Vocabulary (часть 2)

7. Remember the following words and word combinations by heart.

1. option – вариант, опция

2. to lay out – разложить, скомпоновать

3. to identify – определять, идентифицировать

4. to evaluate – оценивать

5. once-and-for-all – на все случаи жизни, однажды и на всегда

6. full-fledged – зд. полноценный

7. complicated – сложный

8. to examine – исследовать

9. legal – юридический

10. probabilistic model – вероятностная модель

Text B

8. Read and translate the text ( part 2) management: six basic steps in decision making Step 3: Explore the Alternatives

After addressing the question «What do we want?», it is natural to ask «What are our options?». The ideal decision maker, if such a person exists, would lay out all the available courses of action and then choose the one that would best achieve his or her objective. Given human limitations, decision makers cannot hope to identify and evaluate all possible options. Most managerial decisions involve more than a once-and-for-all choice from among a set of options. Typically, the manager faces a sequence of decisions from among alternatives.

For instance, at the outset, management at Time Inc. had to decide whether or not to develop Picture Week for market testing. The whole point of the development and testing program was to provide information on which management could base its main decision: whether or not to undertake a full-fledged, nationwide launch of the magazine. Notice that the company could have launched the magazine without extensive market testing. However, it rejected this riskier strategy in favor of a contingent plan of action: to undertake the testing program and then launch the magazine if and only if the test results and economic forecasts were both favorable.

Step 4: Predict the Consequences

Depending on the situation, the task of predicting the consequences may be straightforward or formidable. Sometimes elementary arithmetic suffices. For instance, the simplest profit calculation requires only subtracting costs from revenues. Or suppose the choice between two safety programs is made according to which saves the greater number of lives per dollar expended. Here the use of arithmetic division is the key to identifying the preferred alternative.

In more complicated situations, however, the decision maker often must rely on a model to describe how options translate into outcomes. A model is a simplified description of a process, relationship, or other phenomenon. The main purposes of models are to explain and to predict – to account for past outcomes and to forecast future ones.

The kinds of predictive models are as varied as the decision problems to which they are applied. Many models rest on economic relationships.

Suppose the multinational steel company predicts that a 10 percent price cut will increase unit sales by 15 percent in the foreign market. The basis for this prediction is the most fundamental relationship in economics: the demand curve.

Other models rest on engineering, statistical, legal, and scientific relationships.

So far as prediction is concerned, a key distinction can be drawn between deterministic and probabilistic models. A deterministic model is one in which the outcome is certain (or close enough to a sure thing that it can be taken as certain).

As the term suggests, a probabilistic model accounts for a range of possible future outcomes, each with a probability attached. For instance, the five-year market-share forecast for the natural-juice soft drink might take the following form: a 30 percent chance of less than a 3 percent share, a 25 percent chance of a 3 to 6 percent share, a 30 percent chance of a 6 to 8 percent share, and a 15 percent chance of an 8 to 15 percent share.