Lesson 8 Flashcards
(18 cards)
Why is decision making important in business?
It ensures profitability, efficiency, brand protection, and market confidence; helps businesses grow and adapt.
What happens if no decisions are made in business?
Nothing changes or progresses—uncertainty is worse than a bad decision.
What are the three main types of business decisions?
Strategic, tactical, and operational.
What are decision-making tools used for?
To map out choices, consider outcomes, and visually simplify decision processes.
What are two common types of decision-making tools?
SWOT analysis and decision trees
Why are decision tools valuable?
They consider costs, probabilities, and “what-if” scenarios to guide sound business decisions.
What does SWOT stand for?
Strengths, Weaknesses, Opportunities, Threats.
What are the internal factors in a SWOT analysis?
Strengths and Weaknesses—elements the business can control.
What are the external factors in a SWOT analysis?
Opportunities and Threats—elements outside of business control.
What are examples of business strengths?
Loyal customers, strong brand, good reputation, skilled staff, advanced resources, USP.
What are examples of weaknesses in business?
Resistance to change, outdated tech, poor service, weak systems, poor infrastructure.
What are some business opportunities?
New markets, innovations, emerging tech, social media platforms, process improvements.
What are examples of business threats?
Competitors, economic downturns, tech disruption, supply shortages, changing trends.
What is a decision tree?
A visual flowchart that uses a mathematical model to evaluate business options and outcomes.
What are the basic components of a decision tree?
Root/Decision node (square) – the initial question
Branches – choices and possible outcomes
Probabilities – % chance of each result
Leaf/End nodes – final outcomes
What are benefits of decision trees?
Visual clarity, structured decision-making, and data-driven forecasting.
What are the five key steps in building a decision tree?
Define the decision to be made
List all options
Add associated costs
Add outcome probabilities
Add expected results and calculate net value
Name some business uses of decision trees.
Predict customer churn
Fraud detection
Crop yield predictions
Land/housing price forecasts
Extreme weather forecasting
