Chapter 9 Decision making

Question 1

Decision making

Answer 1

Process of choosing a course of action to deal with a problem or opportunity
5 steps:

Recognize and define the problem or opportunity— gather information and deliberate in order to specify exactly why a decision is needed and what it should accomplish.`

Identify and analyze alternative courses of action— evaluate possible alternative courses of action and their anticipated consequences for costs and benefits.

Choose a preferred course of action— a choice is made to pursue one course of action rather than others.

Implement the preferred course of action— actions are taken to put the preferred course of action into practice.

Evaluate results and follow up as necessary— performance results are measured against initial goals and both anticipated and unanticipated outcomes are examined.

Question 2

Lack-of-participation error

Answer 2

occurs when important people are excluded from the decision-making process.

Question 3

Ethics

Answer 3

is the philosophical study of morality or standards regarding good character and conduct.

Question 4

A moral problem

Answer 4

poses major ethical consequences for the decision maker or others.

Question 5

A moral dilemma

Answer 5

involves choosing among alternatives that contain both potential benefits and harm.

Question 6

Criteria questions

Answer 6

assess a decision in terms of utility, rights, justice, and caring.
Utility— Does the decision satisfy all constituents or stakeholders?
Rights— Does the decision respect the rights and duties of everyone?
Justice— Is the decision consistent with the canons of justice?
Caring— Is the decision consistent with my responsibilities to care?

Question 7

Spotlight questions

Answer 7

expose a decision to public scrutiny and full transparency.

Question 8

Certain environments

Answer 8

provide full information on the expected results for decision-making alternatives.

Question 9

Programmed decisions

Answer 9

implement solutions that have already been determined by past experience.

Question 10

Uncertain environments

Answer 10

provide no information to predict expected results for decision-making alternatives.

Question 11

Nonprogrammed decisions

Answer 11

are created to deal with a unique problem or opportunity at hand.

Question 12

Risk environments

Answer 12

provide probabilities regarding expected results for decision-making alternatives.

Question 13

Risk management

Answer 13

involves anticipating risks and factoring them into decision making.

strategic risks—threats to overall business success

operational risks—threats inherent in the technologies used to reach business success

reputation risks—threats to a brand or to the firm’s reputation

Question 14

A crisis decision

Answer 14

occurs when an unexpected problem can lead to disaster if not resolved quickly and appropriately

Question 15

Classical decision model

Answer 15

views decision makers as acting in a world of complete certainty.

Question 16

Optimizing decisions

Answer 16

give the absolute best solution to a problem.

Question 17

The behavioral decision model

Answer 17

views decision makers as acting only in terms of what they perceive about a given situation.

cognitive limitations—limits on what we are able to know at any point in time.

bounded rationality, where things are interpreted and made sense of as perceptions and only within the context of the situation

Question 18

Satisficing decisions

Answer 18

choose the first alternative that appears to give an acceptable or satisfactory resolution of the problem.

Question 19

Systematic thinking

Answer 19

approaches problems in a rational and analytical fashion.

Question 20

Intuitive thinking

Answer 20

approaches problems in a flexible and spontaneous fashion.

Question 21

Heuristics

Answer 21

are simplifying strategies or “rules of thumb” used to make decisions

Question 22

Availability heuristic

Answer 22

bases a decision on recent events relating to the situation at hand.

Question 23

Representativeness heuristic

Answer 23

bases a decision on similarities between the situation at hand and stereotypes of similar occurrences.

Question 24

The anchoring and adjustment heuristic

Answer 24

bases a decision on incremental adjustments to an initial value determined by historical precedent or some reference point.

Question 25

Confirmation error

Answer 25

the tendency to seek confirmation for what is already thought to be true and not search for disconfirming information

Question 26

Hindsight trap

Answer 26

Tendency to overestimate the degree to which an event that has already taken place could have been predicted.

Question 27

Framing error

Answer 27

is solving a problem in the context perceived

Question 28

Escalating commitment

Answer 28

Tendency to continue a previously chosen course of action even when feedback suggests that it is failing.

Question 29

Individual decisions,

Answer 29

or authority decisions, are made by one person on behalf of the team.

Question 30

Consultative decisions

Answer 30

are made by one individual after seeking input from or consulting with members of a group.

Question 31

Team decisions

Answer 31

are made by all members of the team.

Question 32

Creativity

Answer 32

generates unique and novel responses to problems

Question 33

Individual Creativity skills:

Answer 33

* Work with high energy * Hold ground in face of criticism * Accept responsibility for what happens * Are resourceful even in difficult situations * Are both systematic and intuitive * Are objective—step back and question assumptions * Use divergent thinking—think outside of the box * Use convergent thinking—synthesize and find correct answers * Use lateral thinking—look at diverse ways to solve problems * Transfer learning from one setting to others

Question 34

Techniques for team creativity:

Answer 34

* Associative play— making up and telling stories, engaging in art projects, and building toy models that come to mind when dealing with a problem * Cross-pollination— switching members among teams to gain insights from diverse interests, backgrounds, and experiences when working on problems * Analogies and metaphors— using analogies and metaphors to describe a problem and open pathways to creative thinking