Bachelor of Science in Engineering Management: Strategic Decision Making Flashcards

Which cognitive bias causes engineering managers to give disproportionate weight to the first piece of information received when making strategic decisions?

Answer: Anchoring bias

Anchoring bias occurs when decision makers rely too heavily on the first information presented (the 'anchor'), which then skews subsequent judgments and estimates.

A strategic decision involves 'escalation of commitment.' An engineering manager should recognize this as:

Answer: Continuing to invest in a failing course of action to justify past decisions

Escalation of commitment (sunk cost fallacy) is the tendency to continue investing in a failing project because of past investments rather than future prospects.

In strategic decision making, a 'pre-mortem' analysis is conducted by:

Answer: Imagining a future project has failed and working backwards to identify potential causes

A pre-mortem (prospective hindsight) asks team members to assume the project has already failed and identify plausible reasons, surfacing risks before the decision is finalized.

When using a weighted scoring model for project selection in engineering management, increasing the weight assigned to 'strategic alignment' will:

Answer: Favor projects that better support the organization's long-term strategic goals

Increasing the weight on strategic alignment amplifies the score contribution of that criterion, causing projects with high strategic fit to rank higher relative to those with better financial or technical scores.

The 'Delphi technique' is used in strategic engineering management primarily to:

Answer: Achieve structured consensus from a panel of experts through iterative anonymous rounds

The Delphi technique gathers expert opinions through multiple anonymous questionnaire rounds with controlled feedback, converging toward group consensus while reducing social influence and groupthink.

An engineering manager applies the 'minimax regret' criterion. In a decision under uncertainty, 'regret' is defined as:

Answer: The difference between the optimal payoff for a state of nature and the actual payoff received

Regret (opportunity loss) is the difference between the best possible payoff in a given state of nature and the payoff actually achieved by the chosen alternative under that state.

In engineering project strategy, the 'fast-follower' competitive strategy implies that a firm should:

Answer: Monitor early market movers and rapidly imitate successful innovations to capture market share

A fast-follower strategy allows firms to let pioneers absorb early market uncertainty and then quickly replicate successful products or processes, reducing R&D risk while capturing substantial market share.