Skip to content

CMA Foundation · Fundamentals of Business Economics and Management · Decision-making - Types and Process

A manager at Kapoor Engineering says: 'I will first collect all possible information and then decide only when I am 100% sure of the outcome.' Which understanding of decision-making does this approach ignore?

The approach ignores that decisions deal with the future and are therefore made under uncertainty. Complete certainty is rarely achievable, so managers must decide with reasonable information within available time. Waiting for perfect certainty leads to delay, and delay is itself a choice with costs.

  1. ADecisions are taken in the present and have no link with the future
  2. BDecisions are always taken by a group, never an individual
  3. CA decision is a mental process and cannot be rational
  4. DDecisions are made under uncertainty about future outcomes, so complete certainty is rarely availableCorrect

Explanation

Decisions concern future events, which cannot be known fully. Waiting for 100% certainty would mean no decision is taken, which itself is a decision with costs. Option A is wrong as decisions are future-oriented; options B and C are false statements about nature.

Did you get it right without looking?

One question tells you little. A timed set on Decision-making - Types and Process shows your real accuracy, how long you take and where you lose marks.

Practise Decision-making - Types and ProcessFree diagnostic mock

More Decision-making - Types and Process questions