Reference no: EM132942201

Unit 15 - Financial Management Essential Content

LO1 Apply different approaches used to support effective decision-making

Knowledge-based approach:

A concept which primarily focuses on quantitative, objective and factual information to inform decision-making.

Formal vs informal approaches:

How the formal approach (using structure, systems, processes) differs from the informal approach (relationships, networks, unwritten rules).

The role of stakeholders in decision-making:

The contribution of internal stakeholders (the employees and manager's perspective on the situation) and the contribution of external stakeholders (e.g. suppliers or investors vested interests) to decision-making.

'Make or buy' decisions:

Reaching a strategic decision to internally make or externally buy based on significant influencing factors.

Limiting factor analysis:

Determine the impact of different constraints on production which could prevent sales/growth maximization.

Key factor analysis:

The use of internal and external factors to determine the profitability of a product or service.

Question:

D1 Critique the use of different formal and informal approaches to support decision-making in given organizational examples.