MGMT310A CH15

As Roger tries to decide whether to buy or lease warehouse space, he is operating under ______________________ because he does not know which option will be more expensive, and he needs to sign the papers by the end of the day.

Conditions of bounded rationality

The fundamental underlying assumption of the administrative model of decision making is that _____________________.

People make decisions based on unconscious mental habits and models

In the video, Helena says her decision to move to Costa Rica seemed like kind of "a crazy decision." If her memories of wonderful times surfing in Costa Rica guided her decision, then ___________________ was at work.

The availability heuristic

Jasmine is leading a project team, and it is very important that everyone does his or her fair share of the work. Some weeks certain employees will have a greater workload, and other weeks other employees will have more to do, but it should all even out over the course of the project. Which of the following actions can Jasmine take to promote an even division of labor?

Encourage trust among team members by publicly praising them for their strengths.

In an example of ____________________, people are more likely to take risks when they are trying to avoid a loss than when they are trying to achieve a gain. Presenting information differently can change the decision a person makes.

Framing

Intuition is a particularly problematic way to make decisions when operating ___________________.

In a new enviroment

Simona is attending college part-time while juggling a job and a child who is in first grade. To set priorities and allocate her time so that she can meet all her objectives requires constant decision making. Simona is aware that at times her decisions have led to poor results due to bias. Now she is determined to make more rational decisions. What are some techniques she can use to accomplish this?

"Simona can ask for advice from professional counselors and older women who were once in her shoes who will see the problem from different perspectives . Simona can use a computer program to forecast likely outcomes if she allocates her hours each day in various ways."

"1. Search for signals of threats and opportunities. Identify threats and opportunities when they are small and manageable. 2. Find the Causes. Conduct a root-cause analysis. Determine the sequence of events that led to the incident. Seek answers to the ""why"" question. Recognize that a single cause can generate many symptoms and may share symptoms with other causes. Understand that there may be more than one root cause. 3. Evaluate the Risks. Consider the consequences and the probabilities of the mistake and the missed opportunity. Acknowledge losses that occurred in the past to be ""sunk"" costs that should not impact current decisions. 4. Apply Intuition and emotion. Use intuition and emotion when you want to double-check rational decisions, when crisis situations develop, and when a rational process cannot help you choose between two options. 5. Consider different Perspectives. Challenge your biases. Ask for other opinions. 6. Consider the Time frame. Minimize the negative effects of time pressure on crisis decisions by preplanning and rehearsing. 7. Solve the problem."

SCRIPTS stands for the following seven steps:

Last Tuesday, five employees at Geologic got together to go to lunch. Because they only had an hour to eat, they quickly threw out food ideas (Chinese, pizza, hamburgers, and so on) until they found one restaurant they all agreed on-a Thai restaurant. However, they didn't even consider Indian food, which all of them would have enjoyed more. What decision-making approach did they use?

Satisficing

The best way for Claire to avoid making this mistake in the future is to ____________________.

Seek out information other than her memories of past events to use when making a decision

Athena has been working at Taco Town for 15 years. She can't begin to tell you how many customers she's served, only that she sees more than a hundred people a day. Last week, Athena saw someone walking into the restaurant and instantly knew that he was going to cause trouble. She didn't think; she just automatically set off the restaurant's silent alarm, and police cars pulled up just as the customer pulled out a gun. How did Athena make her decision?

She used intuition.

Helena needs to decide whether she can afford to make her bikinis in two additional colors that are trending for the coming season. She knows exactly how much credit she has with suppliers but not exactly how many swimsuits will sell. This is _____________________ decision. If Helena bases her decision partly on past sales data and partly on her intuition from years in the fashion industry, the ____________________ model would best describe her decision-making process.

An unprogrammed; Administrative

According to James March, _____________________, or a temporary relaxation of rules, can be very helpful when people are trying to consider as many alternatives as possible during the decision-making process.

Playfulness

According to the __________________ model of decision making, it is difficult for managers in organizations to make rational decisions because different managers have different interests, goals, and values, and they need to negotiate with one another.

Political

The rational decision-making model helps people to operate under _______________________ because they must have all of the information they need to make an idea I decision.

Conditions of certainty

The _________________ model of decision making says that people use logic when they are making decisions that will help accomplish organizational goals.

Classical

The fundamental underlying assumption of the political model of decision making is that ___________________________.

Decisions are made by groups with diverse interests, goals, and values

Eric may use the preceding decision-making process if he:

Has enough time to conduct a thorough analysis of the objectives' importance

Availability, representativeness, and adjustment are all _____________________ , or rules of thumb, that can save an individual time when that person makes a complex decision.

Heuristics

A manager's intution is primarily based on __________________.

Past experiences

"Having the bikinis made in New York has made sense so far, but now that our sales volume has grown, it may make sense to export fabric to another country and then import the finished bikinis to the United States. I know what the respective costs are, but I have no idea what quality control will be like if I offshore production. How should I think about this to make sure I'm not too conservative toward risk?"

Ask what Mi Ola stands to lose if you keep production here and what the company might lose if you offshore production.

The _____________________ suggests that people make decisions only on information that is readily accessible in their memories, often information linked to vivid, emotional events.

Avaiaviltiy heuristic

Before approving a new drug, the U.S. Food and Drug Administration requires that companies submit the results of rigorous scientific testing on the drug's effectiveness. These results are reviewed by physicians, statisticians, chemists, pharmacologists, and other scientists who use logic to determine whether a drug is safe. These researchers are using the __________________ model of decision making.

Classical

In the video, Helena describes a coworker as "very methodical" and "not an entrepreneur." This colleague would be most comfortable with the _______________ model of decision making .

Classical

Bob Iger, CEO of Walt Disney, engaged in __________________ when he looked at all of the issues facing Disney after it purchased Lucasfilm and made a choice to shut down the game publisher LucasArts.

Decision Making

Jim is likely to use a different decision-making process if he __________________.

Is too busy to analyze how effective different actions will be at achieving various objectives

Lynn will find the preceding decision-making process impractical if she _____________________.

Lacks the information needed to rate the effectiveness of various options

Giles supervises fashion buyers for a major department store. He knows that bias may enter into their decisions about which fashions to purchase, and he wants to coach his employees to help them neutralize that bias. Which of the following employees is most likely to require his intervention?

Last season, Adele bought a line of coats by a hot new designer, Henrique, but customers did not like them and over half ended up on clearance.

The best way for Claire to avoid making this mistake in the future is to ____________________.

Look at how information is presented and try to see information in both a positive and negative context before making a decision

Teresa just started her first day of work in the international contracts department at Chevron Corporation. Teresa has good language skills; in fact, she is fluent in English, Mandarin Chinese, French, Arabic, and Spanish. She has never worked in a corporate office before, however, and she's not sure exactly what she should be doing. Her new boss has given Teresa a set of goals and objectives for the year but hasn't told Teresa how to meet them. What conditions is Teresa operating under?

Uncertainty

If a manager is operating under __________________________, he or she has some information about the goals of the organization and the actions that might be used to accomplish those goals, but no information about how effective each action would be to achieve those goals.

Conditions of risk

"I want to expand our social media presence, engaging our customers on their preferred platforms in a cost-effective manner. If I use a rational decision-making process, what can I expect the outcome to be?"

You will choose the course of action that scores the highest when rated against your objectives, weighted by importance.

Managers often base their hiring decisions on gut feelings. These feelings are typically formed within 2 minutes of meeting a job applicant and have little to do with the applicant's ability to do the job. These hiring managers are using the _____________ model of decision making.

administrative

On his first day on the job, Alejandro wears a suit and tie, believing this will show his new company that he is serious about his career. However, he immediately notices that his coworkers are wearing chinos and polo shirts, so using ___________________________, he runs to a department store on his lunch hour and buys business casual attire.

an appropriateness framework

When choosing classes last term, Sergey used _________________ , selecting the first classes he found that would fit his schedule, not the best classes given his interest in comparative international studies.

satisficing

When people do not make changes because they are afraid of being embarrassed or punished as a result of their actions, they are subject to ______________________.

status quo bias

Managers who make all of their decisions based on intuition are likely to make _________________ decisions.

Faster

Unfortunately, when making her decision about what wetsuits to buy, Claire is affected by several common decision-making biases. For example, Claire is reviewing advertisements in Underwater Journal and SCUBA Diving Magazine, two key diving periodicals. Underwater Journal says that if wetsuits are replaced every 5 years, 20°/o of stores will be audited, but if the wetsuits are not replaced, there is a one-fifth probability that every store will be audited and a four-fifths probability that no stores will be audited. Claire decides to take the risk and not buy wetsuits this year. Claire's mistake stems from _____________________.

Framing

Unfortunately, when making her decision about what wetsuits to buy, Claire is affected by several common decision-making biases. For example, when trying to decide which manufacturer to use, Claire thinks back to her most memorable dive. She was wearing an XCEL wetsuit, and she can still recall how comfortable she felt in it, despite the fact that she was diving in SO-degree water . Claire's mistake stems from ____________________.

The availability heuristic

The best way for Claire to avoid making this mistake in the future is to ____________________.

Accept the idea that any decision she makes can be a bad decision and evaluate her choices analytically

Jake knows the T in SCRIPTS stands for time frame. How should Jake control the time frame of decision making as the last step before solving the problem?

Acknowledge that when someone presents a prescription for a vital medication, the need is urgent and the situation is emotional, so a plan for addressing the customer should be in place in advance.

The __________________ model of decision making acknowledges that managers are often unable to make rational decisions because they don't have the information they need to do so.

Administrative

If Clarita makes a decision based on gut-level feelings without much conscious thought, she is using ______________________.

Intutitive decision making

Managers who are deciding how to promote a brand-new, groundbreaking product are engaged in making ______________________ decisions because they are in an unstructured situation.

Nonprogrammed

After years of saving, you are finally deciding which house to buy. The decision is complicated, because there are so many homes on the market, and your budget is limited.

Nonprogrammed Decision

In February 2011, Facebook decided that it would be releasing versions of Oregon Trail and Where in the World Is Carmen Sandiego?, two popular video games. Facebook needed to find games that would increase their competitive advantage - it wasn't an easy decision.

Nonprogrammed Decision

When Mi Ola's purchasing manager places the weekly order for new bikinis based on how many of each type have sold that week, this is a _________________ decision, and the process of making it could best be described by the _________________ model.

Programmed; Classical

rational decision-making process consists of the following six steps:

"1. Define the problem. 2. Identify the objectives. 3. Weight the objectives according to their importance. 4. Consider possible courses of action. 5. Rate each course of action on how well it meets each objective. 6. Compute the optimal decision."

You have been promoted to a management position that will require you to make decisions quickly in ambiguous situations. You are aware that this kind of decision making is prone to bias. How can you reduce bias in your decisions?

"Acquire experience that helps you recognize rational decision making and biases . Engage in analogical reasoning by examining case studies, making decision making more abstract and generalized."

Due to high turnover at his company, your friend David has had the opportunity to be promoted several times. Now he holds a management position in which he makes decisions that will have a major impact on the organization. He is very concerned about trying to make decisions in as unbiased a manner as possible and asks you for advice. What do you tell him?

"Understand biases in others so that you don't repeat them.; Accept that you, like everyone, are subject to bias, and examine your thoughts for bias on an ongoing basis."

Under ___________________ , in which information is incomplete, managers are likely to use bounded rationality, satisficing, intuition, and other shortcuts to speed up and simplify decision making.

Ambiguity

Helena's managers meet to discuss customer feedback on the many design ideas she has come up with and decide which bikinis to make next year. For each bikini design, some customers love it, and others hate it. This is _________________ decision. Furthermore, the purchasing manager is primarily concerned about the cost of fabric and trim, the sales manager is primarily concerned about how much Mi Ola can charge for each item, and the marketing manager is primarily concerned about whether the designs will reinforce the brand image. Therefore, how this decision gets made can best be described by the ____________________ model.

An unprogrammed; Political

Unfortunately, when making her decision about what wetsuits to buy, Claire is affected by several common decision-making biases. For example, Claire buys three wetsuits from a relatively new manufacturer. After the suits are purchased, Claire finds information saying how good the suits are. She pays no attention to other articles that point out the flaws of the suits she has already purchased. Claire's mistake stems from _______________________.

Confirmation Bias

Mika is working with six other fashion designers to create a new dress for the reality show Team Runway. She proposes using a new fabric called Intimacy that uses nanotechnology to turn transparent when the wearer's heart speeds up. The rest of her team members, however, believe the judges will prefer a more traditional silk dress. Mika ________________, and the group creates a silk dress.

Conforms

Prika Software has spent $100,000 on developing an app that last year sold only 4,000 copies at $5 each. Nonetheless, the marketing manager is determined to see a return on the money invested. In an example of ______________________, she now wants to spend $75,000 to create a new home page for the product.

Escalation of commitment

In the SCRIPTS process, the P stands for perspectives. What should Jake do to implement this step of the process?

Examine his bias in favor of stocking every drug possible - is it because past customers got upset when the medication they needed was not in stock?

Dr. Spencer Silver was trying to develop a superstrong adhesive, but instead he developed a glue that didn't stick very well. He talked to many fellow engineers, but none of them had a use for his invention. Six years later, another scientist needed a way to keep track of hymns as he was singing in the choir. Suddenly, he remembered Dr. Silver's glue, and the two developed Post-its together. The problem and solution were thrown together randomly, and the solution was created before the problem was known. These researchers were using the _________________ model of decision making.

Garbage Can

A hedge fund wants its investment managers to take an opportunistic stance, carrying more risk in their portfolios relative to the competition. To encourage this behavior, management should:

Host employee gatherings every Friday at which the executives mix innovative cocktails and play jazz classics

You make a decision about the contractor who will remodel your kitchen. You have a budget of $50,000, and you find that different contractors have different ideas about the best way to remodel a kitchen, which makes your decision complicated.

Nonprogrammed Decision

The fundamental underlying assumption of the classical model of decision making is that ____________________.

People make decisions rationally and logically

Every morning when you walk into Starbucks, you decide what to order. You don't have to think, you order the same thing: a venti green tea Frappuccino with extra whipped cream. You can't drink anything else at Starbucks because you don't like hot beverages, coffee, or black tea, and you like your beverages tall and creamy.

Programed Decision

Last spring, your spouse surprised you with a puppy. Fortunately, the puppy (named Loki after the Norse god of mischief) gets along well with your 17 cats. Every day you decide what to feed Loki. It's not a hard decision, he likes Purina Pet Chow.

Programed Decision

You are the CEO for a large scanner manufacturer. Recently, you caught a department manager embezzling money from your company. You decide to fire the department manager because he has violated company rules.

Programed Decision

Deciding when to pay taxes is a _________________ decision because it recurs at regular intervals, and there are strict rules about when taxes must be paid.

Programmed

The ________________________ says that people form opinions and then look for information that supports those opinions. For example, if you believe a colleague does poor-quality work, you are more likely to notice what that coworker does wrong than what he or she does right.

Representativeness heuristic

According to the SCRIPTS process, the first step Jake should take is to:

Review data on medication demands and profit margins.

"One of my customers said to me the other day, 'Why don't you make a bikini that will scare off sharks?' She was joking, but now I'm wondering what opportunities we might miss out on in 5 years because we're not thinking about them now. How can I open up decision making to include possible actions no one's thought of yet?

Temporarily set aside Mi Ola's goals and engage your managers in playfulness to consider actions with no clear relationship to current objectives.

When a person makes a decision by defining a problem, identifying goals, weighting the importance of each goal, considering all possible actions, rating each action based on how well it will meet objectives, and determining an optimal decision, he or she is using a method of decision making based on _______________________.

The Theory of rational choice

When Helena says in the video that she has to make decisions as though she's 25 because otherwise she'll be "way too conservative, and we'll be dead in the water," she is describing a way of countering _______________________.

The status quo bias