Flashcards
3.2.2: Understanding management decision making
Cards in this deck (15)
- 1Decision Making Is All About:*MINIMISING RISK AND MAXIMISING REWARD
- 2Risk Of Making Wrong Decision:-losing money (loss not profit)
-bad staff morale
-lack of staff motivation
-loss of customers
-Share price fall (Plc)
-bad reputation/credibility - 3Reward Of Making Right Decision:-profits -> cash
-opportunities for expansion/growth
-people -> improved morale & motivation
-attract good staff - 4Scientific Decision Makinga method where decision are based on data and their outcomes compared to initial objectives
- 5Scientific Decision Making:Set objectives (SMART)
|
Collect data (market research)
|
Analyse data (is it reliable?)
|
Make decision (strategic: long term or tactical: short term)
|
Implement decision
|
Review decision - 6Advantages of Scientific Decision Making:-logical/structured approach
-reduces risk of mistakes
-easier representation of decision to other people in the business
-easy to compare outcomes - 7Disadvantages to Scientific Decision Making:-theoretical approach
-conflicts possible with mission statement/objectives
-time consuming
-only looks at numbers
-reliability of the data (is it up to date?) - 8Decision Trees:*Expected value of both outcomes x probabilities, added together = EXPECTED NET VALUE OF OPTION
*Expected net value - initial cost = NET GAIN - 9Advantages of Decision Trees:-predicts success or failure based on market research and quantifiable (measurable) data
-allows for uncertainty
-logical/structured - 10Disadvantages of Decision Trees:-uncertainty/risk always a factor
-what if data is unreliable?
-time consuming
-ignores any qualitative factors
-mistakes possible - 11Factors Affecting the Decision:-mission -> must satisfy mission
-objectives -> satisfying mission by ensuring employees understand their objectives
-ethics ->mustn't go against
-external environment -> PESTLE, P5F (competition)
-resources -> limitation of (money, time, people, equipment) - 12Advantages of Institution Decision Making: (gut instinct)-fast decisions
-experience counts
-matching of mission/objectives likely - 13Disadvantages of Institution Decision Making:-no back/data to support the decision
-can be unreliable/biased - 14Decisions Are Also Influenced By:-uncertainty
*OPPORTUNITY COST (the cost of a decision measured by the benefits foregone of the next best alternative) - 15Corporate Social Responsibility:A company's sense of responsibility towards the community and environment in which it operates e.g. reducing waste/pollution or contributing to educational programmes (Google Green -> uses resources efficiently and support renewable energy)
Information
- Description
- Decision making (scientific/institution): factors affecting, influences, advantages and disadvantages), decision trees (advantages and disadvantages), CSR
- Created by
- Ashleigh-Jade Jones
- Views
- 40
- Rating