BSE Bachelor of Science in Engineering Management: Strategic Decision Making 4 — Questions and Answers
Question 1: Which cognitive bias causes engineering managers to give disproportionate weight to the first piece of information received when making strategic decisions?
- Confirmation bias
- Anchoring bias (Correct answer)
- Availability heuristic
- Escalation of commitment
Correct 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.
Question 2: A strategic decision involves 'escalation of commitment.' An engineering manager should recognize this as:
- A positive signal that the team is fully dedicated to project success
- Continuing to invest in a failing course of action to justify past decisions (Correct answer)
- The process of gradually increasing project scope to meet new requirements
- Gaining buy-in from stakeholders through incremental communication
Correct 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.
Question 3: In strategic decision making, a 'pre-mortem' analysis is conducted by:
- Reviewing a past project failure to identify root causes after it has occurred
- Imagining a future project has failed and working backwards to identify potential causes (Correct answer)
- Analyzing a competitor's failed strategy to extract lessons learned
- Auditing current decision processes before a major strategic initiative launches
Correct 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.
Question 4: When using a weighted scoring model for project selection in engineering management, increasing the weight assigned to 'strategic alignment' will:
- Automatically disqualify projects with low technical scores
- Favor projects that better support the organization's long-term strategic goals (Correct answer)
- Reduce the influence of financial metrics on the final ranking
- Eliminate the need to score projects on non-strategic criteria
Correct 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.
Question 5: The 'Delphi technique' is used in strategic engineering management primarily to:
- Conduct controlled experiments to validate engineering hypotheses
- Achieve structured consensus from a panel of experts through iterative anonymous rounds (Correct answer)
- Simulate market responses to new product launches using historical data
- Optimize resource scheduling across multiple concurrent engineering projects
Correct 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.
Question 6: An engineering manager applies the 'minimax regret' criterion. In a decision under uncertainty, 'regret' is defined as:
- The probability-weighted average loss across all states of nature
- The difference between the optimal payoff for a state of nature and the actual payoff received (Correct answer)
- The total opportunity cost of all unchosen alternatives
- The standard deviation of payoffs across decision alternatives
Correct 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.
Question 7: In engineering project strategy, the 'fast-follower' competitive strategy implies that a firm should:
- Invest heavily in R&D to always introduce first-to-market innovations
- Monitor early market movers and rapidly imitate successful innovations to capture market share (Correct answer)
- Focus exclusively on cost leadership through process efficiency
- Avoid new markets until competitors have fully saturated them
Correct 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.
BSE Bachelor of Science in Engineering Management: Strategic Decision Making 4
Which cognitive bias causes engineering managers to give disproportionate weight to the first piece of information received when making strategic decisions?