management decision making

What are the six steps in the scientific decision-making model?

Set objectives → Collect data → Analyse data → Make decision → Implement decision → Review decision

One advantage of scientific decision making

Reduces risk of costly mistakes using data and logic

One disadvantage of scientific decision making

Time-consuming and expensive due to data collection/analysis

What is intuitive decision making?

Making decisions based on gut feeling or instinct

One advantage of intuitive decision making

Fast – doesn’t require data; useful in new or urgent situations

One disadvantage of intuitive decision making

Risky – may be irrational or based on bias/mistakes

How does risk influence decisions?

High risk can bring high reward; managers try to reduce risk

How does uncertainty influence decisions?

Leads managers to prefer low-risk options to avoid big losses

What is reward in decision making?

The expected benefit (e.g. profit, productivity, etc.)

What is opportunity cost?

The benefit of the next best alternative that's given up

Example of opportunity cost

Advertising during the World Cup vs. several Premier League games

List three external factors that affect decisions

Competition, economic conditions, seasonal trends

How do ethics affect decision making?

Business may avoid unethical suppliers even if they’re cheaper

How do resource constraints affect decisions?

Limited money, time, or staff can restrict business actions

What’s the difference between a mission and objectives?

Mission = business’s purpose; Objectives = medium/long-term goals

Practice Q1: One way ethical objectives affect decisions

E.g. Choosing eco-friendly suppliers, even if it costs more

Practice Q2: Which decision type is most likely?

C) Low-risk, high-reward