Strategic Management Theory & Cases: An Integrated Approach 13th Edition by Charles test bank
Given these three criticisms, the role of emergent strategies becomes clear. Unplanned responses to unforeseen circumstances that often arise from autonomous action by individual managers deep within the organization can allow a company to prosper.
82. Select three of the cognitive biases that individual decision makers experience and describe each bias. Choose a real or hypothetical situation for each of them, explaining how the bias is evident in the situation.
ANSWER:
The prior hypothesis bias refers to the fact that decision makers who have strong prior beliefs about the relationship between two variables tend to make decisions on the basis of these beliefs, even when presented with evidence that their beliefs are incorrect. Moreover, they tend to seek and use information that is consistent with their prior beliefs while ignoring information that contradicts these beliefs. For example, managers for U.S. automakers in the 1960s and 1970s believed that Americans bought cars for the luxury features and styling, and therefore they completely missed the trend toward cars that were more reliable, safer, and fuel efficient. Japanese automakers saw the trends and were able to fill that demand first.
Escalating commitment occurs when decision makers, having already committed significant resources to a project, commit even more resources even if they receive feedback that the project is failing. Students exhibit this bias when they work harder to raise their class grade from a D to a C than they will work to raise their grade from a B to an A, even though both improvements have the same impact on their overall grade average.
Reasoning by analogy involves the use of simple analogies to make sense out of complex problems. The problem with this heuristic is that the analogy may not be valid. For example, some managers use war as a metaphor for business competition. However, this analogy limits their ability to consider options such as cooperation in joint ventures.
The representative bias is rooted in the tendency to generalize from a small sample or even a single, valid anecdote. Managers who have had one extremely positive or negative occurrence tend to remember and rely on that occurrence when they make future decisions. If a gambler gets very lucky the first time he wagers, he tends to wager greater amounts and more often than do gamblers who are initially very unlucky.
Illusion of control occurs when managers are overconfident about their abilities to control events. Managers who take on projects that are beyond their capabilities or who refuse to admit that they need help are guilty of this bias.
Availability error arises from our predisposition to estimate the probability of an outcome based on how easy the outcome is to imagine. For example, more people seem to fear a plane crash than a car accident, yet statistically one is far more likely to be killed in a car on the way to the airport than in a plane crash. People outweigh the probability of a plane crash because the outcome is easier to imagine, and because plane crashes are more vivid events than car crashes, which affect only small numbers of people at one time.
83. Describe three characteristics of strong strategic leaders. Explain how each of the three characteristics would help motivate and lead an organization's personnel.
ANSWER:
Strong leaders have a clear, compelling vision of where the organization should go, eloquently communicate this vision to others within the organization in terms that energize people, and consistently articulate their vision until it becomes part of the organization's culture. This ensures that employees understand the fundamental goals they are working toward, guiding them as they make decisions about their daily work.
Strong leaders are committed to accomplishment of the organization's goals, and they demonstrate their commitment through their actions as well as their words. By observing their leader's commitment directly in their actions, employees believe that the goals are truly important, and they also benefit from seeing the appropriate behavior modeled for them.
Strong leaders develop a network of formal and informal sources who keep them well informed about what is going on within the company. Employees see that leaders value their input; they also respect leaders who are able to communicate well with individuals at different hierarchical levels.
Strong leaders delegate when possible but maintain control over critical decisions. Workers are motivated by decision-making power and can reduce the workload of their leaders when they are empowered. However, strong leaders understand that they need to maintain control over certain key decisions. This is best for the organization, and it also protects lower-level workers from the consequences of disastrous choices.