CBS Decision Making & Problem Solving 5

Question 1

A business unit uses a payoff matrix and applies the 'maximax' decision criterion. Which underlying assumption drives this choice?

Accepted Answer

The decision maker is optimistic and seeks the highest possible gain

Answer

Maximax selects the alternative with the highest possible payoff, reflecting an optimistic orientation that focuses on the best-case scenario.

Question 2

What distinguishes 'lateral thinking' from conventional analytical problem solving in a business strategy context?

Accepted Answer

Lateral thinking generates unconventional alternatives by breaking established patterns

Answer

Lateral thinking, coined by Edward de Bono, deliberately disrupts habitual thought patterns to generate creative, non-obvious solutions to strategic problems.

Question 3

A strategic review shows that a business unit consistently over-invests in a failing initiative because of past expenditures. Which bias explains this behavior?

Accepted Answer

Escalation of commitment (sunk cost fallacy)

Answer

Escalation of commitment causes decision makers to continue investing in a losing course of action to justify prior irrecoverable investments.

Question 4

In multi-criteria decision analysis (MCDA), normalizing criteria scores before applying weights serves which purpose?

Accepted Answer

It removes scale differences so criteria measured in different units can be compared fairly

Answer

Normalization converts scores to a common scale (e.g., 0–1), preventing criteria measured in large units (cost in millions) from dominating those measured in small units (ratings 1–5).

Question 5

A facilitator uses 'nominal group technique' (NGT) during a strategic problem-solving workshop. What is the defining characteristic of this method?

Accepted Answer

Structured idea generation with independent voting to prevent dominant voices

Answer

NGT has participants generate ideas silently and independently before group discussion, then vote privately—minimizing the influence of dominant personalities.

(CBS) Certified Business Strategist Practice Test

(CBS) Certified Business Strategist Practice Test

CBS Decision Making & Problem Solving 5