MGT 125 Chapter Notes - Chapter 1: Rationality
27 Oct 2020
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Discuss the three ways managers make decisions. Managers make decisions in accordance with the four management functions of planning, organising, leading and controlling. Managers make decisions in three ways: rationality: Fully objective and logical; carefully de ne a problem and has a clear and speci c goal. Rational decision making assumption applies as we assume that mangers maximise value within speci c constraints. Assumption applies that decisions are made to maximise economic interests. There are three conditions that managers may face when making decisions: certainty, risk and uncertainty: certainty: a situation for which a manager can make accurate decisions because the outcome of every alternative is known. Can make accurate decisions because the outcome of every alternative is known: risk: conditions in which the decisions maker is able to estimate the likelihood of certain outcomes. The ability to assign probabilities to these outcomes may be as a result of personal experience and secondary information.
