2.2 - Understanding management decision making Flashcards
What is Scientific decision making?
Decisions that are made using scientific data and statistics.
What is Intuitive decision making?
Decisions that are made using intuition and experience.
Advantages of using Scientific decision making?
Scientific decision making reduces the risk of making mistakes as decisions are based on data.
Another advantage is that using data provides guidance for managers who may have limited intuition through lack of experience.
Disadvantages of using Scientific decision making?
Scientific decision making can be time-consuming to collect the data required.
Relying on data may mean that the experience or expertise of staff may not be considered.
Using out of date or poor data is unreliable and can affect the quality of the decision made.
Factors that influence which decision-making technique to use.
Risk.
Experience.
Availability and reliability of data.
Advantages of Intuitive decision making.
Some managers may have gut feelings and hunches following years of experience and so their intuition is accurate.
With decision making based on intuition, decisions can be made quickly as there is no need to collect and analyse data.
Disadvantages of Intuitive decision making.
In new situations, or for staff lacking experience, mistakes can be made as there is not enough prior experience to provide accurate intuition.
With intuition, decisions can be made for illogical reasons as data is not considered.
Factors that affect decisions overall.
Risk and uncertaintity.
Reward.
Oppurtinity cost.
What factors should managers consider when making decisions?
Resources.
External environment (Legal,social,political).
Ethical positions of the business.
Business objectives and missions.
What is Taylorism (Scientific management)?
Measuring how long a task took for every worker and setting benchmarks based on those stats.
Who is Jack Welch?
Jack Welch was the CEO of General Electric for 20 years. He wrote a book called ‘Straight from the Gut’ supporting intuitive and gut decision making.
What was Jack Welch’s decision making heuristic?
General Electric operated in lots of industries - aerospace, manufacturing, and more. Jack Welch demanded that any GE division was in the Top 1 or Top 2 businesses in its industry or it would be sold. He sold 71 businesses as CEO of GE.
