Management and decision making

Question 1

What are the processes of scientific decision making in order?

Answer 1

1. Set objectives
2. Collect data
3. Analyse data
4. Make decision
5. Implement decision
6. Review decision

• Repeat if decision did not work

Question 2

Negatives of scientific decision making?

Answer 2

• Reduces risk of expensive mistakes as you can review decisions after data is analysed and adapt
• Costly and time consuming
• Reduces creativity of decisions as it takes away the human factor and the intuition of the decision
• Need reliable data that isnt out of date or biased

Question 3

What are the benefits of intuitive decision making

Answer 3

• Managers with past experience can make good and quick intuitive decisions
• Don’t need to collect and analyse data
• Might not be any data on new or unfamiliar situations
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Question 4

Negatives of Intuitive decision making

Answer 4

• Very risky to rely on it all the time as people make mistakes
• Gut instincts are irrational and not based on logical reasons

Question 5

How does risk, reward and uncertainty influence decision making?

Answer 5

• High-risk decisions can lead to high rewards - can reduce risk through the scientific decision making
• Reward - Managers expect decisions to bring rewards to a business
• Uncertainty - All decisions have some uncertainty but scientific decisions making can reduce uncertainty

Question 6

What is opportunity cost and how is it taken into account

Answer 6

• The value of the next best alternative that has been given up
• Managers compare opportunity costs when they have to choose how to use their limited resources

Question 7

What are the factors of decision making?

Answer 7

• is it in line with the Mission statement?
• Will it help achieve objectives?
• is it ethical?
• How might the external environment affect this decision?
• Are the resources available or are there resource constraints?