3.2.2

Question 1

Scientific decision making

Answer 1

Based on data

Question 2

Advantages of scientific decision making

Answer 2

Logical and rational progress- sensible way of tackling decision
Reduces risk of failure and waste
Can review check to enable wider considerations eg, if it aligns with set objective
High influence stakeholders will trust businesses more and will be more likely to agree
Supported by quantifiable evidence

Question 3

Disadvantages of scientific decision making

Answer 3

slower vs intuitive decision making
data may be too expensive to collect
expensive as more time and labour produced
data may be unreliable, incorrect, historical, biased or unavailable

Question 4

Intuitive decision making

Answer 4

Using a hunch to make decisions, can be used when data is unavailable or unreliable

Question 5

Advantages of intuitive decision making

Answer 5

Quick process
Encourages innovation and creativity
Helps for survival of a business as it’s quick and effective in a competitive market
Previous effective decisions can be relied on

Question 6

Disadvantages of intuitive decision making

Answer 6

Difficult to justify and sell
Reliant on experience and expertise
Risk as it’s not based on data

Question 7

Opportunity cost

Answer 7

cost of one course of action in
terms of the next best alternative foregone

Question 8

Risks

Answer 8

Chance of incurring misfortune or loss eg, employees going on strike
Is measurable

Question 9

Uncertainty

Answer 9

Is a situation in which there is a lack of knowledge and
events, outcomes or consequences are unpredictable eg: covid 19,

Question 10

Decision trees

Answer 10

Model to help businesses make a decision with the cost of decision, probability of success and financial outcome

Question 11

Advantages of decision trees

Answer 11

• Clearly show the options
  available
  • Encourages logical thinking
  • Allows structured discussions
  and comparisons
  • Takes into account risk
  • May raise alternative options
  • Quantifies the outcome of each
  decision
  • Highlights the likelihood of each
  outcome

Question 12

Disadvantages of decision trees

Answer 12

• Relies heavily on estimates i.e.
probabilities and financial
outcomes
• Doesn’t take into account
qualitative factors
• Estimates may be biased
• May not consider external
influences e.g. if the cost of one
option is substantially higher will
this be affected by interest rates
• Non dynamic – may be out of
date before a decision is reache

Question 13

Expected values

Answer 13

Financial outcomes from a specific course of action
adjusted to allow for the probability of it
occurring

Question 14

Net gains

Answer 14

the expected values of a
course of action minus the costs
associated with it

Question 15

Influences on decision making

Answer 15

MISSION
OBJECTIVES
RESOURCES
EXTERNAL EMVIRONMENT