Management and Organizational Studies 1023A/B Study Guide - Midterm Guide: International Accounting Standards Board, Financial Audit, Chief Executive Officer

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Maria Ferraro

Document Summary

Step 1: specify the design problem, including the decision maker"s goals. When determining goals, people often differ in the factors they consider and the importance they attach to these factors. Have to clearly identify goal because making a decision. Understanding the factors that influence the decision maker"s goals and their relative importance is the first step in making effective decisions. For most businesses, identifying the set of options is one of the most important tasks of management. Managers often distinguish themselves by their ability to identify the best option. Step 3: measure benefits (advantages) and costs (disadvantages) to determine the value (benefits reaped less costs incurred) of each option. Every option presents a unique trade-off between benefits and costs. The value of an option is its benefits minus its costs. We measure value relative to the status quo, which is not doing anything at all. The value of the chosen decision option should exceed its opportunity cost.