Business Decision Making

Question 1

What are the 5 stages of decision making?

Answer 1

1. Find and Define the problem
2. Generate and Evaluate alternate solutions
3. Select preferred solution and conduct ethics double check
4. Implement the solution
5. Evaluate Results

Question 2

What are the 3 different approaches to decision making?

Answer 2

1. Divergent thinking
2. Convergent thinking
3. Lateral Thinking

Question 3

Divergent Thinking

Answer 3

A thought process or method used to generate creative ideas by exploring many possible solutions

Question 4

Convergent Thinking

Answer 4

Narrows the available problem solutions to determine the single best solution

Question 5

Lateral Thinking

Answer 5

Involves using indirect and creative means to develop ideas.

Question 6

Intuitive Thinking

Answer 6

Reliance on a ‘hunch’, ‘gut instinct’ or a feeling about what we should do

Question 7

What can impact effective decision making?

Answer 7

1. Inexperience
2. Cognitive Bias
3. Improper Process
4. Inadequate Training
5. Cultural Differences
6. Over compliance
7. Oversimplification
8. Lack of resources
9. Insufficient Timelines

Question 8

What is effective decision making?

Answer 8

1. Successful
2. Responsible
3. Robust
4. Defensible
5. Inclusive

Question 9

Importance of Decision Making - Organization Performance

Answer 9

Decision making is a key driver of organization performance. Companies which are better in making decisions perform better financially.

Question 10

Importance of Decision Making - Financial Performance

Answer 10

There is a strong correlation between decision effectiveness and financial performance (e.g. revenue growth, return on capital, shareholder return), and employee engagement (Blenko et al., 2010).

Question 11

Importance of Decision Making - Ethical decision making

Answer 11

You should not underestimate the ripple out effect of short sighted or unethical decision making. Investors and shareholders are demanding greater levels of accountability for corporations who engage in deceitful and exploitative practices.

Question 12

Importance of Decision Making - Consider those affected

Answer 12

While financial gain is a key driver for many businesses, effective decision-making requires careful consideration of who and what might be affected along the way.

Question 13

Importance of Decision Making - Power to change business practices

Answer 13

Reflect on the power of decision-making to change the way a business could

1. treat its employees
2. impact the environment
3. engage with local communities and cultural groups

Question 14

Importance of Decision Making - Social responsibility and reputation

Answer 14

Businesses these days are not only under pressure to make decisions that comply with the law. There is also an increasing expectation they will be ethical and socially responsible. Failing to do so risks damage to the business’s reputation and its bottom line. Corporate condemnation via social media and global news outlets is a steep price to pay for deciding to prioritize short term financial goals above all others.

Question 15

What is a decision?

Answer 15

A choice made from 2 or more alternatives.

Question 16

What are two common types of decisions that are made?

Answer 16

Programmed - for routine matters, easy to determine what information is required and solution may be developed from past experience.

Non-Programmed - New or unexpected situations, may be difficult to access necessary information to make an effective decision

Question 17

What are the three types of management decisions?

Answer 17

1. Strategic Decisions - long term needs and setting overall goals - usually made by senior executives and focus on the next 5 years
2. Tactical decisions - reflect how strategic decisions can be achieved - made by middle management and focus on next 12 months
3. Operational decisions - manage day to day activities - made by lower management

Question 18

What are the three different conditions that business decisions are made under?

Answer 18

1. Certain environment - predictable and less risk, sufficient information available about alternative actions and outcomes
2. Risk environment - information about alternative courses and outcomes are available but incomplete - risk - must estimate probabilities
3. Uncertain environment - high level of uncertainty and ubiquity - must rely on intuition or collaborate for group problem solving

Question 19

What information do top managers assess?

Answer 19

Formulate strategies, policies, long-term plans and objectives; make strategic decisions

Question 20

What information do middle managers assess?

Answer 20

Formulate operational plans and objectives to implement strategy; make operation decisions

Question 21

What information do lower managers assess?

Answer 21

Implement operational plans and objections; make short-term decisions; transact day-to-day business operations

Question 22

What are external information sources?

Answer 22

Websites

Newspapers

Conferences

New Employees

Question 23

What are internal information sources?

Answer 23

Periodic financial reports

Performance reports

Sales reports

Question 24

Who are stakeholders?

Answer 24

Individuals, groups and institutions that are directly or indirectly affected by the decision

Different stakeholders may provide input or be included in the decision making process

Question 25

What is the impact of stakeholder input?

Answer 25

Decision making is done by individuals but the decision is influenced by a process of stakeholder input

Question 26

What is a collectivist culture?

Answer 26

The benefits and interests of the group outweigh personal ones.

Question 27

What is an individualist culture?

Answer 27

The benefits and interests of the individual outweigh those of the group

Question 28

What are the 6 dimensions upon which cultures differ?

Answer 28

1. Power Distance - the degree of inequality among people that is viewed as being equitable.
2. Uncertainty avoidance - The extent to which people in a given culture prefer structured situations with clear rules over unstructured ones.
3. Individualism
4. Masculinity
5. Long term orientation vs. short-term focus
6. Indulgence - The extent to which people try to control their desires and impulses based on the way they were raised.