Managerial Decision Making Concepts

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What characterizes programmed decisions?

They require extensive analysis of options.

They follow established rules or guidelines. (correct)

They are complex and uncertain processes.

They are made in response to unpredictable threats.

Which step is NOT included in the six steps for making the best managerial decisions?

Identify the decision requirements.

Evaluate the outcomes of the decision.

Implement the decision rapidly. (correct)

Analyze alternatives thoroughly.

What is a major disadvantage of group decision making?

It can result in groupthink. (correct)

It often leads to faster decisions.

It improves the quality of decisions.

It encourages participation from all members.

What role does organizational learning play in decision making?

It promotes creativity and innovation. Signup and view all the answers

How does cognitive bias affect managerial decision making?

It can result in poor choices due to flawed reasoning. Signup and view all the answers

Which of the following differentiates entrepreneurs from intrapreneurs?

Intrapreneurs are typically more risk-averse. Signup and view all the answers

Which of the following best describes nonprogrammed decision making?

It involves decisions made in uncertain environments. Signup and view all the answers

What is one technique to improve group decision making?

Encouraging diverse perspectives. Signup and view all the answers

What is bounded rationality primarily concerned with?

Cognitive limitations affecting decision-making Signup and view all the answers

Which of the following best defines 'risk' in decision-making contexts?

The range of possible outcomes with associated probabilities Signup and view all the answers

What commonly leads to ambiguous information?

Multiple interpretations of the same data Signup and view all the answers

In decision-making, what does satisficing refer to?

Settling for a solution that meets acceptable criteria Signup and view all the answers

Which of the following factors can contribute to incomplete information in decision-making?

Limited resources like time or budget for information gathering Signup and view all the answers

What is a characteristic of systematic errors in decision-making?

They are mistakes made consistently by individuals Signup and view all the answers

Which of the following is NOT considered a cause of incomplete information?

Comprehensive analysis of all potential options Signup and view all the answers

How does the feedback procedure contribute to decision-making?

It helps understand variances between expected and actual outcomes Signup and view all the answers

Which of the following best describes the classical model of decision making?

It prescribes a method for evaluating all alternatives rationally. Signup and view all the answers

What does the term 'bounded rationality' refer to in decision making?

The recognition of the limitations in human decision-making capabilities. Signup and view all the answers

Satisficing is primarily associated with which decision-making model?

Administrative model Signup and view all the answers

What distinguishes reasonable judgment from intuition in decision making?

Reasoned judgment involves careful evaluation of alternatives. Signup and view all the answers

An optimum decision is defined as which of the following?

The decision that aligns with the most desirable outcomes for the organization. Signup and view all the answers

What does the administrative model highlight about the nature of decision making?

It recognizes the inherent uncertainty and risk in decision making. Signup and view all the answers

When do manufacturing supervisors hire new workers based on overtime increases?

When overtime increases by more than 10 percent. Signup and view all the answers

What is the most accurate description of confirmation bias?

The tendency to make decisions based on existing beliefs despite conflicting evidence. Signup and view all the answers

What is the primary disadvantage of group decision-making?

Consensus might be influenced negatively by bias. Signup and view all the answers

Which cognitive bias involves committing additional resources despite failing evidence?

Escalating commitment Signup and view all the answers

What is a key feature of groupthink?

Agreement among members is pursued at the cost of rational decision-making. Signup and view all the answers

Which of these describes the illusion of control in decision making?

Overestimating one's control over activities and events. Signup and view all the answers

How can group decision-making be superior to individual decision-making?

It can draw on the diverse skills of group members. Signup and view all the answers

What leads to the phenomenon of representativeness in decision-making?

Inappropriate generalization from a small sample or vivid event. Signup and view all the answers

What is the objective of organizational learning?

To enhance understanding of organizational and task environment. Signup and view all the answers

What is a learning organization primarily focused on?

Maximizing individual and group creativity Signup and view all the answers

What characterizes a decision maker's creativity?

The discovery of original and feasible alternatives Signup and view all the answers

What is one of the disadvantages of brainstorming as a creativity-promoting technique?

It can lead to production blocking Signup and view all the answers

How does the nominal group technique facilitate decision-making?

By having members individually write and rank their ideas Signup and view all the answers

In which situation is the Delphi technique particularly effective?

When discussing controversial topics remotely Signup and view all the answers

What defines the role of social entrepreneurs?

Individuals addressing social problems with innovative solutions Signup and view all the answers

What is a characteristic of entrepreneurs in general?

They seek opportunities to create and improve products Signup and view all the answers

Which of the following statements about organizational learning is accurate?

It seeks to enhance the creative capabilities of individuals and groups Signup and view all the answers

What is the primary role of an intrapreneur within an organization?

To identify and develop new or improved products Signup and view all the answers

Which characteristic is NOT typically associated with successful entrepreneurs?

Fear of failure Signup and view all the answers

What distinguishes intrapreneurs from traditional managers?

Their role in promoting innovation and new ideas Signup and view all the answers

What term is used to describe a group of intrapreneurs separated from normal operations to foster innovation?

Skunkworks Signup and view all the answers

What challenge do founding entrepreneurs often face when transitioning to management roles?

Difficulty in engaging in management tasks Signup and view all the answers

What is a product champion's key responsibility?

To take ownership and lead a project from idea to execution Signup and view all the answers

Which innovation is NOT attributed to the Palo Alto Research Center?

3D printing technology Signup and view all the answers

Which trait best describes the internal locus of control typical of entrepreneurs?

Responsibility for one's actions and decisions Signup and view all the answers

Study Notes

Chapter 7: Decision Making, Learning, Creativity, and Entrepreneurship

Learning changes everything.
Decision making is the process where managers respond to opportunities and threats by analyzing options and making determinations about organizational goals and courses of action.
Decisions are made in response to opportunities (improve performance) and threats (adversely affect performance).
Programmed decisions are routine, following established rules or guidelines.
Examples of programmed decisions include hiring new workers when overtime increases by a certain percentage.
Nonprogrammed decisions are nonroutine and unusual, unpredictable and lack established rules or guidelines.
Managers respond to these types of decisions based on incomplete information.
Intuition involves feelings and hunches, requiring minimal effort and information gathering, resulting in immediate decisions.
Reasoned judgments are more considered and require time and effort to gather information, generate alternatives and evaluate those alternatives.
The Classical model prescriptively assumes decision-makers can evaluate all possible alternatives and their consequences, ultimately choosing the best course of action.
Optimal decisions are in the best interest of the organization.
This model assumes the availability of all information and the decision-maker's ability to process it.
Bounded rationality describes cognitive limitations that impact interpreting, processing and acting on information.
Incomplete information results from risk and uncertainty, ambiguity, and time constraints.
Risk refers to the probability of certain outcomes.
Uncertainty relates to unknown future outcomes.
Ambiguous information can be interpreted in multiple ways.
Time constraints and information costs limit the amount of information evaluated.
Satisficing is searching for a satisfactory solution rather than the optimal solution to problems or opportunities.
Decision making involves the following six steps: recognize the need for a decision, generating alternatives, assess alternatives, choose among alternatives, implement the chosen alternative, and learn from feedback.
Evaluating possible courses of action includes checking legal, ethical, economic, and practical considerations.
Feedback procedures involve comparing actual results with projected results, determining reasons for deviation, and developing guidelines for future decisions.
Cognitive biases such as confirmation bias and representativeness bias lead to systematic errors in decision-making.
Heuristics are quick mental shortcuts that simplify decision-making.
Individual and group biases affect decision-making outcomes. Groupthink and group decision making, brainstorming, nominal group technique, and Delphi techniques may result in both benefits and drawbacks, especially with different interest groups.
Organizational learning improves employee understanding and management of the organization and its environment.
Learning organizations maximize individuals' ability to think creatively, maximize organizational learning, encourage systems thinking, and develop shared vision.
Creativity refers to a decision-maker's ability to come up with original, novel ideas for courses of action. Key steps include getting off-email and out of the ordinary thinking.
Senge's principles outline building complex models to promote complex ideas like team learning.
Brainstorming and techniques such as these Nominal Group Technique and Delphi Technique assist group decision-making.
Entrepreneurs are individuals who have opportunities and mobilize resources to develop new goods and services.
Social entrepreneurs address social needs and problems, improving well-being.
Intrapreneurs work within an organization to develop new or improved products or processes.
Characteristics of entrepreneurs include being open to experience, internally focused, a high level of self-esteem, and a drive for achievement.
Founding entrepreneurs often lack the skills for effective management, distinguishing entrepreneurship from effective management practices.
Product champions take ownership and show leadership to move the project forward.
Skunkworks are isolation units to promote new product development..
Examples include Xerox PARC.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your understanding of key concepts in managerial decision making, including programmed vs nonprogrammed decisions, the effects of cognitive biases, and group dynamics. This quiz covers essential theories and practices that define effective decision processes in organizations.