2. Managers, leadership and decision making

Question 1

what is opportunity cost

Answer 1

the potential benefits a business misses out on when choosing one option over another

(cost of the next best alternative foregone)

Question 2

what does scientific or intuition depend on 7

Answer 2

• experience of the manager
• previous success/failure
• availability and reliability of data
• form of business: ltd or plc
• time available to make the decision (first mover advantage)
• LEVEL OF RISK that the manager is allowed to take
• a loan application may need data

Question 3

what is scientific decision making

Answer 3

using data to aid decision making

Question 4

what is the circle

Answer 4

set objectives
gather data
analyse data
select
implement
review

Question 5

advantages of scientific decision making - 3

Answer 5

1. logical and rational process as based on data - less risk
   reduce wasted resources
2. review check enables wider considerations - mission statement, corporate, functional objectives
3. ‘keep player’ buy in 1% year
   stakeholder mapping, high power high influence - get their agreement before decision implemented, more likely to agree with data

Question 6

disadvantage of scientific decision making 3

Answer 6

slower than intuition
expensive - more labour/time (short term)
data - historical data? bias?

Question 7

what is intuitive decision making

Answer 7

using a ‘hunch’ to make decisions

Question 8

advantages of intuition 2

Answer 8

quicker d.m process - first mover advantage

experienced manager - rely on many previous decisions

Question 9

disadvantages of intuition 2

Answer 9

increased risk as not based on data

difficult to justify and sell

Question 10

what do decision trees help make decisions on 3

Answer 10

• expected financial outcomes
• probability of success and failure
• initial costs

Question 11

advantages of decision trees 3

Answer 11

• ways of comparing option on financial gain
• forces managers to consider the probabilities of failure
• considers the initial cost

Question 12

disadvantages of desicion trees 3

Answer 12

• figures based on predicitons
• depends on how optimistic or pessimitic the manager is
• only considers financial data, needs to factor other factors (PESTLE + C)

Question 13

4 influences on decision making

Answer 13

MISSION - mission statement will impact d.m, e.g. amazon trying to be earths most customer centric company - need speed, price

OBJECTIVES - corporate objectives + fucntional objectives met?

RESOURCES - available? time, staff, finances and supplies

EXTERNAL ENVIRONMENTS - things outside businesses control

Question 14

what is a stakeholder

Answer 14

someone or an organisation interested in/affected by a business’ activites or decisions

Question 15

internal stakeholders 3 and interests

Answer 15

employees - job security, good working conditions and pay
managers
shareholders - capital growth and dividends

Question 16

external stakeholders 5

Answer 16

suppliers - regular orders and on-time payments
banks and lenders
government - employment and payment of taxes
local community - avoidance of pollution and congestion, and employment
customers - good customer service and value for money

Question 17

high power low interest

Answer 17

keep satisfied

Question 18

high power high interest

Answer 18

manage closely

Question 19

low power low interest

Answer 19

monitor

Question 20

low power high interest

Answer 20

keep informed

Question 21

4 influences on the relationship of stakeholders

Answer 21

leadership styles
business objectives
government
state of the economy

Question 22

ways to reduce conflict between stakeholders

Answer 22

• stakeholder mapping
• culture of good communication and consultation between them
• careful planning and introduction of decisions