REAL 4
identify the benefits of using intuition in the decision-making process. check all that apply.
(1) It can speed up decision making, useful when deadlines are tight. (2) It can be helpful to managers when resources are limited. A drawback, however, is that it can be difficult to convince others that your hunch makes sense. In addition, intuition is subject to the same biases as those that affect rational decision making,
Rational Model of Decision Making
(classical model) explains how managers should make decisions; it assumes managers will make logical decisions that will be the optimum in furthering the organization's best interests Stage 1: identify the problem or opportunity Stage 2: think up alternative solutions Step 3: evaluate alternative and select a solution Step 4: implement and evaluate the solution chosen -PROBLEM: its prescriptive, it describes how managers should make decisions not how they actually do. Assumptions fo Model -Complete information, no uncertainty -Logical, emotional analysis -Best decision for organization
System 2 (Decision Making)
-Kahneman -analytical and conscious slow, deliberate, analytical, and consciously effortful mode of reasoning -need to fill out form or park in narrow space -drawn on to arrive at explicit beliefs and reasoned choices
System 1 (Decision Making)
-Kahneman intuitive and largely unconscious -operates automatically and quickly -fast, automatic, intuitive, and largely unconscious mode -detect hostility in a voice or detect the one object is more distant than another -easy, unreliable story of life, quick and dirty draft of reality, use association and metaphor
Eight Rules for Being a Better Manager
1. Be a good coach 2. Empower your team, dont micro manage 3. Express interest in team members success and personal well being 4. Be productive and result oriented 5. Be a god communicator and listen to your team 6. Help your employees with career development 7. Have a clear vision ad strategy for the team 8. Have key technical skills to advise the team
indicate the three ways that can help managers in "deciding whether to decide"
1. Importance—"How High Priority Is This Situation?" You need to determine how much priority to give the decision situation. If it's a threat, how extensive might prospective losses or damage be? If it's an opportunity, how beneficial might the possible gains be? 2. Credibility—"How Believable Is the Information about the Situation?" You need to evaluate how much is known about the possible threat or opportunity. Is the source of the information trustworthy? Is there credible evidence? 3. Urgency—"How Quickly Must I Act on the Information about the Situation?" Is the threat immediate? Will the window of opportunity stay open long? Can actions to address the situation be done gradually?
Three Attributes among analytics
1. Use of Modeling 2. Multiple Applications 3. Support form top management
In System ____________ of Kahneman's decision making model, reasoned choices are determined.
2
According to the Internal Revenue Service, how many people must join together to qualify as a partnership?
2+
What proportion of U.S. private-sector employees work for a small business?
50%
What proportion of new jobs created between 1992 and 2013 in the United States were created by small businesses?
63%
which of the following is an accurate description of decision making?
A decision is a choice made from among available alternatives. Decision making is the process of identifying and choosing alternative courses of action.
What are good fields for an entrepreneur to explore when trying to uncover a business idea?
A field s/he is highly skilled in A field s/he has a high level of interest in
relaxed change
A manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk. This is, of course, a form of "satisficing"; the manager avoids exploring a variety of alternatives in order to make the best decision. "Why Not Just Take the Easiest Way Out?"
What skill or ability must an entrepreneur have but a good manager may or may not have?
Ability to initiate new goods or services
Directive style of decision making
Action oriented like to focus on facts autocratic type managers
On which of the Big Five dimensions are entrepreneurs likely to score lower than managers?
Agreeableness
Important in combating groupthink
Allowing Criticism Allowing other perspectives
ethics officer
An ethics officer is someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas
Four general styles of decision making
Analytical Conceptual Behavioral Directive
System 2 Thinking
Analytical deliberate Conscious
analytics
Analytics, or business analytics, is the term used for sophisticated forms of business data analysis. In one example of analytics in gambling, data-mining software was used to analyze vast amounts of casino customer data to target profitable patrons.
People who are willing to work in a setting that provides little instruction and little security have a need for what?
Autonomy
How do innovation and creativity relate to entrepreneurship?
Both are essential to being an entrepreneur.
what is the name of a technique used to help groups generate multiple ideas for solving problems in which potential ideas or solutions from group members in a meeting are collected (sometimes anonymously) and written on a board or flip chart?
Brainstorming
Electronic brainstorming, also called __________, is a technique used to help members of a group come together over a computer network to generate ideas and alternatives for solving problems.
Brainwriting
What type of business structure is owned by shareholders and is taxed as a separate entity?
C corporation
Which on elf the following best describes the decisions made by a person with an analytical stye?
Carefully considers lots of info and alternatives
indicate the assumptions prevalent in the rational decision-making model. check all that apply
Complete information, no uncertainty: You should obtain complete, error-free information about all alternative courses of action and the consequences that would follow from each choice. Logical, unemotional analysis: Having no prejudices or emotional blind spots, you are able to logically evaluate the alternatives, ranking them from best to worst according to your personal preferences. Best decision for the organization: Confident of the best future course of action, you coolly choose the alternative that you believe will most benefit the organization.
Assumptions prevalent in the rational decision making model
Complete infö choice of best decision for the organization logical
Big Data analytics can be helpful for businesses in examining large amounts of data to uncover hidden patterns like those in which of the following categories?
Consumer behavior
What characteristic is most important for an entrepreneur to have?
Creativity
What activities might entrepreneurs engage in but self-employed people would likely avoid?
Delegating most of their work to employees Spending money on intriguing but unexplored ideas
What would a self-employed person likely hire an employee to do?
Design a new logo for her business
What are the three components of entrepreneurship?
Determining which opportunities to exploit Creating a new venture or new value Analyzing opportunities
Advantages to group decision making
Different perspectives deeper commitment to the decision greater pool of knowledge
What type of presentation is an executive summary most similar to?
Elevator speech
What are among the Big Five personality characteristics?
Emotional stability Openness to experience Agreeableness
Satisfying Model of decision making
Emphasizes choosing the first solution that meets criteria rather than an optimal choice
which of the following questions would you use to evaluate alternatives in the third stage of the rational model of decision making?
Ethics, Feasibility, and Effectiveness In this stage, you need to evaluate each alternative not only according to cost and quality but also according to the following questions: (1) Is it ethical? (If it isn't, don't give it a second look.) (2) Is it feasible? (If time is short, costs are high, technology unavailable, or customers resistant, for example, it is not.) (3) Is it ultimately effective? (If the decision is merely "good enough" but not optimal in the long run, you might reconsider.)
What are among the main components of a business plan?
Executive summary Sales strategies Market analysis Financial projections
Jerome succeeds in making a big sale for his company. When a coworker asks him how he did it, he says, "I guess I just got lucky today." Which characteristic does Jerome have?
External locus of control
which of the following are appropriate actions for a manager to take if a decision is not working as intended? check all that apply.
Give it more time. You need to make sure employees, customers, and so on have had enough time to get used to the new action. Change it slightly. Maybe the action was correct, but it just needs "tweaking"—a small change of some sort. Try another alternative. If Plan A doesn't seem to be working, maybe you want to scrap it for another alternative. Start over. If no alternative seems workable, you need to go back to the drawing board—to Stage 1 of the decision-making process.
when rivals are focused on winning an argument rather than the goal of a meeting and that topics of the meeting are not discussed. it is an example of _______
Goal displacement. Although the primary task of the meeting may be to solve a particular problem, other considerations may rise to the fore, such as rivals trying to win an argument. Goal displacement occurs when the primary goal is subsumed by a secondary goal.
Steps of Rational Model of decision making
Identify the prob Think up alternative solutions Evaluate alternatives and select a solution Implement and evaluate the solution chosen
Evaluation
If action isnt working? -Give it more time -Change it slightly -Try another alternative -Start over
People possess a _________ system of the mind that blunts bad feelings and cools euphoric ones.
Immune
which of the following is an advantage of group decision making?
Intellectual stimulation ----------------- Greater pool of knowledge. When several people are making the decision, there is a greater pool of information from which to draw. If one person doesn't have the pertinent knowledge and experience, someone else might. Different perspectives. Because different people have different perspectives—marketing, production, legal, and so on—they see the problem from different angles. Intellectual stimulation. A group of people can brainstorm or otherwise bring greater intellectual stimulation and creativity to the decision-making process than is usually possible with one person acting alone. Better understanding of decision rationale. If you participate in making a decision, you are more apt to understand the reasoning behind the decision, including the pros and cons leading up to the final step. Deeper commitment to the decision. If you've been part of the group that has bought into the final decision, you're more apt to be committed to seeing that the course of action is successfully implemented.
Questions to use in th e3rd stage of rational model
Is it feasible? Is it ethical? Is it effective?
Why is proactivity crucial for entrepreneurs?
It allows them to be the first entrant into a market.
Drawbacks to using intuition
It can be difficult to convince others about the validity of your hunch It Is subject to the same decision making biases as rational decision making
According to research, what effect does planning have on the success of a business?
It somewhat increases a business's chances of survival, especially for high-growth-oriented start-ups.
What are among the nine most important characteristics of entrepreneurs?
Need for autonomy Proactivity Need to achieve
In what way are limited partnerships different from general partnerships?
Only one of the partners has control of the operations
What is the primary tool that entrepreneurs use to protect their innovations?
Patents
What is the term for a forward-looking perspective that involves capitalizing on opportunities before others seize them?
Proactivity
Curse of knowledge examples
Professional bankers taking excessive risks Engineers designing remotes with too many buttons
What is the main difference between creativity and innovation?
Profitability
Stage 3 Questions
Questions to ask in stage 3 of rational model Stage 3: Evaluate Alternative and Select a Solution 1. Is it ethical? 2. Is it feasible? (time is short, costs are high, technology is unavailable, etc.) 3. Is it ultimately effective?
People with conceptual decision making style are likely to
Rely on intuition take risks fins creative solutions
What is the main difference in how self-employed people and entrepreneurs interact with employees?
Self-employed people sometimes hire employees to perform their work; entrepreneurs work collaboratively with employees.
Most business partnerships are based on what?
Shared experiences or interests
Which type of company is responsible for the majority of patents created in the United States?
Small firms of fewer than 500 people
When trying to identify a new business opportunity, what should entrepreneurs look at?
Societal trends Current events Underserved markets
Under which business arrangement is it most difficult to get financing due to liability risk?
Sole proprietor
have a high tolerance for ambiguity
Some people desire a lot of structure in their lives (a low tolerance for ambiguity) and find ambiguous situations stressful and psychologically uncomfortable. In contrast, others do not have a high need for structure and can thrive in uncertain situations
which of the following represents the third stage of the rational model of decision making?
Stage 3: Evaluate Alternatives and Select a Solution—Ethics, Feasibility, and Effectiveness
Big Data
Stores of data that are so large or complex that it is difficult to process them using traditional data base management apps
What are common components of a business description?
Strengths, weaknesses, opportunities, and threats analysis Mission, vision, and goals Legal structure of the business
Three key attributes that Babson Colleges Working Knowledge Research Center found among analytics competitors
Support from the top Use of modeling Having multiple applications
T or f? A decision tree is an analytical tool that can help managers to understand the consequences of their decisions and to create a plan to reach a goal.
TRUE
What is a drawback of being a sole proprietor?
The entrepreneur's personal and business assets are put at risk.
Defensive avoidance
The manager cannot find a satisfactory solution so procrastinates, passes the buck or denies the risk of neg consequences.
Relaxed Avoidance
The manager decides to take no action, believing that there will be no significant neg. consequences
Panic
The manager has become frantic to dispose of the problem and therefore cannot deal with the situation realistically.
Relaxed Change
The manager opts for the first available alternative that involves low risk.
What is the best definition of autonomy?
The preference for freedom and independence
Law of Unintended Consequences
The results of rational decision making should be evaluated because things may occur that were not foreseen a "law" in economics
Reasons it can be difficult to make evidence based decisions
There is too much evidence There is not enough evidence People are trying to mislead you
tolerance for ambiguity.
This individual difference indicates the extent to which a person has a high need for structure or control in his or her life
Decision making styles vary along what two dimensions?
Tolerance for ambiguity Value Orientation
Seven Implementation Principles
Treat your organization as an unfinished prototype No brag, just facts. See yourself and your organization as outsiders do Evidence-based management is not just for senior executives Like everything else, you still need to sell it If all else fails, slow the spread of bad practice The best diagnostic question: What happens when people fail
The results of rational decision making should be evaluated because thing may occur that were not foreseen, a "law" in economics known as the Law of ________ Consequences.
Unitntended One "law" in economics is the Law of Unintended Consequences—things happen that weren't foreseen. For this reason, you need to follow up and evaluate the results of the decision.
Data included in Big Data
Web browsing data trails Data in corporate databases Social network communications Surveillance Data
Which of the following is the best diagnostic question for an organization practicing evidence based decision according to Jeffrey Pfeffer and Robert Sutton?
What happens when people fail?
What is a significant point of disagreement among entrepreneurs?
Whether or not to create a business plan
CEOs are more likely to be ousted for ethical violations
Why? 1. public is less forgiving of poor behavior 2. regulations are more stringent 3. companies are expanding operations into developing countries where ethical risks are higher 4. digital communication increase exposure to Irish from hackers/whistleblowers 5 24/7 news cycle amplifies negative info in real time
If you are unsure about the exact costs of your business, how should you present information in the funding requirements section of your business plan?
You should provide the expected range of costs.
brainwriting is the process of brainstorming by using _________.
a computer network
computer-aided design
a computer-based information system that provides a flexible tool for analysis and helps managers focus on the future. This kind of computer-based system aims to produce collected information known as business intelligence,
Predictive Modeling
a data-mining technique used to predict future behavior and anticipate the consequences of change
a computer-based information system that provides a flexible tool for analysis and helps managers focus on the future is known as _________
a decision support system
Decision Tree
a graph of decisions and their possible consequences; it is used to create a plan to reach a goal Ask these questions.. 1. Is proposed action legal? 2. Does proposed action maximize shareholder value? 3. Is proposed action ethical? 4. Would it be ethical not to take proposed action?
which two of the following are examples of the delphi technique?
a group of specialists submit anonymous reports about a subject the expert opinion is complied and consensus is reached The Delphi technique is a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas; the judgments are combined and in effect averaged to achieve a consensus of expert opinion.
defensive avoidance
a manager can't find a good solution and follows by (a) procrastinating, (b) passing the buck, or (c) denying the risk of any negative consequences. This is a posture of resignation and a denial of responsibility for taking action. "There's No Reason for Me to Explore Other Solution Alternatives"
relaxed avoidance
a manager decides to take no action in the belief that there will be no great negative consequences. This condition, then, is a form of complacency: You either don't see or you disregard the signs of danger (or of opportunity) "There's No Point in Doing Anything; Nothing Bad's Going to Happen"
Panic
a manager is so frantic to get rid of the problem that he or she can't deal with the situation realistically. This is the kind of situation in which the manager has completely forgotten the idea of behaving with "grace under pressure," of staying cool and calm. Troubled by anxiety, irritability, sleeplessness, and even physical illness, if you're experiencing this reaction, your judgment may be so clouded that you won't be able to accept help in dealing with the problem or to realistically evaluate the alternatives. "This Is So Stressful, I've Got to Do Something—Anything—to Get Rid of the Problem"
which one of the following best describes the basis of the nonrational models of decision making?
a model that describes how managers actually make decisions Nonrational models of decision making explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions. The nonrational models are descriptive rather than prescriptive: They describe how managers actually make decisions rather than how they should. Two nonrational models are (1) satisficing and (2) intuition.
which two of these options are important in combating groupthink?
allowing criticism allowing other perspective
when making decisions for her department, ellie tends to take a long time because she takes into consideration a large amount of information. what type of decision-making style does ellie demonstrate?
analytical
System 2 Daniel Kahneman
analytical and conscious: System 2 is our slow, deliberate, analytical, and consciously effortful mode of reasoning, which swings into action when we have to fill out a tax form or park a car in a narrow space.
Daniel Kahneman's System 2 thinking characteristics:
analytical, deliberative, conscious
Diagnosis
analyzing the underlying causes -being confronted with a problem/opportunity and seeing how to make an improvement: how to change conditions from present to desirable
sam gave employees a 5% raise last year and expects to give the same percentage raise this year, even though it will push his company's salaries above what is normally paid in the industry. this is example of the ______ bias.
anchoring and adjustment
the ________ bias is based on ban individual's tendency to make decisions based on an initial figure
anchoring and adjustment
a consensus is when all members are able to express their opinions __________.
and reach agreement to support the final decision
an individual's value orientation reflects the extent to which they focus on which of the following dimensions when making decisions?
ask and technical concerns or people and social concerns when making decisions. Some people, for instance, are very task focused at work and do not pay much attention to people issues, whereas others are just the opposite
In the _____________ bias, managers use information readily available from memory to make judgments.
availability
eileen had provided the weekly inventory report to the management team every friday for the past four months, but she wasn't able to generate the report last week bc she was attending a seminar learning how to use the new inventory software. her boss sent her an email reminding her of the importance of the report and asking her to be sure and submit it every friday. this is an example of
avaliability bias
What was the most frequently used source of financing among entrepreneurs in 2017?
bank loans
most people oriented decision making style
behavioral
rather than holding formal meetings in the board room, kevin prefers meeting with his group over lunch at a restaurant. he feels that his group opens up more during these lunches and opinions are openly exchanged. which style of decision making does kevin use?
behavorial
in order to optimize her newest promotion for the hollywood movie company she works for, carli analyzes large amounts of data from social media, industry forecasts and existing customer records to find buying patterns within her customer base. what is carli using to make her decision?
big data analytics
the process of examining large amounts of data in a variety of types to uncover hidden patterns, unknown correlations, and other useful information is known as _________.
big data analytics
the concept that suggests that the ability of decision makers to be rational is limited by constraints such as complexity, skills, time and money is known as __________ rationality
bounded
the concept that suggests that the ability of decision makers to be rational is limited by constraints such as complexity, skills, time and money is known as _____________ rationality
bounded
tonya decided to purchase a piece of equipment from a domestic company instead of an overseas company despite the domestic company's higher cost and lower quality. her decision was based on uncertainty that the foreign shipment would meet her production deadline. according to herbert simon, tonya was feeling the effects of __________.
bounded rationality During the 1950s, economist Herbert Simon—who later received the Nobel Prize—began to study how managers actually make decisions. From his research he proposed that managers could not act truly logically because their rationality was bounded by so many restrictions. Bounded rationality, the concept suggests that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time and money, and their cognitive capacity, values, skills, habits, and unconscious reflexes
michelle met with her five employees around a table and asked each of them to take five minutes to write down what they personally thought their new facility should include. She then collected the information and wrote it down on the white board for all of them to view and decide upon. Michelle is using the __________ technique.
brainstorming
what is the name of a technique used to help groups generate multiple ideas for solving problems in which potential ideas or solutions from group members in a meeting are collected (sometimes anonymously) and written on a board or flip chart?
brainstorming
electric brainstorming, also called ______, is a technique used to help members of a group come together over a computer network to generate ideas and alternatives for solving problems.
brainwriting
Analytics
business analytics, the term used for sophisticated forms of business data analysis
A document that answers critical questions about a business to attract investment and high-quality talent is known as a(n) ______.
business plan
what you need for successful implementation
careful planning sensitivity to those affected
successful implementation of major decisions requires which 2 of the following to occur?
careful planning sensitivity to those affected by the decision Stage 4: Implement and Evaluate the Solution Chosen With some decisions, implementation is usually straightforward (though not necessarily easy—firing employees who steal may be an obvious decision, but it can still be emotionally draining). With other decisions, implementation can be quite difficult; when one company acquires another, for instance, it may take months to consolidate the departments, accounting systems, inventories, and so on
which one of the following best describes the decisions made by a person with an analytical style
carefully considers lots information and alternatives Careful Decision Makers Who Like Lots of Information and Alternative Choices Managers with an analytical style have a much higher tolerance for ambiguity and are characterized by the tendency to overanalyze a situation. People with this style like to consider more information and alternatives than those following the directive style. Analytical individuals are careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations.
an analytical style decision making person:
carefully considers lots of information and alternatives
Decision
choice made from among available alternatives
"don't tell me the truth; just tell me what i want to hear" is an example of the _______ bias
confirmation
the _________ bias occurs when people seek data to support their point of view and disregard information that does not support it
confirmation
the ____________ bias occurs when people seek information to support their point of view and discount data that do not
confirmation
tyler is a die-hard fan of college's football team and he bought season tickets. he tells everyone what a great team it is and about their big wins but seems to forget that the team has a losing record. this is an example of the _________ bias.
confirmation
big data analytics can be helpful for businesses in examining large amounts of data to uncover hidden patterns like those in which of the following categories?
consumer behavior
The general term for an entity that is separate from its owners and thus has its own legal rights is a(n) ______.
corporation
which of the following data would be included in big data?
data in coroprate databases social network communications surveillance data web-browsing data trails Big Data, stores of data so vast that conventional database management systems cannot handle them and so very sophisticated analysis software and supercomputing-level hardware are required. Big Data includes not only data in corporate databases but also web-browsing data trails, social network communications, sensor data, and surveillance dat
included in big data:
data in corporate databases, web browsing data trails, surveillance data, social network communications
A __________ is a choice made from available alternatives.
decision
a _______ is a choice made from available alternatives
decision
a(n) _________ is a graph of decisions and their possible consequences; it is used to create a plan to reach a goal
decision tree
manager cannot find a good possible solution so they avoid, pass the buck, or deny the risk of negative consequences.
defensive avoidance
when a manager can't find a good solution to a serious problem and either procrastinates, passes the buck, or denies that there will be any negative consequences, she or he is adopting which ineffective response to a decision situation?
defensive avoidance
ronnie's company uses large numbers of snow blowers. after several failed, ronnie determined that the failures were due defective motors and decided that the company would uses a different vendor for future purchases. ronnie is making a(n) __________.
diagnosis Whether you're confronted with a problem or an opportunity, the decision you're called on to make is how to make improvements—how to change conditions from the present to the desirable. This is a matter of diagnosis—analyzing the underlying causes.
Problems
difficulties that inhibit the achievement of goals -i.e. customer complaints, supplier breakdowns, staff turnover, sales shortfalls, low employee motivation
people with a _________ style have a low tolerance for ambiguity and are oriented toward tasks and technical concerns in making decisions
directive
people with a(n) ___________ decision-making style have low tolerance for ambiguity and are task oriented. they are efficient, logical, and practical in their approach to solving problems and making decisions. which style do they use?
directive
what are the four general styles of decision making?
directive, analytical, conceptual, and behavioral
4 general styles of decision making
directive, conceptual, analytical, behavioral
goal _____________ occurs when the primary goal is subsumed by the secondary goal
displacement
Minority _________ occurs when a minority in the group publicly opposes beliefs, ideas, procedures, attitudes, or policies assumed by the majority of the group
dissent
minority ___________ occurs when a minority in a group publicly opposes the beliefs, attitudes, ideas, procedures or policies assumed by the majority of the group
dissent
minority dissent
dissent that occurs when a minority in a group publicly opposes the beliefs, attitudes, ideas, procedures, or policies assumed by the majority of the group
All examples of the "curse of knowledge"
engineers designing electronic products (such as DVD remote controls) with too many buttons. professional investors and bankers taking excess risks Specialization improves efficiency, but it also leads to tunnel vision and blind spots. In other words, as our knowledge and expertise grow, we may be less and less able to see things from an outsider's perspective—hence, we are often apt to make irrational decisions.
To be a(n) ___________ means that you have what it takes to start a business; to be a(n) __________ means that you have what it takes to grow or maintain a business.
entrepreneur; manager
jacinda bought stock in AZY company at $70 per share and the price has tumbled since then. the stock is now trading at $7 per share and financial experts keep saying that the stock is like to continue to decline because of a lawsuit pending against the company. she keeps the stock and hopes its will turn around, even though she knows that's not likely. this is an example of ___________
escalation of commitment
ramona is bidding on an auction item against several other people. she knows the bid is already too high, but she doesn't want to give up, so she continues bidding. this is an example of the ________ bias.
escalation of commitment
when decision makers increase their commitment to a project despite negative information about it, they are experiencing which type of bias?
escalation of commitment
when using the ethical decision tree, management should consider whether a proposed action is both legal and ________.
ethical
someone who is trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas, is called a(n) ________
ethics officer
Nonrational models of decision making
explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions.
Nonrational Models of Decision Making
explains how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions -descriptive rather than prescriptive -describes how managers actually make decisions -they are satisficing and intuition
Tolerance for Ambiguity
extent to which a person has a high need for structure or control in her life -desire a lot o structure (low tolerance)
people with a conceptual decision-making style are likely to do which of the following?
find creative solutions rely on intuition take risks Conceptual types adopt a long-term perspective and rely on intuition and discussions with others to acquire information. They also are willing to take risks and are good at finding creative solutions to problems. However, a conceptual style can foster an indecisive approach to decision making.
_______________ bias is the tendency of decision makers to be influenced by a way a problem or situation is presented to them.
framing
the tendency of decision makers to be influenced by the way a situation or problem is presented to them is referred to as the ___________ bias
framing
Partners equally share all profits and losses in a ______.
general partnership
if the action isn't working
give it more time change it slightly try another alternative start over
during which of the following is positive team spirit and striving for unanimity most likely to lead to poor decision making?
groupthink ------------- A few people dominate or intimidate. Sometimes a handful of people will talk the longest and the loudest, and the rest of the group will simply give in. Or one individual, such as a strong leader, will exert disproportionate influence, sometimes by intimidation. This cuts down on the variety of ideas. Groupthink. Groupthink occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation.Page 228 Here the positive team spirit of the group actually works against sound judgment.164 See more about groupthink below. Satisficing. Because most people would just as soon cut short a meeting, the tendency is to seek a decision that is "good enough" rather than to push on in pursuit of other possible solutions. Satisficing can occur because groups have limited time, lack the right kind of information, or are unable to handle large amounts of information.165 Goal displacement. Although the primary task of the meeting may be to solve a particular problem, other considerations may rise to the fore, such as rivals trying to win an argument. Goal displacement occurs when the primary goal is subsumed by a secondary goal.
anchoring and adjustment bias
he tendency to make decisions based on an initial figure.
select the fields that are using big data analytics
health and medicine entertaining and reading hiring and personnel
Benefits of Intuition
helpful too managers when resources are limited can speed up decision making
_____________ are strategies such as "rules of thumb" that simplify decision making
heuristics
the tendency to view events as being more predictable than they really are is referred to as ____________ bias
hindsight
the tendency of people to view events as being more predictable than they really are is referred to as _____________ bias
hindsight when at the end of watching a game we decide the outcome was obvious and predictable, even though in fact it was not. Sometimes called the "I-knew-it-all-along" effect, this occurs when we look back on a decision and try to reconstruct why we decided to do something.
rational model of decision making order:
identify problem or opportunity, think up alternative solutions, evaluate alternatives and select a solution, implement and evaluate the solution chosen.
list the steps of the rational model of decision making in the correct order, with the first step listed at the top and the last step listed at the bottom
identify the problem or opportunity think of alternative solutions evaluate alternatives and select a solution implement and evaluate the solution chosen
list the steps of the rational model of decision making in the correct order, with the first step listed at the top and the last step listed at the bottom.
identify the problem or opportunity think of alternative solutions evaluate alternatives and select a solution implement and evaluate the solution chosen
first step in rational decision making process
identifying the problem
the first step in the rational decision-making process involves _________.
identifying the problem
which of the following are part of the seven implementation principles of evidence-based decision making?
if all else fails, slow the spread of bad practice treat your organization as an unfinished prototype like everything else, you still have to sell it treat your organization as an unfinished prototype no brag, just facts see yourself and your organization as outsiders do evidence-based management is not just for senior executives like everything else, you still need to sell it if all else fails, slow the spread of bad practice the best diagnostic question: what happens when people fail?
decide by evaluating
importance credibility urgency
helps managers deciding what to decide:
importance, credibility, urgency
electronic brainstorming, sometimes called brainwriting
in which members of a group come together over a computer network to generate ideas and alternatives
Big Data
includes not only data in corporate databases but also web-browsing data trails, social network communications, sensor data, and surveillance data -Big Data Analytics: the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful info USES -Analyzing customer behavior and spurring sales -Improving hiring and human resource management -Tracking movie, music, TV, and reading data -Advancing Health and medicine -Aiding public policy
information collected from a decision support system is known as business _______________________
intelligence
the information collected from a decision support system is known as business
intelligence
The belief that you control your own destiny is known as ______ locus of control.
internal
making a choice without the use of conscious thought or logical inference is known as ____________________.
intuition
making a choice without the use of conscious thought or logical inference is known as using ________.
intuition
automated experience
intuition based on feelings
holistic hunch
intuition that stems from expertise
System 1 Thinking
intuitive largely unconscious
according to psychologist daniel kahneman, system 1 thinking is _______.
intuitive and largely unconscious It operates automatically and quickly; it is our fast, automatic, intuitive, and largely unconscious mode, as when we detect hostility in a voice or detect that one object is more distant than another.
Predictive modeling
is a data-mining technique used to predict future behavior and anticipate the consequences of change
decision tree
is a graph of decisions and their possible consequences; it is used to create a plan to reach a goal
Delphi technique
is a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas; the judgments are combined and in effect averaged to achieve a consensus of expert opinion.
Brainstorming
is a technique used to help groups generate multiple ideas and alternatives for solving problems.
at the stage of evaluating alternatives during a decision-making process, which of the following is a question that a manager should ask?
is it feasible? In this stage, you need to evaluate each alternative not only according to cost and quality but also according to the following questions: (1) Is it ethical? (If it isn't, don't give it a second look.) (2) Is it feasible? (If time is short, costs are high, technology unavailable, or customers resistant, for example, it is not.) (3) Is it ultimately effective? (If the decision is merely "good enough" but not optimal in the long run, you might reconsider.)
intuition
is making a choice without the use of conscious thought or logical inference
which of the following questions is NOT one of the questions used in bagley's ethical decision tree?
is the proposed action a benefit to our competitors? --------------------------------------------- is the proposed action legal? if yes, does the proposed action maximize shareholder value? if yes, is the proposed action ethical? If "No," Would It Be Ethical Not to Take the Proposed Action?
framing bias
is the tendency of decision makers to be influenced by the way a situation or problem is presented to them.
sunk-cost bias, or sunk-cost fallacy
is when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it.
identify the drawbacks to using intuition in the decision-making process. check all that apply
it can be difficult to convince others about the validity of your hunch. it is subject to the same decision-making biases as rational decision making.
issues with the rational model
it is prescriptive, it doesn't actually describe how managers make decisions
choose a key benefit of using intuition in decision making
it speeds up the process when deadlines are tight (1) It can speed up decision making, useful when deadlines are tight. (2) It can be helpful to managers when resources are limited. A drawback, however, is that it can be difficult to convince others that your hunch makes sense. In addition, intuition is subject to the same biases as those that affect rational decision making, as we discuss in Section 7.5. Finally, says one senior executive, intuition is fine for start-ups but "often deceives CEOs as their businesses become more complex." Still, we believe that intuition and rationality are complementary and that managers should develop the courage to use intuition when making decisions.
People are often wrong when they predict how _____
long their feelings will last
Intuition Model (nonrational model)
making a choice without the use of conscious thought or logical inference -Holistic Hunch: intuition stemming from expertise, a person explicit knowledge about a person, situation, or decision -Automated Experience: involuntary emotional response to matters, intuition based on feelings
deciding to decide
manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps
which of the following are ways that knowledge of decision-making styles affects managers' work? check all that apply
managers can better identify personal strengths and weaknesses managers gain an understanding of differences that improves the ability to manage conflicts. ---------- know thyself influence others deal with conflict
Satisficing Model (nonrational model)
managers seek alternatives until they find on that is satisfactory and not optimal
satisficing model
managers seek alternatives until they find one that is satisfactory, not optimal, and often choose the first alternative
availability bias
managers use information readily available from memory to make judgments.
Evidence-based management
means translating principles based on best evidence into organizational practice.
basis of nonrational models of decision making
model that describes how managers actually make decisions
Behavioral Style
most people oriented
Analytics are best used to help companies track _______________ apps
multiple
according to the babson college study, successful analytics work with ________ application(s).
multiple
analytics are best used to help companies track _______ applications.
multiple
which of the following decision-making models acknowledges that the decisions managers make are nearly always uncertain and risky, making it difficult for managers to make optimal decisions?
nonrational model
Groupthink
occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation.
consensus
occurs when members are able to express their opinions and reach agreement to support the final decision
Goal displacement
occurs when the primary goal is subsumed by a secondary goal.
________________ are situations that present possibilities for exceeding existing goals.
opportunities
situations that present possibilities for exceeding existing goals are known as ___________
opportunities
ryan learned that recent sales by a competitor in his sales region had fallen because of distribution problems. as a result, ryan decided to add a salesperson to his staff to boost his own company's sales. ryan is demonstrating how a(n) __________ affected his decision making
opportunity
When you overestimate your knowledge or expertise in a decision situation, you fall prey to the ____________ bias
overconfidence
the _________ bias occurs when people's positive feelings about their own decision-making ability is greater than their objective accuracy
overconfidence
the manager cannot deal with the situation properly because they have become frantic
panic
when krystal lost a big sale that meant she would not make her sales quota for the month, she burst into tears. "I can't deal with this!" she waited to a coworker. "I'm a complete failure at this job and I'm just going to quit!" which response to a decision situation does this BEST reflect?
panic
Which of these are great sources of new business ideas?
past experience in-depth industry knowledge
A license with which the government authorizes a person or company to exclude others from making, using, or selling an invention for a time is known as a(n) ______.
patent
select the reasons it can be difficult to make evidence based decisions
people are trying to mislead you there is not enough good evidence there is too much evidence (1) There's too much evidence. (2) There's not enough good evidence. (3) The evidence doesn't quite apply. (4) People are trying to mislead you. (5) You are trying to mislead you. (6) The side effects outweigh the cure. (Example: Despite the belief that social promotion in school is a bad idea—that is, that schools shouldn't advance children to the next grade when they haven't mastered the material—the side effect is skyrocketing costs because it crowds schools with older students, and angrier students, demanding more resources.) (7) Stories are more persuasive, anyway.
Successful Implementation
plan carefully and be sensitive to those affected (how will peeps fell about the change)
successful implementation of major decisions:
plan carefully, be sensitive to those affected by the decision
a data mining technique used to predict future behavior and anticipate the consequences of change is known as _________________ modeling
predictive
a data-mining technique used to predict future behavior and anticipate the consequences of change is known as ________ modeling
predictive a data-mining technique used to predict future behavior and anticipate the consequences of change. Capital One conducts more than 30,000 experiments a year, with different interest rates, incentives, direct-mail packaging, and other variables to evaluate which customers are most apt to sign up for credit cards and will pay back their debt.
the wisdom of crowds
pressure to conform leads members with different ideas to censor themselves
kelly works in the customer service department and at the end of the day she reported to her manager that all of the calls she received that day were customers complaining about the new wheel sprocket the company had just started using. which aspect of the rational decision making process is kelly providing to her manager?
problems
Diagnosis
process of analyzing the underlying cause
Decision Making
process of identifying and choosing alternative courses of action
business analytics tend to be ________ (quantitative or qualitative) in nature
quantitative
business analytics tend to be _______________ in nature
quantitative
even though not everyone in the meeting agreed with the final decision, the group decided to proceed and replace all existing machine parts in the warehouse. in this situation, the group had ___________
reached a consensus
Value Orientation
reflects extent to which a person focuses on either task or technical concerns or people or social concerns when making decisions
Decision Making Style
reflects the combination of how an individual perceives and responds to information Four Styles: directive, analytical, conceptual, or behavioral
Value orientation
reflects the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions
a manager takes no action with belief there will be no negative consequences
relaxed avoidance
manager opts for first available alternative that involves low risk
relaxed change
people with conceptual decision making style:
rely on intuition, take risks, and find creative solutions
the __________ bias reflects our tendency to generalize from a small sample or single event
representativeness
a person's decision making style refers to how a person perceives something as well as how they ___________ to it.
respond
the ________ model of decision making emphasizes choosing the first solution that meets criteria rather than an optimal choice
satisficing
"close enough is good enough" would best characterize which model of decision making?
satisficing model—that is, managers seek alternatives until they find one that is satisfactory, not optimal.
Heuristics are strategies that _____________ the process of making decisions
simplify
heuristics are strategies that _________ the process of making decisions
simplify
Opportunities
situations that present possibilities for exceeding existing goals
Opportunities
situations that present possibilities for exceeding existing goals.
influences of decision making:
size of the group, the knowledge, amount of time available
Ethics Officer
someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas
A __________ is a newly created company designed to grow fast.
start-up
heuristics
strategies that simplify the process of making decisions.
Herbert Simon
studied how managers actually make decisions -proposed bounded rationality
apex enterprises spent a large amount of money to customize a pumping system that it bought many years ago. its suppliers has begun to offer a new pumping system with even better features than its customized system. although the new system is competitively priced, apex decides to keep its older system. this would be an example of the ___________ bias.
sunk-cost
all of the following are characteristics of the delphi group problem-solving technique expect __________.
technological forecasting is required
business analytics
tend to be quantitative in nature
Bounded Rationality
the ability of decision makers to be rational is limited by numerous constraints such as complexity, time and money, their cognitive capacity, values, skills, imperfect information, information overload, and different priorities
overconfidence bias
the bias in which people's subjective confidence in their decision making is greater than their objective accuracy.
bounded rationality
the concept suggests that the ability of decision makers to be rational is limited by numerous constraints,
what are three characteristics that affect decision making by a group?
the efficiency of the group the size of the group (the larger the group, the lower the quality of the decision) the knowledge of group members -------------------- they are less efficient their size affects decision quality they may be too confident knowledge counts
Delphi technique examples:
the expert opinion is compiled and a consensus is reached, a group of specialists submit anonymous reports about a subject
Characteristics that affect decision making by a group
the knowledge of group members the size of the group groups take longer to make decisions
Decision making
the process of identifying and choosing alternative courses of action.
hindsight bias
the tendency of people to view events as being more predictable than they really are,
representativeness bias
the tendency to generalize from a small sample or a single event
when kendra's manager asked the team to come up with some new ideas for drawing people to their trade show booth, kendra decided to be creative and suggested installing a video game in the booth to attract people. which part of the decision-making process does kendra's idea exemplify?
think of alternative solutions
which personality dimension indicates the extent to which a person has a high need for structure or control in their life?
tolerance for ambiguity
Evidence Based Management
translation of principles based on best evidence into organization practice, brining rationality to decision making process Difficult to be because... - too much evidence - no good evidence - evidence doesnt apply -people are trying to mislead you -you are trying to mislead yourself -side effects outweigh the cure -stories are more persuasive
actions for store managers to take if a decision is not working as intended:
try another alternative, give it more time, change it slightly, start over
in a study done at babson college's working knowledge research center, researchers identified three key attributes among organizations committed to quantitative, fact-based analysis. what are those three attributes?
use of modeling, multiple applications, and support from top management
kendall is frustrated with her co-worker, jill. she feels that jill doesn't care that their manager seems to be showing favoritism toward the two other members of their team. jill just focuses on the work she is supposed to do, which demonstrates her _______.
value orientation
decision-making styles vary along two dimensions. what are those dimensions?
value orientation and tolerance for ambiguity A decision-making style reflects the combination of how an individual perceives and responds to information.
people are often wrong when they try to predict which of the following?
what their level of sadness will be in not receiving a reward what their level of happiness will be in receiving a reward how long their feelings about a particular outcome will last
when using a group can help
when it can increase quality, acceptance, development
confirmation bias
when people seek information to support their point of view and discount data that do not
escalation of commitment bias
whereby decision makers increase their commitment to a project despite negative information about it.
