AQA A Level Business 3.2.2 Understanding management decision making

Flashcards for AQA A Level Business 3.2.2 Understanding management decision making

Leadership

The action of leading a group of people or an organisation, or the ability to do this.

Scientific decision making

Making a decision based on evidence and quantitative data.

Intuitive decision-making

Making decisions using feelings, opinions, thoughts, hunches and qualitative information

Decision Tree

A business can’t afford to follow every option so it may use a decision tree to analyse the probability of a success in a choice of strategies.

Payoff figure

How much money the business will yield if a decision is taken.

Expected value

A weighted average of each choice.

Net gain

Expected value minus cost of choice

Entrepreneur

A person who is prepared to take a business risk in return for a reward.

Business reward

A benefit gained as a result of good decision making

Opportunity cost

The cost of making a choice, or the sacrifice of the next alternative that would have been chosen

Mission statement

A summary of the purpose and vision of an organisation

Ethics

The moral principals that govern the behaviour of a business, that they understand right from wrong

External environment

Any factor outside of a business which influences the way it operates

External environment

The factors outside of a business which may have an impact on the way that it operates

Opportunity cost Definition

The value of the next best decision foregone

Decision tree

A business tool, in the form of a diagram, which is used to decide which project should get the financial backing

Uncertainty

An unexpected event or problem that cannot be predicted

Risk

A potential problem which could occur due to poor decision making

Reward

A benefit gained as a result of a good business decision