CSM Problem Solving & Decision Making 2

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?

Accepted Answer

Expected utility theory with risk preference weighting

Answer

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?

Accepted Answer

The 5 Whys method

Answer

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:

Accepted Answer

Ambiguity

Answer

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?

Accepted Answer

Anchoring bias

Answer

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:

Accepted Answer

Choose the first option that meets a minimum acceptable threshold

Answer

Satisficing, a concept from Herbert Simon's bounded rationality, means selecting an option that is 'good enough' rather than the best possible.

(CSM) Certified Strategic Manager Practice Test

(CSM) Certified Strategic Manager Practice Test

CSM Problem Solving & Decision Making 2