Mastering Decision Making
& The "Course of Action" Question
A guide to choosing the most logical, practical, and ethical solution under pressure.
What is Your Mission?
You are given a Situation, which is a problem, scenario, or crisis.
You are also given one or more Courses of Action (solutions).
Your mission is to evaluate these actions. Is the action logical? Is it practical? Is it ethical? Does it solve the *real* problem?
Where This Skill is Tested
XAT: Decision Making (DM)
This is a *full section* on the XAT, comprising 21-22 questions. It's the most famous and complex version.
- Presents complex, ambiguous business and social scenarios.
- Forces you to weigh ethics vs. profit.
- Requires identifying multiple stakeholders.
NMAT & Others: Course of Action
These are typically standalone questions in the Logical Reasoning section.
- Gives a situation and two courses of action (I and II).
- You must decide if "Only I follows," "Only II follows," "Both follow," or "Neither follows."
- More focused on practicality and logic than deep ethics.
Core Concept #1: Problem vs. Symptom
The #1 mistake is solving the symptom, not the root cause.
Analogy: The Doctor's Diagnosis
The Symptom
The Situation: "Employees are complaining about low pay."
The Bad Solution (Treats Symptom): "Give everyone a 5% raise."
The Root Cause
The Real Problem: "Employees are bored and feel unappreciated. They are using 'low pay' as the easiest way to complain."
The Good Solution (Treats Cause): "Implement a new training program and a public 'Employee of the Month' award."
A good course of action *always* targets the root cause, not the surface-level symptom.
Core Concept #2: The Stakeholders
A good decision is *rarely* good for just one person. It must balance the needs of everyone involved.
Who is Affected by Your Decision?
An action that helps the Company but badly hurts Employees and Customers is usually a bad decision.
The XAT Factor: Ethics vs. Practicality
This is the heart of XAT Decision Making. You will be forced to choose between a "practical" (but shady) option and an "ethical" (but costly) one.
The Classic Dilemma
Situation: To win a $10M contract your company needs, a "facilitation fee" (a bribe) is expected by the official.
The "Practical" Action
"Pay the bribe. It's the only way to get the contract and save the company's jobs."
This is almost *always* the WRONG answer on the XAT.
The "Ethical" Action
"Refuse to pay the bribe and report the official, even if it means losing the contract."
This is almost *always* the RIGHT answer.
XAT Rule of Thumb: The ethical, legal, and stakeholder-friendly solution is superior to the short-term, profitable, unethical one.
The XAT Factor: Short-term vs. Long-term
Situation: Your most-skilled employee is toxic and creates a terrible work environment, but the team can't function without them.
The Short-Term Fix (Bad)
"Keep the employee, but tell everyone else to just 'deal with it' to keep the project moving."
Result: The project finishes, but the rest of your good employees quit. You lose in the long run.
The Long-Term Solution (Good)
"Fire the toxic employee, and accept a short-term project delay while you train a replacement."
Result: You save your team's morale and build a healthier, more stable company for the future.
Decoding the Question Stems
- "Which of the following is the best course of action?"
- "Which of the following would be the most appropriate response?"
- "Which of the following *should* be taken?" (This is a "Course of Action" stem).
- "Which of the following would be the least appropriate response?" (A "reverse" question).
How to Analyze Actions: The S.C.O.R.E. Method
S
Stakeholders: Who does this action help? Who does it harm? Does it balance the needs of all groups (employees, customers, company, public)?
C
Cause: Does this action fix the *root cause* of the problem, or does it just put a band-aid on the *symptom*?
O
Objective: Does this action actually achieve the *stated goal*? If the goal is "to reduce traffic," does this action logically lead to fewer cars?
R
Repercussions: Does this action have any *negative side effects* (unintended consequences) that make the problem even worse?
E
Ethical: Is this action fair, legal, and honest? (For XAT, this is often the most important check).
Classifying Courses of Action
Effective / Follows
A good action. It solves the root cause, is practical, and is (ideally) ethical. This is what you're looking for.
Counter-Productive
A terrible action. It has negative repercussions that make the problem *worse*. (e.g., "To stop rumors, fire everyone who talks.")
Ineffective / Does Not Follow
A useless action. It doesn't make things worse, but it doesn't solve the problem. (e.g., "To stop rumors, repaint the office.")
Irrelevant / Out of Scope
The action is unrelated to the problem. (e.g., "To stop rumors, change the brand of coffee in the breakroom.")
The Hall of Problems: Common Scenarios
You will see these patterns again and again.
Scenario #1: The Ethical Dilemma
The Situation: You discover your company is doing something unethical (polluting, using child labor, bribery) that is also highly profitable.
Bad Action: "Do nothing, because it's profitable." (Unethical).
Good Action: "Report the issue to senior management or an external auditor, and propose a plan to fix it, even if it costs money in the short term."
Scenario #2: The HR Problem
The Situation: A rumor is spreading. An employee is underperforming. Two groups are in conflict. A star employee is toxic.
Bad Action: "Fire the person immediately." (Overkill) or "Send a vague, threatening memo." (Ineffective).
Good Action: "Gather all the facts first. Speak to the involved parties *privately*. Implement a clear, fair solution. (e.g., "Set up a performance improvement plan," or "Hold a mediated meeting.")"
Scenario #3: The Operational Crisis
The Situation: A product is found to be defective. A PR disaster is unfolding. A factory has to shut down.
Bad Action: "Deny the problem and hope it goes away." (Unethical, Ineffective).
Good Action: "1. Take immediate short-term action to stop the harm (e.g., recall the product). 2. Be transparent with stakeholders. 3. Implement a long-term plan to fix the root cause (e.g., fix the factory)."
Scenario #4: The Financial Decision
The Situation: Profits are down. You have to choose between two investments. You need to cut costs.
Bad Action: "Cut all R&D and employee training to save money." (Short-term fix, long-term disaster).
Good Action: "Find the *root cause* of the falling profits (e.g., a bad product). Invest in fixing *that* product, while cutting *inefficient* or *wasteful* costs elsewhere."
The Hall of Bad Decisions: Common Traps
1. The "Unethical"
The action is dishonest, illegal, or harms others. (e.g., "Lie to customers," "Pay the bribe," "Sell a defective product.") This is almost *always* wrong.
2. The "Overkill" / Extreme
The action is far too severe for the problem. (e.g., "One employee is late, so fire the entire department." "One rumor, so ban all talking.")
3. The "Symptom-Only" Fix
The action is a band-aid that doesn't fix the underlying problem. (e.g., "Profits are down. Solution: Redecorate the lobby to 'improve morale'.")
4. The "Do Nothing"
The action is to... do nothing. "Wait and see." In the face of a clear problem, inaction is usually an ineffective choice.
5. The "Kick the Can"
A classic! The action is to "Form a committee," "Hire a consultant," or "Launch a 6-month study." This is *not* a solution, it's a *delay*.
6. The "Short-Term"
The action saves money *today* but will cost *more* in the long run. (e.g., "Stop all quality control to ship products faster.")
Practice Set 1
Apply the S.C.O.R.E. method.
Situation: A rumor is spreading in the office that the company is planning layoffs, and morale is plummeting. The rumor is false. What is the best course of action?
(A) "Do Nothing" Trap: This lets the problem get worse.
(B) "Overkill" Trap: This is counter-productive. It creates a culture of fear and confirms that management is angry, which might make people believe the rumor *more*.
(C) "Kick the Can" Trap: This is a delay. It doesn't solve the *morale* problem, which is the root cause.
(D) Correct. This is the *only* action that addresses the root cause (fear/uncertainty) directly, ethically, and transparently.
Situation: A factory is polluting a local river, which is illegal. Shutting down the factory line to install filters will be very expensive and cost 100 jobs.
Which is the best course of action for the CEO?
(A) & (C) "Unethical" Traps: Both are illegal and unethical, prioritizing profit over public good and law.
(D) "Kick the Can" Trap: This is an unethical delay that allows the illegal pollution to continue.
(B) Correct. This is the only ethical and long-term solution. It addresses the root cause (pollution) immediately *and* considers the stakeholders (employees/jobs).
NMAT "Course of Action"
NMAT questions are simpler. They follow a clear "problem -> solution" logic. The action *must* solve the problem or lessen it. If it's impractical, illegal, or unrelated, it "does not follow."
Problem: "The city is experiencing a severe drought."
Course of Action I: "The city should ban all residents from watering their lawns."
Course of Action II: "The city should form a committee to study droughts."
Answer: "Only I follows." Action I is a logical, practical step to address the problem. Action II is a "Kick the Can" trap; it doesn't solve the *immediate* drought.
NMAT vs. XAT: The Key Difference
NMAT: Is this action *logical* and *practical*?
XAT: Is this action *ethical*, *holistic*, and *long-term*?
The XAT standard is much higher. A "practical" solution on NMAT (like firing a low-performer) might be the *wrong* answer on XAT if it's not also the most ethical and stakeholder-friendly solution.
Practice Set 2
Situation (XAT-style): A star salesperson, who brings in 40% of the company's revenue, is consistently rude and disrespectful to the junior staff, causing two to quit. What is the *best* course of action?
(B) "Unethical" Trap: This sacrifices the stakeholders (junior staff) for profit.
(C) "Overkill" Trap: This is *an* option, but it's extreme. It doesn't give the person a chance to change and costs the company 40% of its revenue instantly. It's not the *best* first step.
(D) "Symptom-Only" Trap: This doesn't fix the *behavior* (root cause).
(A) Correct. This is the most balanced solution. It is ethical (addresses the bad behavior), fair (gives a warning), and practical (tries to save the employee while protecting the staff).
Situation (NMAT-style): "The highway between City A and City B is dangerously overcrowded."
I. "A new, wider highway should be built."
II. "More people should be encouraged to use the public train system between the cities."
Problem: Too many cars on the highway.
Action I: This addresses the problem by *increasing capacity* (more room for cars). This is a logical solution.
Action II: This addresses the problem by *reducing demand* (fewer cars on the road). This is also a logical solution.
(E) Correct. Both are logical and practical courses of action that would help solve the problem.
Padding Slide: The "Data" Problem
The Situation: You are a manager. Two departments give you conflicting data about a project's success. You must present the results to the board tomorrow.
Bad Action: "Pick the data that looks better and present it." (Unethical).
Bad Action: "Present both sets of data and let the board figure it out." (Ineffective, you are not doing your job as a manager).
Good Action: "Call an immediate meeting with both department heads. Your goal is not to assign blame, but to understand *why* the data is different. Find the methodological error or a reconciliation between them before presenting."
Padding Slide: The "Bad Boss" Problem
The Situation: Your boss asks you to do something unethical.
Bad Action: "Do it, because he is the boss." (Unethical).
Good Action: "Find a way to refuse *politely* while offering an ethical *alternative*. Frame your refusal around the *risk to the company*."
Example: "I understand the goal is X, but I'm concerned this approach could expose the company to legal risk Y. Could we perhaps achieve the same goal by doing Z instead?"
Padding Slide: The "Angry Customer"
The Situation: An important customer is publicly and angrily complaining about a product failure on social media.
Bad Action: "Delete their comments and block them." (Counter-productive, unethical).
Bad Action: "Respond publicly by arguing with them and proving they are wrong." (Counter-productive).
Good Action: "1. Respond publicly with an apology for their bad experience and (2) immediately move the conversation to a private channel ('Please DM us your details so we can fix this'). 3. Solve their problem. 4. Investigate the root cause."
Padding Slide: The "Limited Resources"
The Situation: You have a budget for *one* new project. Project A is a "safe bet" with a small, guaranteed profit. Project B is a "risky bet" that could be huge or could bankrupt the department.
Analysis: There is no single "right" answer. The "best" action depends on the *context* and *objective*.
If Objective is "Stability": Choose Project A.
If Objective is "High Growth": Choose Project B.
Best Action: "Do more research to reduce the risk of Project B before making a final decision." (This is *not* "kicking the can" - it's active risk management).
Padding Slide: The "Free Rider" Problem
The Situation: You are in a group project. One member, "Bob," is doing no work, and the deadline is approaching.
Bad Action: "Do all of Bob's work for him and say nothing." (Ineffective, short-term fix).
Bad Action: "Go straight to the professor and demand Bob be failed." (Overkill, poor stakeholder management).
Good Action: "First, speak to Bob privately. Ask if there's a problem and clearly state what needs to be done. If he still does nothing, *then* escalate the issue to the professor *as a group*." (Addresses cause, is ethical, follows process).
Padding Slide: The "Two Wrongs"
The Situation: Your competitor is using unethical, false advertising to steal your customers. You are losing money.
Bad Action: "Launch your own false advertising campaign to fight back." (Unethical, "two wrongs don't make a right").
Bad Action: "Ignore it." (Ineffective).
Good Action: "1. Report the competitor to the advertising standards authority or other legal body. 2. Launch your *own* campaign that focuses on your *positive, truthful* attributes, reinforcing your brand's integrity."
Padding Slide: The "Windfall" Problem
The Situation: The company has an unexpected $10M profit. What is the *best* way to use it?
Analysis: This tests your ability to *balance stakeholders*.
Bad Action: "Give it all to the CEO as a bonus." (Bad stakeholder mgt).
Bad Action: "Give it all to the employees as a bonus." (Good for employees, but ignores other stakeholders).
Good Action: "A balanced approach: 1. Give a modest bonus to employees (Stakeholder: Staff), 2. Pay a dividend to shareholders (Stakeholder: Owners), and 3. Re-invest the rest into R&D for long-term growth (Stakeholder: Company)."
Padding Slide: The "New Competition"
The Situation: A new, cheap competitor is stealing your customers with a lower-quality product.
Bad Action: "Lower your quality to match their price." (Counter-productive, destroys your brand).
Bad Action: "Ignore them." (Ineffective).
Good Action: "*Differentiate*. Launch a marketing campaign that *emphasizes* your high quality, reliability, and customer service—the things the cheap competitor *cannot* offer. Reinforce your brand's value."
Padding Slide: The "Public Safety" Problem
The Situation: A city must build a new power plant. The nuclear option is cheapest and cleanest (no emissions), but the public is terrified of it. The coal option is dirty but is politically popular.
Bad Action: "Build the coal plant because it's popular." (Short-term, bad for public health).
Bad Action: "Build the nuclear plant and ignore the public's fears." (Ineffective, poor stakeholder mgt).
Good Action: "Postpone the decision and launch a massive public education campaign, led by third-party experts, to *address the fears* about nuclear power, while also researching ways to make the coal option cleaner."
Padding Slide: The "Sunk Cost" Problem
The Situation: You have spent 2 years and $5M on a project. You just discovered the project is useless and will never work.
Bad Action: "Spend *another* $1M on the project, because you've already spent $5M and can't let it go to waste." (This is the "Sunk Cost Fallacy").
Good Action: "Cancel the project immediately to stop wasting any more money. Perform a 'post-mortem' to learn from the mistake, but do not spend any more on a failed idea."
Final Interactive Quiz
Test your mastery. Find the best course of action.
Summary & Next Steps
Key Takeaways
- Find the Root Cause. Don't just treat the symptom.
- XAT = Ethics First. The long-term, ethical, stakeholder-friendly choice is king.
- NMAT = Practicality First. Is the action a logical step to solve the problem?
- Avoid Traps: "Overkill," "Unethical," "Symptom-Only," and "Kick the Can."
Practice Plan
- Read XAT DM Papers: Go through past XAT Decision Making sections. There is no better practice.
- Analyze Business News: Read articles about real company problems (a product recall, a bad CEO) and ask "What would be the *best* course of action here?"
- Identify Stakeholders: For every problem, list the stakeholders (e.g., Employees, Customers, Shareholders, Public) and analyze the impact on each.