Decision making Flashcards
What are tactical decisions?
Tactical decisions tend to be a response to a short-term factor.
E.g reducing prices if product sales are below the expected figure.
Increasing overtime pay rate if the business places a large unexpected order from a customer.
Can be taken by middle managers and senior managers.
What are strategic decisions?
Strategic decisions are those that have long term implications on the business, often affect the entire business. Made by senior manager because they have a far reaching control.
What are proactive decisions?
They are taken in advance of events.
For example, junior managers may hold extra stock of popular products in case of a sudden rise in demand.
Contingency plans to deal with threats such as an (epidemic, accounting scandals) before they actually occur.
What are reactive decisions?
Taken when businesses respond to events rather than trying to shape them.
Rival films will decide to react to the launch of a new product.
Reactive decision can be less risky but also less profitable.
Taken at all levels within an organisation.
What are routine and non routine decisions?
Routine decisions are taken regularly and are not expected.
Agreeing staff rotas for the coming week.
Appointing new part-time staff to work at weekends.
What is a critical path analysis?
A method of calculating and illustrating how complex projects can be completed as quickly as possible.
It shows the:
- The sequence in which the tasks must be undertaken.
- The length of time taken by each task.
-The earliest time at which each stage can commence.
Allows task to be prioritized.
What are the advantages of critical path analysis?
Helps managers use their time more efficiently by showing which task can commence and when.
Helps managers prioritize tasks.
If delays occur, the CPA network assists manager in deciding what the best solution is to rectify the problem.
What are the disadvantages of critical path analysis?
Complex activities, may be difficult or impossible to represent in the network.
If an external factor changes (i.e unavailability of crucial resources) then the information on the CPA network is not concrete.
The accuracy of the whole CPA network depends on the time duration allocated to the various activities. If these are inaccurate the whole network will give an inaccurate answer.
Depends on the skill of the person.
What is statistical process control?
Uses monitoring systems based on statistic to make sure that production is efficient and meets quality standards.
Most companies monitor customer satisfaction. The results can be presented on a chart.
What are decision trees?
Uses a combination of financial data and probability theory to give expected results.
Can help to reduce the amount of uncertainty in any decision and give manger much more confidence in the choices they make.
Steps needed to construct a decision tree.
1) Identify the options available
2) Asses the likely outcomes of each option
3) Calculating probabilities for every option
4) Forecast additional profits
What are the advantages and disadvantages of decision trees?
They encourage managers to be logical and consider all possibilities. they discourage managers from relying too heavily on hunches and instinct.
Probably most useful when making routine decisions for which financial data and probabilities are likely to be known. It is difficult to get accurate data.
Decision trees can be problematic if the business environment is too changeable. Makes it difficult to assess outcomes.
