MANAGERS, LEADERSHIP & DECISION MAKING-3.2

• What are decision trees?

  A mathematical model used to help managers make decisions.

  Uses estimates and probabilities to calculate likely outcomes and decide which one has the highest net gain.
• What is risk?

  The chance of incurring misfortune or loss.
• What is uncertainty?

  Where there is a lack of knowledge and outcomes are unpredictable.
• What is a hunch?

  An intuition or gut feel, but is hard to justify for decisions involving significant risk.
• What is scientific?

  • Based on data and analysis
  • Time consuming and costly, both no guarantee of the right decision.
  • Increasingly common and automated.
• What is probability?

  The chance of an outcome happening.
• What is the expected value (EV)?

  The financial value of an outcome.
• How do you calculate the EV?

  EV= financial effect X probability.
• What is the net gain?

  The value to be gained from making a decision.
• How do you calculate the net gain?

  Expected value outcome 1 + expected value outcome 2 - costs
• What is opportunity cost?


  The value of the next best alternative that is forgone/sacrificed when a choice is made.
• What is leadership?


  A relationship through which one person influences the behaviour/actions of other people.
• What is an autocratic/authoritarian leader?


  The leader makes a decision without consultation.
• What is a paternalistic leader?

  The leader acts in a fatherly way towards the workforce.

  Makes decisions based on needs of workforce as well as the business.
• What is a democratic leader?

  A leader who consults his team but makes the final decision.
• what is a laissez-faire leader?

  'Leave alone'- leader allows the team to make their own decisions.
• What are the characteristics of leaders?

  • Makes the rules
  • Influences
  • Does the right things
  • Sets the direction
  • Focuses on the people
• What are the characteristics of managers?

  • Plans and organises
  • Controls resources
  • Does things right
  • Minimises risks
  • Solves problems
• What is the Tannebaum Schmidt continuum?

  Leadership model based on a spectrum between two extremes of manger-centred and subordinate-centred approaches.
• Managers approach will depend on:

  Managers beliefs

  • Personality and characteristics
  • Experience
  • Attitude and trust in subordinates
• managers approach will depend on:

  Subordinates

  • Experience
  • Personality and characteristics
  • Trust in leader
• managers approach will depend on:

  Situation

  • Nature of the problem
  • Culture of firm
  • Resource constraints e.g. time