# Chapter 12 Enhancing Decision Making
Which of the following statements best describes the business value of improved decision making at all levels of a firm?
When there is no well-understood or agreed-on procedure for making a decision, it is said to be:
If you can follow a definite procedure to make a business decision, you are making a(n) decision.
Which type of decision is determining vacation eligibility for an employee?
Which type of decision is deciding whether to introduce a new product line?
Establishing a firm's long-term goals is an example of a(n) decision.
The decisions involved in creating and producing a corporate intranet can be classified as decisions.
Checking store inventory is an example of a(n) decision.
Which of the following typically makes the unstructured decisions for a firm?
The phase of decision making involves identifying and exploring various solutions to a problem.
If an inventory manager is required to make a daily decision about parts inventory levels, and the estimated value to the firm of a single improved decision by that manager is $2,500, what is the annual business value of that enhanced decision?
Which of the following is not one of Simon's four stages of decision making?
Some decision scenarios made by middle managers may have unstructured components.
A structured decision is repetitive and routine.
Unstructured decision making is most prevalent at lower organizational levels.
The design phase of decision making consists of discovering, identifying, and understanding the problems occurring in the organization.
The choice phase of Simon's decision-making model includes choosing among solution alternatives.
The first stage in Simon's decision-making process model is the intelligence stage.
An unstructured decision is novel and important and requires the decision maker to provide judgment, evaluation, and insight.
The third stage in Simon's description of decision-making is implementation.
Operational management face primarily semistructured decisions.
A semistructured decision is one in which only part of the problem has a clear-cut answer provided by an accepted procedure.
In your position of office manager at an accounting firm, you are in charge of hiring temporary clerical workers. Describe how Simon's decision-making process applies to this decision. Could that decision be aided by an information system in any way, and if so, how?
Answer
The decision-making process is:
Intelligence, or problem discovery: How many temps need to be hired, for how long, and what skills would they need?
Design, or solution discovery: What temp agencies are available and what are their prices?
Choice, or choosing solutions: Evaluate the offerings of the temp agencies, and evaluate the abilities of temps as per need.
Implementation, or solution testing: Evaluate the work of each temp against assignments and other needs.
An information system that displayed the temps available for hire along with pertinent information such as rate, and past assignments and evaluations would help in this process.
- You are the CIO at an insurance firm and a manager has proposed implementing expensive new project management software that would help increase the efficiency of the IT staff. The idea of improved efficiency sounds good, but is there any way you can evaluate her decision before purchasing the software? Be specific.
Answer
Student answers will vary but should use the steps of the decision-making process and/or the qualities of decisions. One sample answer is: You can ask the manager to describe her decision-making process and evaluate the decision according to the steps she has taken. For example, how did she identify efficiency as a problem that needed solving, and is it the most pressing problem? What solutions were considered and what criteria were used to evaluate them? You can also evaluate the decision according to decision-quality dimensions: accuracy (does the decision reflect reality?), comprehensiveness (does it reflect full consideration of facts and circumstances?), fairness (does it reflect concerns and interests of affected parties?), speed (is it efficient with respect to time and other resources?), coherence (does it reflect a rational process that can be explained to others?), and due process (is it the result of a known process and can it be appealed?).
Which of the following is not one of the five observed ways in which managerial behavior differs from the classical description of managers?
The role of spokesperson falls into which of Mintzberg's managerial classifications?
Mintzberg outlined three categories of managerial roles:
The role of negotiator falls into which of Mintzberg's managerial classifications?
According to Mintzberg, managers in their informational role act as:
Which of the following systems support a manager's role as figurehead of an organization?
All of the following managerial roles can be supported by information systems except:
When managers represent their company in the outside world and perform symbolic duties, they are acting in their:
As discussed in the chapter text, the three main reasons that investments in information technology do not always produce positive results are:
The concept of management involves situations in which managers act on preconceived notions that reject information that does not conform to their prior conceptions.
Which quality dimension of information is concerned that all the necessary data needed to make a decision is present?
The dimension of describes whether data elements are consistently defined.
Google's search engine is an example of which of the following types of decision?
Which of the following describes how the Simon framework of decision-making works in high-velocity decision environments?
A drawback to high-velocity, automated decision-making systems is that:
Behavioral models of management see managers as being than does the classical model.
Which of the following is not one of the five classical functions of managers?
The dimension of in information quality describes whether the structure of data is consistent.
Which of the following information systems supports a manager's role as a resource allocator?
The classical model of management describes what managers do when they plan, decide things, and control the work of others.
Experts from a variety of fields have found that managers are poor at assessing risk.
Studies have found that firms systematically blame poor performance on the external business environment.
What are managerial roles and how did Mintzberg categorize them?
Answer
Managerial roles are expectations of the activities that managers should perform. The three main categories of managerial roles are interpersonal, informational, and decisional. Interpersonal roles involve representing companies and performing symbolic duties as a figurehead, acting as a leader by attempting to motivate, counsel, and support subordinates, and also acting as liaisons between other levels of the firm. Informational roles require managers to act as a nerve center for their organizations, to distribute information to those who need to have it, and to act as a spokesperson for the organization. Decisional roles require managers to act as entrepreneurs by initiating new activities, handle disturbances within the organization, allocate resources, and negotiate conflicts.
- Describe high-velocity automated decision making and its dangers.
Answer
High-velocity automated decision making involves a class of decisions that are highly structured and performed in milliseconds or even nanoseconds, like a Google search or an automated stock trade. The danger is that decisions are made faster than a manager can supervise or control, so mistakes can be disastrous. Humans who write the software enabling these decisions must take great care to ensure the systems operate properly and safely.
- A key business decision in your sporting goods manufacturing company is determining what suppliers to use for your raw materials. How can you determine if a manager in charge of selecting suppliers is making the best choice?
Answer
Student answers will vary but should focus on evaluating the information and criteria behind the decision. One approach is to identify the criteria used (price, quality, reliability, schedule, relationship) and then evaluate the data used to measure them. You can assess the information along information-quality dimensions such as accuracy, integrity, consistency, completeness, validity, timeliness, and accessibility.
- Explain why even well-designed information systems do not always help improve a firm's decision making.
Answer
Student answers will vary but should include the three main reasons: information quality, management filters, and organizational inertia/politics. A sample answer is: High-quality decisions require high-quality information. If data are inaccurate, lack integrity, are inconsistent, incomplete, invalid, not timely, and/or not accessible, then decisions based on them will be poor. Second, management filters can bias decisions when managers reject information that conflicts with their prior beliefs or are overly optimistic/pessimistic. Finally, organizational inertia and politics can prevent action: employees may resist process and role changes, or stakeholders may ignore information that threatens the status quo.
Which of the following BI tools or abilities has been driving the movement toward "smart cities"?
Which of the following statements best describes the term business intelligence?
Decisions regarding managing and monitoring day-to-day business activities are referred to as intelligence.
Which of the following companies is not identified in the text as one of the leading producers of business intelligence and analytics products?
Which of the following is not one of the six main elements in the business intelligence environment discussed in this chapter?
Which of the following is not one of the six main analytic functionalities of BI systems for helping decision makers understand information and take action?
are visual tools for presenting performance data in a BI system.
Which of the following is not a part of business intelligence infrastructure?
A(n) report is produced when a user enters various values in a pivot table to filter data.
A(n) is a BI feature that presents performance data defined by users.
BI that is designed to determine the most likely effects of changes in the business environment is called:
As discussed in the chapter text, Slack Technologies uses which of the following to identify customers who are most likely to use its products frequently and upgrade to its paid services?
Which type of information system uses data visualization technology to analyze and display data for planning and decision making in the form of digitized maps?
Predictive analytics is used for all of the following except:
Which of the following is not an example of a BI predefined production report?
Location analytics can be used for all of the following except:
Business intelligence and analytics can deliver nearly real-time information to decision makers.
GIS software ties location data about the distribution of people or other resources to points, lines, and areas on a map.
Big data is used to analyze consumer preferences for both in-store and online purchases.
Data visualization technologies are used to help human users see patterns and relationships in large amounts of data.
GIS are useful for businesses, but not as much for state and local governments.
The data-driven farming systems described in the chapter-opening case are an example of operational intelligence.
You are an analyst for a firm that imports and distributes specialty oils and vinegars. The firm is considering the development of a business intelligence capability and has asked you to identify the key elements that will be required.
Answer
There are six elements of a business intelligence environment, all of which are needed to build a BI capability: data from the business environment; business intelligence infrastructure (database system, data warehouse, data marts); a business analytics toolset (software tools used to analyze the data); managerial users and methods (trained analytic managers with appropriate methods and skills); a delivery platform (such as MIS, DSS, and ESS); and a user interface so the data and results can be displayed conveniently and powerfully.
- You are evaluating BI software from a variety of vendors. Use your understanding of the importance of the six elements of the BI environment to formulate a question to ask the vendor with respect to each element in order to determine how their software will interplay with your needs.
Answer
Student answers will vary. One sample answer:
Data from the business environment: How does your software integrate with our data sources?
Business intelligence infrastructure: What databases/warehouses/marts does your software support and require?
Business analytics toolset: What analytic tools are included (reporting, dashboards, modeling, etc.)?
Managerial users and methods: Does your software support our management metrics and decision workflows?
Delivery platform: How does your software integrate with our existing BI delivery platforms and security?
User interface: What UI options are available (web, mobile, portal), and what collaboration/sharing features exist?
- What is a GIS? Describe at least three ways in which a GIS could be used.
Answer
A geographic information system (GIS) uses data visualization technology to analyze and display data for planning and decision making in the form of digitized maps. GIS ties location data about the distribution of people or other resources to points, lines, and areas on a map. It can be used to design efficient delivery routes, analyze demographics to choose store locations, target customers likely to purchase, and support government tasks such as emergency response planning or crime analysis.
- Why are managerial users and methods considered to be an important part of the BI environment?
Answer
Managerial users and methods are important because BI hardware and software are tools whose value depends on how managers define goals, choose metrics and analytic methods, interpret results, and decide whether and how to act on the findings.
- You are a city transportation planner and are interested in improving the city's bus service. What types of business intelligence analytic tools might help you do this, and how would you use them?
Answer
You could use a DSS for planning and evaluation, predictive analytics to estimate the effects of route and schedule changes, big data analytics to analyze ridership and traffic patterns, location analytics to understand stop-level behavior, and a GIS to visualize routes, demand, and service coverage.
- How is big data being used in predictive analytics?
Answer
Predictive analytics increasingly uses big data from social media, customer transactions, and sensors/machines. Retailers and other firms analyze large online and in-store customer datasets (plus social data) to create more individualized product recommendations, improving customer spending and retention.
- What is behind the movement towards "smart cities"?
Answer
Smart cities use big data analytics and predictive modeling to turn large public datasets (tax, crime, health, education, utilities) into actionable information, improving decisions about transportation, public safety, health care, and utilities, and enabling more holistic management of city services.
MIS typically produce:
An information system for a building company that tracks construction costs for various projects across the United States would be categorized as a type of:
A pivot table is a(n):
An information system that combines data from internal MIS with information from financial systems and external sources to deliver reports such as profit-loss statements and impact analyses, is an example of:
The leading methodology for understanding the really important information needed by a firm's executives is called the method.
Which of the following type of system would be used to present senior marketing executives with high-level information about customer retention, satisfaction, and quality performance?
Measures defined by management and used to internally evaluate the success of a firm's financial, business process, customer, and learning and growth are called:
Which of the following is a management methodology that attempts to systematically translate a firm's strategy into generate operational targets?
Which of the following is not a true statement about ESS?
Which of the following statements about DSS is not true?
Resource efficiency is a KPI for which of the following dimensions?
A well-designed ESS helps senior executives do all of the following except:
More than 80 percent of the audience for BI consists of power users.
ESS typically produce fixed, regularly scheduled reports based on data extracted and summarized from the firm's underlying transaction processing systems.
BPM uses ideas similar to the balanced scorecard framework with a stronger emphasis on strategy.
What-if analysis works forward from known or assumed conditions.
Sensitivity analysis predicts outcomes from constant inputs.
KPIs are used both in the balanced scorecard framework and BPM.
Describe MIS and DSS and differentiate between them.
Answer
MIS provide operational and middle management with information on the firm's performance to help managers monitor and control key aspects of a business. MIS reports are based on routine flows of data and support structured decision making, producing fixed, regularly scheduled reports extracted and summarized from underlying TPS. DSS support nonroutine decisions and user control. DSS rely more heavily on modeling than MIS, using mathematical or analytical models to perform what-if and other analyses, emphasizing change, flexibility, and rapid response to semistructured and unstructured problems.
- Describe the balanced scorecard model and its role in ESS.
Answer
The balanced scorecard is a framework for operationalizing a firm's strategic plan by focusing on measurable outcomes on four dimensions: financial, business process, customer, and learning and growth. Performance is measured using KPIs defined by senior management. Once the scorecard is defined, information flows for each KPI can be automated and delivered to executives; these automated scorecard-based systems are often referred to as ESS.
- Not all business intelligence users are managers interested in forecasting sales figures for the next quarter. What different types of users are there for a business's intelligence systems?
Answer
BI users include operational employees, customers, suppliers, managers, knowledge workers, and senior executives. Users may be casual users who rely on pre-packaged reports, or power/super users who create custom reports and use advanced analysis features. Power users can exist at any level; operational power users may support IT development, while managerial power users are often business analysts.
