3.2.2 understanding management decision making

Question 1

what is scientific decision making?

Answer 1

an attempt to make logical decisions based on analysed data

Question 2

what is intuitive decision making?

Answer 2

decision making based on experience, also called a ‘hunch’ approach

Question 3

what is a tactical decision?

Answer 3

short to medium term, easy to reverse, fewer resources involved

Question 4

what is strategic decision making?

Answer 4

long term, large commitment of resources, difficult to reverse

Question 5

what are the 6 stages of scientific decision making?

Answer 5

1. set objectives
2. gather data
3. analyse data
4. select
5. implement
6. review

Question 6

what is opportunity cost?

Answer 6

the next best alternative foregone

Question 7

what is a decision tree?

Answer 7

a model that represents the likely outcomes for a business of a number of courses of action on a diagram showing the financial consequences of each

Question 8

what are some advantages to decision trees?

Answer 8

set out problems clearly, logical and quantitative, set out the average expected value of each decision taking into account probability

Question 9

what are some disadvantages of decision trees?

Answer 9

can be difficult to get meaningful data, can be open to bias

Question 10

expected value =

Answer 10

(probability 1 x outcome 1) + (probability 2 + outcome 2)

Question 11

net gain =

Answer 11

expected values - costs

Question 12

what are the influences on decision making?

Answer 12

external environment, ethics, degree of risk, mission/objectives and resource restraints