Decision making

Why does decision making necessarily invovle risk and uncertainty?

Decisions are taken on the basis of available data and assumptions about the future. Incomplete or inaccurate data, faulty assumptions or analysis or unexpected future events such as economic downturn means there is always a risk a decision many have unintended consequences

What is centralisation?

Decisions are tkaen at the top of the hierarchy, and then passed down the chain of command where subordinates carry out instructions

What is decentralisation?

Authority is delegated down the chain of command. More decisions are taken away from head office. 

Define opportunity cost

The best alternative saacrificed when making a deicision

What is Ansoffs Matrix?

• Outlines potential growth strategies by increasing sales in existing or new markets with existing or new products

Define market penetration

Where a firm focuses its activities on building sales of an existing product in a market in which the business is already operating. Low risk as the firm is operating in a  known market

Explain market development

Seeks to find a new market for an existing product- high risk (new segment or overseas)

Explain product development

Launching a new or improved product to an existing market. 

Explain diversification

Targeting a new market with a new product (high risk)

What is critical path analysis?

CPA or network analysis is a managment tool used to plan, control and monitor complex projects

Why use CPA?

• Identifies shortest completion time
• Effective CPA ensures the right resources are in the right place at the right time

How is CPA constructed?

• Break a project into small activities
• Place activities into a sequence
• ETA
• Draw a network diagram
• Identify critical path
• Monitor progresses against forecasts

Key components:

• Node (circle)- shows earliest start/latest finishing times
• EST (Earliest start time)- calculated from left to right- adding time taken to complete current activity to the cumulative total of previous activites
• LFT (latest finishing time)-  shows the latest time an activity can finish without delaying the entire project- calculated from right to left

What is a critical path?

The critical path is th elongest-path in the diagram- critical activities have no float time

What is float time?

Is the spare time available for a given activit

Define free float

The amount of time any one individual can be delayed without affect the ST of the next task. 

FREE FLOAT= EST of next activity - duration of this activity- EST of this activity

5 advantages to using CPA

• Plan, control and monitor compelx projects
• Identify the most efficent paths for completeing the proect
• Identifies whos actvitiy delays the entire project
• Allocate resources efficiently

What is integration?

Merging together of two national economies 

Define globalisation

Process of ever closer links between national economies 

6 reasons why a business might target overseas

• Increase market size
• Exploit spare capacity
• Extend product life cycle
• Counteract a recession/competition
• Spreads risk across numberous markets

Give 3 problems that face internationlal marketing strategies

• Policitcal and legal factors
• Economic factors (economic conditions e.g)
• Social and cultural factors (language e.g)