Decision Making and Assumptions

You have just been promoted from front-line supervisor to be one of the firm's senior managers. During your business education, you learned that the primary role of a manager is to make good decisions. As a supervisor, you had frequently been making routine decisions, but you realize that decision making for the overall company can and will have far greater impact on the company and its employees.

Your boss, the chief executive officer (CEO), realizes that you do not have much practice in this higher level, decision-making process and has asked you to write a memo describing your understanding of how to make important decisions.

Your memo should address the following questions:

• Describe at least 3 criteria that would determine whether the manager is making good decisions. What should be done to better assure that you are making a good decision?
• In the realm of decision making, what are assumptions? Rather than use a dictionary definition, cite several specific assumptions that would go with any real-life decision you have made or have seen made at a company at which you have worked.
• Given the importance of proper assumptions, your boss asked you to assess the accuracy of certain business assumptions and what could you do to test or confirm the credibility of them. The following were major assumptions for each firm:
  • An automobile manufacturer's assumption that the demand for SUVs would continue because gas prices would continue to rise
  • An airline's assumption that there was a need for an airline that provided no added amenities