Business Decision-Making Strategies

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Questions and Answers

What is one decision that Mattel must make regarding its products?

How to allocate its marketing budget between male and female customers

How to expand its services into new markets

What new toys to introduce to the market (correct)

What pricing strategy to adopt for its existing toys

Which company must decide on ticket prices for its flights?

Sears

FedEx

General Motors

Southwest Airlines (correct)

What decision is associated with FedEx in the context provided?

Whether to expand its services into new markets (correct)

What products to discontinue

How to execute its marketing strategy

Whether to offer price discounts to corporate clients

Which aspect of customer focus does Sears need to decide on?

How to allocate its marketing budget (A) Signup and view all the answers

What decision must a bank consider regarding its customers?

Whether to discontinue unprofitable customers (A) Signup and view all the answers

What pricing strategy should be considered for products and services?

What prices should be charged for products and services (B) Signup and view all the answers

What is one way companies can improve their effectiveness according to the content?

How to improve efficiency and effectiveness (A) Signup and view all the answers

Which product-related decision might General Motors face?

Whether to discontinue certain models of automobiles (B) Signup and view all the answers

What is the primary material used by White for joining titanium tubes in bike frames?

Silver alloy (B) Signup and view all the answers

Why has White resisted expanding production at his company?

To preserve product quality and customer relationships (C) Signup and view all the answers

Which of the following is NOT a type of business risk mentioned?

Risks related to exchange rates (D) Signup and view all the answers

What is one benefit of implementing controls in enterprise risk management?

They help in proactively managing risks. (D) Signup and view all the answers

What significant impact can power outages have on businesses?

They can cause direct revenue losses. (C) Signup and view all the answers

How many major power outages did the United States experience between January and April 2010?

35 (C) Signup and view all the answers

What strategy could a company employ to ensure a new facility project stays on time and within budget?

Establish and monitor control measures (B) Signup and view all the answers

How often does George Pauli estimate his company experiences power outages?

Six times a year (A) Signup and view all the answers

What is a business process primarily concerned with?

Carrying out tasks that serve stakeholders (A) Signup and view all the answers

Which term describes how an organization’s functional departments interact to add value?

Value chain (A) Signup and view all the answers

What is ONE potential drawback of a department-focused approach in management?

It may lead to process inefficiencies. (D) Signup and view all the answers

What is a key consideration when designing a new product?

Communicating with all affected departments (A) Signup and view all the answers

What management approach focuses on overall process excellence?

Lean production (A) Signup and view all the answers

What could be an unintended consequence of the Purchasing Department focusing solely on minimizing costs?

Greater material waste and rework (B) Signup and view all the answers

Why is cross-departmental cooperation vital for managers?

To enhance the efficiency of business processes (A) Signup and view all the answers

What is the primary goal of effective managerial accounting?

Establishing plans that consider all stakeholders (D) Signup and view all the answers

What is a direct consequence of rational investors paying less for securities from companies?

Higher prices for goods and services (B) Signup and view all the answers

Which of the following is NOT one of the overarching ethical principles of IMA members?

Transparency (D) Signup and view all the answers

What should a member do if faced with constraints that affect their decision-making performance?

Communicate these limitations (D) Signup and view all the answers

What is one responsibility of IMA members under the principle of Competence?

Maintaining an appropriate level of professional expertise (D) Signup and view all the answers

How should members treat confidential information according to IMA guidelines?

Keep it confidential unless disclosure is authorized (C) Signup and view all the answers

In ethical decision-making, what is the first step to take?

Define alternative courses of action (A) Signup and view all the answers

What might result from a company's unethical behavior regarding securities?

Decreased funds for future investments (B) Signup and view all the answers

What should a member do if they encounter a situation beyond their professional expertise?

Communicate their limitations or constraints (B) Signup and view all the answers

What is a key feature of lean production?

Only producing units in response to customer orders (B) Signup and view all the answers

Which of the following best describes just-in-time production?

Completing products just before shipping to customers (C) Signup and view all the answers

How did Greenpeace communicate its disapproval of Nestlé's palm oil supplier?

Through social media platforms such as Facebook and Twitter (C) Signup and view all the answers

What strategy did Louis Vuitton use to enhance its manufacturing capacity?

Implementing lean production techniques (B) Signup and view all the answers

What was a significant outcome of Nestlé terminating its supplier relationship?

A decrease in palm oil to meet production needs (D) Signup and view all the answers

What is one challenge faced by companies when responding to social media controversies?

Showing they are listening without escalating tensions (B) Signup and view all the answers

Which outcome is NOT commonly associated with lean production?

Higher defect rates (D) Signup and view all the answers

Which is an advantage of U-shaped work arrangements implemented by Louis Vuitton?

Optimization of floor space usage (B) Signup and view all the answers

Study Notes

Decision-Making in Business

Companies like Mattel, Southwest Airlines, and General Motors face critical decisions regarding product offerings, pricing, and model discontinuation.
Customer focus is essential; businesses must balance marketing budgets to target different demographics effectively, as seen with Sears.
Global expansion decisions can bring new market opportunities, illustrated by FedEx's potential service expansions.
Pricing strategies are crucial; companies must evaluate their customer base to decide on premium charges or discounts.

Enterprise Risk Management

Every business strategy and decision carries inherent risks which must be identified and managed through Enterprise Risk Management (ERM).
Businesses face various risks including those from weather, cyber threats, legal compliance, and customer safety.
Implementing controls helps mitigate risks, but cannot eliminate them entirely; effective management focuses on proactive rather than reactive measures.

Managing Operational Risks

Power outages represent significant operational risks, impacting revenue and operational efficiency for businesses like nightclubs and small embroidery companies.
Managers must weigh impacts on all stakeholders when establishing controls for risk management.

Process Management Perspective

Companies often organize by functional departments; however, effective management prioritizes business processes that extend beyond departmental boundaries.
The value chain concept emphasizes how business functions interact to enhance product and service value, requiring cross-departmental communication for successful outcomes.
Process excellence is critical; narrowly focused cost reductions in one area can adversely affect other departments and overall customer satisfaction.

Lean Production

Lean thinking, or Just-in-Time production, focuses on producing only in response to customer orders, reducing inventory and waste while increasing responsiveness.
Louis Vuitton effectively applied lean production to boost capacity without new facilities by optimizing manufacturing layouts and reducing waste through technology.

Ethical Decision Making

Ethical behavior is foundational to managerial accounting, ensuring that data is collected and reported honestly.
Decision-making with ethical implications requires evaluating impacts on all affected parties and seeking guidance from ethical standards, such as those outlined by IMA.
IMA principles advocate for honesty, fairness, objectivity, and responsibility within organizations, contributing to sound ethical practices.

Social media can significantly influence corporate decisions, exemplified by Greenpeace’s campaign against Nestlé for unsustainable palm oil sourcing.
Companies must navigate social media feedback carefully to maintain public image without engaging in disputes with protesters.

Leadership Perspective

Diverse employee needs and beliefs impact organizational dynamics, necessitating effective leadership to harmonize and guide teams towards common objectives.

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Description

Explore the intricacies of business decision-making with this quiz. Learn how companies like Mattel, Southwest Airlines, and General Motors formulate strategies based on customer needs and market conditions. Test your understanding of the factors influencing these critical decisions.