2.2 Understanding management decision making Flashcards
1
Q
What approaches do managers use when decision making
A
- Scientifically (data)
- Upon intuition and the experience
2
Q
Advantages of scientific decision making
A
- Reduces risk of making mistakes as decisions are based on data
- Using data provides guidance for managers who may have limited intuition through lack of experience
3
Q
Disadvantages of scientific decision making
A
- Time-consuming to collect data
- 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- Using out of date or poor data is unreliable and can affect the quality of the decision made
4
Q
Factors influencing decision making
A
- Availability and reliability of data
- Manager’s experience
- The risk the business is willing to accept
5
Q
How to calculate an estimated value using decision trees
A
Probability X outcome of decision
6
Q
Advantages of intuition decision making
A
- Some managers ay 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
7
Q
Disadvantages of intuition decision making
A
- 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
8
Q
Factors influencing intuition decision making
A
- Unavailable or unreliable data (scientific decision making cannot be used)
- Experience of managers
- Willing to risk
9
Q
Factors which affect decision making
A
- Levels of risk and uncertainty
- Reward for managers
- Opportunity costs
10
Q
The different business objectives considered when making decisions
A
- Business missions
- Business objectives
- Ethical positions
- External environment (political, environmental, social, technological, legal and ethical)
- Resources
