The gap between an existing state and a desired state is referred to as
A problem – Business Dictionary explains a problem as: “A perceived gap between the existing state and a desired state, or a deviation from a norm, standard, or status quo.“
Andrew must buy a new office copier. He lists the features the copier must have, such as a built-in scanner, color copying, and an automatic document feeder, along with how much he can spend. Which step of the decision-making process does this represent?
Identifying decision criteria – Decision criteria are principles, guidelines or requirements that are used to make a decision
Andrew foes to the office supply store and talks to a sales representative, who shows him several copiers that can meet his needs. Which step of the decision-making process does this represent?
Developing alternatives – decision makers to gather data, interpret that data, and brainstorm to arrive at a solution of their desire.
What is the first step in the decision-making process?
Identify a problem: The following are steps involved in making a decision:
- Identify the decision.
- Gather relevant info.
- Identify the alternatives.
- Weigh the evidence.
- Choose among the alternatives.
- Take action.
- Review your decision.
Factors that are important or relevant to resolving a problem are referred to as
Decision criteria – This is explained by the fact that when people make decisions, they base their choice on a number of factors, some logical and some personal.
After looking at several copiers, Andrew decides to buy one. He knows other models might be available elsewhere, but he doesn’t have time to keep looking, and the one he is buying seems to meet his needs.
This is an example of Satisficing
The saying, “throwing good money after bad,” meaning that you continue to waste money on a losing proposition.
This best describes what is called an Escalation of commitment
Refers to the concept that many managers lack the time and the ability to process all of the alternatives to solve a problem
Bounded Rationality – According to Herbert Simon, “Rationality is bounded because there are limits to our thinking capacity, available information, and time” (Simon, 1982).
Heidi is the marketing manager a a large winery. The expensive ad campaign she planned has flopped so far, but instead of scrapping it and trying something else, Heidi decides to invest more money in the campaign and runs ads in even more publications.
This is an example of Escalation of commitment
Alicia is convinced that she can tell more about a job applicant in a 5-minute interview than through pre-employment tests or reference checks and insists that her gut instincts are never wrong. Alicia is using
Intuitive decision making – This involves making decisions that are done mentally, without calculations, systems and methods
The data-driven, systematic use of the best available facts and information to improve management practice is referred to as
Evidence-based management (EBMgt) – This involves using multiple sources of scientific evidence and empirical results as a means of attaining knowledge (Barends, Rousseau, & Briner, 2014).
The office manager has to place another order for copy paper, so he checks the office supply company’s website to see if either of his preferred brands is on sale before placing the order. This is an example of a(n)
Programmed decision – This follows standard operating procedures or other well-defined methods.
Brandi’s Bakery has received its first major commercial order, and the owner needs to determine if she can fill this order on her own or if she needs to hire an employee. This is an example of
An unstructured problem – The intelligence, design, and choice phases are not structured hence human intuition is the main determinant of whatever decision made.
A sign in the college bookstore states that students can return a textbook only if it is still shrink-wrapped and returned within the first 10 days of the semester. This is an example of a(n)
Rule
Cashiers at the supermarket are allowed to adjust the price of an item up to a maximum or $5.00 without getting the manager’s approval. This would best be described as a(n)
Policy
In order to make exchanges or returns at a clothing retailer, customer service representatives must follow an established series of steps, such as checking the receipt, inspecting the item for damage, and issuing a store credit. This is an example of a(n)
Procedure
A manager can make the most accurate decision under a situation of __ because the outcome of every alternative is known.
Certainty
Whenever Gabriela needs to book a hotel room in an unfamiliar city, she always stays at a Marriott, because she’s familiar with the brand. This is an example of
A heuristic
Which decision-making bias refers to a decision maker’s tendency to assess how likely something is to happen or how closely it resembles other events or sets of events?
Representation bias
Alberto is a manger who tends to think he know more than he does. He is most likely exhibiting
The overconfidence bias
More people will buy ground beef advertised as “80% lean” instead of “20% fat,” even though the meaning is the same. Which decision-making bias does this reflect?
Framing bias
Managers who weigh their first impression of an applicant more heavily than information received later in the interview are experiencing
The anchoring effect
In making decisions, global managers need to consider the values, beliefs, and attitudes of the people involved. Which guideline for effective decision making does this represent?
Understand cultural differences
Instead of identifying and evaluating alternatives with logic and deductive reasoning, a manager using __ would try to envision and entertain new and innovative solutions to a problem.
Design thinking
Which of the following managers is using big data in decision making?
A large retailer uses software to adjust prices in real time for more than 70 million items based on demand and inventory.
