Questions: GM CEO Rick Wagoner stuck to a cost cutting strategy that streamlined GM's operations and focused on SUVs and trucks during a time when other automakers saw promise in the green movement. This behavior best reflects: Select one: a. escalation of commitment. b. risk aversion. c. satisficing. d. the garbage can model of decision making.

GM CEO Rick Wagoner stuck to a cost cutting strategy that streamlined GM's operations and focused on SUVs and trucks during a time when other automakers saw promise in the green movement. This behavior best reflects: Select one: a. escalation of commitment. b. risk aversion. c. satisficing. d. the garbage can model of decision making.
Transcript text: GM CEO Rick Wagoner stuck to a cost cutting strategy that streamlined GM's operations and focused on SUVs and trucks during a time when other automakers saw promise in the green movement. This behavior best reflects: Select one: a. escalation of commitment. b. risk aversion. c. satisficing. d. the garbage can model of decision making.
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Solution

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The answer is A: escalation of commitment.

Explanation for each option:

a. Escalation of commitment: This term refers to the phenomenon where decision-makers continue to invest in a failing course of action despite evidence suggesting it is not working. Rick Wagoner's decision to stick to a cost-cutting strategy focused on SUVs and trucks, even as the market was shifting towards greener vehicles, reflects an escalation of commitment. He continued to commit to a strategy that was increasingly seen as outdated and risky in the face of changing market dynamics.

b. Risk aversion: This refers to the tendency to avoid taking risks. If Wagoner were risk-averse, he might have been more inclined to diversify GM's product line to include more environmentally friendly vehicles, aligning with the industry's shift towards green technology. Therefore, this option does not accurately describe his behavior.

c. Satisficing: This is a decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal one. While Wagoner's strategy might have been seen as satisficing in the short term, the long-term commitment to a declining market segment suggests a deeper commitment than merely seeking an adequate solution.

d. The garbage can model of decision making: This model describes a chaotic decision-making process where problems, solutions, and decision-makers are disconnected and randomly come together. Wagoner's strategy appears more deliberate and consistent, rather than chaotic or random, making this option less applicable.

In summary, Rick Wagoner's adherence to a strategy focused on SUVs and trucks, despite the industry's shift towards green vehicles, is best explained by escalation of commitment.

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