3.2 Decision Making Flashcards
What is a managers role?
Organising and galvanising staff into implementing strategies needed to achieve business objectives.
What are the key features of a managers role?
- Direct job roles
- Ensure jobs get done correctly
- Supervise
- Rotas
- Training/interview
What is utilitarianism?
Greatest good for greatest number (gave so much good for the benefit of everyone)
What is a leaders role?
Taking the initiative and to motivate and guide a relationship through which one person influences behaviour and actions of others.
What are the key features of a leadership role?
- Negotiation and self awareness
- Passion and determination
- Communication
- Get people to buy in
What type of 3 levels of management are there?
Senior
Middle
Junior
What is a senior manager role?
Board of directors for example, oversee the entire business and its chain of command
What is a middle manager role?
Run functions and departments
What is a junior managers role?
Monitor and control day to day tasks
What does a decision making cycle look like? (Logic chain)
Set objectives
Analyse situation
Assess resources available
Make a clear decision
Review decision
What are the 3 levels of decision making?
Strategic
Tactical
Operational
What is strategic decision making and who is it done by?
Its long term and done by senior management
What is tactical decision making and who is it done by?
Its middle term and its less complex, usually done by middle managers
What is operational decision making and who is it done by?
Its short term and its day to day decisions, usually made by junior managers
Why is decision making important?
Decision making is important because of cashflow management across a project
How many types of leadership styles are there and what are they called?
There are 4 types of leadership and they are:
Autocratic
Paternalistic
Democratic
Laissez-faire
Features of Autocratic leadership?
They say, you do
Communication is top-down
They take no advice
Very little delegation
Outdated
(Good for times of crisis)
Features of Paternalistic leadership?
- Decides what’s best for employers
- Interested in security and social needs of staff
- Still very little delegation
- May consult staff to find out views
- Decisions are made by head of family
- They think employees need directions
- Its important employees and supported and cared for
Features of Democratic leadership?
- Involves workers with group as power is with people
- 2 way communication
- Leader is head figure but lets others lead
- A lot of delegation
Features of Laissez-Faire leadership?
- Leaders have little input into day to day decisions
- Conscious decision to delegate power
- Managers / employees have freedom
- Staff are ready and willing to take on any sort of responsibility
What does Tannebaum and Schmidt’s continuum illustrate and what does it allow for?
A range of potential leadership and management styles
It allows for ‘situational’ factors such as the need for urgency in leadership and decision making. The continuum represents a range of action related to the
- Degree of authority by the leader or manager
- Area of freedom available to non-managers
What 4 type of leadership styles does the model identify?
Tells
Sells
Consults
Joins
What is the Tells leadership style?
The leader identifies problems, makes a decision and announces to see subordinates; expects implementation
What is the Sells leadership style?
The leader still makes decisions but attempts to overcome resistance through discussion and persuasion
What is the Consults leadership style?
The leader identifies problem and presents it to the group. Listens to advice and suggestion
What is the Joins leadership style?
Leader defines the problem and passes on to the solving and decision making to the group (which manager is part of )
What are the factors that come into decision-making?
Organisational structure
Leadership style
Corporate structures
Technology in operations
Risk and reward
Business objectives
What are the 2 types of decision making?
Scientific - facts and numerical data and based on analysis, downside; time consuming and costly, no guarantee on right decision. its increasingly common and automated, supported by big data and data analysis
Intuitive - gut feeling, quick, hard to justify business decisions
What do tactical decisions do and what are they?
They are short term decisions that help to implement the strategy, usually made by middle management. They tend to be immediate.
What are operational decisions?
They tend to relate to day-to-day running of the business. Mainly routine and may be taken by middle or junior managers.
What are strategic decisions?
Strategic decisions are long term in their impact. They affect and shape the direction of the whole business. They are generally made by senior managers.
What did Taylor create?
The idea of measuring business variables so that you can predict and control them.
What is scientific management?
Taking art out of business decision-making - replacing intuition with facts and quantative forecasts.
What is process of scientific decision making?
Scientific decision making involves making decisions based on data/evidence and adopting a systematic approach, rather than intuition. E.g Tesco and their weather scheme
What are the key considerations for making key-decisions?
- Risk
- Reward
- Uncertainty
- Opportunity cost
What are the complications of decision making consideration?
- Resources may be limited
- When resources are scarce, decision making is risky
- When entrepreneurs and managers take calculated risks and weigh up potential implications of decisions before choosing best believed option for the business.
What are the key factors of opportunity costs?
- Missing out on a regular salary/income
- Benefits lost from investment spending
- Lost time with family and friendly
What are the factors influencing opportunity costs?
- Estimating potential sales
- Is the time right?
- Suitable skills
- Cash requirements
What is a decision tree?
It is a diagram that set out all the options a business has, they provide a logical process for decision making.
What are the key features of a decision tree?
- A mathematical decision
- Helps a manager make a decision - is it worth the risk (decides net gain)
- Uses estimates + probability to calculate likely outcomes
How do you calculate Expected Value?
Probability x Profit or Pay off (calculate this for sucess and failure and then add them) = (Success x Profit) + (failure x Profit/loss)
How do you calculate net gain?
Expected value - initial cost
How does net gain aid final decision making?
Compare this net gain to other net gain choices, make your decision (usually) based on higher net gain.
What are the advantages of decision trees?
Choices are set out in a logical way
Potential options and choices are considered at same time
Use of probabilities enable the “risk” of the options to be addressed
Likely costs are considered as well as potential benefits
Easy to understand and tangible results
What are the disadvantages of decision trees?
Probabilities are just estimates (prone to error)
Used quantitative data only
Assignments of probabilities and expected value are prone to bias
Decision making techniques doesn’t necessarily reduce amount of risk
Is option with highest net gain always best?
Depends on risk factor
Depends on initial cost
Depends upon expected return
What are influences on decision making?
Mission
Objectives
Ethics
External environment (competition)
Resource constraints
What are stakeholders?
Individuals or a group of people who are interested in a business
What is the problem of outsourcing ?
- Consumer backlash
- Higher/lower costs
- Less profit towards business, need to pay suppliers
What is stakeholder mapping?
Mapping the criteria of power and interest of stakeholders in order to keep them in consideration and urgency when decision making
What may shareholders/owners be interested in as stakeholders?
Return on investment + dividends or profits
Success and growth of the business
Proper running of the business
What might managers and employees be interested in as stakeholders?
Rewards and incentives
Job security and working conditions
Promotion opportunities
What may customers be interested in as stakeholders?
Value for money
Product quality and customer service
What may suppliers as stakeholders be interested in a business for?
Continued, profitable trade with the business
Financial stability - can the business pay its bills
What might banks and other finance providers as stakeholders be interested in a business for?
Can the business repay amounts invested
Profitability and cash flows of business
Growth in profits and value of the business
What might the govt as stakeholders be interested in a business for?
Correct collection and payment of taxes
Helping business to grow - creating jobs
Compliance with business legislation
What might society as stakeholders be interested in a business for?
Success of a business - particularly creating and retaining jobs
Compliance with local laws and regulations
Name a conflict between potential stakeholders and who it’d be between
Increase selling prices
Supported by shareholders and management, opposed by customers
What are the 6 key influences on the relationship with stakeholders?
Business objectives
Management and leadership styles
Size and ownership of business
Market conditions
Power of stakeholder groups
Govt policies
How should a business respond to variations in stakeholder power and influence?
High level of power and high level of influence - let players, notice and engage w directly
High power low influence - keep satisfied
Low power high interest - communicate w them regularly
Low power low interest - only communicate w them when necessary
What are the 5 different types of communication with shareholders?
5 Pull - final category of engagement w shareholders, only if they choose to access it (Little power and interest)
4 Push - pushing out communication to shareholder groups, eg email (low interest and power )
3 Consultation - seek views of shareholders (limited power and influence -50/50)
2 Participation - partial responsibility and say in decision making (high power low interest )
1 Partnership - group of stakeholders closely involved w decision making and be joint w management team (high power high interest )
