FOM Answer04.doc

Fundamentals of Management, 8e (Robbins et al.)Chapter 4 Foundations of Decision Making1) In decision making, a problem can be defined as a discrepancy between what exists and what the problem solver desires to exist.Answer: TRUEExplanation: A problem is a difference between a desired state and an existing state. For example, suppose a person is hungrythe existing state of not having food. The desired state is to obtain food. So the problem is defined as the difference between the no-food state and the food state.Diff: 2 Page Ref: 72Objective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions2) The second step in the decision-making process is identifying a problem.Answer: FALSEExplanation: The identification of a problem is the first step in the decision-making process. Once you have identified a problem, you can decide how to solve it.Diff: 1 Page Ref: 73Objective: 4.4Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions3) A decision criterion defines factors that are relevant in a decision.Answer: TRUEExplanation: Decision criteria are comprised of factors that will affect a decision. If the decision is between driving or riding a bike to work, criteria might include cost, weather, convenience, ecological considerations, time, clothing, and so on.Diff: 2 Page Ref: 73Objective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions4) Managers identify a problem by comparing the current state of affairs to some standard.Answer: TRUEExplanation: The standard for comparison might be a goal that has been set, or comparison with some historical standard or standard set by a competitor. For example, a manager might detect a discrepancy between a goal of 100 units sold and the existing state of only 50 units sold. This discrepancy constitutes a problem that must be solved.Diff: 3 Page Ref: 73Objective: 4.15) All criteria are equally important in the decision-making process.Answer: FALSEExplanation: Criteria have differing values, depending on their importance. The importance of an individual criterion is indicated by how it is weighted. The greater the weight assigned to the criterion, the greater its importance.Diff: 2 Page Ref: 73AACSB: Analytic skillsObjective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions6) Identifying the wrong problem is just as much a failure for a manager as identifying the right problem and failing to solve it.Answer: TRUEExplanation: Problem identification is a critical part of problem solving and decision making. Solving the wrong problem does nothing to further a managers goals so it is of no value.Diff: 2 Page Ref: 73AACSB: Analytic skillsObjective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions7) The final step of the decision-making process is to implement the alternative that has been selected.Answer: FALSEExplanation: Implementation of the best alternative is the second-to-last step in the process. The final step of the process is to appraise the result of the decision to see if it solved the problem.Diff: 1 Page Ref: 75AACSB: Analytic skillsObjective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions8) A heuristic can simplify the decision-making process.Answer: TRUEExplanation: A heuristic is a rule of thumb that is used to simplify the decision-making process by allowing the decision maker to focus on just a few variables, rather than all variables. When used wisely, heuristics make decision making easier and simpler.Diff: 1 Page Ref: 75AACSB: Analytic skillsObjective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions9) Because heuristics simplify the decision-making process, they are unlikely to lead to errors.Answer: FALSEExplanation: By virtue of their simplicity, heuristics can lead to many different kinds of biases and errors. Using heuristics lures decision makers into ignoring critical elements of the situation and oversimplifying the problem.Diff: 1 Page Ref: 75AACSB: Analytic skillsObjective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions10) Decision makers who cherry-pick information that matches what they already know are guilty of confirmation bias.Answer: TRUEExplanation: Confirmation bias means that the decision maker has already made up his or her mind and is seeking only the information that will confirm that position. Cherry-picking is a way of preferentially selecting information that supports your position and ignoring all other information.Diff: 1 Page Ref: 76Objective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions11) A basketball coach who takes a very good shooter out of a game because she missed her last two shots has availability bias.Answer: TRUEExplanation: Availability bias is the tendency to overaccentuate recent history and discount long-term patterns. This basketball coach is ignoring long-term patternsthe player is a good shooterin favor of very recent historytwo missed shotsso he is displaying availability bias.Diff: 1 Page Ref: 76Objective: 4.1Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions12) A rational decision will never fail to provide the best and most successful solution to a problem.Answer: FALSEExplanation: A rational decision is logical and objective and will maximize the likelihood of solving a problem or achieving a goal. That said, a decision can be arrived at through a rational process and still be wrong due to the decision maker lacking complete information about the situation.Diff: 3 Page Ref: 78Objective: 4.2Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions13) Maximizing value means a decision will have the best possible outcome for the parties involved. Answer: TRUEExplanation: Maximizing value is a matter of making a decision that results in the ideal, or best possible, solution. A baseball manager, for example, wants to make a decision that will not only score runs, a favorable outcome, but win the game, the ideal or maximal outcome.Diff: 2 Page Ref: 79Objective: 4.2Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions14) One assumption of bounded rationality is that managers can analyze all relevant information about all alternatives for a situation.Answer: FALSEExplanation: The idea of bounded rationality says that decision makers can never analyze all information for the alternatives involved. So decision makers need to put limits on how much information they will analyze.Diff: 2 Page Ref: 79Objective: 4.2Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions15) A synonym for the word satisfice is maximize.Answer: FALSEExplanation: The words satisfice and maximize are opposites rather than synonyms. When a manager does not have enough information to maximize, or find the best possible solution to a problem, he or she must compromise, or satisfice. When you satisfice you accept not the best solution, but a solution that is good enough.Diff: 2 Page Ref: 79Objective: 4.216) One assumption of bounded rationality is that managers usually make rational decisions.Answer: TRUEExplanation: Bounded rationality assumes that managers are logical, objective, and fairly rational when they make decisions. However, since managers often dont have access to all of the relevant information for a given situation, they must bound their rationality within the limits of the information they actually have.Diff: 2 Page Ref: 79Objective: 4.2Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions17) Intuitive decision making is systematic, logical, and orderly.Answer: FALSEExplanation: Intuitive decisions may be perfectly sound, but they are not arrived at through a systematic analysis of alternatives. Instead, intuitive decisions are quickly made and rely on experience, unconscious reasoning, feelings, and hunches.Diff: 2 Page Ref: 80AACSB: Reflective thinking skillsObjective: 4.2Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions18) Intuitive decision making cannot be a part of the rational decision-making process.Answer: FALSEExplanation: Intuitive decisions are not arrived at in a deliberative, systematic manner, but they can be objective and logical, so they are considered rational.Diff: 2 Page Ref: 80AACSB: Reflective thinking skillsObjective: 4.2Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions19) The expression throwing good money after bad is an example of an escalation of commitment.Answer: TRUEExplanation: Throwing good money after bad typically denotes a situation in which money has already been wasted on an unsuccessful venturebad money. Throwing more good money into the situation simply because of the bad money already committed is a clear example of escalation of commitment.Diff: 2 Page Ref: 79Objective: 4.220) Emotions should always be strictly ignored in a decision-making process.Answer: FALSEExplanation: Decisions that were accompanied by strong feelings were found to be more reliable than those that did not have an emotional component, according to one study, especially in cases in which decision makers acknowledged their feelings. So emotions should not be ignored during the decision-making process.Diff: 2 Page Ref: 80AACSB: Reflective thinking skillsObjective: 4.2Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions21) Programmed decisions tend to be routine.Answer: TRUEExplanation: A programmed decision is a routine decision that works well in solving structured problems that present no ambiguity or unknown elements. Programmed decisions can usually be made using a systematic procedure, rule, or policy.Diff: 1 Page Ref: 81Objective: 4.3Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions22) A rule is simpler than a policy or a procedure to implement.Answer: TRUEExplanation: A rule is a simple statement that can be applied directly to a situation. For example, a broker can easily follow a rule to sell a specific stock when it reaches a specific price point. A procedure or policy may have an identical outcome, but a more complicated series of steps must be taken to arrive at that outcome. Diff: 2 Page Ref: 82Objective: 4.323) Implementing a procedure requires more judgment and interpretation than implementing a policy.Answer: FALSEExplanation: A procedure is a series of steps that must be followed to arrive at a decision, each of the steps being clear and straightforward. A policy provides guidelines rather than steps for the decision maker to follow. Each guideline must be interpreted and evaluated for the situation at hand. Therefore, a policy requires much more judgment and interpretation than a procedure.Diff: 2 Page Ref: 82Objective: 4.324) A highway speed limit is an example of a policy.Answer: FALSEExplanation: A highway speed limit is an example of a rule, not a policy. Policies require the decision maker to exercise judgment and interpretation. Following a speed limit, on the other hand, involves no interpretation. The driver simply must not exceed the posted speed.Diff: 2 Page Ref: 82Objective: 4.325) Managerial decisions are likely to become more programmed as managers rise in an organizational hierarchy.Answer: FALSEExplanation: Problems that managers face become more unique, ambiguous, and difficult as the status of a manager rises, not more programmed. Top managers are paid more than lower-level managers specifically because they are expected to make difficult decisions. More routine decisions are made by lower-level managers.Diff: 2 Page Ref: 82Objective: 4.3Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions26) Most managerial decisions include an element of risk.Answer: TRUEExplanation: Few situations involve certainty, in which a manager knows all outcomes in a situation and can choose between them. Instead, situations usually involve risk, in which the manager must estimate the probability of different outcomes.Diff: 1 Page Ref: 84Objective: 4.3Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions27) Uncertainty involves a situation in which the probability of a certain outcome is known to be small.Answer: FALSEExplanation: In an uncertain situation, the probabilities of specific outcomes are not known and cannot be reasonably estimated. Therefore, the probability that any outcome is high or low cannot be determined. Diff: 3 Page Ref: 84Objective: 4.328) A manager is more confident of his assessment of a situation if it involves risk rather than uncertainty.Answer: TRUEExplanation: With risk, a manager is able to estimate the likelihood of specific outcomes. With uncertainty, not enough is known even to make estimates. So a manager would be more confident of a position involving risk.Diff: 3 Page Ref: 84Objective: 4.3Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions29) Group decisions tend to provide more complete information than individual decisions.Answer: TRUEExplanation: Because two heads are better than one, groups tend to identify more alternatives and consider more information before coming to a decision.Diff: 1 Page Ref: 84AACSB: Communication abilitiesObjective: 4.4Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions30) An advantage of group decisions is that they increase the perception of the legitimacy of the solution.Answer: TRUEExplanation: When decisions that affect many people are made without their consent, they tend to be less well accepted than group decisions in which all parties are consulted. A group decision is perceived to be more legitimate because it was made in a more democratic manner.Diff: 1 Page Ref: 84AACSB: Communication abilitiesObjective: 4.4Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions31) A drawback of group decision making is groupthink.Answer: TRUEExplanation: When a group experiences groupthink, members do not freely express their opinions for fear of standing out and having to assume responsibility for their actions. Groupthink often results in bland, unimaginative decisions that fail because they are too timid.Diff: 1 Page Ref: 85AACSB: Communication abilitiesObjective: 4.4Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions32) Groups tend to be more efficient and less effective than individual decision making.Answer: FALSEExplanation: The reverse is usually true. Because achieving consensus within a group takes time, group decision making often takes longer than individual decision making, making it less efficient. However, groups are typically more thorough than individuals, so group decisions are often more effective at achieving goals than decisions made by individuals.Diff: 2 Page Ref: 85AACSB: Communication abilitiesObjective: 4.4Learning Outcome: Identify the different types of decisions managers make and discuss how they make decisions33) Two major advantages of electronic meetings are anonymity and honesty.Answer: TRUEExplanation: Electronic meetings allow participants to type in comments without needing to identify themselves. This creates an atmosphere in which people feel more free to express their true feelings. Diff: 2 Page Ref: 87AACSB: Use of information technologyObjective: 4.434) A country with high uncertainty avoidance and high power distance is more likely to engage in groupthink than a country with low uncertainty avoidance and low power distance.Answer: TRUEExplanation: High uncertainty avoidance makes managers avoid difficult decisions and be overly agreeable and accommodating. High power distance allows high-status individuals to dominate groups. Both of these attributes would contribute to groupthink, the tendency of groups to avoid controversy and conform to conventional positions.Diff: 2 Page Ref: 87AACSB: Multicultural and diversity understandingObjective: 4.535) Creative solutions to problems are valued because they are new and different from traditional solutions.Answer: FALSEExplanation: Creative solutions are valued only if they solve problems in ways that are superior to conventional solutions. Often, solving a problem in a creative way can give a company a competitive edge on its competitors.Diff: 1