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Fundamentals of Management, 8e (Robbins et al.

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Chapter 4 Foundations of Decision Making
1) In decision making, a problem can be defined as a discrepancy between what exists and what the
problem solver desires to exist.
Answer: TRUE
Explanation: 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: 72
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
2) The second step in the decision-making process is identifying a problem.
Answer: FALSE
Explanation: 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: 73
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
3) A decision criterion defines factors that are relevant in a decision.
Answer: TRUE
Explanation: 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: 73
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
4) Managers identify a problem by comparing the current state of affairs to some standard.
Answer: TRUE
Explanation: 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: 73
Objective: 4.1

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5) All criteria are equally important in the decision-making process.


Answer: FALSE
Explanation: 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: 73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
6) Identifying the wrong problem is just as much a failure for a manager as identifying the right problem
and failing to solve it.
Answer: TRUE
Explanation: Problem identification is a critical part of problem solving and decision making. Solving
the wrong problem does nothing to further a manager's goals so it is of no value.
Diff: 2 Page Ref: 73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
7) The final step of the decision-making process is to implement the alternative that has been selected.
Answer: FALSE
Explanation: 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: 75
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
8) A heuristic can simplify the decision-making process.
Answer: TRUE
Explanation: 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: 75
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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Copyright (c) 2013 Pearson Education, Inc.

9) Because heuristics simplify the decision-making process, they are unlikely to lead to errors.
Answer: FALSE
Explanation: 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: 75
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
10) Decision makers who "cherry-pick" information that matches what they already know are guilty of
confirmation bias.
Answer: TRUE
Explanation: 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: 76
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
11) A basketball coach who takes a very good shooter out of a game because she missed her last two
shots has availability bias.
Answer: TRUE
Explanation: 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: 76
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
12) A rational decision will never fail to provide the best and most successful solution to a problem.
Answer: FALSE
Explanation: 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: 78
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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13) Maximizing value means a decision will have the best possible outcome for the parties involved.
Answer: TRUE
Explanation: 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: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
14) One assumption of bounded rationality is that managers can analyze all relevant information about
all alternatives for a situation.
Answer: FALSE
Explanation: 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: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
15) A synonym for the word satisfice is maximize.
Answer: FALSE
Explanation: 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: 79
Objective: 4.2
16) One assumption of bounded rationality is that managers usually make rational decisions.
Answer: TRUE
Explanation: Bounded rationality assumes that managers are logical, objective, and fairly rational when
they make decisions. However, since managers often don't 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: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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Copyright (c) 2013 Pearson Education, Inc.

17) Intuitive decision making is systematic, logical, and orderly.


Answer: FALSE
Explanation: 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: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
18) Intuitive decision making cannot be a part of the rational decision-making process.
Answer: FALSE
Explanation: 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: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
19) The expression "throwing good money after bad" is an example of an escalation of commitment.
Answer: TRUE
Explanation: Throwing good money after bad typically denotes a situation in which money has already
been wasted on an unsuccessful venture"bad 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: 79
Objective: 4.2
20) Emotions should always be strictly ignored in a decision-making process.
Answer: FALSE
Explanation: 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 decisionmaking process.
Diff: 2 Page Ref: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
21) Programmed decisions tend to be routine.
Answer: TRUE
Explanation: 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: 81
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
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22) A rule is simpler than a policy or a procedure to implement.


Answer: TRUE
Explanation: 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: 82
Objective: 4.3
23) Implementing a procedure requires more judgment and interpretation than implementing a policy.
Answer: FALSE
Explanation: 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: 82
Objective: 4.3
24) A highway speed limit is an example of a policy.
Answer: FALSE
Explanation: 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: 82
Objective: 4.3
25) Managerial decisions are likely to become more programmed as managers rise in an organizational
hierarchy.
Answer: FALSE
Explanation: 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: 82
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
26) Most managerial decisions include an element of risk.
Answer: TRUE
Explanation: 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: 84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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Copyright (c) 2013 Pearson Education, Inc.

27) Uncertainty involves a situation in which the probability of a certain outcome is known to be small.
Answer: FALSE
Explanation: 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: 84
Objective: 4.3
28) A manager is more confident of his assessment of a situation if it involves risk rather than
uncertainty.
Answer: TRUE
Explanation: 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: 84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
29) Group decisions tend to provide more complete information than individual decisions.
Answer: TRUE
Explanation: 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: 84
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
30) An advantage of group decisions is that they increase the perception of the legitimacy of the
solution.
Answer: TRUE
Explanation: 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: 84
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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Copyright (c) 2013 Pearson Education, Inc.

31) A drawback of group decision making is groupthink.


Answer: TRUE
Explanation: 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: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
32) Groups tend to be more efficient and less effective than individual decision making.
Answer: FALSE
Explanation: 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: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
33) Two major advantages of electronic meetings are anonymity and honesty.
Answer: TRUE
Explanation: 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: 87
AACSB: Use of information technology
Objective: 4.4
34) 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: TRUE
Explanation: 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: 87
AACSB: Multicultural and diversity understanding
Objective: 4.5
35) Creative solutions to problems are valued because they are new and different from traditional
solutions.
Answer: FALSE
Explanation: 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 Page Ref: 88
Objective: 4.5
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36) Decision making begins with ________.


A) selecting alternatives
B) identifying decision criteria
C) identifying a problem
D) eliminating false alternatives
Answer: C
Explanation: C) The process of decision making begins with the identification of a problem. Once the
problem has been identified, the decision maker goes through a series of steps to solve the problem.
Selecting alternatives is part of the decision-making process, but it is a step that comes much later, after
criteria have been identified, weighed against one another, developed into alternatives, and analyzed as
alternatives. Eliminating false alternatives is something that a decision maker might do, but it is not a
recognized part of the process.
Diff: 2 Page Ref: 72
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
37) Which of the following defines a problem in the decision-making process?
A) a discrepancy between what exists and what the decision maker desires to exist
B) a discrepancy between the ideal and the practical
C) something that causes irritation
D) something that calls for attention
Answer: A
Explanation: A) Though problems certainly can irritate, and merit attention, these characteristics are not
universal enough by themselves to define what a problem is in the decision-making process. In this
process, a problem is defined as a discrepancy, or difference between how things are and how the
decision maker wants things to be. A problem is not a difference between the ideal and the practical, but
rather just a situation in which things are less than satisfactory and the decision maker intends to take
action to make them satisfactory.
Diff: 1 Page Ref: 72
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

9
Copyright (c) 2013 Pearson Education, Inc.

38) The decision-making process consists of a series of eight steps that identify a problem and work
toward ultimately ________.
A) determining if there is a solution to the problem
B) solving the problem
C) making a plan to solve the problem
D) breaking down the problem into a series of steps
Answer: B
Explanation: B) The goal of the decision-making process is to solve the problem that has been
identified. The process assumes that there is a solution to the problem, so determining if there is a
solution to the problem is not correct. The process includes making a plan to solve the problem and
breaking the problem down into steps. However, ultimately the decision maker wants to implement the
best alternative to solve the problem, then evaluate this alternative to see if it actually resulted in a
successful solution.
Diff: 1 Page Ref: 72
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
39) To identify a problem, a manager ________.
A) compares one set of standards or goals to a second set of standards or goals
B) looks for unhappy customers
C) uses intuition to see that things don't look right
D) compares the current state of affairs with some standard or goal
Answer: D
Explanation: D) A manager compares what she has now to some standard or goal to identify a problem.
The standard or goal may represent some level of performance from the past, or it could be an as yet
unreached level that the manager thinks can be attained. Looking for unhappy customers or using
intuition to see when things don't look right may be ways to identify problems but they are not general
problem identification methods. Finally, comparing one set of standards or goals to a second set is
incorrect because a problem is always identified by comparing an actual state to a standard or goal, not
one set of standards or goals to another.
Diff: 1 Page Ref: 73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

10
Copyright (c) 2013 Pearson Education, Inc.

40) A manager can faithfully execute the decision-making process but still end up with nothing of value
if ________.
A) he fails to identify the correct problem
B) he fails to assign number values to different criteria
C) he solves the problem inefficiently
D) he fails to correctly identify the steps of the process
Answer: A
Explanation: A) Assigning number values to decision criteria may often be helpful in the decisionmaking process, but they are not required for a successful outcome. Solving the problem inefficiently
may not be ideal, but it is not without value. Identifying the steps of the process has little to do with the
success of the process. That leaves failing to identify the correct problemit does no good to solve a
problem if it is the wrong problem. Solving the wrong problem has no benefit for the organization or its
goals.
Diff: 2 Page Ref: 72
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
41) A manager is considering purchasing new computers for her department. The manager spends time
assessing the computers her department now has. Which stage of the decision-making process is she
going through?
A) identification of a problem
B) identification of decision criteria
C) development of alternatives
D) implementation of an alternative
Answer: A
Explanation: A) The first thing the manager needs to do is identify the problem. More specifically, she
needs to determine whether she actually has a problem or not. If the computers her department now has
are performing satisfactorily, she may decide that she doesn't have a problem and doesn't need to
purchase new computers. The other choicesidentifying criteria, developing alternatives, or
implementing an alternativeall come later in the process, after the manager has determined what her
problem is.
Diff: 2 Page Ref: 72-73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

11
Copyright (c) 2013 Pearson Education, Inc.

42) A manager is determining what kind of new computers she should purchase for her department. She
has made a list of five different computer models for consideration. Which stage of the decision-making
process is this?
A) selection of an alternative
B) identification of decision criteria
C) development of alternatives
D) analysis of alternatives
Answer: C
Explanation: C) Having a list of models means that the manager is beyond identifying decision criteria.
She has identified a group of possible choicesin other words, she has developed a list of alternatives.
Analysis of the alternatives will be the next step in the process, followed by actually selecting one
particular alternative. The manager would have identified decision criteria earlier in the process.
Diff: 2 Page Ref: 73-74
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
43) After purchasing new computers for her department, a manager is now comparing the performance
of the new computers to the computers they replaced. Which stage of the decision-making process is she
carrying out?
A) analysis of alternatives
B) evaluation of decision effectiveness
C) selection of an alternative
D) implementation of an alternative
Answer: B
Explanation: B) The manager is assessing her decision to purchase new computers. Was it worth it?
This is the final stage of the decision-making process, evaluation of decision effectiveness. Analyzing
alternatives, selecting a single alternative, and implementing that single alternative all come earlier in
the decision-making process.
Diff: 2 Page Ref: 72-75
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

12
Copyright (c) 2013 Pearson Education, Inc.

44) For a high-tech bicycle buyer, decision criteria would be determined by ________.
A) whatever most bike buyers recommend
B) expert ratings in bike magazines
C) technical specifications
D) personal preferences of the buyer
Answer: D
Explanation: D) Criteria are chosen solely on the basis of the priorities of the buyer. If bike experts
consider frame composition a key criterion for choosing a bike but the buyer does not consider it
important, then it would be unlikely to be included as a criterion. Similarly, popularity of bike features
or technical specifications might enter into the decision-making process, but only if the buyer thought
they were important. In other words, the only factors that are important for selection of decision criteria
for a bike buyer are the personal preferences of the buyer.
Diff: 2 Page Ref: 73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
45) Which of the following is LEAST likely to be a decision criterion for a high-tech bicycle buyer who
cares primarily about performance?
A) warranty
B) gear mechanism
C) frame composition
D) brake assembly
Answer: A
Explanation: A) A buyer who is looking for performance would care how sturdy and light the frame was
and how efficient the gears and brakes were. The warranty does not directly affect performance so it
would be least likely to be a decision criterion for the bike buyer.
Diff: 2 Page Ref: 73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
46) Which of the following would be a fairly objective criterion by which a bicycle buyer could assess
different bike models?
A) handling
B) weight
C) quality of craftsmanship
D) style
Answer: B
Explanation: B) Of the four choices, only weight can be measured in an objective manner. Handling,
craftsmanship, and style all require making subjective judgments about what the buyer likes and doesn't
like. Style is largely a matter of taste. Handling and craftsmanship cannot be measured on a simple scale.
So weight is the correct choice here.
Diff: 2 Page Ref: 74
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
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Copyright (c) 2013 Pearson Education, Inc.

47) A manager chooses to ignore a rigorous decision-making process and selects TV monitor A over
monitor B because he "trusts" company A more than company B. If the decision he made was rational,
which of the following is true?
A) Monitor A is really the better choice.
B) The manager should have included "trust" as a criterion.
C) Monitor B is really the better choice.
D) The manager must have made a mistake in calculating his weighted criteria.
Answer: B
Explanation: B) There is no way of knowing whether monitor A was really a better choice than B or if
the manager made a calculation error. What is true is that the manager should have included "trust" as
one of his criteria categories. If trust was an overriding factor, then the manager should have weighted it
heavily so it tilted the score toward what his true feelings were. In essence, the manager made a mistake
in selecting and weighting criteria.
Diff: 3 Page Ref: 73-74, 78
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
48) In allocating weights to the decision criteria, which of the following is most helpful to remember?
A) All weights must be the same.
B) The total of the weights must equal 100.
C) The high score should be a 10, and no two criteria should be assigned the same weight.
D) Assign the most important criterion a score, and then assign weights against that standard.
Answer: D
Explanation: D) There are no set rules for weighting criteria. All weights can be the same, but in most
cases they will be different. Similarly, there is no total amount that all weights should equal. The high
score may or may not be assigned a 10, and in many cases two or more criteria can be assigned with the
same weight. Only assigning the most important criterion a score and assigning weights against that
standard offers helpful advicemeasuring each criterion against a standard in most cases will result in a
reliable representation of values.
Diff: 3 Page Ref: 73-74
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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Copyright (c) 2013 Pearson Education, Inc.

49) What is a heuristic?


A) a complicated and systematic method of decision making
B) a purely intuitive method of decision making
C) a totally unreliable method of decision making
D) a shortcut or rule of thumb that is used for decision making
Answer: D
Explanation: D) A heuristic is a rule of thumb that allows a decision maker to focus on a few key
variables in the process. Heuristics can be useful, so they are not totally unreliable. Heuristics are
simple, making a complicated and systematic method of decision making incorrect. Heuristics can be
partly intuitive, but they can also be highly rational, making a purely intuitive method incorrect.
Diff: 2 Page Ref: 75
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
50) Because they are not systematic or comprehensive, using heuristics in place of an eight-step
decision-making process can lead to ________.
A) errors and biases
B) consistently better decisions
C) more imaginative decisions
D) decisions that more directly solve problems
Answer: A
Explanation: A) Though heuristics can be very useful in saving time and effort, they can also lead to
mistakes, making "errors and biases" the correct response here. There is no evidence that using
heuristics results in more imaginative decisions or decisions that solve problems more directly. Finally,
since heuristics are known to lead to errors and biases, they clearly do not lead to better decisions, so
"consistently better decisions" is incorrect.
Diff: 2 Page Ref: 75
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
51) Which of the following is NOT a reason why managers often resort to using heuristics?
A) They seem to eliminate complexity.
B) They seem to eliminate ambiguity.
C) They save time.
D) They thoroughly explore all alternatives.
Answer: D
Explanation: D) The one thing that a heuristic does not do is explore all alternatives for solving a
problem. Instead, a heuristic looks at only a small part of the problem and uses key features to arrive at a
decision and avoid a complete examination of the options. Heuristics often do successfully seem to
make complicated, ambiguous situations easier to understand and deal with, so eliminating complexity
and ambiguity are not correct answers. Without a doubt, heuristics save time, which eliminates "saving
time" as the correct answer.
Diff: 2 Page Ref: 75-76
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

15
Copyright (c) 2013 Pearson Education, Inc.

52) A banker opts for short-term gain despite indications that his decision might not pay off in the long
run. Which error or bias is the banker guilty of?
A) overconfidence
B) immediate gratification
C) selective perception bias
D) representation
Answer: B
Explanation: B) The correct answer here must be an error or bias that deals with short- and long-term
gain. Overconfidence is the tendency of a decision maker to assess his own skills in a more positive light
than they deserve, so it has nothing to do with short-term gain. When a person organizes events based on
faulty perceptions, he is guilty of selective perception bias, again not directly concerned with short-term
gain. Representation bias involves drawing parallels to events that aren't really related, so it is not
correct here. Only immediate gratification, which is the tendency to go for a "quick score," involves
going for short-term rather than long-term gain, so it is the correct response here.
Diff: 2 Page Ref: 75
AACSB: Analytic skills
Objective: 4.1
53) A scientist cites two studies that show a positive effect for her drug and ignores five other studies
that show a negative effect. Which error or bias is she committing?
A) hindsight
B) anchoring effect
C) confirmation bias
D) self-serving
Answer: C
Explanation: C) The scientist is "cherry picking" data that supports her position and ignoring conflicting
data. She is guilty of confirmation bias, seeing only what confirms her preconceived notions. Hindsight
would require her to look back on events and claim that they were predictable, something that is not
relevant here. Neither is self-serving, blaming outcomes on outside factors rather than taking
responsibility for your own errors. Finally, the anchoring effect describes an individual who fails to
adjust to incoming information, again not something that the scientist is doing in this situation.
Diff: 2 Page Ref: 76
AACSB: Analytic skills
Objective: 4.1

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54) One legislator sees decreased tax revenue as the key problem in the budget. A second legislator sees
increased spending as the problem. Each of these legislators has a(n) ________.
A) representation bias
B) self-serving bias
C) availability bias
D) framing bias
Answer: D
Explanation: D) A representation bias is a false parallel of current events to other events, something that
is not occurring here. A self-serving bias, blaming the situation on outside influences, is also not relevant
to this situation. Availability bias occurs when decision makers value only the most recent events that are
relevant to the situation, also not occurring here. What is occurring is that the legislators are framing the
problem in different ways. This framing results in them coming to very different conclusions about how
to solve the problem.
Diff: 2 Page Ref: 76
AACSB: Analytic skills
Objective: 4.1
55) Which of the following is NOT a common decision-making error or bias?
A) sunk costs
B) randomness
C) forest for the trees
D) overconfidence bias
Answer: C
Explanation: C) All of the choices listed are common decision-making errors and biases except "forest
for the trees." Sunk costs refers to managers who fixate on past costs rather than future consequences.
Randomness occurs when managers see patterns and trends that do not exist. Overconfidence bias
occurs when managers overestimate their own strengths and skills.
Diff: 2 Page Ref: 76
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
56) The three main models that managers use to make decisions are ________.
A) rational, bounded rational, and intuitive
B) rational, irrational, and bounded rational
C) intuitive, unintuitive, and rational
D) bounded rational, intuitive, and systematic
Answer: A
Explanation: A) Models that managers use to make decisions include the rational model, the bounded
rational model, and the intuitive model. The rational model focuses on being logical and objective. The
bounded rational model assumes limitations on the rational model and makes "good enough" decisions.
The intuitive model employs emotions and subconscious modes of thinking within a rational context.
The other three choices are incorrect because they include categories that do not identify decisionmaking methods: irrational, unintuitive, and systematic.
Diff: 1 Page Ref: 78-80
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

17
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57) It is assumed that a rational decision maker ________.


A) would never make a wrong choice
B) would be subjective and impractical
C) would face only difficult decisions
D) would be objective and logical
Answer: D
Explanation: D) A perfectly rational decision maker would always make a "good" decision based on
sound reasoning, but he or she could still make the wrong choice in a given situation. A rational decision
maker would face both easy and difficult problems. Subjectivity and impracticality are not
characteristics of a rational decision maker. The important characteristics of a rational decision maker
are that he or she is rational and logical, meaning that being objective and logical is the correct response.
Diff: 2 Page Ref: 78
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
58) What does it mean for a decision maker to maximize value?
A) to make the decision to be as clear and logical as possible
B) to make the achievement of goals as likely as possible
C) to waste as little time and energy as possible
D) to make decision making as simple as possible
Answer: B
Explanation: B) Maximizing value is a question of achieving goals. When a decision maker maximizes
value, he or she makes the decision that is most likely to achieve his or her goal. Being clear and logical,
efficient, or simple are worthy goals for a decision maker, but they do not define maximizing value so
they are incorrect responses for this question.
Diff: 2 Page Ref: 78
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
59) Maximizing value for an organization means making sure that ________.
A) the organization makes money
B) the best interests of the organization are addressed
C) the decision made is as rational as possible
D) the decision is as simple as possible
Answer: B
Explanation: B) Managerial decisions for an organization must always take the organization's best
interests into account. This is how decisions for organizations differ from those for individuals. As an
individual, a manager looks out only for him- or herself. As a manager, the same person must put the
interests of the organization first. Making money, or making highly rational or simple decisions, does
not maximize value for an organization.
Diff: 2 Page Ref: 78
Objective: 4.2

18
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60) Which of the following is NOT assumed in a rational decision?


A) a clear and specific goal
B) a clear and unambiguous problem
C) Most alternatives and consequences are known.
D) Value is maximized.
Answer: C
Explanation: C) The ideal rational decision will feature a clear and specific goal, a problem that is clear
and unambiguous, and value is maximized. This ideal decision would also require that all, not just many
alternatives and consequences, would be known.
Diff: 2 Page Ref: 78
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
61) It is assumed that in most cases the decisions of all managers are limited by ________.
A) greed and short-sightedness
B) having too much information
C) not being able to analyze all information for all alternatives
D) not being able to act rationally or in the best interests of their organization
Answer: C
Explanation: C) Greed and short-sightedness may affect the decisions of some, but clearly not all,
managers. Most managers are rational in that they are reasonable, logical, and have the best interests of
their organization in mind. What limits the decisions of managers most of the time is not having too
much information but having too little, and not having the time or resources to be able to analyze all of
the information that is relevant to all of the alternatives in a given situation.
Diff: 2 Page Ref: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
62) Which term best characterizes a decision that has bounded rationality?
A) virtually perfect
B) rigorous and comprehensive
C) not good enough
D) just good enough
Answer: D
Explanation: D) Rather than thought to be perfect or rigorous and thorough, a bounded rationality
decision is considered to be just "good enough."
Diff: 2 Page Ref: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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63) Software programs that use a series of questions to aid humans in decision making are called
________.
A) text reading software
B) expert systems
C) group systems
D) support software
Answer: B
Explanation: B) Systems that use sequential question-asking systems to aid decision makers such as
doctors who are diagnosing illnesses are called expert systems. Text reading software is used simply to
decipher text. Support software is generic software for any application. Group systems are not used for
decision making.
Diff: 2 Page Ref: 78
AACSB: Use of information technology
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
64) Expert systems are primarily used to help what kinds of decision makers?
A) lower-level managers
B) top managers
C) senior managers
D) experts
Answer: A
Explanation: A) Expert systems are primarily used by non-experts to make high quality decisions.
These non-experts are typically lower-level managers. Top managers, senior managers, or experts all
may use expert systems from time to time, but the systems are designed specifically to guide nonexperts in making useful decisions.
Diff: 2 Page Ref: 78
AACSB: Use of information technology
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
65) Neural networks are able to outdo the performance of humans by ________.
A) analyzing symbols
B) handling up to three variables at once
C) handling hundreds of variables at once
D) reading facial expressions
Answer: C
Explanation: C) Humans typically can only process two or three variables at once when problem
solving. Neural networks can handle hundreds of variables, outdoing human performance. Analyzing
symbols is incorrect because both computers and humans can analyze symbols. As yet, no computers are
proficient at extracting important information by reading facial expressions.
Diff: 2 Page Ref: 78
AACSB: Use of information technology
Objective: 4.2

20
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66) Neural networks differ from expert systems in that they can ________.
A) draw conclusions from data
B) ask questions to the decision maker
C) perform sophisticated calculations
D) learn from experience
Answer: D
Explanation: D) Neural networks are special because they can learn from experience. Situations are
shown to the network, and the network learns to recognize keys to these situations so that it can
recognize them and employ what was learned to make decisions in the future. Drawing conclusions,
asking questions, or performing complicated calculations are normal functions for a software program
and not special to neural networks.
Diff: 2 Page Ref: 78
AACSB: Use of information technology
Objective: 4.2
67) Neural networks outperfom expert systems in uncovering ________.
A) credit card fraud
B) false positives for pregnancy
C) potential credit card customers
D) credit problems in bank mortgages
Answer: A
Explanation: A) Expert systems were flawed in dealing with credit card fraud in that they kept giving
false positivesfinding fraud where it didn't exist. Neural networks proved to be much better at
discovering credit card fraud without many false positives. Neural networks were not used for
pregnancy tests, finding new credit card customers, or finding credit problems in mortgages.
Diff: 2 Page Ref: 78
AACSB: Use of information technology
Objective: 4.2
68) Herbert Simon won the Nobel Prize in economics for his work in describing ________.
A) how people spend money
B) how most people are perfectly rational
C) how people make decisions
D) how people avoid decisions
Answer: C
Explanation: C) Rather than study how people spend money, Simon studied how people made
decisions. He found that people were limited in their ability to use logic and were not perfectly rational
in their decision making. Simon did not investigate how people avoid decisions.
Diff: 2 Page Ref: 79
Objective: 4.2
Learning Outcome: Summarize the major historical and current approaches to management

21
Copyright (c) 2013 Pearson Education, Inc.

69) Which of the following is the best definition for the word satisfice?
A) very satisfying
B) not sufficient
C) accepts a less than perfect solution
D) requires a perfect solution
Answer: C
Explanation: C) When you satisfice you are accepting a "good enough" or less than perfect solution to a
problem. Not sufficient is incorrect because satisficing is often sufficient to solve a problem. Very
satisfying is wrong because though satisfice sounds like satisfy, it has nothing to with that word. Finally,
requires a perfect solution is incorrect because the term does not require the perfect solution, but rather a
compromise on perfection.
Diff: 2 Page Ref: 79
Objective: 4.2
70) Simon found that in making decisions, most people satisficed because they had limited ability to
________.
A) be truthful and honest in situations that deal with other people
B) think independently
C) deal with difficult situations
D) grasp present conditions and anticipate future conditions
Answer: D
Explanation: D) Simon found that people were limited in fully understanding their current situation.
Without understanding the present, they also had trouble planning for the future. Though people may
have trouble being honest, dealing with difficult situations, and thinking independently, none of these
items were involved in Simon's work.
Diff: 2 Page Ref: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
71) A person who satisfices fails to ________.
A) maximize his or her decision
B) understand his or her position
C) accept the truth of a situation
D) make any kind of decision
Answer: A
Explanation: A) Satisficing is accepting a "good enough" position rather than maximizing a decision.
When a decision is maximized, goals are reached and the best possible solution is found. Satisficing
does not entail failing to understand one's position, accept the truth, or make a decision to begin with.
Instead, satisficing involves going with a less than thorough examination of all outcomes to find a "good
enough" solution.
Diff: 2 Page Ref: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

22
Copyright (c) 2013 Pearson Education, Inc.

72) Sticking to a decision despite evidence that it is a mistake is called ________.


A) escalation of commitment
B) escalation of rationality
C) satisficing commitment
D) error enhancement
Answer: A
Explanation: A) In some cases, people feel committed to a decision even when evidence shows that it
was faulty. This tendency of failing to let go of a decision is called escalation of commitment. Escalation
of rationality is incorrect because it does not refer to commitment. Sticking with a poor decision is not
satisficing so that choice is incorrect. Error enhancement may describe this situation somewhat, but it is
not a recognized term.
Diff: 2 Page Ref: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
73) Escalation of commitment can occur when people don't ________.
A) want to make a decision
B) want to admit that an earlier decision was flawed
C) accept current conditions
D) understand that conditions have changed
Answer: B
Explanation: B) Escalation of commitment can occur when people cling to an earlier decision. Rather
than admit it was wrong and that they should start over, they stick with their original decision. Failing to
make a decision in the first place, accepting current conditions, or understanding that conditions have
changed are not situations in which escalation of commitment occurs.
Diff: 2 Page Ref: 79
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
74) Which model of decision making takes advantage of unconscious reasoning?
A) rational
B) nonrational
C) intuitive
D) factual
Answer: C
Explanation: C) Intuitive decision making uses feelings, memories, experiences, and unconscious
reasoning to arrive at decisions. Unlike strictly rational decision making, intuitive decision making is not
a systematic approach. Intuitive decision making is rational to a degree, making nonrational an incorrect
choice. Factual is not a correct choice because it is not recognized as a decision-making model.
Diff: 2 Page Ref: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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Copyright (c) 2013 Pearson Education, Inc.

75) Compared to fully rational decision making, what is a major advantage of intuitive decision making?
A) total reliability
B) fully quantified
C) thoroughness
D) speed
Answer: D
Explanation: D) Intuitive decision making is somewhat reliable, but definitely not totally reliable,
eliminating that choice. Intuitive decision making is not at all thorough. In fact, it is often employed as a
shortcut in decision making. Since the process is never spelled out on paper in terms of numbers and
values, intuitive decision making is almost never quantified. Intuitive reasoning is fast, often because
decision makers are using years of experience to make a single judgment.
Diff: 2 Page Ref: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
76) How often do managers typically use intuitive decision making?
A) 100 percent of the time
B) almost never
C) almost all of the time
D) more than half of the time
Answer: D
Explanation: D) Studies show that intuitive decision making is used more frequently than formal
analysis, meaning that managers use it more than half of the time. No managers claim to use the method
all or almost all of the time. Almost never can be eliminated because managers say they use intuitive
decision making frequently.
Diff: 2 Page Ref: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
77) Intuitive decision making can complement ________.
A) rational decision making only
B) bounded rationality only
C) both rationality and bounded rationality
D) neither rationality nor bounded rationality
Answer: C
Explanation: C) Intuitive decision making does not conflict with a rational mode of thinking. Instead,
intuitive decision making uses experience and feelings to provide shortcuts to rational decision making.
For these reasons, it is clear that both formal rationality and bounded rationality can have intuitive
elements.
Diff: 2 Page Ref: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

24
Copyright (c) 2013 Pearson Education, Inc.

78) Which of the following is NOT a way in which intuition guides people who are making decisions?
A) Intuition provides ethics and values guidelines.
B) Intuition provides a formal analysis method.
C) Intuition provides experiences to draw from.
D) Intuition draws on knowledge, skills, and training.
Answer: B
Explanation: B) Intuition can give people insight into questions that involve ethics and values, past
experience, or knowledge and training. What intuition cannot provide is any kind of formal or
mathematical analysis, so providing a formal analysis method is the correct choice here.
Diff: 2 Page Ref: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
79) Emotions and feelings ________ decision making.
A) have no effect on
B) can improve
C) decrease performance in
D) are more important than facts and logic in
Answer: B
Explanation: B) Studies show that emotions and feelings do affect decision making in a positive way,
improving performance. That said, emotions and feelings do not replace facts and logic in decision
making.
Diff: 2 Page Ref: 80
AACSB: Reflective thinking skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
80) Structured problems are ________.
A) ambiguous
B) undefined and vague
C) clear and straightforward
D) incomplete
Answer: C
Explanation: C) A structured problem involves a clear, unambiguous, well-defined situation in which all
information is provided. The essence of a structured problem is that it is straightforward and complete.
Diff: 2 Page Ref: 81
Objective: 4.3

25
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81) Unstructured problems are ________.


A) perfectly rational
B) clear and straightforward
C) situations in which all options are known
D) situations in which all options are not known
Answer: D
Explanation: D) The essence of an unstructured problem is that information is missing. All alternatives
are not known. The problem solver must analyze the situation based on assumptions that may or may not
be true. This means that situations in which all options are not known is the correct answer. The situation
is not perfectly rational or straightforward. Information in an unstructured problem is incomplete, so all
options are not known.
Diff: 2 Page Ref: 81
Objective: 4.3
82) Which of the following is an example of a structured problem?
A) designing a new MP3 player
B) hiring a lawyer
C) deciding shipping options for a vacuum cleaner
D) drafting a quarterback for a pro football team
Answer: C
Explanation: C) A structured problem should be straightforward and clear-cut. Of the four choices, only
"deciding shipping options" requires a simple analysis of choices and priorities. The other options
designing a new product, hiring a person to represent you in the legal system, and choosing a football
player to lead your teamare much less defined and more open to ambiguity than the correct choice; in
other words they are unstructured problems.
Diff: 2 Page Ref: 81
AACSB: Analytic skills
Objective: 4.3
83) Which of the following is an example of an unstructured problem?
A) finding the list price of different copy machines
B) choosing the best wardrobe for an executive
C) comparing gas mileage for different car models
D) measuring pollution levels in a power plant
Answer: B
Explanation: B) An unstructured problem requires judgment and discrimination among options in a
situation in which not all information is available. Only "choosing the best wardrobe for an executive"
fits this description, as choosing a wardrobe is a subjective act that can be accomplished in many
different ways. The other choicesfinding prices, comparing mileage, and measuring pollutionare
straightforward and do not include this ambiguous, subjective element, so they are incorrect responses.
Diff: 2 Page Ref: 81
AACSB: Analytic skills
Objective: 4.3

26
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84) Structured problems typically have ________ while unstructured problems typically have ________.
A) only one solution; many solutions
B) many solutions; one solution
C) many solutions; fewer solutions
D) two solutions; three solutions
Answer: A
Explanation: A) Structured problems, being straightforward, typically have one solution while
unstructured problems, being more ambiguous, can have many solutions. Two solutions and three
solutions stands out here as plausible but it is clearly incorrect since there is no way to quantify the
number of solutions to problems in such a definite way.
Diff: 2 Page Ref: 81
Objective: 4.3
85) Programmed decisions work well for solving ________.
A) structured problems
B) unstructured problems
C) both structured and unstructured problems
D) poorly defined problems
Answer: A
Explanation: A) Programmed decisions are straightforward, routine ways of making decisions so they
are best at solving structured problems, which themselves are routine and straightforward. The
remaining choice gets eliminated because poorly defined problems fall into the "unstructured" category
and would not be effectively solved with a programmed decision-making process.
Diff: 2 Page Ref: 81
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
86) Programmed decisions draw heavily on which of the following?
A) mistakes made in the past
B) past solutions that were successful
C) past solutions that were unsuccessful
D) innovative, new solutions
Answer: B
Explanation: B) Though programmed decisions draw on the past, they do not focus on mistakes but
rather emulate prior solutions that worked and were successful. Innovative, new solutions is incorrect
because programmed decisions are not at all innovative but instead rely on tried and true methods of
problem solving.
Diff: 2 Page Ref: 81
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

27
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87) Which of the following is NOT a type of programmed decision?


A) systematic procedure
B) policy
C) brainstorm
D) rule
Answer: C
Explanation: C) Brainstorming is a method of drumming up new ideas for problem solving, not a way
to make a programmed decision. The other three choicessystematic procedure, policy, and ruleare
recognized as classic ways to make a programmed decision, so they are incorrect responses here.
Diff: 2 Page Ref: 81
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
88) Following the directions to put together an elliptical exercise machine is an example of which way
to solve a problem?
A) procedure
B) rule
C) general practice
D) policy
Answer: A
Explanation: A) If you could put together the machine with a single action, you would be following a
rule. However, assembly is an entire process of following individual instructions, so it is a procedure,
not a rule. A policy would require much more interpretation of the situation than simply following
instructions.
Diff: 1 Page Ref: 82
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
89) A football coach makes the decision to punt or not to punt on fourth down based on whether he is
past his own 50-yard line. Which decision-making method does the coach use?
A) a policy
B) a hunch
C) a procedure
D) a rule
Answer: D
Explanation: D) The coach's decision is based on a single criterion: is he beyond the 50-yard line?
Decision making that relies on a single parameter is rule-following. A policy and a procedure are not
correct because they involve multiple steps and parameters. A hunch is not correct because it is not a
recognized method of solving structured problems.
Diff: 2 Page Ref: 82
AACSB: Analytic skills
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

28
Copyright (c) 2013 Pearson Education, Inc.

90) Which pair or pairs of terms is/are true? (This question can have more than one correct answer.)
A) structured problem, programmed decision
B) structured problem, structured decision
C) unstructured problem, programmed decision
D) unstructured problem, nonprogrammed decision
Answer: A, D
Explanation: A) Structured problem, programmed decision and unstructured problem, nonprogrammed
decision are both correct. Structured problems that are straightforward and unambiguous are best solved
by routine programmed decisions. Unstructured problems, on the other hand, require a more creative
nonroutine, nonprogrammed decision-making process. Unstructured problem, programmed decision
gives pairs that do not matchunstructured problems are not successfully solved by programmed
decision making. Finally, structured problem, structured decision is wrong because "structured
decisions" is not a recognized category of decision.
D) Structured problem, programmed decision and unstructured problem, nonprogrammed decision are
both correct. Structured problems that are straightforward and unambiguous are best solved by routine
programmed decisions. Unstructured problems, on the other hand, require a more creative nonroutine,
nonprogrammed decision-making process. Unstructured problem, programmed decision gives pairs that
do not matchunstructured problems are not successfully solved by programmed decision making.
Finally, structured problem, structured decision is wrong because "structured decisions" is not a
recognized category of decision.
Diff: 1 Page Ref: 82
AACSB: Analytic skills
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
91) A judge consults guidelines before handing down an award for damages in a legal case. What kind of
decision making is she doing?
A) following a policy
B) following a rule
C) programmed
D) following a procedure
Answer: A
Explanation: A) The judge needs to interpret the situation, so she is following a policy. A rule is much
too simple and confined for this kind of decision. The decision is clearly unprogrammed. Finally, the
judge must take all kinds of subjective and human elements into account for the case, so a procedure is
an incorrect choice.
Diff: 2 Page Ref: 82
AACSB: Analytic skills
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

29
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92) Top managers in an organization tend to ________.


A) make programmed decisions
B) solve structured problems
C) make nonprogrammed decisions
D) solve well-defined problems
Answer: C
Explanation: C) The higher a manager is in an organization, the more likely it is that he or she will be
asked to solve high-level problems. High-level problems are almost always solved by nonprogrammed
decision making, so making nonprogrammed decisions is the correct answer. The other choices all
involve structured problems, so they are not correct responses here.
Diff: 2 Page Ref: 82
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
93) Which three conditions do decision makers face?
A) certainty, risk, uncertainty
B) certainty, uncertainty, confidence
C) risk, high risk, low risk
D) certainty, risk, high risk
Answer: A
Explanation: A) The choice indicating certainty, risk, and uncertainty represents the correct choice,
citing the three recognized conditions that decision makers face. Certainty, uncertainty, confidence is
eliminated because confidence is not a recognized decision-making condition. Similarly, the other two
choices are wrong because "risk" is the only recognized decision-making category"high risk" and
"low risk" are not recognized.
Diff: 2 Page Ref: 83-84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
94) In a condition of certainty, ________.
A) most outcomes are known
B) the decision is already made
C) all outcomes of all alternatives are known
D) some alternatives are not known
Answer: C
Explanation: C) Certainty requires that all alternatives are known, and all outcomes for those
alternatives are also known. This makes the choice indicating "all outcomes of all alternatives are
known" the correct choice and the other choices incorrect because the latter limit the number of
outcomes or alternatives that are known.
Diff: 2 Page Ref: 83-84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

30
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95) If a car buyer knows the inventory dealer price of the same car at different dealerships, he or she is
operating under what type of decision-making condition?
A) risk
B) uncertainty
C) certainty
D) factual
Answer: C
Explanation: C) The situation described is one of certainty because all outcomes and alternatives are
known. Risk would require that the individual needs to make estimates, while uncertainty would mean
that the individual would have no confidence in his or her estimation ability for the situation. Factual is
not a correct choice because it is not a recognized decision-making condition.
Diff: 2 Page Ref: 83-84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
96) A retail clothing store manager who estimates how much to order for the current spring season based
on last spring's outcomes is operating under what kind of decision-making condition?
A) seasonal
B) risk
C) uncertainty
D) certainty
Answer: B
Explanation: B) The ability to make accurate estimates is the critical element in this question. If the
manager can make good estimates, he is operating under risk. If all outcomes are known, then certainty
would apply, while if the situation is too vague for good estimates, uncertainty would apply. Seasonal is
not a recognized decision-making condition, so it is incorrect.
Diff: 2 Page Ref: 83-84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
97) ________ is a situation in which a decision maker has incomplete information about outcomes and
does not have the ability to reasonably estimate outcomes that are not known.
A) Certainty
B) Risk
C) Uncertainty
D) High certainty
Answer: C
Explanation: C) Since the decision maker does not know all outcomes, certainty can be eliminated here.
Risk can be eliminated because the decision maker is not able to make good estimates. That means
uncertainty is the correct response. High certainty is not a recognized category, so it is incorrect.
Diff: 2 Page Ref: 83-84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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98) A low-level manager is most likely to solve problems under which condition?
A) certainty
B) low risk
C) uncertainty
D) low certainty
Answer: A
Explanation: A) A low-level manager primarily solves structured problems, so he or she will deal with
situations of certainty. Low risk and low certainty are not recognized terms, so they are incorrect
responses. Uncertainty would apply to decisions made by top managers rather than low-level managers.
Diff: 2 Page Ref: 83-84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
99) A top-level manager is most likely to solve problems under which condition?
A) certainty
B) risk
C) uncertainty
D) high certainty
Answer: C
Explanation: C) A top-level manager primarily solves unstructured problems, so he or she will deal with
situations of uncertainty. Conditions of certainty and risk would be less common for a top-level
manager, so these responses are incorrect. High certainty is not a recognized term, so it is an incorrect
response.
Diff: 2 Page Ref: 83-84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
100) A manager has a choice of three investment funds. To assess them, he looks at their past investment
records over the previous five years. The manager is operating under which condition?
A) certainty
B) probability
C) uncertainty
D) risk
Answer: D
Explanation: D) The manager can use the investment records over previous years to assign probabilities
to each fund. That means he is operating under a condition of risk. Certainty would require that he
would know precisely how funds would perform, while uncertainty would mean he would have no way
to predict performance. "Probability" is not a recognized decision-making condition.
Diff: 2 Page Ref: 83-84
AACSB: Analytic skills
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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101) A manager has a choice of three bank CDs that pay different amounts of interest over different time
periods. The manager is operating under which condition?
A) jeopardy
B) certainty
C) uncertainty
D) risk
Answer: B
Explanation: B) The manager knows the exact amounts of interest that the CDs will pay over each time
period, so he is operating under a condition of certainty. Risk would require the manager to need to
estimate the interest that the funds would generate. Uncertainty would be a condition in which the
manager could not even make good estimates for each fund. "Jeopardy" is not a recognized decisionmaking condition.
Diff: 2 Page Ref: 83-84
AACSB: Analytic skills
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
102) A manager wants to invest in one of three start-up companies. All three of the companies seem to
have a good business plan. None of the companies has a track record. The manager is operating under
which condition?
A) uncertainty
B) certainty
C) low certainty
D) risk
Answer: A
Explanation: A) None of the start-ups has a track record, so the manager cannot reasonably assign
probable chances of success for any of them. This means that he is operating under a condition of
uncertainty. Risk would require that the manager could make reasonable estimates of success for each
company. Certainty would mean that the manager would know how each company would fare. "Low
certainty" is not a recognized decision-making condition.
Diff: 2 Page Ref: 83-84
AACSB: Analytic skills
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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103) A key to what is commonly used to assess risk is for a decision maker to examine the ________ an
investment.
A) promises made by a company for
B) ads posted by a company for
C) historical data for
D) minor details of
Answer: C
Explanation: C) Of the four choices listed, historical data is most important by far. Promises made or
ads posted by a company are of little value in assessing risk. Similarly, minor details are usually minor,
that is, unimportant, so that choice is incorrect.
Diff: 3 Page Ref: 84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
104) Managers in organizations make group decisions ________.
A) frequently
B) never
C) almost never
D) rarely
Answer: A
Explanation: A) Group decisions are very common in most organizations so "frequently" is the correct
response. Group decisions allow the people who will be affected by the decision to take part in the
decision. The other choices are incorrect because they do not reflect how common group decision
making is.
Diff: 1 Page Ref: 84
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
105) The eight steps of decision making ________.
A) can only be employed by individuals
B) can only be employed in very small groups
C) can be employed by individuals and groups
D) can only be employed by groups
Answer: C
Explanation: C) The eight steps of decision making can be used by individuals or groups of any size.
All of the other choices for this question somehow limit the scope of eight-step decision making, so they
are incorrect.
Diff: 2 Page Ref: 84
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

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106) One advantage of group decision making is that it usually provides ________ than individual
decision making.
A) faster decisions
B) more ethical decisions
C) less confusion
D) more information
Answer: D
Explanation: D) Group decisions are rarely faster, more ethical, or less confusing than individual
decisions. In fact, group decisions usually take more time and can involve more confusion than
individual decisions. One thing that group decisions consistently provide is more information for
decisions. Having more people take part in a decision allows for more points of view and more sources
of information to be includedtherefore, more information is the correct response.
Diff: 2 Page Ref: 84
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
107) Group decisions generally feature ________ acceptance than decisions made by an individual.
A) greater
B) less
C) neither greater nor less
D) more enthusiastic
Answer: A
Explanation: A) Group decisions are generally better accepted than individual decisions, primarily
because more people feel a part of the decision-making process. This eliminates "less" and "neither
greater nor less" as correct responses. There is no data to indicate one way or another how
enthusiastically decisions are accepted, so "more enthusiastic" is incorrect.
Diff: 2 Page Ref: 84
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
108) Group decision making typically increases the legitimacy of a decision because the decision was
made ________.
A) over a long period of time
B) democratically
C) by experts
D) primarily by the group leader
Answer: B
Explanation: B) It is hard to argue that a decision that was decided in a democratic manner is not
legitimate, making "democratically" the correct response. The period of time in which a decision was
made does not increase its legitimacy. Group decisions are not likely to be made by experts, so that is
not a correct response. Finally, a group decision by a group in which all members were not equally
empowered would tend to have less, rather than more, legitimacy.
Diff: 2 Page Ref: 84
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
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109) Decisions made by individuals typically suffer from suspicions that the decision maker ________.
A) is dishonest
B) is not rational
C) did not try to analyze the situation
D) did not consult all interested parties
Answer: D
Explanation: D) Most organization members trust decision makers to a degree, so individual decisions
do not usually suffer from feelings that the decision maker is not honest or rational. Similarly, it is
assumed that the decision maker applied some kind of analytical skill to the situation. The primary
worry for most organization members is that the decision maker did not get diverse enough viewpoints
to make the decision.
Diff: 2 Page Ref: 84
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
110) Seeking the views of a diverse group of people can provide a decision maker with ________ on
issues.
A) fresh perspectives
B) conventional wisdom
C) universal agreement
D) a foolproof way to get the perfect answer
Answer: A
Explanation: A) Seeking diverse views provides no guarantee of a perfect answer for a problem. A
decision maker seeking an easy way out is not likely to find agreement among diverse opinions, so
universal agreement is also wrong. People with very different perspectives are highly unlikely to supply
conventional wisdom in a situation, so that choice can be eliminated as a correct response. That leaves
"fresh perspectives" as the correct asnwer choice, as fresh perspectives from diverse viewpoints that can
be surprising and very instructive to a decision maker, providing ideas that she would never have been
able to come up with on her own.
Diff: 2 Page Ref: 84
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams

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111) Which of the following is a drawback to seeking diverse views in decision making?
A) less reliable decision
B) easier decision-making process
C) more time consuming
D) less time consuming
Answer: C
Explanation: C) A major drawback to seeking diverse views is that it takes time to reconcile diverse
views and hammer out a decision that takes all of their best points into account. Since seeking diverse
views is more time-consuming, it does not make for an easier decision-making process, eliminating that
choice. Less reliable decision can be ruled out because there is no evidence that seeking diverse views in
any way compromises the quality of the decision itself.
Diff: 2 Page Ref: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
112) Which phrase best summarizes the drawbacks of group decisions?
A) A camel is a racehorse put together by a manager.
B) A camel is a racehorse put together by a committee.
C) A camel is a no racehorse when it comes to speed.
D) A camel beats a racehorse in a long race.
Answer: B
Explanation: B) The choice indicating a camel is a racehorse put together by a committee expresses the
idea that committees can combine many good ideas into a single not-so-good idea by failing to
appropriate a single point of view that focuses on a single goal. A racehorse put together by a manager
might reflect a strength, rather than drawback, of a group decision. The other two choices are both true
to some extent, but neither identifies a drawback of group decisions, so both choices are incorrect.
Diff: 2 Page Ref: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
113) Groups decisions are usually ________ individual decisions.
A) more efficient than
B) less efficient than
C) equal in efficiency to
D) more efficient but less effective than
Answer: B
Explanation: B) Because it takes time to put groups together, and it also takes time to get a group to
reach agreement, group decisions are almost always more time consuming than individual decisions.
This means that group decisions are less, rather than more, efficient than individual decisions. More
efficient but less effective is also incorrect because it states that group decisions are less effective than
individual decisions, a conclusion for which there is no valid evidence.
Diff: 2 Page Ref: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
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114) Since all members of a group are rarely equal in status, most groups suffer from ________.
A) minority domination
B) majority domination
C) too much diversity
D) gridlock
Answer: A
Explanation: A) Minority domination is the result of one or a few group members asserting their wills
and opinions over other members of the group, distorting the decision-making process. Minority
domination can diminish the legitimacy of a decision, causing observers to feel that the decision does
not reflect a true group consensus. The other choices here do not match the description. Majority
domination would have a large faction of a group taking over, while too much diversity would be the
opposite of minority domination and might result in gridlock.
Diff: 2 Page Ref: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
115) ________ can cause people in a group to fail to express their true opinions.
A) Ambiguous responsibility
B) Group imbalance
C) Pressure to conform
D) Years of experience
Answer: C
Explanation: C) Individuals often don't want to be the "squeaky wheel" in a group, so rather than speak
up, they feel pressure to conform and go along with the prevailing group views. Ambiguous
responsibility might encourage, rather than discourage, people to speak up, since it would allow them to
escape consequences for their views. Years of experience also might encourage people to express their
views, since experience might make them feel more comfortable in the group. Finally, a group that lacks
balance would not predictably affect how eagerly people in a group speak up.
Diff: 2 Page Ref: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
116) Which of the following is a primary characteristic of groupthink?
A) conflict among group members
B) failure to reach consensus within a group
C) complete conformity among group members
D) candidness and openness within a group
Answer: C
Explanation: C) Groupthink is the tendency of group members to conceal their real views and conform
to avoid controversy, so it is best described by the choice that highlights conformity. Conflict or
candidness among group members would not be evident in groupthinkin fact, the opposite of these
conditions would be likely to prevail: total accord and a lack of openness. Finally, a group that suffered
from groupthink would likely reach consensus easier than other groups, making failure to reach
consensus within a group an incorrect response..
Diff: 3 Page Ref: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
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117) Which of the following is NOT a factor that can increase the probability of groupthink?
A) Influential group members dominate the discussion and the decision-making process.
B) Group leaders stress the importance of consensus above all other concerns.
C) The group has more than 40 group members.
D) Group leaders solicit ideas from all group members without passing judgment on their ideas.
Answer: D
Explanation: D) Groupthink, the tendency of group members to conform in an artificial way, can be the
result of overly dominant group leaders, a group that is too large, or too much emphasis put on being
agreeable. Groupthink would not be likely to result from leaders who solicit ideas from members in a
noncritical way, as this would make group members comfortable in expressing themselves. This makes
group leaders soliciting ideas from all members without passing judgment the correct response.
Diff: 3 Page Ref: 85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
118) Which of the following is the most effective number of people to have in a group?
A) 5-7
B) 2-4
C) 10-15
D) 16-25
Answer: A
Explanation: A) Research has shown that free expression within a group can be inhibited when a group
is either too small or too large. Studies have shown that the ideal group size has about 5 to 7 participants,
making that the correct response.
Diff: 2 Page Ref: 86
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
119) Which of the following is used exclusively to generate creative ideas in a group setting?
A) brainstorming
B) nominal group technique
C) groupthink
D) electronic meetings
Answer: A
Explanation: A) Nominal group technique and electronic meetings are meetings in which groups cannot
only generate ideas but also come to decisions, so neither is exclusively an idea-generating technique.
Brainstorming is used exclusively for generating ideas, so it is the correct response here. Groupthink is a
negative condition that afflicts groups, so it is an incorrect response.
Diff: 1 Page Ref: 86
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams

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120) Which of the following is NOT allowed in a brainstorming session?


A) clear definition of the problem
B) criticism or dismissal of poor ideas
C) large number of alternatives
D) recording of all alternatives
Answer: B
Explanation: B) The essence of brainstorming requires that all ideas be treated in roughly equal ways.
The important thing for brainstorming is simply to generate ideas, not to stand in judgment of ideas,
which makes criticism or dismissal of poor ideas the correct response. A brainstorming session would
definitely feature a clear definition of the issue, generation of a large number of alternatives, and the
recording of those alternatives for later analysis, so all three of these choices are incorrect.
Diff: 2 Page Ref: 86
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
121) Which of the following group techniques allows group members to meet together, but at the same
time facilitates independent decision making?
A) brainstorming
B) nominal group technique
C) large meetings of over 50 individuals
D) small meetings of less than 10 individuals
Answer: B
Explanation: B) Neither large nor small meetings can ensure independent thoughtboth meeting forms
can fall victim to groupthink or domination by a few individuals. Nominal group technique can generate
independent thought, as it allows group members to express opinions secretly so they can be assessed on
their own merits. Brainstorming is an idea-generating technique only, so it cannot result in independent
decision making.
Diff: 2 Page Ref: 86
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
122) The ________ blends the nominal group technique with sophisticated computer technology.
A) personal meeting
B) electronic meeting
C) virtual meeting
D) preliminary meeting
Answer: B
Explanation: B) Of the choices, only the electronic meeting combines the anonymous aspect of nominal
group technique with computer technology. In an electronic meeting, participants type in comments
without identifying themselves, thus ensuring that all comments will be taken on an equal basis. A
personal meeting, virtual meeting, or preliminary meeting cannot supply the anonymity of an electronic
meeting, so these three choices are incorrect.
Diff: 2 Page Ref: 86
AACSB: Use of information technology
Objective: 4.4

40
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123) What advantages does videoconferencing provide for group decision making?
A) anonymous expression of opinions
B) less groupthink
C) less minority domination
D) savings on travel and time
Answer: D
Explanation: D) Videoconferencing is a face-to-face encounter, so it does not provide anonymous
expression of opinions, reduce groupthink, or reduce minority domination. What videoconferencing
does do is save on travel and time. Individuals thousands of miles away can meet face-to-face without
the expenditure of money and time it would take to meet in person. This makes savings on travel and
time the correct response.
Diff: 2 Page Ref: 87
AACSB: Use of information technology
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
124) Mid-level managers in a country with high power distance are ________ than managers from a low
power distance country.
A) more likely to make risky decisions
B) less likely to make risky decisions
C) less likely to make safe, conservative decisions
D) more likely to disagree with their leaders' decisions
Answer: B
Explanation: B) High power distance means that leaders have a disproportionate amount of power when
compared to subordinatesusually resulting in mid-level managers making inordinately safe decisions
to avoid disapproval from their superiors. This makes "less likely to make risky decisions" the correct
response. Similarly, high power distance would decrease, rather than increase, the likelihood of midlevel managers disagreeing with leaders.
Diff: 1 Page Ref: 87
Objective: 4.5
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
125) Mid-level managers in a country with low uncertainty avoidance are ________ than managers from
a high uncertainty avoidance country.
A) more likely to make risky decisions
B) less likely to make risky decisions
C) less likely to make foolish decisions
D) more likely to avoid making decisions
Answer: A
Explanation: A) Low uncertainty avoidance means that managers tend not to shy away from uncertainty
usually resulting in them being more likely to make risky decisions. Managers seeking to avoid risk
might avoid making any kind of decision. Foolish decisions might be risky, so being less likely to make
a foolish decision would also be incorrect.
Diff: 1 Page Ref: 87
Objective: 4.5
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
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Copyright (c) 2013 Pearson Education, Inc.

126) Individualistic countries like the United States tend to have ________ than group-oriented
countries like Japan.
A) more conformity and more cooperation
B) more conformity and less cooperation
C) less conformity and more cooperation
D) less conformity and less cooperation
Answer: D
Explanation: D) An individualistic country has its strengths and weaknesses. It would tend to feature
less cooperativeness (an overall weakness) and less conformity (an overall strength) than a more grouporiented culture. This makes less conformity and less cooperation the correct choice.
Diff: 1 Page Ref: 88
Objective: 4.5
127) The use of ringisei in Japanese organizations reflects which of the following values in Japanese
culture?
A) tradition-following
B) consensus-seeking
C) risk taking
D) go-it-alone
Answer: B
Explanation: B) Ringisei is a reflection of how Japanese culture values form a consensus so all
participants share the responsibility of a decision. This makes consensus-seeking the correct choice.
Ringisei does not specifically reflect tradition, though Japanese cultures do place great value on
tradition. Ringisei is more or less the opposite of both risk taking and go-it-alone, so both of those
responses are incorrect.
Diff: 2 Page Ref: 88
AACSB: Multicultural and diversity understanding
Objective: 4.5
128) French management style tends to be ________ in style.
A) permissive
B) group oriented
C) rule following
D) autocratic
Answer: D
Explanation: D) French managers tend to be domineering in style, highlighting the absolute authority of
the superior manager. This makes "autocratic" the correct response and rules out "permissive" as this is
somewhat the opposite of autocratic. Group-oriented or rule-following management does not fit the
French style as closely as the correct choice.
Diff: 2 Page Ref: 88
AACSB: Dynamics of the global economy
Objective: 4.5

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129) When dealing with international organizations, managers must be ________ in order to
accommodate the managing styles of different cultures.
A) as flexible as possible
B) as inflexible as possible
C) as strict as possible
D) as thorough
Answer: A
Explanation: A) Flexibility is the key when dealing with managers from different cultures who may
have very different ideas about decision making than domestic managers. This rules out both inflexible
and strict because both choices identify a less-flexible approach. Thoroughness can be helpful, but it
would not help avoid misunderstanding as much as flexibility in dealing with foreign management.
Diff: 2 Page Ref: 88
AACSB: Dynamics of the global economy
Objective: 4.5
130) ________ helps people find better solutions to problems using innovative problem-solving
methods.
A) Planning
B) Creativity
C) Organization
D) Structure
Answer: B
Explanation: B) Creativity focuses on using innovation to solve problems using novel approaches and
methods. While planning, organization, and structure can all aid in problem solving, none of those
choices specifically employs innovationso they are incorrect choices.
Diff: 2 Page Ref: 88
Objective: 4.5
Learning Outcome: Describe the innovation process and identify strategies for stimulating creativity
and innovation
131) According to one study, about ________ of men and women were somewhat creative.
A) 1 percent
B) 10 percent
C) 30 percent
D) 60 percent
Answer: D
Explanation: D) The study of 461 men and women found that only about 1 percent of them could be
categorized as "highly creative," but a full 60 percent were at least "somewhat creative." This means that
60 percent is the correct response for this question.
Diff: 2 Page Ref: 88
Objective: 4.5
Learning Outcome: Describe the innovation process and identify strategies for stimulating creativity
and innovation

43
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132) One well-accepted model states that individual creativity requires ________, or a commanding
understanding of a subject matter.
A) expertise
B) task motivation
C) high interest
D) intuition
Answer: A
Explanation: A) A complete understanding of a subject matter, or expertise, is a necessary component of
creativity, according to the model. Task motivation, high interest, and intuition are all required for
creativity, but none of them describes a thorough understanding of a subject.
Diff: 2 Page Ref: 88
Objective: 4.5
Learning Outcome: Describe the innovation process and identify strategies for stimulating creativity
and innovation
133) Which of the following is NOT a characteristic of a creative problem solver?
A) self confidence
B) tolerance for ambiguity
C) frustrates easily
D) accepts risks readily
Answer: C
Explanation: C) A creative person has faith in his or her ability to solve problems, can hold conflicting
ideas without abandoning them, and will take intellectual risks. A trait that a creative person cannot have
is to be easily frustrated as the creative process usually requires finding countless "wrong" answers to a
question before a "right" answer emerges.
Diff: 2 Page Ref: 89
Objective: 4.5
Learning Outcome: Describe the innovation process and identify strategies for stimulating creativity
and innovation
134) Which of the following traits do all creative people seem to share?
A) They like to save time.
B) They get along well with others.
C) They love their work.
D) They don't like to work hard.
Answer: C
Explanation: C) A large part of creativity is perseverance, so individuals who do not truly love what
they do usually do not have the stamina to solve the problems they are faced with. Getting along well
with others and saving time do not help individuals persevere or aid in the creative process in some other
way, so they are incorrect responses. Not liking to work hard is the opposite of the case for creative
people, as they typically work much harder than other people in pursuit of their goals.
Diff: 2 Page Ref: 89
Objective: 4.5
Learning Outcome: Describe the innovation process and identify strategies for stimulating creativity
and innovation

44
Copyright (c) 2013 Pearson Education, Inc.

135) Which of the following tends to impede a person's creativity?


A) providing time and resources
B) clearly defined goals
C) being watched while you work
D) internal motivation
Answer: C
Explanation: C) Internal motivation, clearly defined goals, and time and resources all serve to increase,
rather than decrease, creativity. The only item listed that impedes creativity is surveillancebeing
watchedas it puts undue pressure on the problem solver and distracts him or her from the goal. That
makes being watched while you work the correct response.
Diff: 2 Page Ref: 89
Objective: 4.5
Learning Outcome: Describe the innovation process and identify strategies for stimulating creativity
and innovation
Decisions, Decisions (Scenario)
Sondra needed help. Her insurance company's rapid growth was necessitating making some IT changes,
but what changes? Should they modify the servers that they currently used or purchase an entirely new
system? Sondra was confused and needed help in making the correct decision.
136) According to the decision-making process, the first step Sondra should take is to ________.
A) analyze alternative solutions
B) identify decision criteria
C) evaluate her decision's effectiveness
D) identify the problem
Answer: D
Explanation: D) The first step in any problemsolving situation is to identify the problem. Sondra's
problem appears to be should she buy a new system or fix the old system? Identifying decision criteria,
analyzing possible solutions, and evaluating the process will come later in the process.
Diff: 1 Page Ref: 72
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

45
Copyright (c) 2013 Pearson Education, Inc.

137) Sondra has decided to collect information about the features the company needs for its system.
Which stage of the decision-making process is she carrying out?
A) identify alternative solutions
B) identify decision criteria
C) evaluate her decision's effectiveness
D) allocate weights to the criteria
Answer: B
Explanation: B) In collecting information, Sondra is identifying the key points, or criteria, that are
important to her company. After these criteria are analyzed, she will go on to identify a list of solutions
and assign weights to those solutions.
Diff: 2 Page Ref: 73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
138) Sondra has determined that the speed of the system she settles on is twice as important as the
capacity of the system. Which stage of the decision-making process is she carrying out?
A) allocation of weights to criteria
B) selecting an alternative
C) implementing the alternative
D) identifying the problem
Answer: A
Explanation: A) In determining that one criterion is more important than another, Sondra is weighting
the criteria. Before doing that, she needed to identify her problem. After assigning weights, she will
develop and analyze alternatives, then select an alternative, and finally implement that alternative.
Diff: 2 Page Ref: 73
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
139) Sondra has decided to purchase a new system. After obtaining permission, she has ordered the
system from a reputable company. Which stage of the decision-making process is she carrying out in
making the order?
A) analyzing alternative solutions
B) selecting an alternative
C) implementing the alternative
D) identifying the problem
Answer: C
Explanation: C) In deciding on a new system, Sondra selected an alternative. Prior to that, she first
identified the problem and after identifying criteria, weighting the criteria, and developing alternatives,
she analyzed those alternatives. Note that selecting an alternative is not the correct response, because in
ordering the new system Sondra was going beyond merely selecting an alternative and actually
implementing the selected alternative, making implementing the alternative the correct response.
Diff: 3 Page Ref: 72-74
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
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Copyright (c) 2013 Pearson Education, Inc.

140) The very last step Sondra should take, according to the decision-making process, is to ________.
A) analyze alternative solutions
B) select alternatives
C) implement the alternative
D) evaluate the decision's effectiveness
Answer: D
Explanation: D) Without evaluating the decision, the problem solver is not able to assess whether the
problem was actually solved or the situation was actually improved. Evaluating the effectiveness of the
decision also allows the decision maker to determine whether the correct problem was identified in the
first place. All of the other answer choices identify steps that come earlier in the decision-making
process.
Diff: 1 Page Ref: 75
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
141) In a short essay, list and discuss the first four steps in the decision-making process. Give an
example of each step.
Answer: Step 1: Identification of a problem
The decision-making process begins with a discrepancy between an existing and a desired state of
affairs. An example of identifying a problem is choosing a new car.
Step 2: Identification of decision criteria
Once the manager has identified a problem that needs attention, the decision criteria important to
resolving the problem must be identified. That is, managers must determine what factors are relevant in
making a decision. An example of identifying decision criteria is deciding what features you need in a
new car.
Step 3: Allocation of weights to the criteria
At this step, the decision maker must compare the items in order to give them the correct priority in the
decision. The most important criterion is assigned the heaviest weight. Other criteria are assigned
weights in comparison with that standard. Weights can be quantitativewith number valuesor
determined on a qualitative scale. An example of weighting decision criteria is ranking the features of a
new car in order of their importance.
Step 4: Development of alternatives
The fourth step requires the decision maker to use the criteria to develop a list of possible alternatives
that may solve the problem. An example of developing alternatives is making a list of possible new cars.
Diff: 2 Page Ref: 72-76
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

47
Copyright (c) 2013 Pearson Education, Inc.

142) In a short essay, list and discuss the final four steps in the decision-making process. Give an
example of each step.
Answer: Step 5: Analysis of alternatives
Once the alternatives have been identified, the decision maker must critically analyze each alternative.
From this comparison, the strengths and weaknesses of each alternative become evident. An example of
analyzing alternatives is to make a table of weighted scores for possible new cars.
Step 6: Selection of an alternative
The sixth step is the important act of choosing the best alternative from among those considered. All the
pertinent factors should be considered here, both objective and subjective. Then a choice of a single
alternativeor group of alternativesshould be selected. An example of selecting an alternative is to
choose a single new car from a list of alternatives.
Step 7: Implementation of the alternative
Implementation involves carrying out the decision that was made. In the car example, it involves
purchasing the car that was selected.
Step 8: Evaluation of decision effectiveness
The last step in the decision-making process involves appraising the outcome of the decision to see if the
problem has been resolved. Did the alternative chosen and implemented accomplish the desired result?
If not, the decision maker may consider returning to a previous step or may even consider starting the
whole decision process over. An example of this final step would be to assess the success of the carbuying decision. Was the right car selected? Did it have all of the features and characteristics that were
needed? Did it perform all of the functions that were needed?
Diff: 2 Page Ref: 72-76
AACSB: Analytic skills
Objective: 4.1
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

48
Copyright (c) 2013 Pearson Education, Inc.

143) In a short essay, discuss why creativity is important to decision making. Describe a situation in
which a creative solution is used to solve a problem.
Answer: Creativity is important to decision making because it allows managers to solve problems in
more efficient, effective, and innovative ways. Innovation is valuable because it can open up new paths
of exploration for an organization, sometimes exposing needs that weren't known and possible
opportunities that weren't suspected.
An example of a creative solution to a problem is the recent development of a software bowling game
for senior citizens. Rather than try to develop a new game for children or young adultstwo fairly
saturated marketsthe company turned its attention to a neglected market, senior citizens. Could the
company get seniorswho typically don't use computersto play video games? They could if they
created the right game.
The company worked hard to develop a program that was "friendly" to its typical usera senior citizen
who had no computer skills or knowledge. The result was a huge hit. Seniors all over the United States
now rave about this fun new game. Leagues have formed. Tournaments have been organized. Seniors
especially enjoy the fact that they can play the game at home, and that physical disabilities don't prevent
them from playing. The success of the game is a good example of how being creative can solve a
problem.
Diff: 3 Page Ref: 88-89
AACSB: Analytic skills
Objective: 4.5
Learning Outcome: Describe the innovation process and identify strategies for stimulating creativity
and innovation
144) In a short essay, discuss bounded rationality and satisficing.
Answer: Perfect rationality requires that the decision maker face a clear and unambiguous problem with
a clear and specific goal and have knowledge of all possible alternatives for his or her decision and all
outcomes and consequences that result from choosing each one of those alternatives. In the real world,
these conditions are almost never met. Rather than address the virtually impossible chore of identifying
all alternatives and outcomes of the decision, the decision maker chooses to apply bounded rationality,
which limits the scope of the decision to just some, rather than all, alternatives and consequences.
Bounded rationality requires the decision maker to satisfice, or choose a "good enough" solution to the
problem, rather than maximize his or her decision by identifying the perfect rational solution.
Diff: 3 Page Ref: 79
AACSB: Analytic skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

49
Copyright (c) 2013 Pearson Education, Inc.

145) In a short essay, discuss the differences among a procedure, a rule, and a policy. Include specific
examples of each to support your answer.
Answer: A procedure is a series of sequential steps that a manager can use for responding to a wellstructured problem. An example of a procedure is instructions for how to install a new thermostat for
your home heating system. You follow the instructions in a step-by-step manner to remove the old
thermostat and install the new one.
A rule is an explicit statement that tells a manager what he or she can or cannot do. Managers frequently
use rules when they confront a well-structured problem because rules are simple to follow and ensure
consistency. For example, a rule at a local tennis club might dictate that if the courts are full, players can
play no longer than one hour. When their hour is up they can get bumped from their court.
A policy provides guidelines to channel a manager's thinking in a specific direction. In contrast to a rule,
a policy establishes parameters for the decision maker rather than specifically stating what should or
should not be done. Policies differ from procedures in that they typically leave quite a bit of
interpretation up to the decision maker. An example of a policy is guidelines that require scientists at a
research lab to have an advanced degree in their field, at least three years of postdoctoral work, and at
least five published scientific papers to their credit. These requirements are guidelinescandidates who
lack all of the qualifications but have other strengths may also be considered for the job. It would be up
to the decision maker to determine how rigorously the policy would be followed.
Diff: 2 Page Ref: 82
Objective: 4.3
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
146) In a short essay, identify and explain the advantages and disadvantages of group decision making.
Answer: Group decisions provide more complete information than do individual ones, as a group will
bring a diversity of experiences and perspectives to the decision process that an individual acting alone
cannot. In addition, because groups have a greater quantity and diversity of information, they can
identify more alternatives than can an individual. Furthermore, group decision making increases
acceptance of a solution. Finally, the group decision-making process is consistent with democratic
ideals; therefore, decisions made by groups may be perceived as more legitimate than decisions made by
a single person.
Group decisions are not without their drawbacks. It takes time to assemble a group, and the interaction
that takes place once the group is in place is frequently inefficient. Groups almost always take more time
to reach a solution than an individual would take to make the decision alone. Groups may also be subject
to minority domination, in which one or a few group members compel others to adhere to their agenda.
Another problem is the pressure to conform in groups. In groupthink, a form of conformity, group
members withhold their views in order to avoid controversy, avoid taking responsibility for their actions,
and give the appearance of agreement. As a result, groupthink undermines critical thinking in the group
and eventually harms the quality of the final decision. And, finally, ambiguous responsibility can
become a problem. Group members share responsibility, so the responsibility of any single member is
watered down and no one ends up taking "ownership" of the group's final decision.
Diff: 2 Page Ref: 84-85
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions
50
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147) In a short essay, describe how brainstorming can help avoid groupthink and enhance creativity in
group decision making.
Answer: Brainstorming is a relatively simple technique for overcoming the pressures for conformity
that retard the development of creative alternatives. Brainstorming utilizes an idea-generating process
that specifically encourages any and all alternatives while withholding any criticism of those
alternatives. In a typical brainstorming session, participants "freewheel" as many alternatives as they can
in a given time. No criticism is allowed, and all the alternatives are recorded for later discussion and
analysis.
Diff: 2 Page Ref: 85-86
AACSB: Communication abilities
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
148) In a short essay, describe how nominal group technique can help avoid groupthink and enhance
creativity in group decision making.
Answer: Nominal group technique helps groups arrive at a satisfactory solution to a problem. The
technique restricts discussion during the decision-making process. Group members must be present, as
in a traditional committee meeting, but they are required to operate independently. They secretly write a
list of general problem areas or potential solutions to a problem. The chief advantage of this technique is
that it permits the group to meet formally but does not restrict independent thinking as so often happens
in the traditional interacting group. Since opinions are expressed anonymously, participants are more
candid, honest, creative, and ambitious with their comments and suggestions.
Diff: 2 Page Ref: 85-86
AACSB: Analytic skills
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams
149) In a short essay, describe how electronic meetings can help avoid groupthink and enhance
creativity in group decision making.
Answer: The most recent approach to group decision making blends the nominal group technique with
sophisticated computer technology. It is called the electronic meeting. Once the technology for the
meeting is in place, the concept is simple. Participants sit around a horseshoe-shaped table that is empty
except for a series of computer terminals. Issues are presented to the participants, who type their
responses onto their computer screens. Individual comments, as well as aggregate votes, are displayed
on a projection screen in the room. The major advantages of electronic meetings are anonymity, honesty,
and speed.
Diff: 2 Page Ref: 85-86
AACSB: Use of information technology
Objective: 4.4
Learning Outcome: Describe the best practices of groups and teams

51
Copyright (c) 2013 Pearson Education, Inc.

150) In a short essay, discuss the assumptions of rationality and the validity of those assumptions.
Answer: A decision maker who was perfectly rational would be fully objective and logical. He or she
would carefully define a problem and would have a clear and specific goal. Moreover, making decisions
using rationality would consistently lead toward selecting the alternative that maximizes the likelihood
of achieving that goal.
The assumptions of rationality apply to any decision. Rational managerial decision making assumes that
decisions are made in the best economic interests of the organization. That is, the decision maker is
assumed to be maximizing the organization's interests, not his or her own interests.
Managerial decision making can follow rational assumptions if the following conditions are met: the
manager is faced with a simple problem in which the goals are clear and the alternatives limited; the
time pressures are minimal; and the cost of seeking out and evaluating alternatives is low. However,
most decisions that managers face in the real world don't meet all of those tests.
Diff: 2 Page Ref: 78-80
AACSB: Analytic skills
Objective: 4.2
Learning Outcome: Identify the different types of decisions managers make and discuss how they make
decisions

52
Copyright (c) 2013 Pearson Education, Inc.