decision making

• what is intuition?


  judgement made on qualitative criteria, perhaps experience and strength of market understanding
• what is short termism?


  a widespread tendency within a business to focus on short term results probably at the cost of long term success
• what is strategic decision?


  one that is made in circumstances of uncertainty and where the outcome will have a major impact on the long term future of the business
• what is a tactical decision?


  deciding what to do in circumstances that are immediate and where a mistake is unlikely to have a major impact on the business
• what is the process of decision making?


  setting objectives

  gathering and interpreting data

  selecting the chosen option

  implementing a decision

  reviewing
• what are the 2 approaches to decision making?


  hunch and scientific
• what is hunch?


  based on intuition, gut feel and experience

  quick and risky
• what is scientific?


  based on data

  time consuming and costly

  supported by big data
• what is a programmed decision?


  familiar and routine decision
• what is a non familiar programmed decision?


  less structured and require unique solutions
• what are the key factors that influence business decisions?


  business objectives/ budgets

  organisational structure

  attitude to risk

  availability and reliability of data

  the external environment
• what is an expected value?


  these are the forecast actual values adjusted by the probability of their occurrence
• what is datas role in decision making?


  real time data capture of transactions

  responding to real time changes in market conditions

  market research

  capacity management

  inventory control
• what are net gains?


  subtracting the initial outlay from the expected value to find out whether or not a decision is to produce a surplus
• what is probability?


  the likelihood of something occurring usually expressed as a decimal
• what is a decision tree?


  a mathematical model used to help managers make decisions and uses estimates to calculate likely outcomes
• advantages of using decision trees


  choices are set out in a logical way

  potential options are considered at the same time

  use of probabilities enables the risk to be considered

  tangible results
• disadvantages of using decision trees


  probabilities are just estimates

  ignores qualitative data

  probabilities are prone to bias

  doesn't necessarily reduce the risk
• why is scientific decision making becoming more popular?


  more widespread availability of data

  greater experience of data analysts
• examples of internal stakeholders


  employees

  shareholders
• examples of connected stakeholders


  customers (by a receipt)

  suppliers

  banks/financial providers
• examples of external stakeholders


  competitors

  government

  the local community