CSM Problem Solving & Decision Making 2 — Questions and Answers
Question 1: A strategic manager must choose between two projects with equal expected returns but different risk profiles. Which decision-making framework best addresses this scenario?
- First-mover advantage analysis
- Expected utility theory with risk preference weighting (Correct answer)
- SWOT matrix comparison
- Balanced scorecard evaluation
Correct answer: Expected utility theory with risk preference weighting
Expected utility theory accounts for a decision-maker's risk preference, allowing comparison of options beyond simple expected value.
Question 2: During root cause analysis, a team repeatedly identifies symptoms rather than underlying causes. Which technique forces deeper investigation?
- Brainstorming
- The 5 Whys method (Correct answer)
- PEST analysis
- Force field analysis
Correct answer: The 5 Whys method
The 5 Whys iteratively asks 'why' to drill past symptoms to the root cause of a problem.
Question 3: A company faces a decision under conditions where outcome probabilities are unknown. This situation is best described as:
- Risk
- Certainty
- Ambiguity (Correct answer)
- Volatility
Correct answer: Ambiguity
Ambiguity (or uncertainty) occurs when neither outcomes nor their probabilities are known, unlike risk where probabilities can be estimated.
Question 4: Which cognitive bias causes managers to overweight information received first when evaluating strategic options?
- Confirmation bias
- Anchoring bias (Correct answer)
- Availability heuristic
- Framing effect
Correct answer: Anchoring bias
Anchoring bias occurs when the first piece of information encountered disproportionately influences subsequent judgments.
Question 5: A manager applies satisficing rather than optimizing when making a decision. This means they:
- Select the mathematically optimal solution
- Choose the first option that meets a minimum acceptable threshold (Correct answer)
- Delegate the decision to a committee
- Collect all possible data before deciding
Correct answer: Choose the first option that meets a minimum acceptable threshold
Satisficing, a concept from Herbert Simon's bounded rationality, means selecting an option that is 'good enough' rather than the best possible.
Question 6: When a strategic problem is poorly defined and stakeholders disagree on both the problem and solution, it is classified as a:
- Tame problem
- Wicked problem (Correct answer)
- Simple problem
- Complicated problem
Correct answer: Wicked problem
Wicked problems are characterized by unclear problem definitions, conflicting stakeholder views, and no definitive solution.
Question 7: A decision tree is most useful in strategic problem solving when:
- All variables are qualitative
- Sequential decisions involve probabilistic outcomes (Correct answer)
- The problem involves only two stakeholders
- Data is unavailable for analysis
Correct answer: Sequential decisions involve probabilistic outcomes
Decision trees map sequential choices and their probabilistic outcomes, enabling calculation of expected values for each decision path.
CSM Problem Solving & Decision Making 2
A strategic manager must choose between two projects with equal expected returns but different risk profiles.
Which decision-making framework best addresses this scenario?