Table 10.3 Nancy Recently Tried to Talk Her Executive Management Team into Team

Table 10.3
Nancy recently tried to talk her executive management team into moving into international markets. She emphasizes the positive opportunities that were possible, but her supervisors turn her idea down because they fear the risks involved. They preferred expanding existing markets to entering new markets. Nancy reviews the meeting with her supervisor later to see how she could improve it. Her supervisor says that she didn't provide sufficient information prior to the meeting and several of the executives were drawing on information currently on their desks, showing the international market was a dangerous place to be, rather than the exciting opportunity Nancy tried to present. Gail, Nancy's friend, suggested at lunch that the 'old-boys' network was functioning, and she was turned down because they weren't going to let some pushy woman tell them what they should be doing. About four months after the presentation, the executive management team meets again to decide about the investment of capital and effort. Existing markets are drying up, and if the company doesn't move into new markets, especially internationally, it may well fail. Obsolescence of the product line and the growth of competition is destroying their market share and profitability. However, the management team decides to invest more money and effort into existing markets and to let the international idea sit.
-Refer to Table 10.3. How could the management team's decision to continue to invest in existing markets be explained?

A) This is an example of the escalation of commitment.
B) Their bounded discretion restrains their action.
C) The framing effect keeps them from seeing the problem.
D) None of these.

Correct Answer:

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