PART THREE: DECISION MAKING, PLANNING, AND STRATEGY
1 TOPIC 6 - CHAPTER 7: DECISION MAKING, CREATIVITY, AND
ENTREPRENEURSHIP
1) Each month, Brian reviews sales data, analyzes market opportunities and threats, and
determines organizational goals and actions for the coming month. This is an example of
A) groupthink.
B) intuition.
C) decision making.
D) bounded rationality.
E) brainstorming.
Answer: C
Explanation: Decision making is the process by which managers respond to opportunities
and threats by analyzing the options and making determinations, or decisions, about specific
organizational goals and courses of actions.
Difficulty: 2 Medium
Topic: Nonprogrammed decisions
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2) ________ decisions are routine and based on rules and guidelines.
A) Brainstormed
B) Nonprogrammed
C) Programmed
D) Intuitive
E) Creative
Answer: C
Explanation: Programmed decisions are decisions that have been made so many times in the
past that managers have developed rules or guidelines to be applied when certain situations
inevitably occur.
Difficulty: 1 Easy
Topic: Programmed decisions
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
1
,3) In the classical model of decision making, managers
A) create heuristics to simplify the process.
B) identify and evaluate all possible alternatives before choosing a course of action.
C) apply representativeness bias to identify alternatives.
D) use intuition to select the most satisfactory solution.
E) use satisficing to select the optimum solution.
Answer: B
Explanation: The classical model is prescriptive, meaning it specifies how decisions should
be made based on the assumption that the decision making can identify and evaluate all
possible alternatives to choose the most appropriate course of action.
Difficulty: 2 Medium
Topic: Classical decision-making model
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
4) In the classical model of decision making, the most appropriate decision possible in light
of what is believed to be the most desirable consequences for the organization is known as
the ________ decision.
A) intuitive
B) creative
C) heuristic
D) subjective
E) optimum
Answer: E
Explanation: The optimum decision is the most appropriate decision possible in light of what
they believe to be the most desirable consequences for the organization.
Difficulty: 1 Easy
Topic: Classical decision-making model
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
5) Programmed decision making is a(n) ________ process.
A) novel
B) routine
C) intuitive
D) ambiguous
E) creative
Answer: B
2
,Explanation: Programmed decision making is a routine, virtually automatic process.
Difficulty: 1 Easy
Topic: Programmed decisions
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
6) In the classical model of decision making, the most appropriate decision possible in light
of what is believed to be the most desirable consequences for the organization is known as
the ________ decision.
A) intuitive
B) creative
C) heuristic
D) subjective
E) optimum
Answer: E
Explanation: The optimum decision is the most appropriate decision possible in light of what
they believe to be the most desirable consequences for the organization.
Difficulty: 1 Easy
Topic: Classical decision-making model
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7) Managers for an organic grocery chain were deciding whether to open a new store in a
neighborhood currently unserved by any competitors. One manager felt that the lack of
competitive presence was an opportunity to capture the newest customers. Another manager
viewed the lack of a competitor in the area as an indicator that the local community may not
be interested in organic products. This difference in perspective illustrates the concept of
A) ambiguity.
B) satisficing.
C) confirmation bias.
D) groupthink.
E) illusion of control.
Answer: A
Explanation: A reason why information is incomplete is that much of the information
managers have at their disposal is ambiguous information. Its meaning is not clear—it can be
interpreted in multiple and often conflicting ways.
Difficulty: 3 Hard
Topic: Administrative and classical models of decision making
Learning Objective: 07-01 Understand the nature of managerial decision making,
3
, differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) The first step in the managerial decision-making process is to
A) choose between alternatives.
B) assess alternatives.
C) learn from feedback.
D) recognize the need for a decision.
E) conduct a retrospective analysis.
Answer: D
Explanation: The first step in the decision-making process is to recognize the need for a
decision.
Difficulty: 1 Easy
Topic: Decision-making process
Learning Objective: 07-02 Describe the six steps managers should take to make the best
decisions, and explain how cognitive biases can lead managers to make poor decisions.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
9) When discussing solutions for increasing profitability of a new product, Dale raises a
concern that one of the alternatives may negatively impact sales for other products. Dale's
concern demonstrates a focus on the ________ of the alternative.
A) sustainability
B) practicality
C) legality
D) ethicalness
E) functionality
Answer: B
Explanation: Managers must decide whether they have the capabilities and resources
required to implement the alternative, and they must be sure the alternative will not threaten
the attainment of other organizational goals.
Difficulty: 2 Medium
Topic: Decision-making process
Learning Objective: 07-02 Describe the six steps managers should take to make the best
decisions, and explain how cognitive biases can lead managers to make poor decisions.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
10) Capable managers who repeatedly make the same mistakes that lead to poor decisions are
making
A) dialectical errors.
4
1 TOPIC 6 - CHAPTER 7: DECISION MAKING, CREATIVITY, AND
ENTREPRENEURSHIP
1) Each month, Brian reviews sales data, analyzes market opportunities and threats, and
determines organizational goals and actions for the coming month. This is an example of
A) groupthink.
B) intuition.
C) decision making.
D) bounded rationality.
E) brainstorming.
Answer: C
Explanation: Decision making is the process by which managers respond to opportunities
and threats by analyzing the options and making determinations, or decisions, about specific
organizational goals and courses of actions.
Difficulty: 2 Medium
Topic: Nonprogrammed decisions
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2) ________ decisions are routine and based on rules and guidelines.
A) Brainstormed
B) Nonprogrammed
C) Programmed
D) Intuitive
E) Creative
Answer: C
Explanation: Programmed decisions are decisions that have been made so many times in the
past that managers have developed rules or guidelines to be applied when certain situations
inevitably occur.
Difficulty: 1 Easy
Topic: Programmed decisions
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
1
,3) In the classical model of decision making, managers
A) create heuristics to simplify the process.
B) identify and evaluate all possible alternatives before choosing a course of action.
C) apply representativeness bias to identify alternatives.
D) use intuition to select the most satisfactory solution.
E) use satisficing to select the optimum solution.
Answer: B
Explanation: The classical model is prescriptive, meaning it specifies how decisions should
be made based on the assumption that the decision making can identify and evaluate all
possible alternatives to choose the most appropriate course of action.
Difficulty: 2 Medium
Topic: Classical decision-making model
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
4) In the classical model of decision making, the most appropriate decision possible in light
of what is believed to be the most desirable consequences for the organization is known as
the ________ decision.
A) intuitive
B) creative
C) heuristic
D) subjective
E) optimum
Answer: E
Explanation: The optimum decision is the most appropriate decision possible in light of what
they believe to be the most desirable consequences for the organization.
Difficulty: 1 Easy
Topic: Classical decision-making model
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
5) Programmed decision making is a(n) ________ process.
A) novel
B) routine
C) intuitive
D) ambiguous
E) creative
Answer: B
2
,Explanation: Programmed decision making is a routine, virtually automatic process.
Difficulty: 1 Easy
Topic: Programmed decisions
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
6) In the classical model of decision making, the most appropriate decision possible in light
of what is believed to be the most desirable consequences for the organization is known as
the ________ decision.
A) intuitive
B) creative
C) heuristic
D) subjective
E) optimum
Answer: E
Explanation: The optimum decision is the most appropriate decision possible in light of what
they believe to be the most desirable consequences for the organization.
Difficulty: 1 Easy
Topic: Classical decision-making model
Learning Objective: 07-01 Understand the nature of managerial decision making,
differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7) Managers for an organic grocery chain were deciding whether to open a new store in a
neighborhood currently unserved by any competitors. One manager felt that the lack of
competitive presence was an opportunity to capture the newest customers. Another manager
viewed the lack of a competitor in the area as an indicator that the local community may not
be interested in organic products. This difference in perspective illustrates the concept of
A) ambiguity.
B) satisficing.
C) confirmation bias.
D) groupthink.
E) illusion of control.
Answer: A
Explanation: A reason why information is incomplete is that much of the information
managers have at their disposal is ambiguous information. Its meaning is not clear—it can be
interpreted in multiple and often conflicting ways.
Difficulty: 3 Hard
Topic: Administrative and classical models of decision making
Learning Objective: 07-01 Understand the nature of managerial decision making,
3
, differentiate between programmed and nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex, uncertain process.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) The first step in the managerial decision-making process is to
A) choose between alternatives.
B) assess alternatives.
C) learn from feedback.
D) recognize the need for a decision.
E) conduct a retrospective analysis.
Answer: D
Explanation: The first step in the decision-making process is to recognize the need for a
decision.
Difficulty: 1 Easy
Topic: Decision-making process
Learning Objective: 07-02 Describe the six steps managers should take to make the best
decisions, and explain how cognitive biases can lead managers to make poor decisions.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
9) When discussing solutions for increasing profitability of a new product, Dale raises a
concern that one of the alternatives may negatively impact sales for other products. Dale's
concern demonstrates a focus on the ________ of the alternative.
A) sustainability
B) practicality
C) legality
D) ethicalness
E) functionality
Answer: B
Explanation: Managers must decide whether they have the capabilities and resources
required to implement the alternative, and they must be sure the alternative will not threaten
the attainment of other organizational goals.
Difficulty: 2 Medium
Topic: Decision-making process
Learning Objective: 07-02 Describe the six steps managers should take to make the best
decisions, and explain how cognitive biases can lead managers to make poor decisions.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
10) Capable managers who repeatedly make the same mistakes that lead to poor decisions are
making
A) dialectical errors.
4
