place when the outcomes of decisions are
evaluated, and this assessment can produce enormous benefits.
58) B
Once the set of alternative solutions has been carefully evaluated, the next task is to rank the
various alternatives and make a decision.
59) C
When examining alternative courses of action, managers need to be clear about the potential
effects of their decisions. Will the decision have an unethical effect in some way? Determining if
a possible low-priced beef source used inhumane methods to slaughter livestock deals with the
ethical issue of animal abuse.
60) D
Systematic errors are errors that people make over and over and that result in poor decision
making.
61) C
62) B
63) D
64) B
65) B
66) C
67) C
Group decision making allows managers to process more information and to correct one
another's errors. Groups often take much longer than individuals to make decisions. Getting two
or more managers to agree to the same solution can be difficult. Group decision making can be
undermined by biases.
68) B
weaknesses before it is implemented. The purpose is to identify all the reasons that might make
the preferred alternative unacceptable. In this way, decision makers can be made aware of the
possible perils of recommended courses of action.
69) B
To avoid groupthink, a member of the decision-making group plays the role of devil's advocate
and critiques and challenges the way the group evaluated alternatives and chose one over the
others. The purpose is to identify all the reasons that might make the preferred alternative
unacceptable. Decision makers can be made aware of the possible perils of recommended
courses of action.
70) B
To counteract groupthink, a manager often tries to enhance the diversity of a group, thereby
bringing in different perspectives. The manager accomplishes this by bringing two coworkers of
Mexican descent into a group that currently does not have any members of Latino descent.
71) A
Organizational learning is the process through which managers seek to improve employees'
desire and ability to understand and manage the organization and its task environment so
employees can make decisions that continuously raise organizational effectiveness.
72) D
Creativity is the ability of a decision maker to discover original and novel ideas that lead to
feasible alternative courses of action.
73) A
To develop a sense of personal mastery among employees, managers must empower employees
74) A
By allowing a subordinate to proceed on a work project even though she does not agree with
how the subordinate wants to do the work, Jamaica is allowing the subordinate to experiment and
explore, which promotes creativity.
75) B
Organizations need to encourage employees to develop and use complex mental models. Mental
models are sophisticated ways of thinking that challenge employees to find new or better ways of
performing a task to deepen their understanding of what is involved in a particular activity.
76) D
A shared vision is a common mental model that all organizational members use to frame
problems or opportunities. In this situation, the manager is trying to create a common mental
model that all members will use to treat customers.
77) A
While focusing on systems thinking, managers must recognize the effects of one level of
learning on another.
78) B
Individuals building mental models should develop complex mental models to challenge them to
find new or better ways of performing a task.
79) B
Senge thought that team learning is more important than individual learning as a way to increase
organizational learning. He pointed out that most important decisions are made within
organization subunits such as groups, functions, and divisions.
80) C
generate and debate a wide variety of alternatives from which to make a decision.
81) B
During brainstorming, after a manager describes in broad outline the problem the group is to
address, group members share their ideas and generate alternative courses of action.
82) C
The main reason for the loss of productivity in brainstorming appears to be production blocking,
which occurs because group members cannot always simultaneously make sense of all the
alternatives being generated, think up additional alternatives, and remember what they were
thinking.
83) A
Production blocking occurs because group members cannot always simultaneously make sense
of all the alternatives being generated, think up additional alternatives, and remember what they
were thinking.
84) D
The nominal group technique is especially useful when an issue is controversial and when
different managers might be expected to champion different courses of action.
85) D
In the nominal group technique, the following procedure is used: (1) One manager outlines the
problem to be addressed, and 30 or 40 minutes are allocated for group members, working
individually, to write down their ideas and solutions. (2) Managers take turns reading their
suggestions to the group. One manager writes all the alternatives on a flip chart. No criticism or
evaluation of alternatives is allowed until all alternatives have been read. (3) The alternatives are
then discussed in the sequence in which they were first proposed. (4) When all alternatives have
been discussed, each group member ranks all the alternatives from most preferred to least
preferred, and the alternative that receives the highest ranking is chosen.
86) C
One way to bring distant managers together to brainstorm is to use the Delphi technique, a
written approach to creative problem solving. The questionnaire is sent to the managers and
departmental experts who are most knowledgeable about the problem. They are asked to
generate solutions and mail the questionnaire back to the group leader.
87) C
One way to bring distant managers together to brainstorm is to use the Delphi technique, a
written approach to creative problem solving. The questionnaire is sent by the group leader to the
managers and departmental experts who are most knowledgeable about the problem. They are
asked to generate solutions and mail the questionnaire back to the group leader.
88) A
Generally, with the nominal group technique, a group of managers meets in a closed-door
session.
89) D
Creativity results when employees have an opportunity to experiment, to take risks, and to make
mistakes and learn from them. And employees must not fear that they will be looked down on or
penalized for ideas that might at first seem outlandish; sometimes those ideas yield truly
innovative products and services. Also, creativity declines when managers look over the
shoulders of talented employees and try to “hurry up” a creative solution. Therefore, to promote
Aretha’s individual creativity, Pat should praise her square-shaped tennis racquet idea and allow
her to think of more ideas without any hands-on supervision.
90) B
When group members "piggyback" they build on each other's ideas. Such a process is very
interactive. Allowing members to present ideas without being criticized and presenting an outline
of the problem are effective practices, but they do not enhance interaction.
91) C
One way to promote intrapreneurship is to encourage individuals to assume the role of product
champion, a manager who takes "ownership" of a project and provides the leadership and vision
that take a product from the idea stage to the final customer.
92) A
A skunkworks is a group of intrapreneurs who are deliberately separated from the normal
operation of an organization to encourage them to devote all their attention to developing new
products. The idea is that if these people are isolated, they will become so intensely involved in a
project that development time will be relatively brief and the quality of the final product will be
enhanced. The secrecy with which this unit functioned and speculation about its goals led others
to refer to it as "the skunkworks."
93) C
A skunkworks is a group of intrapreneurs who are deliberately separated from the normal
operation of an organization to encourage them to devote all their attention to developing new
products. The idea is that if these people are isolated, they will become so intensely involved in a
project that development time will be relatively brief and the quality of the final product will be
enhanced.
94) A
One way to promote intrapreneurship is to encourage individuals to assume the role of product
champion, a manager who takes “ownership” of a project and provides the leadership and vision
that take a product from the idea stage to the final customer. By recognizing that one employee is
the staunchest advocate for organic perfume and encouraging her to take charge of the project,
Corrine is enabling her to be a product champion for this new product.
95) C
Intrapreneurs have many of the same qualities as entrepreneurs. These qualities include internal
locus of control, which involves taking responsibility for what happens to them. The applicant
who takes responsibility for the failure of a project shows internal locus of control. Also,
intrapreneurs have self-esteem and feel confident and capable of handling most situations. This
same applicant's confidence that he will correct his mistakes shows high self-esteem.
96) Essay
Student examples will vary. Programmed decision making is routine and automatic. It arises in
situations that an organization has faced many times before, and for which it can develop rules
and guidelines to be applied. For example, setting up procedures on how to order office supplies
is a programmed decision. Nonprogrammed decision making is nonroutine. It arises in situations
that are new, ambiguous, and/or complex. No ready-made decision rules have been set down.
The likelihood of error is much greater in nonprogrammed decision making than in programmed
decision making. For example, deciding which areas of the United States are best for opening a
new chain restaurant is a nonprogrammed decision.
97) Essay
Student examples will vary. Intuition is the set of feelings, beliefs, and hunches that come readily
to mind, require little effort and information gathering, and result in on-the-spot decisions.
Sometimes managers have to make rapid decisions and do not have time to carefully consider the
issues involved. They must rely on their intuition to quickly respond to a pressing concern.
For example, when fire chiefs, captains, and lieutenants manage firefighters battling dangerous,
out-of-control fires, they often need to rely on their expert intuition to make on-the-spot
decisions that will protect the lives of the firefighters, save the lives of others, contain the fires,
and preserve property—decisions made in emergency situations entailing high uncertainty, high
risk, and rapidly changing conditions. In other cases, managers do have time to make reasoned
judgments, but there are no established rules to guide their decisions. Regardless of the
circumstances, making nonprogrammed decisions can result in effective or ineffective decision
making.
98) Essay
Student examples will vary. The following is a sample answer. The three important concepts in
this model are bounded rationality, incomplete information, and satisficing decisions. March and
Simon believed that managers do not have the mental ability to absorb and evaluate all of the
possible relevant information for a complex decision.
 March and Simon coined the term "bounded rationality" to describe the situation in
which the number of alternatives a manager must identify is so great and the amount of
information so vast that it is difficult for the manager to even come close to evaluating it
all before making a decision. For example, to determine whether to start a new product
line, a manager could be swamped with data from various surveys and research reports,
opinions of experts and fellow co-workers, and economic indicators from the stock
market. As a result, the manager would have difficulty evaluating all this information to
make a decision.
 Information is incomplete because the full range of decision-making alternatives is
unknowable in most situations, and the consequences associated with known alternatives
are uncertain. Information is incomplete because of risk and uncertainty, ambiguity, and
time constraints. For example, a manager might want to find out why a certain product
sold below expectations. The data the manager receives could indicate some of the
reasons. However, other reasons might not show up in the data. As a result, the action
needed to improve the product's performance is uncertain.
 Satisficing is exploring a limited sample of all potential alternatives. When managers
satisfice, they search for and choose acceptable, or satisfactory, ways to respond to
problems and opportunities rather than trying to make the optimal decision. For example,
the managers of the clothing company might realize that an overhaul of their product is
required to significantly increase profits. However, such action is expensive and risky
because there is a chance that the overhaul will not have the desired outcome. As a result,
the managers choose a safer option, namely changing one type of clothing, such as shirts,
which helps with profitability but does not have the significant outcome needed.
99) Essay
Student examples will vary. The following is a sample answer. Once managers have generated a
set of alternatives, they must evaluate the advantages and disadvantages of each one. The key to
a good assessment of the alternatives is to define the opportunity or threat exactly and then
specify the criteria that should influence the selection of alternatives for responding to the
problem or opportunity. One reason for bad decisions is that managers often fail to specify the
criteria that are important in reaching a decision. Successful managers use four criteria to
evaluate the pros and cons of alternative courses of action:
 Legality: Managers must ensure that a possible course of action will not violate any
domestic or international laws or government regulations. For example, if a credit card
company wants to implement new debt-collection practices and late-fee charges, it must
make sure that in doing so it does not violate any laws or government regulations.
 Ethicalness: Managers must ensure that a possible course of action is ethical and will not
unnecessarily harm any stakeholder group. Many decisions managers make may help
some organizational stakeholders and harm others. When examining alternative courses
of action, managers need to be clear about the potential effects of their decisions. For
example, before staring the production of a new product, a company should examine the
environmental footprint it would leave behind if this product were produced. The
company must make sure it does not cause permanent ecological damage and threaten the
health and safety of people living in an area.
 Economic feasibility: Managers must decide whether the alternatives are economically
feasible, that is, whether they can be accomplished, given the organization's performance
goals. Typically managers perform a cost-benefit analysis of the various alternatives to
determine which one will have the best net financial payoff. For example, if a company
wants to expand by opening 100 new restaurants, it must make sure that the cost of
opening these restaurants does not exceed the money obtained from them.
 Practicality: Managers must decide whether they have the capabilities and resources
required to implement the alternative, and they must be sure the alternative will not
threaten the attainment of other organizational goals. At first glance, an alternative might
seem economically superior to other alternatives, but if managers realize it is likely to
threaten other important projects, they might decide it is not practical after all. For
example, if a company is considering opening an online store, it must make sure that
doing this will threaten its brick-and-mortar stores.
100) Essay
Using the work of March and Simon as a basis, researchers have developed a step-by-step model
of the decision-making process and the issues and problems that managers confront at each step.
The six steps are (1) recognize the need for a decision; (2) generate alternatives; (3) assess
alternatives; (4) choose among alternatives; (5) implement the chosen alternative; (6) learn from
feedback.
Students can give any two of the following explanations.
 Recognize the need for a decision: Some stimuli usually spark the realization that a
decision must be made. These stimuli often become apparent because changes in the
organizational environment result in new kinds of opportunities and threats.
 Generate alternatives: Having recognized the need to make a decision, a manager must
generate a set of feasible alternative courses of action to take in response to the
opportunity or threat. Management experts cite failure to properly generate and consider
different alternatives as one reason why managers sometimes make bad decisions.
 Assess alternatives: The key to a good assessment of the alternatives is to define the
opportunity or threat exactly and then specify the criteria that should influence the
selection of alternatives for responding to the problem or opportunity. In general,
successful managers use four criteria to evaluate the pros and cons of alternative courses
of action: legality, ethicalness, economic feasibility, and practicality.
 Choose among the alternatives: Once the set of alternative solutions has been carefully
evaluated, the next task is to rank the various alternatives and make a decision.
 Implement the chosen alternative: Once a decision has been made and an alternative has
been selected, it must be implemented, and many subsequent and related decisions must
be made.
 Learning from feedback: Effective managers always conduct a retrospective analysis to
see what they can learn from past successes or failures. The procedure should include
these steps:
 Compare what actually happened to what was expected to happen as a result of the
decision.
 Explore why any expectations for the decision were not met.
 Derive guidelines that will help in future decision making.
101) Essay
Student examples will vary.
Illusion of control is a source of cognitive bias that results from the tendency to overestimate
one’s own ability to control activities and events.
102) Essay
The advantages of group decision making include
 It is less likely to be biased and make judgment errors.
 It can draw on the combined knowledge and skills of all group members.
 It can process more information.
 It allows members to correct one another's errors.
 It increases the probability of successful implementation.
 It generally takes longer.
 In group decision making, gaining agreement may be difficult.
 It can be undermined by biases. A major source of group bias is groupthink.
103) Essay
The existence of groupthink raises the question of how to improve the quality of group and
individual decision making so managers make decisions that are realistic and are based on
thorough evaluation of alternatives. One technique known to counteract groupthink is devil's
advocacy. Devil's advocacy is a critical analysis of a preferred alternative to ascertain its
strengths and weaknesses before it is implemented. The devil's advocate critiques and challenges
the way the group evaluated alternatives and chose one over the others. The purpose of devil's
advocacy is to identify all the reasons that might make the preferred alternative unacceptable. In
this way, decision makers can be made aware of the possible perils of recommended courses of
action. Devil's advocacy can thus help counter the effects of groupthink.
104) Essay
Student examples will vary. The following is a sample answer. The two techniques that have
been found to be most useful in groups suffering from groupthink or cognitive biases are devil's
advocacy and diversity.
weaknesses before it is implemented. Typically one member of the decision-making group plays
the role of devil's advocate. The devil's advocate critiques and challenges the way the group
evaluated alternatives and chose one over the others. The purpose of devil's advocacy is to
identify all the reasons that might make the preferred alternative unacceptable. In this way,
decision makers can be made aware of the possible perils of recommended courses of action. For
example, a group might come to an easy conclusion that a certain resource should be used to
produce a product because it is inexpensive to obtain. However, a devil's advocate in the group
could point out that the country producing most of this resource is having political problems that
might hamper production. Also, this country uses sweatshop labor that is unethical.
Another way to improve group decision making is to promote diversity in decision-making
groups. Bringing together managers of both genders from various ethnic, national, and functional
backgrounds broadens the range of life experiences and opinions that group members can draw
on as they generate, assess, and choose among alternatives. Moreover, diverse groups are
sometimes less prone to groupthink because group members already differ from each other and
thus are less subject to pressures for uniformity. For example, if a company wants to sell more
products to female consumers, they should make sure their decision-making groups have a
significant number of women, who can provide insight in choosing various alternatives.
105) Essay
Peter Senge’s five principles for creating a learning organization are personal mastery, complex
mental models, team learning, building a shared vision, and systems thinking.
Students can discuss any three of the following principles.
 For organizational learning to occur, top managers must allow every person in the
organization to develop a sense of personal mastery. Managers must empower employees
 As part of attaining personal mastery, organizations need to encourage employees to
develop and use complex mental models that are sophisticated ways of thinking that
challenge them to find new or better ways of performing a task to deepen their
understanding of what is involved in a particular activity.
 Managers must do everything they can to promote group creativity. Team learning
(learning that takes place in a group or team) is more important than individual learning
in increasing organizational learning.
 Managers must emphasize the importance of building a shared vision: a common mental
model that all organizational members use to frame problems or opportunities.
 Managers must encourage systems thinking—the effects of one level of learning on
another.
106) Essay
To encourage creativity at the group level, organizations can use group problem-solving
techniques that promote creative ideas and innovative solutions. These techniques can also
prevent groupthink and help managers uncover biases. The two techniques discussed here are
brainstorming and nominal group technique.
generate and debate a wide variety of alternatives from which to make a decision. Generally,
from 5 to 15 managers meet in a closed-door session and proceed like this:
 One manager describes in broad outline the problem the group is to address.
 Group members share their ideas and generate alternative courses of action.
 As each alternative is described, group members are not allowed to criticize it; everyone
withholds judgment until all alternatives have been heard. One member of the group
records the alternatives on a flip chart.
 Group members are encouraged to be as innovative and radical as possible. Anything
goes; and the greater the number of ideas put forth, the better. Moreover, group members
are encouraged to build on each other's suggestions.
 When all alternatives have been generated, group members debate the pros and cons of
each and develop a short list of the best alternatives.
 One manager outlines the problem to be addressed, and 30 or 40 minutes are allocated for
group members, working individually, to write down their ideas and solutions. Group
members are encouraged to be innovative.
 Managers take turns reading their suggestions to the group. One manager writes all the
alternatives on a flip chart. No criticism or evaluation of alternatives is allowed until all
alternatives have been read.
 The alternatives are then discussed, one by one, in the sequence in which they were
proposed. Group members can ask for clarifying information and critique each alternative
to identify its pros and cons.
 When all alternatives have been discussed, each group member ranks all the alternatives
from most preferred to least preferred, and the alternative that receives the highest
ranking is chosen.
107) Essay
Answers will vary, but should include discussion of videoconferencing and the Delphi technique.
The following is a potential student answer.
Videoconferencing is one way to bring distant managers together to brainstorm. I could set up a
meeting in which the managers and I would interact via video, thereby allowing for the sharing
of ideas, problems, and possible solutions.
Also, I could use the Delphi technique, which is a written approach to creative problem solving.
As the group leader, I would write a statement of the problem and a series of questions to which
participating managers are to respond. After this, I would send the questionnaire to the managers,
asking them to generate solutions and mail the questionnaire back to me. Once I receive the
questionnaires, I would record and summarize the responses. I would then send the results back
to the participants, with additional questions to be answered before a decision can be made. The
process would be repeated until a consensus was reached and the most suitable course of action
was apparent.
108) Essay
Student examples will vary. The intensity of competition today, particularly from agile, small
companies, has made it increasingly important for large, established organizations to promote
and encourage intrapreneurship to raise their level of creativity and organizational learning. The
higher the level of intrapreneurship, the higher will be the level of learning and innovation.
Organizations can promote intrapreneurship in many ways.
 Product champions: One way to promote intrapreneurship is to encourage individuals to
assume the role of product champion, a manager who takes "ownership" of a project and
provides the leadership and vision that take a product from the idea stage to the final
customer. For instance, a breakfast cereal company could encourage a manager to take
ownership of a new organic cereal and thereby guide the development of this product
from the idea stage to the final customer.
 Skunkworks: A skunkworks is a group of intrapreneurs who are deliberately separated
from the normal operation of an organization. The idea is that if these people are isolated,
they will become so intensely involved in a project that development time will be
relatively brief and the quality of the final product will be enhanced. For example, a
telecommunications company that focuses on producing cell phones could develop a
skunkworks group to come up with ideas for a wide variety of products. The skunkworks
might think of creating a portable GPS device, a product that the company does not
currently produce. Because the skunkworks devotes a lot of time on this product, its
development will probably be carefully and fully considered, thereby enhancing its
quality and easing its implementation by the company.
 Rewards for creativity: To encourage managers to bear the uncertainty and risk
associated with the hard work of entrepreneurship, it is necessary to link performance to
rewards. Organizations must reward intrapreneurs equitably if they wish to prevent them
from leaving and becoming outside entrepreneurs who might form a competitive new
venture. For example, a company could provide bonuses to intrapreneurs based on their
contributions to the organization.

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Student name:__________

21) What do managers do to regulate routine activities?

31) The classical model of decision making assumes that

57) What is the final step in the managerial decision-making process?

67) Why is group decision making considered beneficial?

tudent examples will vary.

102) Identify the advantages and disadvantages of group decision making.

The advantages of group decision making include

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