3.2.2 Managers Leadership And Decision Making Flashcards
(18 cards)
What is scientific decision making?
A logical and structured approach to decision making using data and analysis. It often involves tools like decision trees. Reduces risk through evidence-based choices.
What is intuitive decision making?
A decision based on instinct, experience, or gut feeling, rather than data. Faster, but riskier and subjective.
What are the pros and cons of scientific decision making?
✅ Reduces bias, increases consistency, based on evidence
❌ Can be time-consuming, relies on data quality, may ignore human factors
What are the pros and cons of intuitive decision making?
✅ Quick, uses experience, useful in uncertain or fast-moving situations
❌ Can be irrational, hard to justify, inconsistent
What is a decision tree?
A diagram that shows possible outcomes of decisions, including probabilities, expected values, and net gains.
How do you calculate expected value in a decision tree?
Multiply each possible outcome by its probability, then add the results:
EV = (probability × outcome) + (probability × outcome)
What is net gain in a decision tree?
Net Gain = Expected Value – Cost of Decision
Helps determine if the decision is financially worthwhile.
What are the advantages of using decision trees?
✅ Quantifies risks and rewards
✅ Encourages logical, data-based thinking
✅ Useful for comparing options
What are the limitations of decision trees?
❌ Relies on accurate data/probabilities
❌ Ignores qualitative factors
❌ Outcomes may still be uncertain
What is risk in decision making?
The possibility that the actual outcome will differ from the expected outcome, potentially leading to loss.
What is reward in decision making?
The benefit gained if a decision leads to a successful outcome (e.g. profit, market share).
What is uncertainty in decision making?
Lack of certainty about future events or outcomes, often due to incomplete information.
What is opportunity cost?
The value of the next best alternative foregone when a decision is made.
How does a business’s mission influence decision making?
The mission sets the long-term purpose, guiding decisions that align with the company’s values and goals.
How do objectives influence decision making?
Objectives provide measurable targets. Decisions are evaluated based on how well they help achieve these goals.
How do ethics affect decision making?
Ethical businesses consider the impact on stakeholders and society. May avoid profitable choices if they conflict with moral principles.
How does the external environment influence decision making?
Factors like the economy, competition, legislation, and customer trends can create constraints or opportunities.
What are resource constraints and how do they affect decisions?
Limitations in labour, time, money, or raw materials that restrict what choices are feasible.
