Question

1. Which decision issues do you think are the most difficult to address in an organization? Why do you think these are difficult to address?

2. If employees are unable to meet a standard set in an organization, what effects would you expect this to have on the total productivity of the organization? How can the management promote a culture of productivity in the whole organization?

3. How will a specific business entity benefit from using the Balanced Scorecard? What effects would this have to the areas of management accounting?

4. What are the different risks that business entities are exposed to currently? What advise can you give to the management in order to mitigate if not eliminate these risks?

Answer 1

Ans 1

The most difficult issue in decision making in Organization is "Escalation of Commitment.

Due to the complex and often uncertain nature of business environment , business leaders often make sub optimal decisions which they come to realize later. However the stage at which they realize their mistake, they have committed so much to this decision that they find it difficult to admit and reverse the decision. This is called Escalation of Commitment.

For Example a CEO of an automotive firm decides to launch a new budget car assuming huge demand from the mass market. He goes ahead and announce the future launch in the press. However the design team comes up and says the design of the budget car would make it unviable. The CEO still presses ahead as he has already put his reputation on the line for this launch.

Time and again even good business leaders have into this trap and find it difficult to reverse their decision even after realizing the fallacy of their logic.