8587787
Description
Flashcards by Ashleigh-Jade Jones, updated more than 1 year ago
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Created by Ashleigh-Jade Jones
over 7 years ago
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| Question | Answer |
| Decision Making Is All About: | *MINIMISING RISK AND MAXIMISING REWARD |
| Risk 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 |
| Reward Of Making Right Decision: | -profits -> cash -opportunities for expansion/growth -people -> improved morale & motivation -attract good staff |
| Scientific Decision Making | a method where decision are based on data and their outcomes compared to initial objectives |
| Scientific 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 |
| Advantages 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 |
| Disadvantages 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?) |
| Decision Trees: | *Expected value of both outcomes x probabilities, added together = EXPECTED NET VALUE OF OPTION *Expected net value - initial cost = NET GAIN |
| Advantages of Decision Trees: | -predicts success or failure based on market research and quantifiable (measurable) data -allows for uncertainty -logical/structured |
| Disadvantages of Decision Trees: | -uncertainty/risk always a factor -what if data is unreliable? -time consuming -ignores any qualitative factors -mistakes possible |
| Factors 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) |
| Advantages of Institution Decision Making: (gut instinct) | -fast decisions -experience counts -matching of mission/objectives likely |
| Disadvantages of Institution Decision Making: | -no back/data to support the decision -can be unreliable/biased |
| Decisions Are Also Influenced By: | -uncertainty *OPPORTUNITY COST (the cost of a decision measured by the benefits foregone of the next best alternative) |
| Corporate 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) |
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