Chapter 5: Understanding management decision making

Question 1

Programmed decisions

Answer 1

Familiar and routine decisions

Question 2

Non-programmed decisions

Answer 2

Less structured and require unique solutions

Question 3

Risk

Answer 3

Chance of incurring misfortune or loss

Question 4

Uncertainty

Answer 4

Situation in which there is a lack of knowledge and events, outcomes or consequences are unpredictable

Question 5

Opportunity cost

Answer 5

Is the next best alternative foregone

Question 6

Scientific decision making

Answer 6

Based on data and uses a logical, rational approach to déclin making

Question 7

Decision tree

Answer 7

Model that represents the likely outcomes for a business of a number of courses of action on a diagram showing the financial consequences of each

Question 8

Probability

Answer 8

The chance of a particular event occurring

Question 9

Expected values

Answer 9

Financial outcomes from a specific course of action adjusted to allow for the probability of its occurring

Question 10

Net gains

Answer 10

The expected values of a course of action minus the costs associated with it

Question 11

Ethics

Answer 11

Moral principles, which should underpin business decisions and actions

Question 12

The external environment

Answer 12

Comprises those external forces ( such as changes in competition or consumers incomes) that can influence a business’s activities