MANAGEMENT - Decisional activities

- Management is the process of reaching o Practically all types of managerial activities

organizational goals by working with and through are based on one or the other types of
people and other organizational resources decisions
- Management has the following 3 characteristics: o Managers are continuously involved in
o It is a process or series of continuing and decisions of different kinds since the
related activities decision made by one manager becomes
o It involves and concentrates on reaching the basis of action to be taken by other
organizational goals managers
o It reaches these goals by working with and - Inter-personal activities
through people and other organizational o Management involves achieving goals
resources through people
o Managers have to interact with superiors
CATEGORIES OF MANAGEMENT as well as the sub-ordinates
A. Management as a Process o Managers maintain good relations with
- As a process, management refers to a series of subordinates including inter-personal
inter-related functions activities and taking care of the problem
- It is the process by which management creates,
operates and directs purposive organization C. Management as a Discipline
through systematic, coordinated and co-operated - Management as a discipline refers to that branch
human efforts of knowledge which is connected to study of
- According to George R. Terry, “Management is a principles & practices of basic administration
distinct process consisting of planning, organizing, - It specifies certain code of conduct to be followed
actuating and controlling, performed to determine by the manager & also various methods for
and accomplish stated objective by the use of managing resources efficiently
human beings and other resources” - Management as a discipline specifies certain code
- Aspects of Management as a Process of conduct for managers & indicates various
o Management is a Social Process methods of managing an enterprise
o Management is an Integrating Process - Management is a course of study which is now
o Management is a Continuous Process formally being taught in the institutes and
universities after completing a prescribed course
B. Management as an Activity or by obtaining degree or diploma in management,
- Like various other activities performed by human a person can get employment as a manager
beings such as writing, playing, eating, cooking - Any branch of knowledge that fulfills following two
etc, management is also an activity because a requirements is known as discipline:
manager is one who accomplishes the objectives o There must be scholars & thinkers who
by directing the efforts of others communicate relevant knowledge through
- According to Koontz, “Management is what a research and publications
manager does” o The knowledge should be formally
- Informational activities imparted by education and training
o In the functioning of business enterprise, programmes
the manager constantly has to receive and - Since management satisfies both these problems,
give information orally or in written therefore it qualifies to be a discipline
o A communication link has to be maintained - Though it is comparatively a new discipline but it is
with subordinates as well as superiors for growing at a faster pace
effective functioning of an enterprise
D. Management as a Group - The level of management determines a chain of
- Management as a group refers to all those persons command, the amount of authority & status
who perform the task of managing an enterprise enjoyed by any managerial position
- When we say that management of ABC & Co. is
good, we are referring to a group of people those A. Top level / Administrative level
who are managing - Consists of board of directors, chief executive or
- A group technically speaking, management will managing director
include all managers from chief executive to the - The ultimate source of authority and it manages
first - line managers (lower-level managers) goals and policies for an enterprise
- But in common practice management includes - Devotes more time on planning and coordinating
only top management functions
- Those who are concerned with making important
decisions, these persons also enjoy the authorities B. Middle level / Executory
to use resources to accomplish organizational - The branch managers and departmental
objectives & also responsibility to for their efficient managers
utilization. - Responsible to the top management for the
- Management as a group may be looked upon in 2 functioning of their department
different ways: - Devote more time to organizational and directional
a. All managers taken together functions
b. Only the top management - In small organization, there is only one layer of
middle level of management but in big enterprises,
E. Management as a Science there may be senior and junior middle level
- Science is a systematic body of knowledge management
pertaining to a specific field of study that contains
general facts which explains a phenomenon C. Low level / Supervisory / Operative / First-line
- Establishes cause and effect relationship between managers
two or more variables and underlines the principles - Supervisory / operative level of management
governing their relationship - Consists of supervisors, foreman, section officers,
- The principles are developed through scientific superintendent, etc
method of observation and verification through - According to R.C. Davis, “Supervisory
testing management refers to those executives whose
work has to be largely with personal oversight and
F. Management as an Art direction of operative employees”
- Art implies application of knowledge & skill to trying - Concerned with direction and controlling function
about desired results of management
- An art may be defined as personalized application
of general theoretical principles for achieving best THE EVOLUTION OF MANAGEMENT THEORY
possible results - Evolution in management theory over the last
century is the history of the constantly changing
G. Management as a Profession role of leaders in organizations
- As organizational leaders evolved from the carrot-
LEVELS OF MANAGEMENT and-stick wielding owner-managers of the earlier
- Refers to a line of demarcation between various Industrial Era to the Servant Leaders of the 21st
managerial positions in an organization Century
- The number of levels in management increases - Early managers rely on authority and strongarm
when the size of the business and work force tactics to reach their goals, while, servant leaders
increases and vice versa in our time are challenged to set personal
 examples by living the values and principles they - Taylor sought to reduce the time a worker spent
wish their followers to achieve on each task by optimizing the way the task was
done.
Began in the industrial revolution in the late 19th
century as: C. Frank and Lillian Gilbreth
- Managers of organizations began seeking ways to - Refined Taylor’s work and made many
better satisfy customer needs. improvements to the methodologies of time and
- Large-scale mechanized manufacturing began to motion studies.
adopt small-scale craft production in which goods - Time and motion studies
were produced. - Breaking up each job action into its components.
- Social problems were developed in the large - Finding better ways to perform the action.
groups of workers employed under the factory - Reorganizing each job action to be more efficient.
system. - Also studied worker-related fatigue problems
- Managers began to focus on increasing the caused by lighting, heating, and the design of tools
efficiency of the worker-task mix. and machines.

D. Max Weber
- Developed the concept of bureaucracy as a formal
system of organization and administration
designed to ensure efficiency and effectiveness.

Weber’s Principles of Bureaucracy

1. Formal Hierarchal Structure
2. Rules-based Management
3. Functional Specialty Organization
4. Up-focused or In-focused Mission
5. Impersonal
A. Adam Smith (18th century economist) 6. Employment-based on Technical
- Observed that firms manufactured pins in one of Qualifications
two different ways:
o Craft-style - each worker did all steps. E. Henri Fayol
o Production - each worker specialized in - Synthesized various tenets or principles of
one step. organization and management
- Realized that job specialization resulted in much - He published "The Principles of Scientific
higher efficiency and productivity Management" in the USA in 1911
o Breaking down the total job allowed for the
division of labor in which workers became Fayol’s 14 Principles of Management
very skilled at their specific tasks. 1. Division of work – divide work into specialized
tasks and assign responsibilities to specific
B. Frederick Winslow Taylor individuals.
- “Father of Scientific Management “(systematic
study of the relationships between people and 2. Authority – delegate authority along with
tasks for the purpose of redesigning the work responsibility.
process for higher efficiency”) in the late 1800’s to
replace informal rule of thumb knowledge. 3. Discipline – make expectations clear and sanction
violations.
4. Unity of command – each employee should be 3. Mathematical or “Management Science” Approach
assigned only to one supervisor. - Sees managing as mathematical processes,
concepts, symbols, and models.
5. Unity of direction – employees’ efforts focused on - Looks at management as a purely logical
achieving organizational objectives. process, expressed in mathematical symbols
and relationships.
6. Subordination of individual interest to the general
interest – the general interest must predominate. 4. Decision Theory Approach
- Focuses on the making of decisions, persons
7. Remuneration – systematically reward efforts that or groups making decisions, and the decision-
supports the organization’s direction. making process.
- Some theorists use decision making as a
8. Centralization – determine the relative importance springboard to study all enterprise activities.
of superior and subordinate roles. The boundaries are no longer clearly defined.

9. Scalar chain – keep communications within the 5. Re-engineering Approach

chain of command. - Concerned with fundamental re-thinking,
process analysis, radical re-design, and
10. Order – order jobs and material so they support dramatic results.
the organization’s direction.
6. Systems Approach
11. Equity – managers should be kind and fair to their - Systems have boundaries, but they also
subordinates. interact with the external environment; that
means organization are open systems.
12. Stability of tenure – management should provide - Recognizes the importance of studying
orderly personnel planning and ensure that interrelatedness of planning, organizing, and
replacements are available to fill vacancies. controlling in an organization as well as in the
many subsystems.
13. Initiative – employees who are allowed to originate
and carry out plans will exert high levels of effort. 7. Socio-technical Approach
- Technical system has a great effect on the
14. “Esprit de corps” – promoting team spirit will build social system (personal attitudes, group
harmony and unity within the organization. behavior).
- Focuses on production, office operations, and
APPROACHES TO MANAGEMENT other areas with close relationships between
1. Empirical or Case Approach the technical system and people.
- Studies experience through cases.
- Identifies successes and failures. 8. Group Behavior Approach
- Emphasizes behavior of people in groups.
2. Contingency or Situational Approach - Based on sociology and social psychology.
- Managerial practice depends on - Primarily studies group behavior patterns.
circumstances (i.e., a contingency or a - The study of large groups is often called
situation). organizational behavior.
- Contingency theory recognizes the influence
of given solutions on organizational behavior 9. Interpersonal Behavior Approach
patterns. - Focuses on interpersonal behavior, human
relations, leadership, and motivation.
 - Based on individual psychology. B. Informational Roles
- pertain to receiving and transmitting
10. Cooperative Social Systems Approach information so that manager can serve as the
- Concerned with both interpersonal and group nerve centers of their organizational units.
behavioral aspects leading to a system of
cooperation. C. Decisional Roles
- Expanded concept includes any cooperative - involve making significant decisions that affect
group with a clear purpose. the organization.

11. McKinsey’s 7-S Framework

- Strategy Interpersonal Roles
- Structure
- Systems
Role Description
- Style
- Staff
- Shared Values Performs symbolic duties of a
Figurehead
- Skills legal or social nature.

12. Total Quality Management Approach

Builds relationships with
- Focuses on providing dependable, satisfying
subordinates and
products and services (Deming) or products or Leader
communicates with help and
services that are fit for use (Juran), as well as information.
conforming to its quality requirements
(Crosby).
Maintains networks of contacts
13. Management Process or Operational Approach Liaison outside work unit who provide
help and information.
- Draws together concepts, principles,
techniques, and knowledge from other fields
and managerial approaches. Informational Roles

14. Managerial Roles Approach

- Original study consisted of observations of five Role Description
chief executives.
- On the basis of this study, ten managerial roles Seeks internal and external
were identified and grouped into interpersonal, Monitor informational about issues that
informational, and decision roles. can affect organization.

THE MANAGERIAL ROLES APPROACH:

A. Interpersonal Roles Transmits information internally
Disseminator that is obtained from either
- grow directly out of the authority of a
internal or external sources.
manager’s position and involve developing and
maintaining positive relationships with
significant others. Transmits information about
Spokesperson
the organization to outsiders.
 Time Servers
Decisional Roles - These are generally older mangers who have
lost interest in their job and environment, and
are marking time until retirement or moving to
Role Description
another job.
- They take all necessary action to avoid stress,
Acts as initiator, designer, and and maintain a low profile within the company.
Entrepreneur encourager of change and - Although these mangers are not generally
innovation. lazy, their low motivation means that they do
the minimum amount of work needed to hold
down a job.
Takes corrective action when
Disturbance - Decisions are avoided since they could lead to
organization faces important,
Handler mistakes.
unexpected difficulties.
- Personal status is very important to them.
- Time servers usually have good management
Distributes resources of all experience, and if motivated can become a
Resource types including time, funding, very valuable asset to the organization.
Allocator equipment, and human
- They often consider themselves to be “father
resources.
or mother figures”.
- They understand people and can build an
Represents the organization in effective team if they try.
major negotiations affecting the - They recognize achievements in others and
Negotiator
manager’s areas of are ready to acknowledge them.
responsibility.
Climbers
- These managers are driven by extreme
MANAGEMENT STYLES
personal ambition and will sacrifice everything,
Administrators
including self and family, to get to the top of the
- Administrators look to company rules and
corporate ladder.
regulations for solving all problems. They live
- They want to achieve and to be seen to have
by the book and are usually very good
achieved, especially by those in a superior
employees. They show total loyalty to the
position.
organization and have probably been with the
- Climbers will pursue personal advancement by
company for many years.
fair means or foul. However, they become
- Administrators are usually not very good
demotivated if this does not show quick
communicators, using the official company
results, and this can eventually lead to stress.
channels for all communications, which are
- Self-interests come before those of the
often limited to one level upwards and
organization, and peers will be fought in order
downwards.
to gain an advantage and to build an empire.
- They are not good in resolving conflict, looking
- Status is important but only as a sign of
to company rules for resolving these. In spite
seniority.
of their rather mechanistic approach.
- They are generally respected by their staff, and
Generals
by peers, for their organizational loyalty and
- This is usually a younger person who exhibits
knowledge.
lots of energy.
 - The general likes to rule and manipulate Nice Guys
power, but is achievement oriented: power is - These managers are usually weak-willed and
used to get tasks done. are more interested in being liked, by peers
- Generals work extremely hard, driving and subordinates, than in achieving targets.
themselves and those around them. - They do not criticize their subordinates, even
- Generals are sociable and mix well at all levels. when they are poor performers, and may in
They usually get their way with peers by fact support too much, so unconsciously
overwhelming, although peers can resent this retarding their development.
if it is done too often.
- Status is important to generals, but for the Bosses
luxury associated with it, not as a symbol of - Bosses are extremely inflexible and are often
seniority. mistaken for strong-minded people.
- They are strong-willed individuals, often with - Usually, they are only strong talkers, and hide
the same characteristics as a self-made behind abusive language.
entrepreneur. - They try to terrorize subordinates and peers,
- Usually, they are optimistic about the future, creating conflict to emphasize their own
sometimes wrongly. power.
- Managers in the boss category are often
Supporters brought into a company to act as “Hatchet
- Supporters maintain a balanced view about Men”.
the world, the organization, subordinates, and - In the short-term, they can show results, but in
themselves. long-term they are very destructive, causing
- They are usually experience managers who more harm than good.
are knowledgeable in management - They are insecure in themselves and get
techniques and apply them where they can. security by humiliating others in public.
- Supporters work through people in achieving - They advance by pointing out the mistakes of
their aims. others, and not by their own achievements.
- They are good at delegation and develop their
subordinates by giving them responsibility. FIVE FILIPINO STYLES OF MANAGEMENT
- The people working under them are highly Managers by “Kayod”
motivated. - “Kayod” is a Filipino term which means “to
- Supporters’ personal technical knowledge is sweat it out or to give oneself to hard work”.
usually lacking, but this compensated for by - This manager is action-hungry, highly
the support they themselves receive from the dedicated, but his manners are rather formal
specialists within their department. and that of an introvert.
- Supporters are good facilitators and are very - He is a serious worker and will not give in to
good in managing change. bribing or any anomalous deals.
- They recognize achievement and reward it.
- They tend to be loners and do not mix well with Managers by “Lusot”
peers. - “Lusot” is another Filipino word which means
- This means that they can often miss out on “capitalizing on a loophole”.
information from the grapevine, so that they - Thus, this manager will be always on the
are not always well-briefed on organizational lookout for loophole of anything and will use
matters. them to avoid too much work, or shortcuts and
to do unconventional or even illegal ways to
attain objectives. Generally, an extrovert.
- He deals with people informally.
Managers by “Libro” - The power of technical expertise would not
- “Libro” in English, book. be seen again until Napoleon
- This type of manger operates by the dictates - Origins of merit system
of the book. - Origins of civil service (to regulate pay)
- What the manuals other formal documents - The core features of modern public
say. administration were first found in the
- He is systematic and analytical. Roman Empire
- He usually has adequate formal training in - Depersonalization, separation of public
management. and private funds, hierarchy, functional
specialization
Managers by “Oido” - The virtue of military service (as training in
- This manager leaves his managerial skills by administration)
oido or by ear.
- He has a vast field of practical experiences to C. The military heritage of public administration
compensate for his lack of formal management - The history of the world can be viewed as the
education. rise and fall of public administrative institutions
- He is the opposite of the “Libro” manager. - Rome was effective because the army’s
organizational doctrine made it superior to its
Managers by “Ugnayan” competitors and because it was backed up by
- He is a hybrid of all type of managers. a sophisticated administrative system of
- Hence, he is one type of manager now, and supply backed by taxes
different in another time, depending on the - The military heritage of public administration
situation. - The Roman empire only fell when its legions
- He is a gifted reconciler of all philosophers and degenerated into corps of mercenaries and
beliefs held by various types of managers. when its supply and tax bases were corrupted
- He integrates various styles of management - Both victorious soldiers and successful
depending on the need and conditions of his managers tend to be inordinately admired and
organization. rewarded as risk takers
- He is participatory and coordinative.
PLANNING
ORIGIN OF MANAGEMENT - The most fundamental and basic of all
A. The key to the city management function.
- an era when the only way into a city was - Involves a rational approach in selecting and
through a locked gate achieving goals and objectives and deciding on
- The profession of management began and the actions to achieve them.
developed as the profession of arms - Strongly implies managerial innovation.
- war is not possible without an effective system - Bridges the gap from where we are and to where
of public administration we want to go.
- first public administrators: military officers
- first armies: mobs with managers Close Relationship of Planning and Controlling
- Gradually developed hierarchy, line and staff Any attempt to control without plans is
personnel, logistics and communications meaningless, since there is no way for people to tell
whether they are going where they want to go (the
B. The continuing influence of ancient Rome result of the task of control) unless they first know
- transfer of managerial control – from wealth where they want to go (part of the task of planning).
and power to professional expertise first Plans thus furnish the standards of control.
happened in the Roman army
TYPES OF PLANES Types of objectives needed by an organization:
1. VISION 1. Financial Objectives
- A picture of the state of the desired outcome in the - Outcomes that relate to improving firm’s
future usually in the long term from current time. financial performance.
- It answers the question “where do we want to go?” EXAMPLES:
- It is a plan, a goal, an objective. It should be a. McCORMICK & COMPANY
specific, measurable, attainable, realistic and time- - Improve returns from each of our existing
bound. operating groups.
- Achieve a 20% return on equity.
Developing a Vision - Achieve net sales growth rate of 10% per year.
Begins with thinking strategically - Maintain average earnings per share growth
a. About the firm’s future makeup; rate of 15% per year.
b. Forming vision of firm’s future in 5-10 years b. QUAKER OATS COMPANY
- To achieve return on equity at 20% or above,
Task is to: “real” earnings growth averaging 5% or better
- Inject sense of purpose into firm’s activities; over time, be a leading marketer of strong
- Provide LONG-TERM DIRECTION; consumer brands, and improve the profitability
- Give the firm STRONG IDENTITY; of low-return businesses or divest them.
- Decide “WHO we are, WHAT we do, & WHERE
we are - headed” 2. Strategic Objectives
- Outcomes that will result in greater
2. PURPOSES AND MISSIONS competitiveness & stronger long-term market
- Identifies the basic purpose or function or position
tasks of the organization or any part of it. EXAMPLES:
- In every social system, enterprises have a a. NIKE
basic function or task assigned to them by - Protect & improve Nike’s position as the
society. number one athletic brand in America.
- For example, the purpose of a business - Build a strong momentum in growing fitness
generally is the production and distribution of market.
goods and services. - Intensify the company’s effort to develop
- The purpose of a state highway department is products that customers need and want.
the design, building, and operation of a system b. ATLAS CORPORATION
of state highways. - To become a low-cost, medium-size gold
- The purpose of the courts is the interpretation producer, producing in excess of 125,000
of laws and their application. ounces of gold a year and building gold
- The purpose of a university is teaching, reserves of 1,500,000
research, and providing services to the
community. 3. STRATEGIES
- It is defined as the determination of the basic
3. GOALS OR OBJECTIVES long-term objectives of an enterprise and the
- Represent not only the end point of planning, adoption of courses of action and allocation of
but also the end toward which organizing, resources necessary to achieve these goals.
directing/leading, and controlling are aimed. - Consists of competitive moves & business
approaches to produce successful
performance
- Management’s “game plan” for:
o Running the business
 o Strengthening firm’s competitive 8. BUDGETS
position - A statement of expected results expressed in
o Satisfying customers numerical terms. It may be called a
o Achieving performance targets “quantified” plan. In fact, the financial
operating budget is often called a “profit plan”.
4. POLICIES - It may be expressed in financial terms: in terms
- General statements or understandings that of labor-hours, units of product, or machine-
guide or channel thinking in decision making. hours; or in any other numerically measurable
- They help decide issues before they become terms.
problems. - It may deal with operation, it may reflect capital
- Make it unnecessary to analyze the same outlays, or it may show cash flow.
situation every time it comes up, and - They are also control devices. However,
- Unify other plans, thus permitting other making a budget is clearly planning. The
managers to delegate authority and still budget is the fundamental planning instrument
maintain control over what their subordinates in many companies.
do. - The budget is necessary for control, but it
cannot serve as a sensible standard of control
5. PROCEDURES unless it reflects plans.
- Plans that establish a chronological sequence
of required actions. In handling future STEPS IN PLANNING
activities; 1. Being Aware of Opportunities
- Details of the exact manner in which certain All managers should:
activities must be accomplished.; - Take at preliminary look at possible future
opportunities and see them clearly and
6. RULES completely.
- Spell out specific required actions or non- - Know where their company stands in the light
actions. of its strengths and weaknesses.
- Usually the simplest type of plan. - Understand what problems it has to solve and
- The essence of rule is that it reflects a why.
managerial decision that a certain action must - Know what it can expect to gain.
– or must not – be taken. - Planning requires a realistic diagnosis of the
- Rules are different from policies in that policies opportunity situation.
are meant to guide decision making by
marking off areas in which managers can use 2. Establishing Objectives
their discretion, while rules allow no discretion - To be done for the long-term as well as for the
in their application. short range.
- Objective specify the expected results and
7. PROGRAMS indicate the end points of what is to be done,
- A complex of goal, policies, procedures, rules, where the primary emphasis is to be placed,
task assignments, steps to be taken, and what is to be accomplished.
resources to be employed, and other elements - Objectives must be SMART.
necessary to carry out a given course of
action; 3. Developing Premises
- They are ordinary supported by budgets. - Establish, circulate, and obtain agreement to
utilize critical planning premises such as
forecasts, applicable basic policies, and
existing company plans.
 - Premises are assumptions about the DECISION MAKING
environment in which the plan is to be carried - It is defined as the selection of a course of
out. action from among alternatives; it is at the core
of planning.
4. Determining Alternative Courses - A plan cannot be said to exist unless a
- Search for and examine alternative courses of decision–a commitment of resources,
action, especially those not apparent. direction, or reputation–has been made.
- The more common problem is not finding - Managers sometime see decision making as
alternatives but reducing the number of their central job because they must constantly
alternatives so that the most promising may be choose what is to be done, who is to do it, and
analyzed. when, where, and occasionally even how it will
- Even with mathematical techniques and the be done.
computer, there is limit of the number of
alternatives that can be thoroughly examined. MAJOR STEPS IN DECISION MAKING
1. Identifying Alternatives and the Limiting Factor
5. Evaluating Alternative Courses - The ability to develop alternatives (by
- Evaluate the alternatives by weighing them in ingenuity, research, and common sense), is
the light of premises and goals. often as important as being able to select
correctly among them.
6. Selecting a Course - The manager needs help in this situation, as
- This is the point at which the plan is adopted – well as assistance in choosing the best
the real point of decision making. alternative, is found in the concept of the
- Occasionally, an analysis and evaluation of limiting or strategic factor.
alternative courses will disclose that two or - A limiting factor is something that stands in the
more are advisable, and the manager may way of accomplishing a desired objective.
decide to follow several courses rather than - The principle of the limiting factor states that,
the one best course. by recognizing and overcoming those factors
that stand critically in the way of a goal, the
7. Formulating Derivative Plans best alternative course of action can be
- When a decision is made, planning is seldom selected.
complete, and a seventh step is indicated.
- Derivative or action plans are almost invariably 2. Evaluation of Alternatives
required to support the basic plan. - This is the point of ultimate decision making,
although decisions must also be made in the
8. Quantifying Plans by Budgeting other steps of planning—in selecting goals, in
- Quantify decisions and plan by converting choosing critical premises, and even in
them into budgets. selecting alternatives.
- The overall budget of an enterprise represents - Because of complexities in evaluating
the sum total of income and expenses, with alternatives, newer methodologies and
resultant profit or surplus, and the budgets of applications and analysis are needed:
major balance sheet items such as cash and o Advantages/ Disadvantages
capital expenditures. o Strengths/ Weaknesses
- If done well, budgets become a means of o Cost-Benefit Analysis (C.B.A.)
adding various plans and set important o Decision Trees
standards against which planning progress
can be measured.
3. Selecting an Alternative: Three Approaches
- Bases for selecting from among alternative
courses of action

Decision Making under Certainty, Uncertainty, and

Risk
A. Certainty
- In a situation involving certainty, people are
reasonably sure about what will happen when
they make a decision. The information is
reliable and is considered to be reliable, and
the cause-and-effect relationships are known.

B. Uncertainty
- In a situation of uncertainty, on the other hand,
people have only a meager database, they do
not know whether or not the data are reliable,
and they very unsure about whether or not the
situation may change.

C. Risk
- In a situation with risks, factual information may
exist, but it may be incomplete. To improve
decision making, one may estimate the
objective probability of an outcome by using,
for example, mathematical models. On the
other hand, subjective probability, based on
judgment and experience, may be used.