Bachelor of Science in Engineering Management: Strategic Decision Making Flashcards

Which strategic analysis tool evaluates a firm's internal capabilities and external environment by categorizing factors as Strengths, Weaknesses, Opportunities, and Threats?

Answer: SWOT analysis

SWOT analysis organizes internal factors (Strengths, Weaknesses) and external factors (Opportunities, Threats) to inform strategic decision making.

An engineering firm faces a 'wicked problem'—one that is complex, interdependent, and has no single correct solution. The BEST strategic approach is to:

Answer: Use iterative, adaptive approaches with stakeholder collaboration

Wicked problems require iterative, collaborative approaches because they are ill-defined, interdependent, and evolve as stakeholders and conditions change.

In the context of strategic decision making, 'scenario planning' is best described as:

Answer: Developing multiple plausible future states to test strategy robustness

Scenario planning constructs multiple distinct future narratives to evaluate how well strategies perform across a range of possible conditions, improving strategic resilience.

A manager applies a maximin decision rule to a payoff table under uncertainty. This means the manager will:

Answer: Choose the alternative with the best worst-case payoff

The maximin rule (maximize the minimum) is a conservative strategy that selects the option whose worst possible outcome is better than the worst outcomes of all alternatives.

When engineering managers use 'real options analysis' for capital investment decisions, the key advantage over standard NPV is:

Answer: It explicitly values managerial flexibility to adapt decisions as uncertainty resolves

Real options analysis captures the value of managerial flexibility—such as options to expand, defer, or abandon a project—which static NPV calculations ignore.

The 'garbage can model' of organizational decision making suggests that decisions result from:

Answer: Random collisions among problems, solutions, participants, and choice opportunities

The garbage can model (Cohen, March, Olsen) describes organized anarchies where decisions emerge from the simultaneous availability of problems, solutions, participants, and opportunities rather than a rational process.

In portfolio management for engineering projects, the primary purpose of the efficient frontier is to:

Answer: Show the set of portfolios that offer the highest return for a given level of risk

The efficient frontier represents the optimal set of project portfolios that deliver the maximum expected return for each level of risk, guiding resource allocation decisions.