Chapter 8 Making Decisions
1) A decision is a choice made between two or more available alternatives.
Answer: True
Rationale:
This statement is true. A decision involves selecting one option from multiple alternatives.
2) A programmed decision is typically a one-shot structured decision that is usually less
structured than a nonprogrammed decision.
Answer: False
Rationale:
This statement is false. Programmed decisions are repetitive and routine, while nonprogrammed
decisions are typically one-shot and less structured.
3) A decision that is routine and repetitive, and typically handled in a specific way, is called a
nonprogrammed decision.
Answer: False
Rationale:
This statement is false. Routine and repetitive decisions are classified as programmed decisions,
not nonprogrammed decisions.
4) All decisions are categorized into programmed and nonprogrammed decisions.
Answer: False
Rationale:
This statement is false. While many decisions can be categorized as programmed or
nonprogrammed, not all decisions fit neatly into these categories.
5) Decisions made through consensus usually take less time than those made by a single
individual.
Answer: False
Rationale:
This statement is false. Consensus decision-making often takes longer than decisions made by a
single individual because it involves reaching agreement among multiple parties.
6) Employees are more likely to be committed to a decision reached through consensus.
Answer: True
Rationale:
This statement is true. Employees are more likely to be committed to a decision when they have
been involved in the decision-making process and their input has been considered.
7) Decision makers who believe the source of all good is outside of themselves, and therefore
rely heavily on suggestions from others, are classified as having an exploitative orientation.
Answer: False
Rationale:
This statement is false. Decision makers with an exploitative orientation believe that they are the
source of all good and rely heavily on their own judgment rather than suggestions from others.
8) Decision makers characterized by the desire to preserve the status quo as much as possible are
classified as having a hoarding orientation.
Answer: True
Rationale:
This statement is true. Decision makers with a hoarding orientation are focused on preserving the
status quo and are often resistant to change.
9) A relevant alternative is one that is both feasible for solving an existing problem and also
feasible for implementation.
Answer: True
Rationale:
This statement is true. A relevant alternative is one that is not only feasible for solving a problem
but also feasible for implementation within the constraints of the situation.
10) In the decision-making process, it is important to accurately identify an existing problem
prior to listing the possible alternatives for solving the problem.
Answer: True
Rationale:
This statement is true. Accurately identifying the problem is a crucial step in the decisionmaking process, as it lays the foundation for generating and evaluating alternative solutions.
11) Decision making is essentially a problem-solving process that involves eliminating barriers
to organizational goal attainment.
Answer: True
Rationale:
This statement is true. Decision making involves identifying problems, generating alternatives,
and selecting the best course of action to achieve organizational goals.
12) During the decision-making process, organizational goals should be kept in mind when
selecting the most beneficial alternative.
Answer: True
Rationale:
This statement is true. Organizational goals provide a framework for evaluating alternatives and
selecting the one that best aligns with the overall objectives of the organization.
13) Implementation of the chosen alternative is the final step in the decision-making process.
Answer: False
Rationale:
This statement is false. Implementation is an important step in the decision-making process, but
it is not the final step. The final step is evaluating the outcome of the decision and making any
necessary adjustments.
14) Generally, organizational decisions are made under conditions of complete certainty of
future consequences.
Answer: False
Rationale:
This statement is false. Organizational decisions are often made under conditions of uncertainty,
where the outcomes of alternative courses of action are not known with certainty.
15) The confirmation bias is the tendency to believe certain outcomes because others believe the
same.
Answer: False
Rationale:
This statement is false. The confirmation bias is the tendency to search for, interpret, or prioritize
information in a way that confirms one's preconceptions or hypotheses.
16) According to the probability theory, the expected value for an alternative equals the income
that alternative would produce, multiplied by its probability of producing that income.
Answer: True
Rationale:
This statement is true. The expected value of an alternative is calculated by multiplying the value
of each possible outcome by its probability of occurring and summing these values.
17) One of the disadvantages of group decision making is that they cost the organization more
than individual decisions.
Answer: True
Rationale:
This statement is true. Group decision making can be more time-consuming and costly than
individual decision making due to the need to coordinate and communicate among group
members.
18) Groupthink is a group decision-making process in which group decisions can be of higher
quality than individual decisions thanks to the group members' efforts to maintain friendly
relationships among themselves.
Answer: False
Rationale:
This statement is false. Groupthink is a phenomenon in which group members prioritize harmony
and conformity over critical evaluation of alternative viewpoints, leading to poor decision
making.
19) In the nominal group technique, group members never meet face to face.
Answer: False
Rationale:
This statement is false. In the nominal group technique, group members do meet face to face, but
they initially work independently to generate ideas before coming together to discuss and
evaluate them.
20) The Delphi group decision-making technique is a process that involves circulating
questionnaires on a specific problem among group members, sharing those results, and
continuing to recirculate and refine responses until a consensus is reached.
Answer: True
Rationale:
This statement is true. The Delphi technique is a structured communication technique used to
gather and distill the knowledge of a group of experts on a particular issue to achieve a
consensus.
21) A choice made between two or more available alternatives is a(n) ________.
A) directive
B) consensus
C) decision
D) alternative
E) objective
Answer: C
Rationale:
A decision is a conclusion or resolution reached after consideration. It involves choosing
between two or more alternatives based on preferences, values, and goals.
22) Which of the following is true about decisions and decision making?
A) Managers make decisions only when performing the controlling function.
B) In the process of deciding, all the alternatives are combined to form a final alternative which
invariably is the choice made.
C) Organizations only have to consider significant decisions that have a major impact on
business.
D) Decision making is the process of choosing the best alternative for reaching objectives.
E) All managerial decisions are of equal significance to the organization.
Answer: D
Rationale:
Decision making involves selecting the best course of action from among available alternatives
to achieve a desired result. It is a key function of management that occurs across all managerial
activities, not just during the controlling function.
23) Programmed decisions are ________.
A) nonstructured
B) one-shot decisions
C) routine and repetitive
D) made by top management
E) made by computers
Answer: C
Rationale:
Programmed decisions are routine decisions that are repetitive and occur with some frequency.
They are typically made using established guidelines or procedures.
24) Trendy Garb is a retail store that sells women's apparel. The store has comprehensive rules,
policies, and procedures for matters related to customer complaints and product returns. Hence,
when faced with either of these situations, the store manager simply needs to refer to these
guidelines and accordingly proceed. This is an example of ________.
A) overlapping responsibility
B) nonprogrammed decision
C) rule of thumb
D) decision tree
E) programmed decision
Answer: E
Rationale:
This is an example of a programmed decision because it involves a routine and repetitive
situation for which the store has established rules, policies, and procedures.
25) Nonprogrammed decisions are ________.
A) made by the workforce
B) one-shot decisions
C) routine and repetitive
D) less time-consuming
E) made by computers
Answer: B
Rationale:
Nonprogrammed decisions are unique and nonrecurring, requiring a custom solution rather than
following a routine or established procedure.
26) Which of the following is an example of a nonprogrammed decision?
A) determining how products will be arranged on the shelves of a supermarket
B) deciding how to handle customer complaints and product returns
C) identifying and selecting a new supplier of raw materials
D) evaluating the performance of a job applicant on a job sample test
E) writing an email requesting one's senior for a few days off
Answer: C
Rationale:
Identifying and selecting a new supplier of raw materials is an example of a nonprogrammed
decision because it is unique and requires a custom solution.
27) Which of the following is a traditional technique for handling a programmed decision?
A) judgment
B) rules of thumb
C) habit
D) intuition
E) training
Answer: C
Rationale:
Habit is a traditional technique for handling programmed decisions because it involves following
established routines or procedures.
28) Judgment, intuition, and creativity would most likely be classified as ________.
A) modern decision-making techniques appropriate for handling programmed decisions
B) traditional decision-making techniques appropriate for handling nonprogrammed decisions
C) traditional decision-making techniques appropriate for handling programmed decisions
D) modern decision-making techniques appropriate for handling nonprogrammed decisions
E) techniques that can be used for programmed as well as nonprogrammed decisions
Answer: B
Rationale:
Judgment, intuition, and creativity are often used in nonprogrammed decision making because
they involve unique situations that require thinking beyond established guidelines or procedures.
29) The proportion of the total management system that a decision will affect is called the
________.
A) scope of the decision
B) unity of command
C) span of control
D) level of management
E) discretionary area
Answer: A
Rationale:
The scope of a decision refers to the extent to which it impacts the entire management system or
organization.
30) The broader the scope of a decision, ________.
A) the higher the level of the manager responsible for making it
B) the higher are the number of decision makers involved
C) the lesser are the number of management levels
D) the quicker a decision is made
E) the larger is the workforce responsible for making it
Answer: A
Rationale:
The broader the scope of a decision, the higher the level of management responsible for making
it because it will likely have a greater impact on the organization as a whole.
31) A ________ is an agreement on a decision by all the individuals involved in making that
decision.
A) law
B) consensus
C) fiat
D) declaration
E) clause
Answer: B
Rationale:
Consensus refers to an agreement among all individuals involved in making a decision. It implies
that everyone agrees and supports the decision.
32) Which of the following is true about decisions taken through consensus?
A) It occurs when the team members approve of an individual's decision.
B) It requires little involvement or assistance from the manager.
C) Its effectiveness can be hampered by poor interpersonal relations.
D) It is foolproof and successful at all times.
E) The decision group generally consists of only managers.
Answer: C
Rationale:
Consensus decision making can be affected by poor interpersonal relations because it requires a
high degree of collaboration and agreement among team members.
33) All the English teachers at Springfield High School jointly developed and agreed on the
standards that students must achieve in order to graduate to the next grade. This is an example of
________.
A) bounded rationality
B) consensus
C) rules of thumb
D) intuitive decision making
E) groupthink
Answer: B
Rationale:
This is an example of a decision made through consensus because all the English teachers jointly
developed and agreed on the standards.
34) The main disadvantage of arriving at decisions through consensus is ________.
A) it results in very few practical solutions
B) it reduces employees' commitment to the decision
C) it involves time-consuming discussions
D) often the manager must make the decision
E) it focuses "several heads" on the decision
Answer: C
Rationale:
One of the main disadvantages of consensus decision making is that it can be time-consuming
due to the need for extensive discussions and agreement among all participants.
35) The ________ orientation of decision makers makes them believe that the source of all good
is outside themselves, and therefore makes them rely heavily on suggestions from other
organization members.
A) receptive
B) exploitative
C) hoarding
D) ideal
E) marketing
Answer: A
Rationale:
Receptive orientation in decision making indicates a belief that good ideas come from outside
oneself, leading decision makers to rely heavily on suggestions from others.
36) Even though Amy is the leader of a team, she finds it very hard to make decisions on her
own. She often asks her colleagues for their opinion on matters that come up and relies on these
inputs to make the final decision. Which of the following decision-making orientations does
Amy have?
A) marketing-oriented
B) hoarding
C) indecisive
D) exploitative
E) receptive
Answer: E
Rationale:
Amy's reliance on her colleagues' opinions and inputs indicates a receptive orientation in
decision making, where she values and seeks external ideas and suggestions.
37) An organizational decision maker who is willing to steal ideas as necessary to make good
decisions ________.
A) has a hoarding orientation
B) is a marketing-oriented decision maker
C) has an exploitative orientation
D) has a latent orientation
E) has an ideal decision-making orientation
Answer: C
Rationale:
A decision maker with an exploitative orientation is willing to take ideas from others, even if it
means not giving credit or taking advantage of their contributions.
38) Peter often asks his colleagues for their ideas and suggestions in order to make a decision.
However, he never gives credit to the individuals who give him the ideas and passes the ideas off
as his own. Which of the following orientations does Peter have?
A) intuitive
B) exploitative
C) hoarding
D) marketing-oriented
E) ideal
Answer: B
Rationale:
Peter's behavior of not giving credit for ideas and passing them off as his own indicates an
exploitative orientation in decision making.
39) The ________ orientation is found in decision makers who desire to preserve the status quo
as much as possible.
A) receptive
B) ideal
C) exploitative
D) hoarding
E) legitimate
Answer: D
Rationale:
The hoarding orientation in decision making is characterized by a desire to preserve the status
quo and avoid change or innovation.
40) Jack works at an advertising agency and leads a team of 8 graphic designers. Whenever he
has to make a decision, he does so by himself and rarely asks his team members for their
suggestions or inputs. Which of the following orientations does Jack have?
A) ideal
B) exploitative
C) receptive
D) hoarding
E) marketing-oriented
Answer: D
Rationale:
Jack's behavior of making decisions by himself and not seeking input from his team members
indicates a hoarding orientation in decision making, where he prefers to keep decision-making
authority to himself.
41) Decision makers who feel that they are only as valuable as the decisions they make and are
highly conscious of what others think about their decisions would be classified as ________.
A) having a hoarding orientation
B) being receptive
C) being exploitative
D) having an ideal orientation
E) being marketing-oriented
Answer: E
Rationale:
Decision makers with a marketing-oriented orientation are highly conscious of their image and
value, often seeking validation from others for their decisions.
42) The ________ decision-making orientation emphasizes the realization of the organization's
potential as well as that of the decision maker. Such decision makers try to use all of their talents
when making decisions.
A) ideal
B) exploitative
C) receptive
D) marketing
E) tangible
Answer: A
Rationale:
The ideal decision-making orientation focuses on realizing the organization's and decision
maker's potential, utilizing all talents in decision making.
43) Ideal decision makers ________.
A) preserve the status quo
B) allow others to make decisions for them
C) accept little outside help in making decisions
D) are characterized by reason and sound judgment
E) make decisions that will only enhance their value in the firm
Answer: D
Rationale:
Ideal decision makers are characterized by reason and sound judgment, focusing on making
decisions that benefit the organization.
44) A(n) ________ alternative is one that is considered feasible for solving an existing problem
and for implementation.
A) relevant
B) unrelated
C) isolated
D) distinct
E) external
Answer: A
Rationale:
A relevant alternative is one that is practical and suitable for solving a specific problem and can
be implemented effectively.
45) The first step in the decision-making process is to ________.
A) identify possible alternatives for solving an organizational problem
B) identify organizational objectives
C) identify an existing problem
D) gather feedback about an existing problem
E) implement the selected alternative
Answer: C
Rationale:
The first step in the decision-making process is to identify and define the problem that needs to
be addressed.
46) After identifying an existing problem, the next step in the decision-making process is
________.
A) selecting the best among the alternative solutions
B) listing alternative solutions
C) identifying organizational objectives
D) gathering feedback on the implemented alternative
E) implementing the selected alternative
Answer: B
Rationale:
Once a problem is identified, the next step is to brainstorm and list possible alternative solutions.
47) Which of the following best describes the authority factors that limit the number of problemsolving alternatives available?
A) The orders issued by a manager's supervisor are unclear.
B) The level of organizational technology is inadequate for certain alternatives.
C) The physical facilities of an organization are inappropriate for certain alternatives.
D) A manager's superior tells the manager that a certain alternative is not feasible.
E) The chosen alternative is too costly for the organization.
Answer: D
Rationale:
Authority factors that limit problem-solving alternatives include directives or instructions from
higher-level managers that certain alternatives are not feasible or acceptable.
48) Having too many alternatives may demotivate decision makers, which harms decision
making. This is known as the ________.
A) bandwagon effect
B) confirmation bias
C) paradox of choice
D) loss aversion effect
E) overconfidence bias
Answer: C
Rationale:
The paradox of choice refers to the phenomenon where having too many options can lead to
decision paralysis and dissatisfaction with the chosen option.
49) Jared recently sent an email to all the members of his department asking them for their
opinions about where the department should have its quarterly team lunch. The response was
overwhelming as Jared received more than 40 suggestions. This is an example of ________.
A) paradox of choice
B) bandwagon effect
C) confirmation bias
D) confidence bias
E) loss aversion effect
Answer: A
Rationale:
Jared's experience of receiving overwhelming responses to his request for suggestions illustrates
the paradox of choice, where having too many options can lead to difficulty in making a
decision.
50) Which of the following is the final step in the decision-making process?
A) identify organizational objectives
B) gather feedback to find out if the problem is solved
C) implement the selected alternative
D) select the most beneficial alternative
E) list alternative solutions
Answer: B
Rationale:
The final step in the decision-making process is to gather feedback to determine if the problem
has been effectively solved and if the chosen alternative has been successful.
51) ________ refers to the fact that managers are constrained in terms of time, computational
power, and knowledge when making decisions.
A) Intuition
B) Unrealistic optimism
C) Bounded rationality
D) Rational ignorance
E) Cognitive bias
Answer: C
Rationale:
Bounded rationality refers to the idea that decision makers are limited by various constraints,
such as time, information, and cognitive abilities, which prevent them from fully rational
decision making.
52) Which of the following is true about the definition of bounded rationality?
A) Managers rely on their inborn ability to synthesize information quickly and effectively.
B) Managers have access to complete and accurate information for making a decision.
C) Managers adhere to rules of thumb when making decisions.
D) Statistical probabilities can be attributed to alternative potential outcomes.
E) Managers do not always have access to the resources required to make rational decisions.
Answer: E
Rationale:
Bounded rationality acknowledges that managers do not always have access to complete or
accurate information, nor do they have the time or cognitive ability to process all available
information, leading them to make decisions that are satisfactory rather than optimal.
53) ________ occurs when an individual makes a decision that is not optimal, but is good
enough.
A) Loss aversion
B) Satisficing
C) Intuition
D) Bias
E) Unrealistic optimism
Answer: B
Rationale:
Satisficing is the concept of accepting a decision that is satisfactory or "good enough" rather than
trying to optimize or find the best possible solution.
54) John wants to start his own pet shop and has put out an ad for the post of shop assistant. He
hired the first candidate he interviewed without reviewing the remaining applications because the
first one fit the given criteria. This is an example of ________.
A) confirmation bias
B) risk
C) bias
D) satisficing
E) heuristics
Answer: D
Rationale:
This is an example of satisficing, where John accepted the first candidate that met his criteria
rather than reviewing all applications to find the best candidate.
55) ________ refers to an individual's inborn ability to synthesize information quickly and
effectively.
A) Bounded rationality
B) Satisficing
C) Bias
D) Intuition
E) Optimism
Answer: D
Rationale:
Intuition is the ability to understand or know something without the need for conscious
reasoning, often based on past experience or instinct.
56) ________, also known as simple rules of thumb, are often used by individuals to make
decisions.
A) Bounded rationality
B) Syntax
C) Folksonomies
D) Intuition
E) Heuristics
Answer: E
Rationale:
Heuristics are simple rules of thumb or mental shortcuts that individuals use to make decisions,
often in situations where full rationality is not feasible.
57) ________ refers to the departure from rational theory that produces suboptimal decisions.
A) Uncertainty
B) Satisficing
C) Dogmatism
D) Bias
E) Bounded rationality
Answer: D
Rationale:
Bias refers to the tendency to deviate from rational decision making, leading to suboptimal or
irrational choices.
58) The bandwagon effect, a common decision-making bias, is ________.
A) the characteristic of an individual who prefers to avoid losses rather than acquire gains
B) the tendency to believe certain outcomes because others believe the same
C) the tendency to believe that our forecasts for future events are better than they truly are
D) the tendency to search for information that supports one's preconceived beliefs
E) an individual's tendency to believe that he/she is less susceptible to risky events
Answer: B
Rationale:
The bandwagon effect is the tendency for individuals to adopt certain behaviors or beliefs
because others are doing the same, often leading to conformity and herd behavior.
59) The tendency to search for information that supports one's preconceived beliefs and to ignore
information that contradicts those beliefs is known as ________.
A) confirmation bias
B) loss aversion
C) the bandwagon effect
D) overconfidence
E) unrealistic optimism
Answer: A
Rationale:
Confirmation bias is the tendency to seek out information that confirms one's existing beliefs or
hypotheses while ignoring or discounting contradictory evidence.
60) Which of the following biases refers to individuals who tend to strongly prefer avoiding
losses rather than acquiring gains?
A) loss leaders
B) zero-risk bias
C) self-serving bias
D) loss aversion
E) money illusion
Answer: D
Rationale:
Loss aversion refers to the tendency for individuals to strongly prefer avoiding losses over
acquiring gains, even when the outcome is the same in terms of value.
61) Overconfidence is the tendency to ________.
A) believe certain outcomes because others believe the same
B) search for information that supports one's preconceived beliefs
C) believe that our forecasts for future events are better than they truly are
D) strongly prefer avoiding losses rather than acquiring gains
E) believe that one is less susceptible to risk than others
Answer: C
Rationale:
Overconfidence refers to the tendency to believe that our judgments and abilities are better than
they actually are, including overestimating the accuracy of our forecasts for future events.
62) Individuals' tendency to believe that they are less susceptible to risky events than others is
referred to as ________.
A) the bandwagon effect
B) the confirmation bias
C) loss aversion
D) overconfidence
E) unrealistic optimism
Answer: E
Rationale:
Unrealistic optimism is the belief that one is less likely to experience negative events compared
to others. It can lead to underestimating risks and overestimating the likelihood of positive
outcomes.
63) ________ refers to situations in which statistical probabilities can be attributed to alternative
potential outcomes.
A) Optimism
B) Surety
C) Uncertainty
D) Risk
E) Heuristics
Answer: D
Rationale:
Risk refers to the uncertainty or probability of an adverse event occurring, and it can be
quantified using statistical probabilities.
64) ________ refers to situations where the probability that a particular outcome will occur is not
known in advance.
A) Uncertainty
B) Risk
C) Unrealistic optimism
D) Heuristics
E) Overconfidence
Answer: A
Rationale:
Uncertainty describes situations where the likelihood of different outcomes is not known or
cannot be accurately estimated.
65) ________ refers to the likelihood that an event or outcome will actually occur.
A) Surety
B) Ratio
C) Probability
D) Brainstorming
E) Bias
Answer: C
Rationale:
Probability is a measure of the likelihood that a specific event will occur, typically expressed as a
number between 0 and 1.
66) The formula for expected value (EV) is ________.
A) interest rate × probability
B) income × probability
C) cost of risk × probability
D) cost of risk / probability
E) income / probability
Answer: B
Rationale:
The expected value (EV) is calculated by multiplying the value of each possible outcome by its
probability of occurring and then summing these values. This formula is represented as EV =
Σ(Outcome × Probability).
67) Lisa is trying to decide on the location of her entrepreneurial venture — Flower Power, a
specialty wedding flower service. She has three possible locations (A, B, C) in mind. Lisa has
projected that in the first year of operation, under ideal conditions, her company would generate
$80,000 at Location A, $55,000 at Location B, and $45,000 at Location C. However, after
further analysis, Lisa has determined that there is only a 20 percent chance of ideal conditions
occurring during the first year of operation in Location A. Locations B and C have a .4 and a .8
probability, respectively, for ideal conditions during the first year of operations. Based on this
information, which location should Lisa choose?
A) Lisa should choose location A.
B) Lisa should choose location B.
C) Lisa should choose location C.
D) Lisa should choose either Location A or B because both are viable.
E) Lisa should choose either Location A or C because both are viable.
Answer: C
Rationale:
To determine the expected value of each location, multiply the projected revenue by the
probability of ideal conditions. The expected values are: Location A: $80,000 × 0.20 = $16,000,
Location B: $55,000 × 0.40 = $22,000, Location C: $45,000 × 0.80 = $36,000. Since Location C
has the highest expected value, Lisa should choose Location C.
68) Lisa is trying to decide on the location of her entrepreneurial venture — Flower Power, a
specialty wedding flower service. She has three possible locations (A, B, C) in mind. Lisa has
projected that in the first year of operation, under ideal conditions, her company would generate
$80,000 at Location A, $55,000 at Location B, and $45,000 at Location C. However, after
further analysis, Lisa has determined that there is only a 20 percent chance of ideal conditions
occurring during the first year of operation in Location A. Locations B and C have a .4 and a .8
probability, respectively, for ideal conditions during the first year of operations. Based on this
information, the expected value for Location A is ________, while for Location B it is
________.
A) $400,000; $137,500
B) $16,000; $22,000
C) $64,000; $33,000
D) $96,000; $77,000
E) $320,000; $82,500
Answer: B
Rationale:
The expected value for each location is calculated by multiplying the projected revenue by the
probability of ideal conditions. For Location A, it is $80,000 × 0.20 = $16,000. For Location B,
it is $55,000 × 0.40 = $22,000.
69) ________ is a decision-making tool used in risk situations — situations in which decision
makers are not completely sure of the outcome of an implemented alternative.
A) Probability theory
B) Bandwagon effect
C) Loss aversion
D) Heuristics
E) Bounded rationality
Answer: A
Rationale:
Probability theory is a mathematical framework used to model uncertain situations and make
decisions based on probabilities.
70) When decisions are reached using probability theory, the alternative normally chosen is the
one with ________.
A) the lowest expected value
B) the highest expected value
C) the lowest cost/benefit ratio
D) the lowest risk
E) the highest risk
Answer: B
Rationale:
In decision-making using probability theory, the alternative with the highest expected value is
typically chosen because it offers the best balance of risk and reward.
71) A graphic decision-making tool used to evaluate decisions containing a series of steps is
known as a ________.
A) decision support system
B) decision theory
C) morphological box
D) decision tree
E) Delphi chart
Answer: D
Rationale:
A decision tree is a visual representation of decision-making scenarios and possible outcomes,
often used to evaluate decisions containing multiple steps or branches.
72) Which of the following is an advantage of group decision making?
A) Groups take less time than individuals to arrive at a decision because of the collective and
diverse mentality of groups.
B) Group decisions do not cost the organization as much as individual decisions do.
C) Group decisions are of a higher quality than individual decisions because of the friendly
relationships that exist within the group.
D) Group decisions can be effectively controlled and influenced by the dominant members of the
group.
E) Members of the group tend to support the implementation of the decision more fervently than
they would if the decision had been made by an individual.
Answer: E
Rationale:
One advantage of group decision making is that members tend to support the implementation of
the decision more fervently than they would if the decision had been made by an individual,
leading to greater commitment and buy-in.
73) The phenomenon of compromising the quality of a decision to maintain relationships within
a team is referred to as ________.
A) doublethink
B) crowdsourcing
C) brainstorming
D) groupthink
E) scapegoating
Answer: D
Rationale:
Groupthink is the phenomenon where members of a group prioritize harmony and conformity
over critical evaluation of alternatives, leading to a deterioration in the quality of the decision.
74) A group decision-making process which forbids negative feedback on any suggested
alternative by any group member until all members have presented alternatives is known as
________.
A) groupthinking
B) brainstorming
C) doublethink
D) mindmapping
E) scapegoating
Answer: B
Rationale:
Brainstorming is a group decision-making process where all members are encouraged to generate
ideas without criticism, which are then evaluated collectively after all ideas have been presented.
75) Which of the following is the first step in the process of brainstorming?
A) Members comment on ideas.
B) Group leader chooses members.
C) Ideas are evaluated.
D) Group members state ideas.
E) Ideas are recorded.
Answer: D
Rationale:
In brainstorming, the first step is for group members to state their ideas without judgment or
evaluation.
76) Becky is leading her team in an open discussion on the possibilities of implementing flexible
work hours for her department. One of the team members keeps interrupting with negative
feedback on the suggested ideas. He is breaking the cardinal rule of ________.
A) scapegoating
B) brainstorming
C) crowdsourcing
D) groupthinking
E) the Delphi technique
Answer: B
Rationale:
In brainstorming, negative feedback on any suggested idea is discouraged until all ideas have
been presented, in order to promote creativity and idea generation.
77) The nominal group technique of decision making begins with ________.
A) members presenting their individual ideas orally
B) the entire group discussing their ideas simultaneously
C) group members writing down individual ideas on the matter being discussed
D) members writing their ideas on a board for all other members to see
E) a secret ballot which allows members to support their favorite ideas without fear
Answer: C
Rationale:
The nominal group technique begins with group members individually writing down their ideas,
which are then shared and discussed by the group.
78) In the nominal group technique of decision making, after all the members have discussed the
ideas, they ________.
A) discuss their ideas one-to-one with the group leader
B) present their personal views on each of the ideas discussed
C) write down each idea on the board for all the other members to refer to
D) take out a secret ballot to support their favorite idea
E) adopt and implement the most cost-effective idea
Answer: D
Rationale:
After group members have discussed their ideas in the nominal group technique, they typically
vote using a secret ballot to support their favorite idea without influence from others.
79) Naomi leads a team of software developers. Because of the sudden increase in the number of
projects over the last few weeks, the team will need to work additional hours in order to meet the
various deadlines. She asks her team members to write down their individual ideas on whether
they should extend their daily work hours or simply work on Saturday for the next two months.
They are also encouraged to come up with other solutions that can help them solve the problem.
Which of the following methods of decision-making is Naomi most likely using?
A) the Delphi technique
B) the nominal group technique
C) brainstorming
D) groupthinking
E) controlled creativity
Answer: B
Rationale:
Naomi is most likely using the nominal group technique, as she is asking team members to
individually generate ideas before discussing them as a group.
80) The group decision-making process that involves the circulation of questionnaires on a
specific problem among group members is known as ________.
A) groupthink
B) brainstorming
C) the Delphi technique
D) the nominal group technique
E) the devil's advocate technique
Answer: C
Rationale:
The Delphi technique is a group decision-making process where experts answer questionnaires in
multiple rounds, with feedback provided between each round. It is used to achieve consensus
among experts on a specific problem.
81) The first step in the Delphi technique is ________.
A) asking group members to offer solutions
B) identifying a problem
C) allowing group members to meet face to face
D) preparing a questionnaire on the problem at hand
E) identifying experts on the matter being discussed
Answer: B
Rationale:
The Delphi technique begins with identifying a problem that requires input and feedback from a
group of experts or participants.
82) Decision making using the Delphi technique ends ________.
A) with a secret ballot which allows members to support their favorite ideas
B) when group members are allowed to finally meet face to face
C) after all the responses of the group members have been consolidated
D) once a consensus problem solution is reached
E) after all questionnaires have been scored and tallied
Answer: D
Rationale:
The Delphi technique concludes when the group reaches a consensus on the problem solution,
which is typically achieved through multiple rounds of questionnaires and feedback.
83) Sid wants to involve his team of remotely located architects in a decision-making exercise.
His plan is to circulate a questionnaire on the problem at hand, share the questionnaire results,
and continue to recirculate and redefine individual responses until a consensus is reached. Which
type of decision-making technique is Sid planning to implement?
A) groupthink
B) brainstorming
C) the Delphi technique
D) the nominal group technique
E) the devil's advocate technique
Answer: C
Rationale:
Sid is planning to implement the Delphi technique, which involves using questionnaires to gather
input from experts or participants, iterating on the responses until a consensus is reached.
84) An advantage of brainstorming is that ________.
A) it allows members to know why individuals voted the way they did
B) it provides the option of supporting or rejecting an idea without fear of recrimination
C) it supports the expression of as many useful ideas as possible
D) it is suitable for teams whose group members are geographically dispersed
E) members are not required to defend their ideas
Answer: C
Rationale:
Brainstorming encourages the free expression of ideas without criticism, which can lead to the
generation of a wide range of creative solutions to a problem.
85) An advantage of the nominal group technique is that ________.
A) it prevents members from questioning the validity of others' ideas
B) it allows members to know why individuals voted the way they did
C) discussions are structured and feedback on the ideas are not immediately gathered
D) it is suitable for teams whose group members are geographically dispersed
E) it provides the option of supporting or rejecting an idea without fear of recrimination
Answer: E
Rationale:
The nominal group technique allows participants to anonymously support or reject ideas, which
can lead to more honest and diverse input from group members.
86) What is a decision? Explain the difference between programmed and nonprogrammed
decisions.
Answer: A decision is a choice between two or more alternatives, while the decision-making
process is the process of choosing the best alternative for reaching objectives. A decision
situation may involve simply choosing whether to spend the day studying, swimming, or golfing.
It does not matter which alternative is chosen, only that a choice is made.
Decisions are commonly classified as either programmed or nonprogrammed decisions. A
programmed decision is a routine decision that is repetitive and typically requires specific
handling methods. On the other hand, a nonprogrammed decision is typically a one-shot decision
that is less structured than a programmed decision.
87) What are the orientations of weak decision makers?
Answer: Decision makers are the first element of the decision situation. They are the individuals
or groups who actually make the choice among alternatives. According to Ernest Dale, weak
decision makers usually have one of four orientations: receptive, exploitative, hoarding, and
marketing.
Decision makers who have a receptive orientation believe that the source of all good is outside
themselves, and therefore they rely heavily on suggestions from other organization members.
Basically, they want others to make their decisions for them.
Decision makers with an exploitative orientation also believe that the source of all good is
outside themselves, and they are willing to steal ideas as necessary to make good decisions. They
build their organizations on others' ideas and typically hog all the credit, extending little or none
to the originators of the ideas.
The hoarding orientation is characterized by the desire to preserve the status quo as much as
possible. Decision makers with this orientation accept little outside help, isolate themselves from
others, and are extremely self-reliant. They are obsessed with maintaining their present position
and status.
Marketing-oriented decision makers look on themselves as commodities that are only as valuable
as the decisions they make. Thus they try to make decisions that will enhance their value, and
they are highly conscious of what others think of their decisions.
88) Discuss briefly the steps in the decision-making process.
Answer: A decision is a choice of one alternative from a set of available alternatives. The
rational decision-making process comprises the steps the decision maker takes to arrive at this
choice. The process a manager uses to make decisions has a significant impact on the quality of
those decisions.
Decision making is essentially a problem-solving process that involves eliminating barriers to
organizational goal attainment. The first step in this elimination process is identifying exactly
what the problems or barriers are, for only after the barriers have been adequately identified can
management take steps to eliminate them.
Once a problem has been identified, managers should list the various possible solutions. Few
organizational problems are solvable in only one way. Managers must search out the numerous
available alternative solutions to most organizational problems.
Next, decision makers can select the most beneficial solution only after they have evaluated each
alternative carefully. This evaluation should consist of three steps. Only after these steps have
been completed will managers know which alternative seems most advantageous to the
organization.
The next step is to put the chosen alternative into action. Decisions must be supported by
appropriate action if they are to have a chance of success.
After the chosen alternative has been implemented, decision makers must gather feedback to
determine the effect of the implemented alternative on the identified problem. If the identified
problem is not being solved, managers need to seek out and implement some other alternative.
89) What is bounded rationality?
Answer: Bounded rationality refers to the fact that managers are bounded in terms of time,
computational power, and knowledge when making decisions. In other words, managers do not
always have access to the resources required to make rational decisions. As a result of bounded
rationality, managers satisfice, which occurs when an individual makes a decision that is not
optimal but is good enough.
90) What is the probability theory? Define probability and expected value. How are they related
to each other?
Answer: Probability theory is a decision-making tool used in situations where the decision maker
is not completely sure of the outcome of a particular possible alternative course of action.
Probability refers to the likelihood that a particular event or outcome will occur. The expected
value of an outcome is the income a specific alternative would produce multiplied by probability
that it will produce that income.
Test Bank for Modern Management: Concepts and Skills
Samuel C. Certo, S. Trevis Certo
9780133059922, 9780133254105, 9780135983546
