Decision-Making Strategies Chapter 6

Questions and Answers

In general, what happens as the group size increases?

Lower the quality of their decisions. (correct)

Faster they make decisions.

Faster they come to consensus.

Higher the quality of their decisions.

According to Harvard Business Review, what is driving the increase in CEO firings due to ethical lapses?

CEO firings due to ethical lapses. (correct)

Job applicants relocating from other cities.

Closing of stores on small town squares.

Donations to the ACLU.

Between 2008 and 2018, the ________ quadrupled.

number of CEOs fired for ethical lapses

Concerns about ethical behavior have led many companies to appoint a(n) ________.

ethics officer Signup and view all the answers

To make picking orders more efficient, Amazon uses ________.

autonomous devices Signup and view all the answers

How is artificial intelligence defined?

The ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent human beings. Signup and view all the answers

"All birds lay eggs. A swan is a bird. Therefore, a swan lays eggs." This passage is an example of:

A syllogism. Signup and view all the answers

What would you recommend to Kirvo to help with his business needs?

Artificial intelligence Signup and view all the answers

Rural Regional Hospital uses ________.

Robotic process automation Signup and view all the answers

Which statement truthfully explains how AI benefits businesses?

AI enhances strategic and day-to-day decision making. Signup and view all the answers

What is the greatest challenge of implementing AI in businesses?

Implementation is the biggest AI challenge. Signup and view all the answers

What dangers did Stephen Hawking warn about?

Weaponized AI. Signup and view all the answers

In which scenario do firms see the greatest performance increases?

Humans leverage leadership and teamwork alongside machines that enhance speed. Signup and view all the answers

Delfina employs the ________ bias to decide which people might be customers.

Categorical thinking Signup and view all the answers

Which of the following portrays Juul's attempt at exercising evidence-based management?

Relying on more than 110 scientific studies supporting its products. Signup and view all the answers

What decision-making style should Juul's CEO utilize?

Conceptual Signup and view all the answers

What bias does law enforcement likely suffer from regarding Juul?

Confirmation Signup and view all the answers

What barriers affect Juul's CEO's ability to make a rational decision?

Bounded rationality. Signup and view all the answers

What question should Ryan be most prepared to respond to in his interview?

Describe the process you use to make decisions. Signup and view all the answers

If Ming-Na surveys 25 customers to determine if they like the coffee, she will most likely suffer from confirmation bias.

False Signup and view all the answers

Decision making is the process of identifying and choosing alternative courses of action.

True Signup and view all the answers

When evaluating the alternatives of a decision, managers need to base decisions strictly on cost, quality, and feasibility.

False Signup and view all the answers

With satisficing, managers look for alternatives until they find one that is satisfactory, not optimal.

True Signup and view all the answers

Managers with a low tolerance for ambiguity and an orientation toward task and technical concerns have a behavioral decision-making style.

False Signup and view all the answers

What would you advise Annie to do first in her decision-making process?

List the decisions she needs to make. Signup and view all the answers

What is a decision?

Choice made from among available alternatives. Signup and view all the answers

What model is Kade applying in his decision-making process?

Rational model of decision making. Signup and view all the answers

Haya is at which stage of the decision-making process?

Thinking up alternative solutions. Signup and view all the answers

What should Greta probably perform to turn the problem around at the factory?

Diagnosis. Signup and view all the answers

To improve the likelihood of making ethical decisions, you could:

Practice mindfulness. Signup and view all the answers

What question is Akio asking himself regarding his alternatives?

Is it feasible? Signup and view all the answers

In the fourth and final step, what does Milena need to do?

Implement and evaluate the compensation plan chosen. Signup and view all the answers

The ________ model assumes managers will make logical decisions that are the optimal means of furthering the organization's best interests.

classical Signup and view all the answers

When organizing decisions into categories, which type requires the most time and attention?

Strategic decisions. Signup and view all the answers

________ are difficulties that inhibit the achievement of goals.

Problems Signup and view all the answers

Seizing the opportunity to partner with a trendy restaurant could:

Allow her to grow her business much faster than she expected. Signup and view all the answers

Karima's decision to open a restaurant feels 'right' and is uncertain. She is enacting:

Nonrational decision making. Signup and view all the answers

The idea that decision makers' ability to be rational is limited by constraints is called ________.

bounded rationality Signup and view all the answers

Santiago will likely encounter ________ due to his decision-making context.

Bounded rationality. Signup and view all the answers

Alonso follows the satisficing model by:

Ordering some that seem fairly nice and have animals on them. Signup and view all the answers

The limitations affecting LaShawn and Nathan's decision are hindrances to:

Rational decision making. Signup and view all the answers

Scott was acting on ________ that snow removal might be a good addition to the service offerings.

intuition Signup and view all the answers

After a week as an executive assistant, Christopher was dismayed at the ________ shown by his boss.

hubris Signup and view all the answers

Nonrational decision-making models, such as ________, describe how managers sometimes make decisions.

intuition Signup and view all the answers

Audrey is relying on ________ to demonstrate that managers need to think and act responsively.

evidence-based decision making Signup and view all the answers

Why is it hard to bring the best evidence to bear on decisions?

There's too much evidence and there's not enough good evidence. Signup and view all the answers

Reggie's Records uses time-series forecasts to predict future sales. What is it using?

Data analytics. Signup and view all the answers

________ is a technique used to predict future outcomes based on historical data.

Predictive analytics Signup and view all the answers

Predictive Health purchased sophisticated analysis software to leverage the power of:

Big data. Signup and view all the answers

How does Dominique assign her employees' schedules?

Dominique uses survey results to ensure her sales staff who score highest on customer satisfaction are scheduled in the times. Signup and view all the answers

A person's ________ reflects the combination of how he or she perceives and responds to information.

decision-making style Signup and view all the answers

________ is the process of examining data sets in order to draw conclusions about the information they contain.

Data mining Signup and view all the answers

Jordan probably has a ________ tolerance for ambiguity.

Low. Signup and view all the answers

DeAndre probably has a decision-making style that indicates he:

Has a high tolerance for ambiguity but struggles to make decisions quickly. Signup and view all the answers

Angelina's decision-making style is best described as:

Conceptual. Signup and view all the answers

Saburo likely has a(n) ________ decision-making style.

Behavioral. Signup and view all the answers

Max most often uses a(n) ________ decision-making style.

Directive. Signup and view all the answers

Warrick would probably be ideally suited for the position of:

Ethics officer. Signup and view all the answers

What is a decision tree?

A graph of decisions and their possible consequences. Signup and view all the answers

Managers should utilize ________ when confronted with a decision.

Bagley's ethical decision tree. Signup and view all the answers

When Zion wrote the football coach's contract for over two million dollars and included targets for conference wins and bowl appearances, he was trying to avoid what type of bias?

Escalation of commitment Signup and view all the answers

Trevon's hotel needs updates to secure a corporate lodging agreement. Given the time constraints, which decision-making model will he likely employ?

The satisficing model Signup and view all the answers

Isaiah is doing what his boss wants but at a slower pace. What principle is he applying?

If all else fails, slow the spread of bad practice Signup and view all the answers

Fatma is convinced her business idea will succeed to the point of ignoring caution. What type of bias might she be experiencing?

Overconfidence Signup and view all the answers

Seamus is experiencing stress and anxiety, which causes him to miss important details. Concerned about his review, what might the district manager show as a bias?

Focusing on performance data from only the last few weeks Signup and view all the answers

Ichiro, an on-site coordinator, tolerates ambiguity and seeks new ideas. How is his decision-making style best described?

Analytical Signup and view all the answers

Tova uses three factors when deciding which employees will take on a project. What is she using?

Heuristics Signup and view all the answers

What bias causes decisions to be influenced by initial figures?

Anchoring and adjustment bias Signup and view all the answers

If Byron is experiencing confirmation bias, which of the following is true?

Byron recently started working graveyard shift, and traffic is always lighter at night and in the early morning hours. Signup and view all the answers

Nalani experienced bias when she didn't want to hire Laila, thinking she lacked training like Logan. What type of bias is this?

Representativeness Signup and view all the answers

People who seek information to support their views while discounting contradictory data suffer from which bias?

Confirmation Signup and view all the answers

Azhar feels too much money has been spent to abandon a training program. What bias does he experience?

Sunk-cost bias Signup and view all the answers

James and En-Chi do not want to reduce their house's selling price after listing it. What bias are they experiencing?

Anchoring and adjustment Signup and view all the answers

Julieta believes she is an exceptional singer. If she has overconfidence bias, what is likely to occur?

Julieta will audition for a Broadway show, but will not get the part. Signup and view all the answers

Republican and Democratic advertisements represent competing portrayals of Charlie Williams. This is an example of what bias?

Framing bias Signup and view all the answers

Nikos becomes more committed to a problematic used copier. What bias is he likely facing?

Escalation of commitment Signup and view all the answers

Which bias causes people to see events as more predictable than they actually are?

Hindsight Signup and view all the answers

The advantages of __________ include greater knowledge, different perspectives, and deeper commitment.

Group decision-making Signup and view all the answers

What is a disadvantage of group decision-making?

Disadvantages of group decision making Signup and view all the answers

Evona's team agreed with her without research. What practice are they engaging in?

Groupthink Signup and view all the answers

Satisficing is characterized by a group's ability to settle for decisions that are what?

Good enough Signup and view all the answers

Carson Contractors focuses on construction techniques that minimize germ spread as a response to which goal?

Goal displacement Signup and view all the answers

Which statement reflects research findings about group decision-making?

Groups make better decisions than most individuals acting alone. Signup and view all the answers

Which of the following lists shows ways to improve group problem-solving?

Brainstorming, dialectic method, post-mortems Signup and view all the answers

Zoe should consider using a group to develop a plan if it will what?

Increase acceptance of the plan Signup and view all the answers

Which technique helps groups generate multiple ideas for solving problems?

Brainstorming Signup and view all the answers

What is Elijah expected to do as the devil's advocate in the group?

Be the critic Signup and view all the answers

Ronin believes the ________ method saves time by exploring opposing options up front.

Dialectic Signup and view all the answers

During a job interview, how can you show your decision-making skills?

Describe a time in which you used intuition Signup and view all the answers

Reflecting on past decisions prepares you for future decisions by doing what?

Giving you a set of options for solving problems Signup and view all the answers

Is Jenna, the owner of Terrific Tots Preschool, considering families' feelings by deciding to open later?

No, she did not consider how the affected people may feel. Signup and view all the answers

What decision-making style does Raven use, given her problem-solving process?

Rational Signup and view all the answers

Sakura feels constrained by her limited budget for a marketing campaign. What is she affected by?

Affected by bounded rationality Signup and view all the answers

Hunter continues to invest in a problematic project. What type of bias might he be suffering from?

Escalation of commitment Signup and view all the answers

Study Notes

Decision-Making Processes

Annie should first list the decisions she needs to make to establish a clear path forward.
A decision is defined as a choice made from among available alternatives.
Kade follows the rational model of decision making by identifying problems, brainstorming solutions, evaluating options, and implementing his decision.
Haya is generating alternative solutions to combat competition in the car dealership market.

Problem Diagnosis and Ethical Considerations

Greta, as a quality control inspector, should perform a diagnosis to tackle issues of contamination in baby food batches.
Practicing mindfulness can enhance the likelihood of making ethical decisions and improving interpersonal relationships.
Akio assesses the feasibility of each alternative to solve his company's problems.

Decision-Making Models

Milena exemplifies the rational decision-making process by identifying problems, developing alternatives, evaluating solutions, and implementing a chosen compensation plan.
The classical model assumes managers will make logical, optimal decisions for the organization's well-being.
Strategic decisions require the most time and attention compared to quick or ethical decisions.

Challenges in Decision-Making

Problems inhibit goal achievement, like lack of parking hurting a restaurant's success.
Luana's opportunity with a trendy restaurant could significantly accelerate her business growth.
Decisions can be driven by nonrational models, where emotional judgement plays a larger role.

Bounded Rationality and Intuition

Bounded rationality suggests that decision-making is constrained by various limitations, like complexity and cognitive capacity.
Santiago's complex decision about the factory's future is hindered by bounded rationality, considering multiple factors like location and demand.
Following the satisficing model, Alonso chooses invitations without extensive research to balance quality and efficiency.

Decision-Making Style and Role Suitability

Insight into an individual's decision-making style enhances understanding of how they process information and react to challenges.
Individuals like Jordan may exhibit a low tolerance for ambiguity, preferring structured environments.
Angelina's conceptual decision-making style allows her to engage creatively and consider broad options.

Ethics in Decision-Making

An ethics officer is suited for ensuring that company decisions are ethical and lawful, particularly during dilemmas.
Bagley's ethical decision tree assists in assessing the legality and ethics of actions within a company to uphold shareholder value.

Bias Awareness

Zion's structuring of a coach's contract helps avoid escalation of commitment bias by linking bonuses to measurable outcomes.
Trevon utilizes the satisficing model due to time constraints, which emphasizes finding satisfactory solutions rather than optimal ones.

Focus on Data and Analytics

Data analytics involves analyzing data sets to draw conclusions and forecast future trends.
Predictive analytics utilizes historical data patterns to make informed decisions about future outcomes.
Big data is essential for organizations, like Predictive Health, that exceed conventional data management capabilities.

Overconfidence in Decision-Making

Fatma illustrates overconfidence bias by disregarding professional advice and investing heavily in her business idea without sufficient research.### Overconfidence and Cognitive Biases
Overconfidence: A tendency to overestimate one's own abilities or performance.
Example: Julieta, believing she is an outstanding singer, auditions but fails to secure a role.

Hindsight Bias

Hindsight Bias: The inclination to see events as having been predictable after they have already happened.
Impacts decision-making by causing individuals to believe they could have foreseen outcomes.

Framing Bias

Framing: The way information is presented affects decision-making.
Political advertisements illustrate this by portraying candidates in contrasting lights to sway voter opinions.

Escalation of Commitment

Escalation of Commitment: Continued investment in a failing strategy due to previous investments.
Example: Nikos continues to support a malfunctioning copier due to prior commitments.

Managerial Decision-Making

Analytical Decision-Making Style: Ichiro's approach of seeking contradictory opinions and tolerating ambiguity to make informed decisions.
Heuristics: Tova simplifies decision-making by using key factors like employee attitude and knowledge.

Cognitive Biases in Decision-Making

Anchoring and Adjustment Bias: Initial figures influence decision-making; e.g., sellers setting a high price based on arbitrary values.
Confirmation Bias: Seeking information that aligns with existing beliefs, such as Byron underestimating traffic issues after a schedule change.

Representativeness Bias

Representativeness Bias: Judging individuals based on stereotypes or past experiences.
Nalani's reluctance to hire Laila due to perceived inadequate training exemplifies this bias.

Group Dynamics in Decision-Making

Advantages of Group Decision-Making: Increased knowledge pool and diverse perspectives lead to better decisions.
Disadvantages: Groupthink, goal displacement, and satisficing hinder effective problem-solving.
Groupthink: Evona’s team exhibits groupthink by agreeing with her without critical analysis.

Creativity and Problem-Solving Techniques

Brainstorming: A technique for generating various ideas during group problem-solving.
Brainwriting: Encourages uninterrupted idea flow, limiting social cues to foster creativity.

Ethical Considerations in Business

Ethics Officer: An appointed individual responsible for guiding ethical practices within organizations.
Increase in CEO Firings: A notable rise in the number of CEOs dismissed for ethical breaches from 2008 to 2018.

Technological Integration in Business

Artificial Intelligence (AI): Defined as the ability of machines to perform tasks usually requiring human intelligence.
Robotic Process Automation: Employed by Rural Regional Hospital for efficient routing and record maintenance.

Recommendations for Businesses

AI enhances decision-making capabilities and improves business efficiencies.

Important Terms

Sunk-Cost Bias: Maintaining commitment to a failing project due to prior investments.
Bounded Rationality: Decision-making affected by limited resources and time constraints.
Dialectic Method: Advocating conflicting ideas to examine multiple perspectives before arriving at a decision.### Advertising and AI
Implementation poses the largest challenge in AI integration within advertising sectors.
Predictive analytics utilizes algorithms to analyze past sales trends for improvement.

Concerns Regarding AI

Stephen Hawking highlighted risks posed by weaponized AI, including autonomous weapons and deep fake technology.

Performance and Workforce Dynamics

The most significant performance improvements occur when humans use leadership and teamwork, enhanced by machines for speed.

Decision-Making Biases

Delfina employs categorical thinking to identify potential customers at trade shows by analyzing appearance and behavior.
Confirmation bias affects law enforcement, as they selectively gather data that supports their predetermined beliefs about Juul's legality.

Evidence-Based Management

Juul demonstrates evidence-based management by referencing over 110 scientific studies in support of its products.

CEO Decision-Making Style

A conceptual decision-making style is necessary for Juul's CEO, considering the need for tolerance towards ambiguity and social concerns.

Barriers to Rational Decision-Making

Juul's CEO faces bounded rationality due to imperfect information and conflicting objectives impacting decision-making processes.

Candidates should be prepared to explain their decision-making processes during job interviews, highlighting experiences and methodologies.

Confirmation Bias and Survey Results

A survey of only 25 customers from a larger pool does not inherently indicate confirmation bias if conducted properly.

General Decision-Making Principles

Decision-making encompasses identifying and selecting from various alternative actions.
Evaluating alternatives requires considering broader criteria beyond just cost, quality, and feasibility, emphasizing a more nuanced approach.
Satisficing involves searching for satisfactory options rather than the absolute best, reflecting a practical decision-making strategy.

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Description

Explore key decision-making strategies with Annie as she navigates post-college life choices. This chapter focuses on organizing, evaluating, and prioritizing decisions to make informed choices for her future.