3.2

• Theory X


  - Average worker is lazy and dislikes work

  - Workers need to be controlled and directed

  - Centralised organisation and exercise of authority
• Theory Y


  - Most people enjoy work

  - Workers will take responsibility and organise themselves

  - Decision-making can be delegated
• Autocratic leader


  - Boss keeps all key decisions to themselves

  - Boss does not listen to employees and does not want feedback

  - Gives orders rather than power to subordinates
• Laissez-faire leader


  - Leader has little input into day-to-day decision-making

  - Managers/employees have freedom to do what they think is best

  - Allows people to get on with things themselves
• Paternalistic ("fatherly")

  - Leader decides what is best for employees

  - Boss treats staff as part of the family (parent/child relationship)

  - Still little delegation
• Decision Trees


  - A mathematical model

  - Used to help managers make decisions

  - Uses estimates and probabilities to calculate likely outcomes

  - Helps decide whether the net gain from a decision is worthwhile
• Square on a decision tree

  Decision
• Circle on a decision tree

  Outcome
• Disadvantages of using decision trees

  - Probabilities are just estimates - always prone to error

  - Uses quantitative data only - ignores qualitative aspects of decisions

  - Assignment of probabilities and expected values prone to bias

  - Decision-making technique doesn't necessarily reduce the amount of risk
• 2 approaches to decision making

  - Hunch

  - Scientific
• Hunch


  - Based on intuition, gut feeling and experience

  - It is very quick (key benefit)

  - Hard to justify for business decisions involving significant risk
• Scientific


  - Based on data and analysis

  - Increasingly common and automated, supported by Big Data and data analysis

  - Most firms want to adopt a scientific approach to their decision making which is supported by data

  - Downside: time-consuming & costly; no guarantee of the right decision
• Internal stakeholders (inside an organisation)


  - Owners

  - Employees

  - Managers
• Low interest-low power

  Monitor
• High interest-low power

  Keep informed
• Low interest-high power

  Keep satisfied
• Key influences on business decisions

  - Business objectives/budgets

  - Organisational structure

  - Attitude to risk

  - Availability & reliability of data

  - The external environment