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Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
7. The best diagnostic question: What happens when people fail? While you certainly want to
celebrate your successes, you do not want to ignore your failures. You want to learn from them.
Perhaps you decided not to spend money on marketing this quarter—but ADT did and sent a
postcard to all the houses in targeted ZIP codes. As a result, ADT gained business and you lost
customers.
Difficulty: 2 Medium
Topic: Decision Making Process
Learning Objective: 07-03 Describe how evidence-based management and business analytics
contribute to decision making.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
93) Define and describe analytics. Give an example of an organization using analytics and how
they are using it.
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94) Describe the four decision-making styles. For each style, explain the extent to which a person
has a high need for structure, control, and ambiguity in his or her life.
Then, identify which decision-making style each of the following managers has:
(a) April has a tendency to overanalyze a situation. For this reason, she is slower to make
decisions, but she responds well to new or uncertain situations, which makes her the perfect
candidate to open a new branch of the business in a neighboring town.
(b) Bob has a long-term perspective, and he relies on intuition and discussions with others to
acquire information. He is willing to take a risk and is good at finding creative solutions to
problems; however, sometimes he can be indecisive. Because of his skills and his ability to gather
information, Bob is a good candidate for the director of market research position at his company.
(c) Calvin holds a lot of meetings and prefers to avoid conflict. He enjoys working with others and
social interactions in which opinions are openly exchanged. He is supportive, receptive to
suggestions, and prefers verbal to written information. Due to his decision-making style, Calvin
has been promoted to the floor manager of a local restaurant, where he will oversee the kitchen and
waitstaff.
(d) Devora, the CEO of a beauty supply company, is action-oriented and decisive. She focuses on
the facts and on profits in the short run. She tends to be autocratic and enjoys being in control.
Devora would never work for any company where she cannot be "top dog."
54
95) Deidre, who is the CEO of a shoe retailer, needs to make a tough decision on whether to close
3 of the 200 stores that are unprofitable. Closing the stores will mean laying off 45 employees right
before the holiday season. Leaving the communities also means that local people will have no
place to purchase reasonably priced shoes and sneakers. Use the decision tree to recommend what
Deidre should do. Be sure to consider each of the steps.
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96) This question contains two parts; be sure to answer both.
First, explain at least five of the nine common decision making biases, giving an example of each.
Next, imagine that you are a real-estate agent who is trying to sell a huge house to a wealthy
couple. Explain how the buyers may be subject to each of the biases that you list.
56
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
5. Anchoring and adjustment bias—being influenced by an initial figure. It is sometimes seen in
real-estate sales. Before the crash in the real-estate markets, many homeowners might have been
inclined at first to list their houses at an extremely high (but perhaps randomly chosen) selling
price. These sellers were then unwilling later to come down substantially to match offers that
reflected what the marketplace thought the house was really worth.
The potential home buyers may make a reasonable offer for a house, but the owners may be
unwilling to negotiate because they became fixated on their initial figure (asking price), which was
too high.
6. The overconfidence bias—people’s subjective confidence in their decision making is greater
than their objective accuracy. For instance, with experienced investment advisors whose financial
outcomes simply depended on luck, “the illusion of skill is not only an individual aberration; it is
deeply ingrained in the culture of the industry.”
The young couple may believe that they should buy a house in a certain town because “the town is
on its way up, and we’ll be able to make a boatload of money by selling our house a few years from
now.”
7. The hindsight bias—the tendency of people to view events as being more predictable than they
really are, as when at the end of watching a game we decide the outcome was obvious and
predictable, even though in fact it was not.
After the home buyers purchase a house, they may look back and say, “From the first minute we
walked in the door, we knew that we’d be living here within a month.”
8. The framing bias—shaping how a problem is presented. The framing bias is the tendency of
decision-makers to be influenced by the way a situation or problem is presented to them. For
instance, customers have been found to prefer meat that is framed as “85% lean meat” instead of
“15% fat,” although, of course, they are the same thing.
The potential home buyers may be influenced by a realtor describing a house as “the ideal house
for people who have many friends and love to entertain.” If the potential home buyers see
themselves as popular, they may be more likely to buy the house because of the way the real-estate
agent framed it.
9. Escalation of commitment bias—increasing commitment to a project despite negative feedback
about it. A website called Swoopo.com capitalizes on this bias by offering a penny auction in
which, say, a $1,500 laptop is offered for bidding starting at a penny and going up one cent at a
time, but it costs bidders 60 cents to make a bid. “Once people are trapped into playing,” suggests
one account about this form of bias, “they have a hard time stopping.”
If the home buyers decide to buy a house, they may bring their parents to see it. The parents may
point out various defects in the house, which only makes the home buyers more insistent on buying
the house because their commitment to buying the house has escalated.
Difficulty: 2 Medium
57
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Topic: Decision Making Process
Learning Objective: 07-05 Identify barriers to rational decision making and ways to overcome
them.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
97) Raquel, the HR manager of a large manufacturing company, is considering if she should
appoint a group to improve on the company's present diversity plan. The goal is to increase the
diversity of the company's workforce. Discuss the advantages and disadvantages of using group
decision making in this situation.
58
98) The Me Too Movement, a recent movement against sexual harassment and sexual assault, and
others have seen many top CEOs and celebrities lose their jobs. Discuss why CEOs and other
highly visible individuals are more likely to be ousted for ethical violations, or in this case sexual
misconduct violations.
99) This question has three parts.
More companies are starting to invest in Big Data, but what does that mean?
Define Big Data.
Describe how it is different from analytics and list three of its possible uses.
59
100) Describe how knowledge of the decision-making styles will influence your own decisions.
60
101) An often forgotten step in the decision-making process is a project post-mortem. Define the
term project post-mortem and identify its purpose. Then describe the actual meeting itself.
102) Describe how learning decision-making skills will help prepare you for a job interview.
62
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Establishing a Decision Methodology: There is no single “right” way to solve problems. The key is
to establish a process or method that works for me. Consider using or modifying the following
steps:
1. Analyze the situation. Why does a decision need to be made? What would happen if I delayed
making a decision? Who will be affected by the decision? What information, data, analytics, or
research do I need to consider in order to understand the causes and possible solutions? Are there
political issues you need to take into account?
2. Consider what others would think about the solutions under consideration. Would I be proud of
my decision if someone tweeted it out or printed it on the front page of the newspaper?
3. Seek advice or feedback from others before making a decision.
4. Conduct a cost-benefit analysis of different solutions. Do the benefits of any exceed the costs? Is
it okay to incur higher short-term costs for a better long-term solution?
5. Is the decision consistent with my values and principles? Am I willing to co-opt my values or
principles? Consider the cost of doing so.
6. Make the decision and observe the consequences. Then do a post-mortem.
Demonstrating These Competencies During a Job Interview: Being career ready means possessing
the desired knowledge, skills, attitudes, and other characteristics (KSAOs) and being able to
demonstrate them during a job interview. Assuming I possess some of these skills, now it’s time to
make a plan for making a positive impression. I can prepare answers to the following
behaviorally-based questions:
• Describe the process I use to make decisions. Provide a specific example in which this process
resulted in a positive outcome.
• Tell me about a time in which I had to make a quick decision. How did I approach the situation
and what obstacles did I face? How did I make this decision without having all the necessary
information?
• Describe a time in which I used intuition to make a decision rather than relying on data or hard
facts. What was the outcome of my decision, and what did I learn from the experience?
Difficulty: 2 Medium
Topic: Decision Making Process
Learning Objective: 07-07 Describe how to develop the career readiness competencies of critical
thinking/problem solving and decision making.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
