REVIEW AND APPLICATIONS
CHAPTER SUMMARY
4-1 Describe the decision-making process. The decision-making process consists of eight
steps: (1) identify the problem, (2) identify the decision criteria, (3) weight the criteria,
(4) develop alternatives, (5) analyze alternatives, (6) select alternative, (7) implement
4-2 Explain the three approaches managers can use to make decisions. The first approach
is the rational model. The assumptions of rationality are as follows: The problem is clear
and unambiguous, a single, well-defined goal is to be achieved, all alternatives and
consequences are known, and the final choice will maximize his or her economic payoff.
4-3 Describe the types of decisions and decision-making conditions managers face.
Programmed decisions are repetitive decisions that can be handled by a routine approach
and are used when the problem being resolved is straightforward, familiar, and easily
defined (structured). Non-programmed decisions are unique decisions that require a
4-4 Discuss group decision making. Groups offer certain advantages when making
decisions—more complete information, more alternatives, increased acceptance of a
solution, and greater legitimacy. On the other hand, groups are time-consuming, can be
dominated by a minority, create pressures to conform, and cloud responsibility. Three
4-5 Discuss contemporary issues in managerial decision making. As managers deal with
employees from diverse cultures, they need to recognize common and accepted behavior
when asking them to make decisions. Some individuals may not be as comfortable as
others with being closely involved in decision making, or they may not be willing to
DISCUSSION QUESTIONS
4-1 Why is decision making often described as the essence of a manager’s job?
4-2 Describe the eight steps in the decision-making process.
Answer: The decision-making process consists of eight steps: (1) identify problem; (2)
4-3 All of us bring biases to the decisions we make. What would be the drawbacks of
having biases? Could there be any advantages to having biases? Explain. What are
the implications for managerial decision making?
Answer: Exhibit 3-5 shows the common managerial biases used in decision making. Any
of these biases could contribute to poor decision making that could negatively impact
4-4 “Because managers have so many powerful decision-making tools, they should be able
to make more rational decisions.” Do you agree or disagree with this statement?
Why?
Answer: Students should realize that technology helps decision making, it doesn’t make
The electronic meeting blends the nominal group technique with computer technology.
Numerous people sit around a horseshoe-shaped table that is empty except for a series of
4-5 Is there a difference between wrong decisions and bad decisions? Why do good
managers sometimes make wrong decisions? Bad decisions? How might managers
improve their decision-making skills?
Answer: Students’ answers will vary. There could be a difference. Good managers can
sometimes make the wrong choices due to inadequate information, biases, a lack of
4-6 Describe a decision you’ve made that closely aligns with the assumptions of perfect
rationality. Compare this decision with the process you used to select your college. Did
you depart from the rational model in your college decision? Explain.
Answer: Students’ answers will vary. Students should take all eight steps into
4-7 Explain how a manager might deal with making decisions under conditions of
uncertainty.
4-8 Why do you think organizations have increased the use of groups for making
decisions and when would you recommend using groups to make decisions?
4-9 Find two examples each of procedures, rules, and policies. Bring your examples to
class and be prepared to share them.
4-10 Do a Web search on the phrase “dumbest moments in business” and get the most
current version of this list. Choose three of the examples and describe what happened.
What’s your reaction to each example? How could the managers in each have made
better decisions?
MyManagementLab
Students can find the following assisted-graded writing questions at
4-11 Today’s world is chaotic and fast-paced. How does time pressure affect managerial
decision making? What can managers do to still be good decision makers under such
conditions?
4-12 Discuss the pros and cons of managers using technology to help make decisions.
Management Skill Builder: Building a Creative Decision Maker
Creativity is a frame of mind. You need to open up your mind to new ideas. Every individual has
the ability to be creative, but many people simply don’t try to develop that ability. In
contemporary organizations, those people may have difficulty being successful. Dynamic
environments and managerial chaos requires that managers look for new and innovative ways to
attain their goals, as well as those of the organization.
Personal Inventory Assessment: Problem Solving, Creativity, and Innovation
Making decisions is all about solving problems. Do this PIA and find out about your level of
creativity and innovation in problem solving.
Skill Basics
The following are suggestions for developing your creativity by opening up your mind to
new ideas, a critical skill for you as a manager:
Think of yourself as creative.
Pay attention to your intuition.
Move away from your comfort zone.
Determine what you want to do.
Think outside the box.
Look for ways to do things better.
Find several right answers.
Believe in finding a workable solution.
Brainstorm with others.
Turn creative ideas into action.
Practicing the Skill
Read through this scenario and follow the directions at the end of it.
Every time the phone rings, your stomach clenches and your palms start to sweat. And
it’s no wonder! As sales manager for Brinkers, a machine tool parts manufacturer, you’re
besieged by calls from customers who are upset about late deliveries. Your boss, Carter
Hererra, acts as both production manager and scheduler. Every time your sales
representatives negotiate a sale, it’s up to Carter to determine whether production can
actually meet the delivery date the customer specifies. And Carter invariably says “No
problem.” The good thing about this is that you make a lot of initial sales. The bad news
is that production hardly ever meets the shipment dates that Carter authorizes. And he
doesn’t seem to be all that concerned about the aftermath of late deliveries. He says, “Our
customers know they’re getting outstanding quality at a great price. Just let them try to
match that anywhere. It can’t be done. So even if they have to wait a couple of extra
days or weeks, they’re still getting the best deal they can.” Somehow the customers don’t
see it that way. And they let you know about their unhappiness. Then it’s up to you to try
to soothe the relationship. You know the problem is taken care of, but what possible
solutions are there? After all, how are you going to keep from making your manager mad
or making the customer mad?
Break into groups of three. Assume you’re the sales manager. What creative solutions
can your group come up with to deal with this problem?
Experiential Exercise
Magic Carpet Software
To: Rajiv Dutta, Research Manager
From: Amanda Schrenk, Vice President of Operations
Re: Software Design Decisions
Rajiv has been asked to research the role of emotions in decision making. What do the “experts”
say? Is it even an issue that managers need to be concerned about? What’s the best way to deal
with it? Rajiv’s boss expects a one-page bulleted list of the important points he will find from his
research (with citations).
Teaching Tip: The topics of diversity and professionalism may not sound like they fit
together, but they both have a common component – they are both able to illicit strong
emotions in individuals. And both diversity and professionalism are related to decision
making. In assigning this case to students, be aware that the literature on emotions is
grouped into the types of emotions, their origins, and their outcomes. Students may want
to take several emotions and focus on two or three. The six major categories of emotions
are anger, fear, joy, love, sadness, and surprise. Researching the outcomes of emotions in
a business context, students will find the main relationship that has been examined is
happiness and its relationship with employee performance/success.
Case Application 1: Big Brown Numbers
Discussion Questions
4-14 Why is efficiency and safety so important to UPS?
4-15 Would you characterize a driver’s route decisions as structured or unstructured
problems? Programmed or nonprogrammed decisions? Explain.
4-16 How would ORION technology help drivers make better decisions? (Think of the steps in
the decision-making process).
4-17 How is UPS being a sustainable corporation?
Sustainability was defined in Chapter 1 as “a company’s ability to achieve its business
goals and increase long-term shareholder value by integrating economic, environment,
Case Application 2: The Business of Baseball
Discussion Questions
4-18 In a general sense, what kinds of decisions are made in baseball? Would you
characterize these decisions as structured or unstructured problems? Explain. What
type(s) of decision-making condition would you consider this to be? Explain.
4-19 Is it appropriate for baseball managers to use only quantitative, objective criteria in
evaluating their players? What do you think? Why?
4-20 Describe how baseball front office executives and college coaches could use each of the
following to make better decisions: (a) rationality, (b) bounded rationality, and (c)
intuition.
Student responses to this question will vary, but might suggest that front office executives
and college coaches can use rationality to establish certain consistent and logical statistics
4-21 Can there be too much information in managing the business of baseball? Discuss.
Case Application 3: Tasting Success
Discussion Questions
4-22 Which decisions in this story could be considered unstructured problems? Structured
problems?
4-23 How does the Black Book help Coke’s managers and other employees in decision
making?
4-24 What does Coke’s big data have to do with its goals?
4-25 Do some research on revenue analytics. What is it? How can it help managers make
better decisions?
Revenue analytics is a decision-making technique focused on building revenue as
opposed to focusing on cutting costs to save money. This changes the way a manager