CHAPTER 7 – DECISION MAKING PROCESS

41. To make a decision is to

a) select from among different possible alternatives.
b) solve a problem.
c) take advantage of an opportunity.
d) avoid negative consequences.
e) identify needs in the marketplace.
Ans: a

42. An important step for Joel as he embarks on a decision-making process is to

a) listen to the customers.
b) be aware of and identify the need for making a decision.
c) delegate the matter to his staff.
d) choose the best alternative by using perfect information.
e) have a successful track record in earlier decisions.
Ans: b

43. The four basic steps of the decision-making process are

a) identify the need for a decision, develop alternatives, choose an alternative, and implement the
alternative.
b) identify a need or opportunity, brainstorm alternatives, select an alternative, and execute the
alternative.
c) delegate, design, develop, and deliver.
d) determine the need for a decision, specify one's purpose and goals, develop alternatives, and
decide on an alternative.
e) None of these.
Ans: a

44. ____________________ tend to alert people to the need for a decision.

a) Problems and opportunities
b) Positive results in a stable environment
c) Alternatives based on bounded rationality
d) Escalating commitments
e) Information distortions
Ans: a

45. Issues requiring a decision include

a) the future viability of the organization.
b) customer complaints.
c) an increase in the number of defective parts in production.
d) an opportunity to innovate with a new product line.
e) All of these.
Ans: e

46. ________________ can be seen as assimilated guidelines or procedures that help people interpret and
respond to what is happening around them.
a) Rules and regulations
b) Strategic goals
c) Scripts
d) SWOT analysis results
 e) Cultural icons
Ans: c

47. Managers gather information from _________________ for determining the need to make decisions.
a) financial statements
b) quality reports
c) market and industry trends
d) business media
e) All of these
Ans: e

48. Two basic types of decisions are

a) rational and micro.
b) programmed and nonprogrammed.
c) escalating and de-escalating.
d) procedural and scripted.
e) All of these.
Ans: b

49. ______________________ would be a programmed decision.

a) Determining a target market for the new product line
b) Test marketing a new flavored drink at Coca Cola
c) Beginning expansion into the global market
d) Launching a new entrepreneurial venture
e) Adopting "green" initiatives for the organization
Ans: b

50. Symptom(s) indicating a deeper problem include

a) declining sales.
b) a drop in profits.
c) an increase in defects.
d) None of these.
e) All of these.
Ans: e

51. _______________ and ______________ enable people to understand the underlying problem.
a) Resources; people
b) Time; resources
c) Money; people
d) Time; people
e) Time; money
Ans: b

52. _________________ make(s) it difficult to determine the need for making a decision.
a) Resource availability
b) Information distortion
c) Different interpretations
d) Dominant personalities
e) Alternatives such as "do nothing"
Ans: c
53. ______________________ is a viable alternative response.
a) Doing nothing
b) Following a routine response
c) Developing a nonprogrammed response
d) All of these
e) None of these
Ans: d

54. A viable alternative that does not require any effort or time to develop is
a) a nonprogrammed response.
b) a routine response.
c) the "do nothing" response.
d) information distortion.
e) an increasing commitment.
Ans: c

55. Programmed decisions are

a) related to strategic initiatives.
b) made through automation with artificial intelligence.
c) dependent on significant investments.
d) routine responses to repeatable situations.
e) used to respond to unusual situations.
Ans: d

56. ______________ and ________________ enable people to make programmed decisions.

a) Advanced computer technology; artificial intelligence
b) Policies; decision rules
c) Accountability discussions; disciplinary measures
d) Performance standards; new situations
e) Escalating commitment; bounded rationality
Ans: b

57. Programmed decisions enable managers to have

a) strategic influence in future decisions.
b) many more opportunities to work through the four basic steps in decision making.
c) efficient responses to similar situations that arise.
d) computer assistance in delegating responsibilities for outcomes.
e) a way to analyze underlying problems.
Ans: c

58. Managers decide how much to invest in creating nonprogrammed alternatives on the basis of three
factors:
a) importance, urgency, and cost.
b) policies, contingencies, and urgency.
c) strengths, weaknesses, and threats.
d) importance, novelty, and urgency.
e) strengths, opportunities, and sustainability.
Ans: d

59. Crisis scenarios enable managers to have _______________ alternatives to deal with unusual events,
just in case they happen.
 a) new
b) ready-made
c) old
d) random
e) classic
Ans: b

60. Selecting an appropriate alternative depends on two key factors:

a) commitment and industry knowledge.
b) commitment and available knowledge.
c) goal achievement and market knowledge.
d) goal consensus and available knowledge.
e) goal consensus and commitment.
Ans: d

61. The term ________________ refers to the level of agreement among organizational members about
goals for the future.
a) kaizen in Japanese management
b) rational consensus
c) strategic decision making
d) classical-rational
e) goal consensus
Ans: e

62. Accumulating organizational knowledge for a decision helps organizations

a) reduce risk.
b) increase profits.
c) decrease defects.
d) increase quality.
e) lower stress.
Ans: a

63. The term "risk" refers to the chance that a decision will
a) have a positive impact on efforts to achieve the goal.
b) have a negative impact on efforts to achieve the goal.
c) have no impact on efforts to achieve the goal.
d) have financial consequences.
e) strongly affect people and their efforts to achieve the goal.
Ans: b

64. The classical rational decision-making method is based on

a) low consensus and low knowledge.
b) low consensus and high knowledge.
c) high consensus and low knowledge.
d) high consensus and high knowledge.
e) None of these.
Ans: d

65. Tools for the classical rational decision-making method include

a) break-even analysis.
b) decision trees.
 c) inventory models.
d) SWOT analysis.
e) All of these.
Ans: e

66. Bargaining, compromise, and coalition formation are different ways of making decisions with the
___________________ method.
a) classical rational
b) random
c) political
d) incremental
e) trial and error
Ans: c

67. At Puzzle Play Teambuilders, Inc., there is often low consensus and high knowledge with decision
making based on the ________________ method.
a) random
b) political
c) incremental
d) trial and error
e) rational
Ans: b

68. The political decision-making method includes behaviors such as

a) creating coalitions.
b) blaming people for failures.
c) exchanging favors for self-interested reasons.
d) building networks.
e) All of these.
Ans: e

69. Intuition may have a significant impact on the _______________ decision-making method.
a) classical rational
b) political
c) incremental trial and error
d) administrative
e) random
Ans: c

70. Political decision making results in

a) higher anxiety.
b) increased job dissatisfaction.
c) reliance on the judgment of ineffective managers.
d) None of these.
e) All of these.
Ans: e

71. Continuous improvement is closely associate with the ______________ decision-making method.
a) administrative
b) random
c) incremental trial and error
 d) strategic
e) break-even
Ans: c
72. Kaos Inc. has low consensus on goals and little or no available knowledge for making progress with
their organization. This means they are probably using the ________________ decision-making
method.
a) administrative
b) random
c) political
d) conflictual
e) confrontational
Ans: b

73. Lindy has some knowledge about the camping and outdoor gear business, and her management team
shares some goal consensus. Her management team probably has a(an) _________________ model
for decision making.
a) random
b) incremental
c) trial and error
d) political
e) administrative
Ans: e

74. ________________ and _________________ are important ideas in understanding how decisions are
actually made, rather than just how they should be made.
a) Satisficing; strategic focus
b) Satisficing; bounded rationality
c) Optimizing; satisficing
d) Optimizing; bounded rationality
e) Mimetic behavior; optimizing
Ans: b

75. During a business networking reception, Taylor met many people for the first time and, as a result, left
with subjective information, such as first impressions, that can lead to
a) satisficing.
b) optimizing.
c) mimetic behaviors.
d) bounded rationality.
e) None of the above.
Ans: d

76. Greg's objectivity in his judgment about the new leadership can be distorted by ______________ and
_______________.
a) past practices; current decisions
b) current practices; past decisions
c) classical rationality; perfect information
d) available time; a resource-rich environment
e) high familiarity; extensive knowledge about the leadership
Ans: b

77. The ease of implementing a decision depends on

a) the extent of change required in the organization.
 b) the number of people involved.
c) the amount of time required.
d) the level of resistance among organizational members.
e) All of these.
Ans: e

78. Increased _________________ in the early parts of the decision-making process increase(s) the
likelihood of getting the decision implemented.
a) programming
b) participation
c) information
d) change initiatives
e) intuition
Ans: b

79. To achieve the highest level of participation in decision making, Langley should _______________
organizational members.
a) consult with individual
b) consult with groups of
c) facilitate discussion among
d) delegate to
e) decide for
Ans: d

80. "Throwing more money after a bad decision" indicates ___________________ in decision making.
a) information distortion
b) kaizen
c) escalation of commitment
d) bounded rationality
e) satisficing
Ans: c

81. One of the reasons why mergers and acquisitions fail is that managers do not collect the necessary
information to conduct due diligence. As managers continue to dismiss or ignore information that
raises the possibility of failure, the decisions are likely to be based on
a) information distortion.
b) first impressions.
c) bounded rationality.
d) subjective data.
e) intuition
Ans: a

82. Existing organizational structure and systems can create ______________________, which contributes
to escalation of commitment.
a) low commitment
b) high job dissatisfaction
c) administrative inertia
d) a toxic work environment
e) an authoritative decision-making style
Ans: c
83. Managers can minimize the potential for escalation of commitment by
a) valuing the results of previous decisions.
b) discontinuing legacy practices for their own sake.
c) being courageous enough to reverse poor decisions.
d) valuing the input from new managers.
e) All of these.
Ans: e

84. Multistream decision making emphasizes more ________________ and less ___________________.
a) materialism; participation
b) participation; individualism
c) financial goals; stakeholder well-being
d) information; intuition
e) explicit knowledge; tacit knowledge
Ans: b

85. Multistream decision making can be as easily prompted by _____________________ as by managers.

a) stakeholders
b) shareholders
c) owners
d) investors
e) venture capitalists
Ans: a

86. Multistream managers use _________________ to be sensitive to different stakeholders in order to

identify areas where decisions may be needed.
a) a "listening" posture
b) surveys
c) Gallup polls
d) market databases
e) government census data
Ans: a

87. Multistream managers consider alternatives that address goals related to ________________.
a) financial well-being
b) sustenance economics
c) social justice
d) All of these
e) None of these
Ans: d

88. Mainstream managers consider the use of ______________ to be weak.

a) intuition
b) inspiration
c) tacit knowledge
d) All of these
e) None of these
Ans: d

89. Multistream managers use ______________knowledge in choosing among alternative courses of

action.
 a) explicit
b) tacit
c) intuitive
d) None of these
e) All of these
Ans: e

90. Mainstream decision making leans more toward a _______________ approach, whereas a Multistream
approach can accommodate ________________ outcomes.
a) rational; intuitive
b) rational; hard-to-define
c) intuitive; rational
d) instinctive; intuitive
e) gut wrenching; rational
Ans: b

91. When Hadley Hanshaw Inc. implemented a decision that employees would manage their range of fringe
benefits with the new IT system, the managers had to deal with
a) resistance and feedback.
b) feedback and sabotage.
c) identifying a need for a new IT system.
d) generating alternatives.
e) delegating the issue to the employees.
Ans: a

92. Multistream managers would be likely to invite stakeholder participation in which of the following
decision-making steps?
a) Identifying the need for a decision
b) Generating alternatives
c) Selecting an alternative
d) Implementing the decision
e) All of these
Ans: e

93. Multistream managers consider decisions as _________________, and this enables them to be more
open to feedback
a) final
b) preliminary
c) experiments
d) arbitrary
e) None of these
Ans: c

94. At the Oasis Restaurant, the chef and owner solicited ideas for specials for the month from customers
and employees and awarded a prize to the person whose dish received the most customer votes for
favorite dish. This illustrates _____________ in decision making.
a) arbitrary standards
b) experimenting
c) explicit knowledge
d) identifying an opportunity
e) All of these
Ans: b
95. For a Web-based business in financial advising, Lawrence had a Multistream approach to using client
feedback for ___________________ rather than _______________ his decisions.
a) defending; improving
b) defending; clarifying
c) improving; defending
d) improving; changing
e) clarifying; changing
Ans: c

96. A(an) ________________ approach is used in the Multistream approach to implementing a decision.
a) invitational
b) presentational
c) objective
d) command and control
e) financial viability
Ans: a

97. As a Mainstream manager, Stephen dislikes hard-to-quantify factors. He prefers

a) rational decision making.
b) measures that are difficult to define.
c) a "general happiness" approach.
d) tacit knowledge.
e) nonprogrammed decision making.
Ans: a

98. The holistic concerns that characterize the Multistream decision-making approach include
a) social justice and environmental sustainability.
b) maximizing effectiveness and efficiency.
c) increasing productivity to raise the profit margin.
d) "green" initiatives to support maximizing financial goals.
e) wealth maximization through environmental initiatives.
Ans: a

99. When the major hotels began their environmental initiatives to reduce water and energy use by asking
guests to reuse towels, their primary objective was to _______________ for their shareholders.
a) maximize environmental sustainability
b) maximize wealth
c) decrease environmental damage
d) promote sustenance economics
e) boost social well-being
Ans: b

100. As a Multistream manager, Carlos was faced with competing goals among his employees, customers,
and board members. He managed their differences by encouraging ______________.
a) open-minded communication
b) mutual respect
c) mutual benefit
d) None of these
e) All of these
Ans: e
101. Multistream managers deal with multiple _____________ to address multiple forms of
______________ with multiple ___________________ to evaluate decisions.
a) goals; well-being; shareholders
b) goals; participation; shareholders
c) financial goals; decision making; stakeholders
d) goals; well-being; criteria
e) shareholders; financial needs; criteria

102. The Multistream approach to generating alternatives is to include different

a) managers.
b) shareholders.
c) stakeholders.
d) members of the top management team.
e) members of an organizational function.
Ans: c

103. Mainstream managers make _______________ decisions to enhance financial goals, even though
there is a known risk of adversely affecting people or the environment.
a) political
b) rational
c) random
d) administrative
e) incremental trial and error
Ans: b

104. Multistream decision-making process can be initiated to effect improvements in ________________

well-being.
a) social
b) environmental
c) financial
d) All of these
e) None of these
Ans: d

105. ____________________ is one of the reasons why a poor decision to enter into a merger may be
supported, because managers are reluctant to acknowledge the poor decision.
a) Multistream management
b) Mainstream management
c) Administrative inertia
d) None of these
e) All of these
Ans: c

ESSAYS
126. Describe the four-step decision-making process.
Ans: The first step is to identify the need for making a decision, which stems from a need or an
opportunity. Determining the need for a decision is based on norms, values, and past practices. The
second step is the development of different alternatives that can address the need. There are at least
three such alternatives: do nothing, respond by replicating past decisions, or make a new kind of
 decision. The third step is to select one of the alternatives for implementation, which is affected by
goal consensus and available knowledge. The fourth step is implementing the chosen alternative. The
outcomes from the last step are then evaluated and used as feedback to determine whether another
decision-making process needs to get under way.

127. Discuss the four-step decision-making process from a Mainstream decision-making perspective.
Ans: For Step 1, the norm or value used to identify the need for a decision is based whether there is a
problem or opportunity that affects wealth maximization. There are two basic types of decisions:
programmed and nonprogrammed. For Step 2, Mainstream managers need to generate alternatives
that will enhance wealth maximization. Three basic alternatives are to do nothing, follow a routine
response, or develop a nonprogrammed response. For Step 3, one of the alternatives needs to be
selected. Both the extent of goal consensus and the amount of available knowledge affect the way an
alternative is chosen. There are five basic methods for choosing an alternative: random, political,
administrative, incremental trial and error, and classical rational. Mainstream decision makers have
a strong preference for the classical rational approach, which requires high goal consensus and high
available knowledge. Lastly, in Step 4, the alternative is implemented, which includes managing
resistance and dealing with feedback..

128. Describe how bounded rationality and satisficing affected your decision about what college or
university to attend.
Ans: Bounded rationality consists of the lack of perfect information and the cognitive limitations that
interfere with making the best decision possible. In selecting a college, having perfect information
would mean having all the information about each college and institution. I did not have the tools or
the time for processing all of the information on each college or university. Thus, my college decision
was based on bounded rationality, which also leads to a satisficing decision. I made a satisficing
decision based on the information I had collected to as I assembled alternatives for higher education
that reasonably addressed my needs.

129. Use an example to discuss the five methods for selecting an alternative.
Ans: The five methods for choosing an alternative are based on a 2 X 2 matrix where goal consensus
is superimposed on available knowledge. The five methods are classical rational, incremental trial
and error, administrative, random, and political. A good example of a classical rational decision is
the process used to research pharmaceutical drugs. Multiple stakeholders would have to understand
about the efficacy of a drug to achieve high availability of knowledge; there would need to be high
goal consensus to invest in the drug and launch it into the market. Political decisions are based on
having a high level of knowledge, but consensus on the goal is low. Decisions for board membership
of publicly traded companies may be political because there is often a high level of knowledge about
the potential candidates, but there is low consensus on which candidate to select. For the
incremental trial and error method, there is high goal consensus but low available knowledge.
Decisions could be considered as "experiments" with attention focused on feedback. Continuous
improvement initiatives are an example. The random method is often used to select an alternative
under conditions of low goal consensus and low available knowledge. When companies try to enter
into the international market, there could be low goal consensus and low available knowledge. As a
result, random decisions would be made. The administrative model involves moderate available
knowledge and moderate goal consensus. Decisions focusing on adopting new IT technology systems
could fall in this category, because people have different attitudes about technological changes and
different levels of interest in learning more.

130. Discuss ways in which Multistream decision making can help to mitigate the problem of escalating
commitment.
Ans: The escalation of commitment refers to investing ever more resources, even when evidence
indicates that the original decision was a poor one. Multistream decision making would include
broad stakeholder participation in every step of the process. The diversity of perspectives from
different stakeholders would improve the quality of the decision, and the probability of a poor
decision being made would be diminished. Furthermore, if a poor decision has been implemented,
different stakeholders will confront the situation and stop the distortion of information. The opposing
information would be used in a supportive and open communication process to encourage a change
of direction to rectify the earlier poor decision.