Management and Organizational Studies 1023A/B Chapter Notes - Chapter 4: Financial Accounting Standards Board, Internal Revenue Service, International Accounting Standards Board

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

Document Summary

The four-step framework for decision making: specify the decision problem, including the decision makers goals, identify options, measure benefits (advantages) and costs (disadvantages) to determine the value (benefits reaped less costs incurred) of each option. Value: its benefit less its costs: measure value relative to status quo (which is doing nothing at all, decision with highest value is only one where value exceeds its opportunity cost. Opportunity cost: the value to the decision maker of the next best option (highest valued alternative forgone: make the decision (choosing the option with highest value) Organization: a group of individuals engaged in collectively beneficial mission (can be for profit, or not for profit) For a family owned venture, goal is to increase family wealth. For publicly held businesses, goal is to maximize shareholder value (maximize returns to shareholders) Use policies and procedures, monitoring systerms, performance evaluation, and incentives to align individual goals with organizational goals.