1. ‘Chance favours only the prepared mind’
‘Chance favours only the prepared mind’. Louis Pasteur 1) Explain what you understand by this statement.
Louis Pateur- Scientist, pasteurisation and penicillin

2. TOPIC: Topic 1: Business Organization and Environment
LESSON TITLE: Decision-making Tools
COMPETENCY FOCUS:
Entrepreneurship (S4): To develop your entrepreneurial skills in preparing a realistic proposal for a new business start-up. You will understand the process a business will have to go through when starting up, including the underlying principles of starting a business.  
[IB Learner Profile Development: Thinker]
Learning Objectives
By the end of the lesson, you should be able to…
LO1) To identify two different models available to businesses when making decisions
LO2) Apply a formal decision-making framework to a given situation
LO3) Analyse the extent that the decision tree business technique supports a businesses decision making.
SMSC: You will assess the organisational culture of businesses in terms of fundamental structure, purpose and strategy development.
CRITICAL THINKING KEY:
Knowledge Application Analysis Evaluation

3. Decision-making Framework
Effective decision-making is one of the key roles of management at all levels of seniority within an organisation.
There are 2 different approaches to decision-making:
Intuitive decision-making (gut-feeling)
Scientific decision-making (based on fact/data)

4. Decision-making
Businesses of all sizes have to make many decisions each day - some are fairly simple and routine, whilst others are more complex and require significant management time and effort.
Some examples of decisions that all businesses need to make are:
Where should we locate the business?
What goods should we produce?
What price should we charge?
What should we do if a supplier fails to deliver on time?
Which job agency should we use to provide us with some temporary workers?
Which employee appraisal system should we use?

5. Types of Decision
A strategic decision is one which is very high-risk and is likely to influence the overall long-term policy and direction of the business. As such, it is likely to be dealt with by senior management (e.g. what new products to develop).
A tactical decision is a fairly routine, predictable, short-term decision, which is normally handled by middle management (e.g. what price to charge for products). Other decisions which are repetitive, day-to-day and fairly risk-free are handled by lower-level management, and are generally referred to as operational decisions (e.g. how long should tea-breaks be?).

6. Decision-making Framework

7. Internal and External Constraints on Decision-making
Organisational Structure
Changes in the business cycle
Financial constraints
Legal constraints
Labour
Changes in economic environment
Attitude of the workforce to change
Corporate aims

8. Help…!
Which theoretical frameworks/models can help a business with making an important decision that affects the business?

9. Decision Trees (HL)
Decision Tree= a diagram that sets out all the options connected with a decision and the outcomes and economic returns that you might expect.

10. Decision Trees (HL) Constructing Decision Trees:
Constructed from left to right
Each branch represents an option together with a range of outcomes and the chances of these occurring
Decision points are represented by a
these are called decision nodes.
- Chance Node (represents several outcomes)

11. Using Decision Trees
What are the advantages and disadvantages for a business using decision trees?

12. Decision Tree (HL)
Work your way through pages 61-63, making notes and constructing your own decision tree.

13. Decision Tree (HL)
Exam question/case study Pg. 63 ‘Which Market?’

14. Decision Tree (HL)
Exam Practice: ‘Decision trees assess different possible outcomes from a variety of alternatives.’ Explain this statement.

15. Reflection
Reflect on what you have learnt this lesson. What do you need to know more about?