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30 pay life policy?

Whole Life Insurance from AmericanFamily Life Insurance Company helps toprovide long-term financial protection foryou and those who depend on you.Policies designed for convenienceAmerican Family Life offers policies thatallow premiums to be paid for in 10, 20 or30 years:● American Family 10-Year-Pay WholeLife Insurance● American Family 20-Year-Pay WholeLife Insurance● American Family 30-Year-Pay WholeLife InsuranceSeveral payment options are available, soyou can choose the frequency of paymentsyou're comfortable with, whether it bemonthly, quarterly, semi-annual or annualpayments, or paying the full premiumamount at a discounted rate. The 10-Year-Pay and 20-Year-Pay Whole Life policiesmay be issued from ages 0-80 and the 30-Year-Pay may be issued from ages 0-70.Level death benefitWhole Life insurance provides a level deathbenefit to age 100. In addition, the total deathPermanenceDeath BenefitThe amount statedin the policy aspayable upon thedeath of theperson whose lifeis being insured.benefit may be increased by policy dividendsthat have been used to purchase paid-upadditions or that have been left to accumulateat interest.Dividends can increase policy valuesAmerican Family Life's Whole Life policiesare participating, meaning the life insurancepolicy is eligible for the payment of dividends.Dividends will be credited to the policy on itsanniversary. Dividends, while not guaranteed,may increase the policy's cash surrender valueand death benefit, depending on the dividendoption selected.Four dividend options are available:Paid-Up Additional Life InsuranceDividends, if declared, are used to purchasepaid-up additional life insurance. These paid-upadditions may increase the policy's cashsurrender value and are also eligible to earndividends if declared in future years.Accumulatewith InterestDividends, ifdeclared, areleft with theCompany toaccumulatewith interestat a rate setby AmericanFamily Life.This optionmay increase the total death benefit as wellas the total cash value.Reduce PremiumsDividends, if declared, may be used to reducethe premium due. (This option is not availablewhen premiums are paid monthly.)CashDividends, if declared, are paid to thepolicyowner by check from the Company.Guaranteed level premiumsWhole Life insurance provides level premiumpayments which are guaranteed; premiums willnever increase regardless of changes in healthor age.Tax-deferred cash value growthwith guaranteed minimumsWhole Life insurance offers the potential forlong-term cash value growth which can be afuture source of funds. Cash values may beborrowed through policy loans. Any policy loansoutstanding at death, plus any unpaid loaninterest, will be deducted from the deathbenefit.Distribution options for death proceedsThe beneficiary has several options for receivingdeath benefit proceeds. The policyowner mayelect the method of payment during theinsured's life, or if no such election has beenmade, the beneficiary may make the election atthe time of death.Retained Asset AccountAn interest-bearing account for proceeds, subject toaccount balance minimums, where the beneficiaryhas check-writing privileges and complete access toand control of the funds in the account.DividendsThe amount ofmoney returnedto the owner of theparticipating policydetermined by pastexperience of thecompany in investmentearnings,mortality andexpenses whencompared to thepricing assumptionsof the policy.Dividends are notguaranteed and aresubject to change.Cash SurrenderValueThe amount incash availableupon surrender, orcashing in, of thepolicy.Paid-UpAdditional LifeInsuranceInsurance onwhich all requiredpremiums havebeen paid.LongevityPolicy LoansA loan made byan insurer to apolicyowner that issecured by part orall of the cash valueof the policy.BeneficiaryA person designatedby the policyownerto receive theproceeds of thepolicy upon thedeath of the insured.Death BenefitProceedsThe amountactually paid to thebeneficiary upon thedeath of the insured.Lump SumA single payment allowing greater ability tomeet immediate financial obligations.Multiple Payment OptionsPayments providing an income which can beguaranteed to last for the beneficiary's entirelifetime.Nicotine and non-nicotine ratesAmerican Family Life offers lower ratesfor various premium classes.Optional benefits...protection even ifyou become disabledWaiver of Premium Benefit RiderBy purchasing this optional coverage, yourpremiums will be waived if the primary insuredbecomes totally disabled for a period of sixconsecutive months or more, begining afterage 5 and before age 60, as defined in therider.Payer Death or Disability Waiverof Premium Benefit RiderIf the policy insures a child 15 years of ageor younger when it is issued, an adult familymember who is paying premiums may alsobe insured for Waiver of Premium by addingthis rider.Solid FoundationStrengthOptional benefits...more reasonsto choose Whole LifeGuaranteed Purchase OptionBenefit RiderThis rider guarantees the right topurchase up to $50,000 of additionalpermanent life insurance withoutmedical examination or proof of healthon the policy anniversary dates nearestthe date the primary insured reachesattained ages of 25, 28, 31, 34, 37 and40 years. Alternate option dates includethe events of marriage, childbirth oradoption. Using an alternate option dateresults in forfeiture of the next regularlyscheduled option date.Children's Insurance RiderThis optional rider provides $10,000 ofcoverage on natural, adopted and stepchildrenof the primary insured. Thepremium is the same regardless of thenumber of children. If a child is coveredunder this rider, coverage ends at age 25.If the child insured is between ages 18and 25, he/she may convert the coveragesubject to a maximum of $50,000 ofpermanent insurance.If the primary insured dies while this rideris in force, each child insured under thisrider will receive Paid-Up Term To Age 25life insurance.This brochure is for informationalpurposes only and is not a part of anypolicy contract. This is a brief summaryof some of the policy and rider features.Additional terms and conditions mayapply. Specific and actual terms andconditions are found only in the policyor rider contract.Accidental Death Benefit RiderThis optional coverage provides anadditional death benefit up to age 65 ifdeath occurs from an "accident" as definedin the rider.Accelerated Death Benefit RiderThis rider allows the policyowner to receiveup to 75% of the available death benefit toa maximum of $250,000, should theprimary insured be diagnosed asterminally ill with an anticipated life spanof twelve months* or less. This rider carriesno additional premium.Automatic Premium Loan BenefitThis optional benefit will cover unpaidpremiums after the policy has accumulatedcash value. Under this option, AmericanFamily Life will automatically make a loanto cover the premium not paid by the lastday of the 31-day grace period.Ask your agentIf you have questions or would like moreinformation about life insurance fromAmerican Family Life, please call or visityour local American Family agent.* 24 months in IL, KS & WAAmerican Family Life Insurance CompanyHome Office - Madison, WI 53783amfam.comPolicy Form L-24(10)Policy Form L-24(20)Policy Form L-24(30)ADL-12243-Rev. 7/07© 2007All your protection under one roof®American Family Insurance offers a variety of insuranceproducts and financial services at competitive rates-plusmultiple line discounts may apply. Consider reviewing yourcoverages and financial needs as your life circumstanceschange:• Improved your home or bought a new home?• Purchased a new vehicle?• Graduated from school?• Changed your marital status?• Welcomed a baby to your family?• Have a new teenage driver in your family?• Purchased or received something valuable?- Jewelry- Motorcycle, boat or snowmobile- Computer- Started or added to a collection (e.g., coins,stamps, fine art, etc.)• Started a new business or a new job?• Thinking about retirement?Have you reviewed your insurance coverages lately? Ifnot, contact your local agent for a no-obligation personalinsurance review.We'll review your current insurance forcostly duplications and gaps in coverage.


Differentiate between standard costing budgetary control?

LESSON 6:BUDGETARY CONTROL AND STANDARD COSTINGLearning ObjectivesAfter studying this chapter you should be able to Understand· Budgetary control· Standard costingStandard CostingIntroductionFrom Management's point of view, "What a product shouldhave costed" is more important than."What it did cost".Managers are constantly comparing their product cost with"What it should have costed". Reasons for deviations arerigorously analyzed and responsibilities are promptly fixed.Thus, "what a product should have costed" is a question ofgreat concern to management for improvement of costperformance. A scientific answer to this problem, i.e.,an answerbased on reasons and consequences, is developed by use ofstandard costing. Standard Costing is a managerial device, todetermine efficiency and effectiveness of cost performance. Firstof all, we briefly discuss different terms to be used in thislesson.Standard. It' is a predetermined measurable quantity set indefined conditions.Standard cost:- Standard cost is a scientifically predeterminedcost, which is arrived at assuming a particular level of efficiencyin utilization of material, labour, and indirect services. CIMAdefines standard cost as "a standard expressed in money. It isbuilt up from an assessment of the value of cost elements. Itsmain uses are providing bases for performance measurement,control by exception reporting, valuing stock and establishingselling prices."Standard cost is like a model, which provides basis of comparisonfor actual cost. This comparison of actual cost withstandard cost reveals very useful information for cost vontrol.Standard cost has also been referred to as cost plan for a singleunit. Cost plan will give element-wise outline of what theproduct cost should be according to management's thinking.This thinking is not merely an estimate or guess work. It isbased on certain assumed conditions of efficiency, economicand other factors. Standard cost is primarily used for following:-· Establishing budgets· Controlling costs and motivating and measuring efficiencies.· Promoting possible cost reduction.· Simplifying cost procedures and expediting cost reports· Assigning cost to materials, work-in-process and finishedgoods inventories.· Forms basis for establishing bids and contracts and forsetting selling prices.Standard Costing. According to CIMA (London), "standardcosting is a control technique which compares standard costsand revenues with actual results to obtain variances which areused to stimulate improved Performance." Use of standardcosting is not confined to industries having repetitive processesand homogeneous products only. This technique has establishedthe advantages of its use in industries havingnon-repetitive processes like manufacture of automobile,turbines, boilers and heavy electrical equipment.Standarcd Costing and Estimated Cost:- following are thepoints of difference between standard cost and estimated cost.1. Scientific Determination:- standard cost is scientificallydetermined. It means considerable amount of time andenergy is spent to decide how a task should be accomplishedand what resources it should consume. Estimated cost is notscientifically determined. It is based on past data relating toproduct, which is adjusted according to anticipated changesin future.2. Representation of Management's View: standard costrepresents management vies of efficient operation andrelevant expenditure. For this reason, standard cost ensures aparticular efficiency in utilization of material, labour andindirect services. The idea of efficiency does not dominatedetermination of estimated cost.3. Different Aims: "What a product cost should be" and"What a product cost will be" point towards the twodifferent attitudes, that dictate determination of standardcost and estimated cost.4. Usage of Control:- Standard cost primarily helpsmanagement in controlling cost performance. For thisreason, precision efficiency and analysis become importantingredients of standard cost determination.Limitations of Historical Costing1. Data does not provide yardstick of comparison for actualcost.2. Data is made available too late to correct inefficiencies that arecausing costs to go out of limits.3. Data does not provide motivation to employees to strive foraccomplishment of there objectives.4. Data provides insufficiently for budgeting, planning,decision-making and price quotation.These limitations of historical costing are primarily responsiblefor advent and wide usage of standard costing.Standard Costing and Budgetary ControlBudgetary control and standard costing are two different terms.These techniques are complementary to each other. These areinterrelated techniques, but these techniques are not interdependent.Standard costing is introduced primarily to ascertainefficiency and effectiveness of cost performance. Budgetarycontrol is introduced to state in figures an approved plan of22 11.269© Copy Right: Rai UniversityADVANCED MANAGEMENT ACCOUNTINGaction relating to a particular period both standard costing andbudgetary control have to following common features:1. Both have common object of improving managerial control.2. Both techniques are based on the presumption that cost iscontrollable.3. In both the techniques results of comparison are analyzedand reported to management.Despite these common features these are two different techniques.The points of difference are summarized as follows:-1. Denote Different Ideas. Standard costing denotes a unitidea. It outlines, what a unit should cost. Standard costprovides a cost plan for a unit whereas budget denotes a"total idea". The statement clearly explains the difference;"Budgeted cost of material is Rs. 1,000/-, if 10,000 units areproduced at a standard cost of Re.1/-each".2. Different aims- Budget seeks to lay down a monetary limitof expenses, which should not be normally exceeded. If thislimit is exceeded the actual profit will fall short of budgetedprofit. Standard costing seeks to procure efficient utilizationof material, labour and indirect services3. Different scope- Budgets are laid down for all functions ofan organisation like production, purchase, selling anddistribution and research and development. Standard costingrelates primarily to one function i.e., production. It mainlydeals with manufacturing cost only4 Treatment of Income and Expenditure:- budgetpreparation considers both income and expenditure, whereasuse of standard costing is mainly confined to expenditureonly.5. Difference in Treatment of Variance:- in practical life,budget are taken to be the monetary ceiling. Often efforts aredirected to see that budgets are not exceeded, because failureto be in budgetary limit will call for detailed explanation tohigher management. In standard costing, variances aresubjected to microscopic view with reference to causes andincidence. All distinct deviation are reported to highermanagement6. Different Function:- Budgetary control desrescribes amonetary limit which, if adhered to will keep the businessout of financial crisis. Standard costing emphasizes aparticular efficiency in utilization of input resources. It mayhighlight new areas forAdvantages of Standard Costing1. Use of standard costing leads to optimum utilization ofmen, material, and resource.2. Its use provides a yardstick for comparison of actual costperformance.3. Only distinct deviation is reported to management. Thus, ithelps application of the principle of "management byexception".4. It is very useful to management in discharging functions, likeplanning, control, and decision-making and price fixation.5. It creates an atmosphere of cost consciousness.6. It motivates workers to strive for accomplishment ofdefined targets. It precipitates an attitude that is conducive toefficiency.7. It highlights areas, where probe promise improvement.8. Its introduction leads to simplification of procedures andstandardization of products.9. Its introduction enables the management to reduce timerequired for preparation of reports for pricing, control orquotation.10.Its use enables to find out the cost of finished goodsimmediately after completion.11.If standard costing is used, stock ledgers can be kept interms of quantities only. This eliminates much clerical effortin pricing, balancing and posting on stores ledger cards.12.Its use may encourage action for cost reduction.Limitations of Standard Costing: -Standard costing is very good system, but it should be givingregard to following limitation:1. Establishment of standards may demand a lot of skill,imagination and experience. If all factors are not in harmony,desired result will not be forthcoming.2. Variance analysis is useful, whereas deviation are linked withresponsibilities. Sometimes, it is difficult to fix responsibility,because the result happens to be outcome of a number ofcontributory factors.3. Standards should correspond to current conditions for bestresults. Current conditions change very rapidly. Revision ofstandard is a costly exercise and leads to a lot of associatedproblems. For this reason revision of standards may getignored. This delay may be disastrous for effectiveness of thesystem.4. It is difficult to use standard costing, when workingconditions do not permit standardization of materialcontents, labor contents or the use of indirect servicesrelating to different jobs, processes and services.5. Lack of interest by appropriate level of management rendersthe use of standard costing ineffective.6. Isolating the Controllable and uncontrollable elements ofvariances is a very difficult exercise and this difficulty restrictsthe application of standard costing.7. Sometimes, use of standard costing creates adversepsychological effects, if standards are set at a high level.Preliminaries to Establishment ofStandardsBefore standard cost for different elements of cost is determined,management must take decisions about the following:1. Length of period of use. First of all decision is to bearrived at, relating to a period, for which standards will beused. According to this decision, management will decide touse current standard, basic standard or normal standard.This decision is the starting point for establishment orstandards.2. Types of standards to be used. It means that managementshould decide how tight or looses standards ought to be.© Copy Right: Rai University11.269 23ADVANCED MANAGEMENT ACCOUNTINGPolicy of management will help to take this decision. If costreduction is the aim, a tight standard will be choice ofmanagement. Similarly, if pricing decision and planning theexpenditure is the aim of management, standardscorresponding to the current conditions will be the choice ofmanagement.3. Review of existing procedures. The existing procedureshould be subjected to review, because some activities mayhave to be routinised and wastages, rejections and losses mayhave to be standardized. This review will call for a completestudy of technical and operational aspects of organization.4. Classification of accounts. The existing accounts manualin an organisation may not be sufficient to comply with therequirements of cost collection, cost analysis and variancereporting. For this reason, existing accounts manual mayhave to be suitably adapted to meet the requirements. Thismay call for a change in existing classification of heads ofaccounts.5. Review of existing coding system. The existing codingsystem is subjected to review to adapt it to introduction ofstandard costing. This change may demand orientation ofexisting coding system.Factors Interfering with the Successfuluse of Standard CostingSome of the factors, which tend to interfere with the successfuluse of standard costing, are summarized below:1. Some companies have well-developed standard cost plans forproduct costing. Still they make little use of standard costingfor managerial purposes. One valve manufacturing concernhad been collecting labour cost variance by departments forseveral years and yet they did not know what to do withthem. When a discussion of these variances took place withthe foreman of the department in which the variancesoccurred, the cost accountant could not believe that he hadignored these variances for control purposes2. Some standards are out-of-date or unreliable. They are not,therefore, taken seriously.3. Reports are not made in terms which managementunderstands. Using technical cost accounting terminologywill not help executives having a production or salesbackground.4. Changing conditions made it necessary to revise standardsmore often. Many firms do not do this.5. Sometimes it is difficult for management to make effectiveuse of standards, since it is difficu1t to determine the sourcesof variances. When these sources are eventually discovered somuch time has elapsed since they occurred that themanagerial effectiveness of control is lost.Special use of Standard CostingThe use of standard costing is fast growing as an effectivetechnique of cost accountancy. Its special uses are discussedunder following headings:1. Adds to managerial effectiveness and efficiency. It is notenough for a manager to be effective. He has to be efficient aswell. Performance of a manager should be both effectiveand efficient, i.e., desired objective should be accomplishedwith minimum input resources. The use of standard costingprovides media to specify these objectives of effectivenessand efficiency. It also provides framework to measure thedegree of attainment of effectiveness and efficiency.2. Aids inventory costing. Valuation of inventory at standardcost simplifies the pricing of inventory. It enables thecompany to follow a consistent practice. All operating gainsand losses are charged off to accounting period in which theyarise. This enables executives to analyse the variances by type,causes and locations. When standard costing is used, a unitstandard cost is available for inventory valuation and pricingof store issues. It avoids the need to compute a new averageunit price with each input entry, as is the case, when perpetualinventory records are kept at actual cost.3. Help in product pricing. The knowledge of standard costof product can be useful as one of many factors to be takeninto account for pricing. The standard cost of a product is auseful starting point in pricing. It provides a warning thatunless this amount and something more for profit isrecovered in the selling price, the product will not be reallyprofitable. The knowledge gained in setting standard costprovides the entire cost picture of the product ranging fromits out -of-pocket cost to full costs. With all thisinformation, it becomes possible to ascertain the extent towhich an available price will cover out-of-pocket costs andcontribute to recovery of fixed costs. The standard costprovides one of the many factors that should be consideredin pricing.3. Reduces clerical record keeping and aids cost reduction.Standard costs may result in reduction of clerical work. Forexample, under actual cost system, each item of each materialrequisition must be costed separately, when LIFO or FIFOmethod is used. In a large company, this is an enormoustask, since thousands of requisitions may be issued. Under astandard costing system, all the issues of a particular typehave to be multiplied once by the standard cost. Understandard costing, only quantities have to be maintained onstores records. This saving is, of course, partially offset bythe added cost of establishing and revising standards.Budgetary ControlIntroductionFor effective running of a business, management must know:i. Where it intends to go, i.e., organizational objectives.ii. How it intends to accomplish its objective.iii. Whether individual plans fits in the overall organizationalobjective.iv. Whether operations conform to the plan of operationsrelating to that period.Budget control is the device that a company uses for all thesepurposes.Budget: a budget is a quantitative expression of plan of actionrelating to the forthcoming budget period. It represents awritten operational plan of management for the budget period.It is always expressed in terms of money and quantity. It is the24 11.269© Copy Right: Rai UniversityADVANCED MANAGEMENT ACCOUNTINGpolicy to be followed during the budget period for attainmentof specified objectives.The essential features of a budget are:.(a) financial and quantitativestatement of the action plan, (b) laid down prior to thebudget period during which it is followed (c) based onmanagement's policy (d)prepared for specified objective.In the ClMA terminology, budget is defined as follows:--"A plan expressed in money. It is prepared and approved priorto the budget period and may show income, expenditure, andthe capital to be employed. May be drawn up showing incrementaleffects on former budgeted or actual figures, or becompiled by zero-based budgeting."Budgetary Control and Budgeting. The terms budgetarycontrol and budgeting are often used interchangeably to refer toa system of managerial control. Budgetary control implies theuse of a comprehensive system of budgeting to aid managementin carrying out its functions like planning, coordinationand control. It is a system, which uses budgets for planning andcontrolling different activities of business. This systeminvolves:-i. Division of organization on functional basis into differentsections (each section is technically known as a budget center)ii. Preparation of separate budgets for each "budget center",iii. Consolidation of all functional budgets to present overallorganizational objectives during THC forthcoming budgetperiod,iv. Comparison of actual level of performance against budgets.Comparison process is stretched far enough to declare eitherattainment of objective or basis of revision of plan ofaction andv. Reporting the variances with proper analysis to provide basisfor future course of action.In the CIMA (London) Terminology"Budgetary control is the establishment of budgets relating toresponsibilities of executives to the requirement of a policy, andthe continuous comparison of actual with budgeted resultseither to secure by individual action the objective of that policyor to provide a basis for revision."Budgeting is a way of managing business and industry. Itemphasizes that management should anticipate problems anddifficulties. Advance decision should be taken for the course ofactivities during the forthcoming budget period. Budgetarycontrol denotes a formal system based on the concept ofbudgeting.Objectives of Budgetary Control1. Planning. Planning is an important managerial function. Ithelps to decide in advance what to do, how to do it, when todo it and who is to do it. Planning, thus, helps the managersto anticipate eventualities, prepare for contingencies forachieving the ultimate goa1s. Budget preparation drives themanagers to plan ahead. Managers express their operationalplans for anticipated business conditions. Without a formalprocedure of budgetary control, many operating managerswill not find the time to plan ahead. Thus, budgeting is animportant sub-units in the attainment of overallorganizational objectives.2. Communication. The employees of an organization shouldknow organizational aims, objectives of sub-units (budgetcentres) and the part that they have to play for theirattainment. Budgets effectively communicate thisinformation to employees.3. Coordination. To coordinate is to harmonize all theactivities of a company so as to facilitate its working and itssuccess. Coordination will lead to following results:a. each department will work in harmony with others,b. each department will know the specific role that it has toplay in the accomplishment of overall organisationalobjectives, and.c. the sequential arrangement of activities of differentdepartments is so governed that overlapping of activitiesand wastage of time and labour is avoided.A comprehensive system of budgeting helps to coordinatedifferent functional budgets. In other words, a budget willpreclude the production department from producing morethan the sales department can sell.4. Motivation. If employee have actively participated inbudget preparation and if they are convinced that theirpersonal interests are closely associated with the success oforganizational plan, budget provide motivation in the formof goals to be achieved. The budgets will motivate theworkers, depends purely on how the workers have beenmentally and physically involved with the process ofbudgeting.5. Control. Under the system of budgetary control, budgetforecast is thoroughly discussed and reviewed to be finallyapproved as functional budgets. Thereafter a lot of cuts andadjustments are made to make functional budgets fit in theorganizational objectives. Then budget formation isfollowed by a feedback system to pinpoint the extent ofvariation between actual level of performance and budgetedlevel of performance. Thus, the inbuilt mechanism of theroutine of budgetary control is bound to precipitate to anoperational control6. Approved Plan. A master budget provides an approvedsummary of results to be expected from proposed plan ofoperations. It concerns all functions of organization andserves as a guide to executives and departmental headsresponsible for various departmental objectives.Requirements of a Good Budgeting SystemFollowing are the requirements of a good budgeting system:i. Budgeting process should be backed and supported by thechief executive of an organization.ii. The organizational goal should be quantified and clearlystated These goals should be within the framework oforganizations' strategic and long-range plans.iii. The organizational goals must be divided in functionalgoals.© Copy Right: Rai University11.269 25ADVANCED MANAGEMENT ACCOUNTINGiv. The functional goals should not conflict with overallorganizational objectives.v. All in the organization should mentally accept the exercise ofbudget preparation.vi. The persons responsible for execution of budget shouldparticipate in budget preparation.'vii.The budget should be realistic. It should represent goals thatare reasonably attainable.viii.The budget, should cover all phases of the organizationix. The budgeting should be a continuous exercise.x. Periodic reports should be prepared promptly comparingbudget and actual results.xi. Clear-cut organizational lines should be established withappropriate delegation of responsibilities for effectiveimplementation.Advantages of Budgetary Control1. A budget programme forces the managers to plan ahead.2. It forces early consideration of basic policies.3. All members of top management participate in budgetcommittee. For this reason even planning at departmentallevel gets benefit of experience of seasoned executives.4. All functional heads are compelled to make plans inharmony with the plans of other departments.5. Management is forced to put down in cold figures, what itmeans by satisfactory results.6. It demands the most economical use of labour, materials,facilities and capital.7. It inculcates a habit of timely, careful, adequate considerationof all factors before reaching important decisions.8. The use of budgets removes clouds of uncertainties forlower levels of management regarding basic policies andobjectives.9. The use of budgets promotes understanding of theproblems of co-workers10.It facilitates periodic self-analysis of the organization.11.It aids in obtaining bank credit.12.Management is forced to give timely and adequate attentionto the effect of changing business conditions.Limitations of Budgetary Control1. Estimates are used as basis for budget plan and estimates arebased, mostly on available facts and best managerialjudgment. Since a lot of human element is involved inexercising managerial judgment, it is but natural to givesome allowance in interpretation and utilization ofestimated results. Budgeting based on inaccurate forecasts isuseless as a yardstick for measuring the actual performance.2. The circumstances are constantly changing and, therefore,budgets and budgetary techniques will not be useful, till theyare continually adapted.3. In order that a system may be successful, adequate budgeteducation should be imparted at least through the formativeperiod. Sufficient training programmes should be arrangedto make employees give positive response to budgetaryactivities.4. Execution of budgetary control will not automatically occur.A continuous budget consciousness throughout theorganization is needed for achievement of this objective.5. Budgetary control cannot reduce the manageria1 function toa formula. It is only a managerial tool which measureseffectiveness of managerial control.6. The use of budget may lead to restricted use of resources.Budgets are often taken as limits. Effort may, therefore, notbe made to exceed the performance beyond the budgetedtargets, even though it may be physically possible.7. Frequent changes may be called for in budgets due to fastchanging industrial climate. It may be difficult for a companyto keep pace with these fast changes, because revision ofbudget is an expensive exercise.The following Question-answer formatSummarizes the Chapters LearningObjectives1. Explain the major features and advantages of a budget.A budget expresses in quantitative terms, an organizationsobjective and possible steps for achieving them. Thus, abudget is tool that helps managers in both their planningand control functions. The two major parts of a budget arethe operating budget and the financial budget. Advantagesof budget include formalisation of planning, providing aframework for judging performance and aiding incoordinating their efforts.2. Anticipate possible human relations problem caused bybudgets.The success of a budget depends heavily on employeereaction to it. Negative attitude toward budget usuallyprevent realization of many of the benefits of budgeting.Such attitude are usually cused by managers who use budgetsto force behaviour or to punish employees. Budgetsgenerally are more useful when they are formulated with thewilling participation of all affected parties.3. Understand the importance of budgetingof budgetingtomangers.The budgetary process compels managers to think and toprepare for changing conditions. Budgets are aids inplanning, communicating, setting standards of prformance,motivating personnel towards goals, measuring results anddirecting attention to problem ares that need investigation.NotesSubmitted by ,╚►♥ѕαη∂єєρ♥◄╝


Discuss the various decision situations that can be dealt with by the managers while performing decision making function What are the different approaches which can be applied in each condition?

1. What is Decision Making?Decision-making is an essential aspect of modern management. It is a primary function of management. A manager's major job is sound/rational decision-making. He takes hundreds of decisions consciously and subconsciously. Decision-making is the key part of manager's activities. Decisions are important as they determine both managerial and organizational actions. A decision may be defined as "a course of action which is consciously chosen from among a set of alternatives to achieve a desired result." It represents a well-balanced judgment and a commitment to action.It is rightly said that the first important function of management is to take decisions on problems and situations. Decision-making pervades all managerial actions. It is a continuous process. Decision-making is an indispensable component of the management process itself.Means and ends are linked together through decision-making. To decide means to come to some definite conclusion for follow-up action. Decision is a choice from among a set of alternatives. The word 'decision' is derived from the Latin words de ciso which means 'a cutting away or a cutting off or in a practical sense' to come to a conclusion. Decisions are made to achieve goals through suitable follow-up actions. Decision-making is a process by which a decision (course of action) is taken. Decision-making lies embedded in the process of management.According to Peter Drucker, "Whatever a manager does, he does through decision-making". A manager has to take a decision before acting or before preparing a plan for execution. Moreover, his ability is very often judged by the quality of decisions he takes. Thus, management is always a decision-making process. It is a part of every managerial function. This is because action is not possible unless a firm decision is taken about a business problem or situation.This clearly suggests that decision-making is necessary in planning, organising, directing, controlling and staffing. For example, in planning alternative plans are prepared to meet different possible situations. Out of such alternative plans, the best one (i.e., plan which most appropriate under the available business environment) is to be selected. Here, the planner has to take correct decision. This suggests that decision-making is the core of planning function. In the same way, decisions are required to be taken while performing other functions of management such as organising, directing, staffing, etc. This suggests the importance of decision-making in the whole process of management.The effectiveness of management depends on the quality of decision-making. In this sense, management is rightly described as decision-making process. According to R. C. Davis, "management is a decision-making process." Decision-making is an intellectual process which involves selection of one course of action out of many alternatives. Decision-making will be followed by second function of management called planning. The other elements which follow planning are many such as organising, directing, coordinating, controlling and motivating.Decision-making has priority over planning function. According to Peter Drucker, it is the top management which is responsible for all strategic decisions such as the objectives of the business, capital expenditure decisions as well as such operating decisions as training of manpower and so on. Without such decisions, no action can take place and naturally the resources would remain idle and unproductive. The managerial decisions should be correct to the maximum extent possible. For this, scientific decision-making is essential.2. Definitions of Decision-makingThe Oxford Dictionary defines the term decision-making as "the action of carrying out or carrying into effect".According to Trewatha & Newport, "Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem".3. Characteristics of Decision MakingDecision making implies choice: Decision making is choosing from among two or more alternative courses of action. Thus, it is the process of selection of one solution out of many available. For any business problem, alternative solutions are available. Managers have to consider these alternatives and select the best one for actual execution. Here, planners/ decision-makers have to consider the business environment available and select the promising alternative plan to deal with the business problem effectively. It is rightly said that "Decision-making is fundamentally choosing between the alternatives". In decision-making, various alternatives are to be considered critically and the best one is to be selected. Here, the available business environment also needs careful consideration. The alternative selected may be correct or may not be correct. This will be decided in the future, as per the results available from the decision already taken. In short, decision-making is fundamentally a process of choosing between the alternatives (two or more) available. Moreover, in the decision-making process, information is collected; alternative solutions are decided and considered critically in order to find out the best solution among the available. Every problem can be solved by different methods. These are the alternatives and a decision-maker has to select one alternative which he considers as most appropriate. This clearly suggests that decision-making is basically/fundamentally choosing between the alternatives. The alternatives may be two or more. Out of such alternatives, the most suitable is to be selected for actual use. The manager needs capacity to select the best alternative. The benefits of correct decision-making will be available only when the best alternative is selected for actual use.Continuous activity/process: Decision-making is a continuous and dynamic process. It pervades all organizational activity. Managers have to take decisions on various policy and administrative matters. It is a never ending activity in business management.Mental/intellectual activity: Decision-making is a mental as well as intellectual activity/process and requires knowledge, skills, experience and maturity on the part of decision-maker. It is essentially a human activity.Based on reliable information/feedback: Good decisions are always based on reliable information. The quality of decision-making at all levels of the Organisation can be improved with the support of an effective and efficient management information system (MIS).Goal oriented process: Decision-making aims at providing a solution to a given problem/ difficulty before a business enterprise. It is a goal-oriented process and provides solutions to problems faced by a business unit.Means and not the end: Decision-making is a means for solving a problem or for achieving a target/objective and not the end in itself.Relates to specific problem: Decision-making is not identical with problem solving but it has its roots in a problem itself.Time-consuming activity: Decision-making is a time-consuming activity as various aspects need careful consideration before taking final decision. For decision makers, various steps are required to be completed. This makes decision-making a time consuming activity.Needs effective communication: Decision-taken needs to be communicated to all concerned parties for suitable follow-up actions. Decisions taken will remain on paper if they are not communicated to concerned persons. Following actions will not be possible in the absence of effective communication.Pervasive process: Decision-making process is all pervasive. This means managers working at all levels have to take decisions on matters within their jurisdiction.Responsible job: Decision-making is a responsible job as wrong decisions prove to be too costly to the Organisation. Decision-makers should be matured, experienced, knowledgeable and rational in their approach. Decision-making need not be treated as routing and casual activity. It is a delicate and responsible job.4. Advantages of Decision MakingDecision making is the primary function of management: The functions of management starts only when the top-level management takes strategic decisions. Without decisions, actions will not be possible and the resources will not be put to use. Thus decision-making is the primary function of management.Decision-making facilitates the entire management process: Decision-making creates proper background for the first management activity called planning. Planning gives concrete shape to broad decisions about business objectives taken by the top-level management. In addition, decision-making is necessary while conducting other management functions such as organising, staffing, coordinating and communicating.Decision-making is a continuous managerial function: Managers working at all levels will have to take decisions as regards the functions assigned to them. Continuous decision making is a must in the case of all managers/executives. Follow-up actions are not possible unless decisions are taken.Decision-making is essential to face new problems and challenges: Decisions are required to be taken regularly as new problems, difficulties and challenges develop before a business enterprise. This may be due to changes in the external environment. New products may come in the market, new competitors may enter the market and government policies may change. All this leads to change in the environment around the business unit. Such change leads to new problems and new decisions are needed.Decision-making is a delicate and responsible job: Managers have to take quick and correct decisions while discharging their duties. In fact, they are paid for their skill, maturity and capacity of decision-making. Management activities are possible only when suitable decisions are taken. Correct decisions provide opportunities of growth while wrong decisions lead to loss and instability to a business unit.5. Steps Involved In Decision Making ProcessDecision-making involves a number of steps which need to be taken in a logical manner. This is treated as a rational or scientific 'decision-making process' which is lengthy and time consuming. Such lengthy process needs to be followed in order to take rational/scientific/result oriented decisions. Decision-making process prescribes some rules and guidelines as to how a decision should be taken / made. This involves many steps logically arranged. It was Peter Drucker who first strongly advocated the scientific method of decision-making in his world famous book 'The Practice of Management' published in 1955. Drucker recommended the scientific method of decision-making which, according to him, involves the following six steps:Defining / Identifying the managerial problem,Analyzing the problem,Developing alternative solutions,Selecting the best solution out of the available alternatives,Converting the decision into action, andEnsuring feedback for follow-up.The figure given below suggests the steps in the decision-making process:-Identifying the Problem: Identification of the real problem before a business enterprise is the first step in the process of decision-making. It is rightly said that a problem well-defined is a problem half-solved. Information relevant to the problem should be gathered so that critical analysis of the problem is possible. This is how the problem can be diagnosed. Clear distinction should be made between the problem and the symptoms which may cloud the real issue. In brief, the manager should search the 'critical factor' at work. It is the point at which the choice applies. Similarly, while diagnosing the real problem the manager should consider causes and find out whether they are controllable or uncontrollable. Futurity of the decision,The scope of its impact,Number of qualitative considerations involved, andUniqueness of the decision.Analyzing the Problem: After defining the problem, the next step in the decision-making process is to analyze the problem in depth. This is necessary to classify the problem in order to know who must take the decision and who must be informed about the decision taken. Here, the following four factors should be kept in mind:Collecting Relevant Data: After defining the problem and analyzing its nature, the next step is to obtain the relevant information/ data about it. There is information flood in the business world due to new developments in the field of information technology. All available information should be utilised fully for analysis of the problem. This brings clarity to all aspects of the problem.Developing Alternative Solutions: After the problem has been defined, diagnosed on the basis of relevant information, the manager has to determine available alternative courses of action that could be used to solve the problem at hand. Only realistic alternatives should be considered. It is equally important to take into account time and cost constraints and psychological barriers that will restrict that number of alternatives. If necessary, group participation techniques may be used while developing alternative solutions as depending on one solution is undesirable.Selecting the Best Solution: After preparing alternative solutions, the next step in the decision-making process is to select an alternative that seems to be most rational for solving the problem. The alternative thus selected must be communicated to those who are likely to be affected by it. Acceptance of the decision by group members is always desirable and useful for its effective implementation.Converting Decision into Action: After the selection of the best decision, the next step is to convert the selected decision into an effective action. Without such action, the decision will remain merely a declaration of good intentions. Here, the manager has to convert 'his decision into 'their decision' through his leadership. For this, the subordinates should be taken in confidence and they should be convinced about the correctness of the decision. Thereafter, the manager has to take follow-up steps for the execution of decision taken.Ensuring Feedback: Feedback is the last step in the decision-making process. Here, the manager has to make built-in arrangements to ensure feedback for continuously testing actual developments against the expectations. It is like checking the effectiveness of follow-up measures. Feedback is possible in the form of organised information, reports and personal observations. Feed back is necessary to decide whether the decision already taken should be continued or be modified in the light of changed conditions.Every step in the decision-making process is important and needs proper consideration by managers. This facilitates accurate decision-making. Even quantitative techniques such as CPM, PERT/OR, linear programming, etc. are useful for accurate decision-making. Decision-making is important as it facilitates entire management process. Management activities are just not possible without decision-making as it is an integral aspect of management process itself. However, the quality of decision-making should be always superior as faulty/irrational decisions are always dangerous.Various advantages of decision-making (already explained) are easily 'available when the entire decision-making process is followed properly. Decisions are frequently needed in the management process. However, such decisions should be appropriate, timely and rational. Faulty and hasty decisions are wrong and even dangerous. This clearly suggests that various advantages of decision-making are available only when scientific decisions are taken by following the procedure of decision-making in an appropriate manner.For accurate/rational decision-making attention should be given to the following points:Identification of a wide range of alternative courses of action i.e., decisions. This provides wide choice for the selection of suitable decision for follow-up actions.A careful consideration of the costs and risks of both positive and negative consequences that could follow from each alternation.Efforts should be made to search for new information relevant to further evaluation of the alternatives. This is necessary as the quality of decision depends on the quality of information used in the decision-making process.Re-examination of the positive and negative effects of all known alternatives before making a final selection.Arrangements should be made for implementing the chosen course of action including contingency plans in the event that various known risks were actually to occur.Efforts should be made to introduce creativity and rationality in the final decision taken.6. Why Rational and Right Decisions Are Not Possible?Rational decisions are the best decisions under the available circumstances. All decisions should be rational as such decisions facilitate expansion of business and give more profit, goodwill and prosperity to a business unit. Rationality and decision-making are closely related concepts. Rationality principle is applicable to all types of decisions. All decisions (business, economic, social etc.) should be fair and rational. They should serve as examples over a long period. For such decisions, rational/scientific/balanced approach is essential while making decisions. In the absence of such approach, decisions are likely to be faulty and dangerous to the Organisation and also to all concerned parties.Rationality in decision-making is possible through human brain which has the ability to learn, think, analyze and relate complex facts and variables while arriving at a decision. A manager has to introduce rationality in his decision-making by using his skills, experience, knowledge and mental abilities.On some occasions, such rational and right decisions are not taken due to variety of possible reasons. It is also possible that the decision taken may be rational when taken but is treated as wrong/irrational/faulty because' the results available from the decision taken are not as expected/positive/encouraging. Rational decisions may not be possible when the approach of the decision-maker is casual and superficial. He may not be alert, careful and cautious while taking the decisions or he might not have followed the decision-making process in a scientific manner. In brief, all business decisions should be rational as far as possible as such rational decisions offer many benefits/advantages. However, rational decisions may not be taken on certain occasions. According to Herbert A. Simon, human beings are not always rational in the decisional process.7. Reasons Why Rational and Right Decisions May Not Be Possible?Inadequate information, data and knowledge: For rational decision-making accurate, reliable and complete information about various aspects of the problem under investigation is necessary. The possible future trends can be estimated with the help of such information. This facilitates rational decision-making. However, adequate and reliable information may not be available at the time of decision-making. As a result, the decisions become defective or irrational. Such decision may prove to be faulty in the course of time. This is how the decisions become irrational to certain extent.Uncertain environment: Decisions are taken on the basis of information available about various environmental variables. However, the variables are many and complex in nature. They may be related to political, economic, social and other aspects. It is not possible to study all such variables in depth due to inadequate information/data. This leads to inaccuracy in decision making and the decisions taken are not fully rational.Limited capacity of decision-maker. A decision-maker should be expert, knowledgeable, intelligent and matured. He needs vision and capacity to imagine possible future situation. In the absence of such qualities, the decision-maker may not be able to take rational decisions. Similarly, the decision taken may not be rational if the decision-maker fails to follow all necessary steps required for scientific decision-making. A hasty decision or decision taken without full use of all mental faculties may not be fully rational. Thus, decisions are likely to be less rational if the decision maker lacks capacity to take rational decisions.Personal element in decision-making: Decision-making should be always impartial and also favorable to the Organisation. Decision against Organisation but favorable to decision maker or other employees will be unfair. Such decision will not be rational. Similarly, every decision-maker has his own personal background in the form of personal beliefs, attributes, preferences, likes and dislikes and so on. A decision-maker is expected to keep these elements away while taking management decisions. This may not be possible in the case of all decision-makers and on all occasions. However, decisions are not fully rational when such personal element comes in the picture.A decision cannot be fully independent: Managerial decisions are interlinked and interdependent. A manager has to make adjustments or compromises while making decisions. For example, for reducing price, some compromise with the quality may be necessary. A manager gives more importance to one and less to the other. He takes one decision which is rational at the same time makes some compromise in the other decision. As a result, other decision is not likely to be fully rational. In short, business decisions are interlinked. This brings an element of irrationality in some decisions.The points noted above suggest why it is not possible to take rational and right decisions on all occasions.8. Relationship Between Planning and Decision-makingThere is close relationship between planning and decision-making. Decision-making has priority over planning function. It is the starting point of the whole management process. In fact, decision-making is a particular type of planning. A decision is a type of plan involving commitment to resources for achieving specific objective. According to Peter Drucker, it is the top management which is responsible for all strategic decisions such as the objectives of the business, capital expenditure decisions as well as operating decisions such as training of manpower and so on. Without management decisions, no action can take place and naturally the resources would remain idle and unproductive. The managerial decisions should be correct to the maximum extent possible. For this, scientific decision-making is essential.Read Similar ArticlesManagement Functions And Process, Management ThoughtIntroduction To Managerial Economics - Indian Economics 1Steps in the Decision Making Process of a ManagerLinkWithinecision making can be regarded as the mental processes (cognitive process) resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice.[1] The output can be an action or an opinion of choice.Contents[hide]1 Overview2 Problem analysis vs decision making3 Everyday techniques4 Decision making stages5 Decision making steps6 Cognitive and personal biases7 Post-decision analysis8 Cognitive styles8.1 Influence of Myers-Briggs type8.2 Optimizing vs. satisficing8.3 Combinatoral vs. positional9 Neuroscience perspective10 See also11 References[edit] OverviewHuman performance in decision terms has been the subject of active research from several perspectives.From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, preferences an individual has and values they seek.From a cognitive perspective, the decision making process must be regarded as a continuous process integrated in the interaction with the environment.From a normative perspective, the analysis of individual decisions is concerned with the logic of decision making and rationality and the invariant choice it leads to.[2]Yet, at another level, it might be regarded as a problem solving activity which is terminated when a satisfactory solution is reached. Therefore, decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.One must keep in mind that most decisions are made unconsciously. Jim Nightingale, Author of Think Smart-Act Smart, states that "we simply decide without thinking much about the decision process." In a controlled environment, such as a classroom, instructors encourage students to weigh pros and cons before making a decision. However in the real world, most of our decisions are made unconsciously in our mind because frankly, it would take too much time to sit down and list the pros and cons of each decision we must make on a daily basis.[citation needed]Logical decision making is an important part of all science-based professions, where specialists apply their knowledge in a given area to making informed decisions. For example, medical decision making often involves making a diagnosis and selecting an appropriate treatment. Some[which?] research using naturalistic methods shows, however, that in situations with higher time pressure, higher stakes, or increased ambiguities, experts use intuitive decision making rather than structured approaches, following a recognition primed decision approach to fit a set of indicators into the expert's experience and immediately arrive at a satisfactory course of action without weighing alternatives. Recent robust decision efforts have formally integrated uncertainty into the decision making process. However, Decision Analysis, recognized and included uncertainties with a structured and rationally justifiable method of decision making since its conception in 1964.A major part of decision making involves the analysis of a finite set of alternatives described in terms of evaluative criteria. These criteria may be benefit or cost in nature. Then the problem might be to rank these alternatives in terms of how attractive they are to the decision maker(s) when all the criteria are considered simultaneously. Another goal might be to just find the best alternative or to determine the relative total priority of each alternative (for instance, if alternatives represent projects competing for funds) when all the criteria are considered simultaneously. Solving such problems is the focus of multi-criteria decision analysis (MCDA) also known as multi-criteria decision making (MCDM). This area of decision making, although it is very old and has attracted the interest of many researchers and practitioners, is still highly debated as there are many MCDA / MCDM methods which may yield very different results when they are applied on exactly the same data.[3] This leads to the formulation of a decision making paradox.[edit] Problem analysis vs decision makingIt is important to differentiate between problem analysis and decision making. The concepts are completely separate from one another. Traditionally it is argued that problem analysis must be done first, so that the information gathered in that process may be used towards decision making.[4]Problem analysisAnalyze performance, what should the results be against what they actually areProblems are merely deviations from performance standardsProblem must be precisely identified and describedProblems are caused by a change from a distinctive featureSomething can always be used to distinguish between what has and hasn't been effected by a causeCauses to problems can be deducted from relevant changes found in analyzing the problemMost likely cause to a problem is the one that exactly explains all the factsDecision makingObjectives must first be establishedObjectives must be classified and placed in order of importanceAlternative actions must be developedThe alternative must be evaluated against all the objectivesThe alternative that is able to achieve all the objectives is the tentative decisionThe tentative decision is evaluated for more possible consequencesThe decisive actions are taken, and additional actions are taken to prevent any adverse consequences from becoming problems and starting both systems (problem analysis and decision making) all over againThere are steps that are generally followed that result in a decision model that can be used to determine an optimal production plan.[5]In a situation featuring conflict, role-playing is helpful for predicting decisions to be made by involved parties.[6]Decision planningMaking a decision without planning is fairly common, but does not often end well. Planning allows for decisions to be made comfortably and in a smart way. Planning makes decision making a lot more simpler than it is. Decision will get four benefits out of planning: 1. Planning give chance to the establishment of independent goals. It is a conscious and directed series of choices. 2. Planning provides a standard of measurement. It is a measurement of whether you are going towards or further away from your goal. 3. Planning converts values to action. You think twice about the plan and decide what will help advance your plan best. 4. Planning allows to limited resources to be committed in an orderly way. Always govern the use of what is limited to you (e.g. money, time, etc.)[7][edit] Everyday techniquesSome known decision making techniques include:Pros and cons: listing the advantages and disadvantages of each option, popularized by Plato and Benjamin Franklin.[8] Contrast the costs and benefits of all alternatives. Also called Rational decision making.Simple prioritization: choosing the alternative with the highest probability-weighted utility for each alternative (see Decision analysis)Satisficing: examining alternatives only until an acceptable one is found.Elimination by Aspects: choosing between alternatives using Mathematical psychology[9] Technique was introduced by Amos Tversky in 1972. It is a covert elimination process that involves comparing all available alternatives by aspects. The decision-maker chooses an aspect; any alternatives without that aspect are eliminated. The decision-maker repeats this process with as many aspects as needed until there remains only one alternative[10]Preference Trees: In 1979 Amos Tversky and Shmuel Sattach updated the elimination by aspects technique by presenting a more ordered and structured way of comparing the available alternatives. This technique compared the alternatives by presenting the aspects in a decided and sequential order. It became a more hierarchical system in which the aspects are ordered from general to specific [11]Acquiesce to a person in authority or an "expert", just following ordersFlipism: flipping a coin, cutting a deck of playing cards, and other random or coincidence methodsPrayer, tarot cards, astrology, augurs, revelation, or other forms of divinationTaking the most opposite action compared to the advice of mistrusted authorities (parents, police officers, partners ...)Opportunity cost: calculating the opportunity cost of each options and decide the decisionBureaucratic: set up criteria for automated decisionsPolitical: negotiate choices among interest groupsAn emerging need of using software for decision making process is happening for individuals and businesses. This happens due to the complexity of many decions that have to be made today, and require to think of different stakeholders, categories, elements, or factors that impact high-level decisions.[edit] Decision making stagesDeveloped by B. Aubrey Fisher, there are four stages that should be involved in all group decision making. These stages, or sometimes called phases, are important for the decision making process to beginOrientation stage - This phase is where members meet for the first time and start to get to know each other.Conflict stage - Once group members become familiar with each other, disputes, little fights and arguments occur. Group members eventually work it out.Emergence stage - The group begins to clear up vague opinions by talking about them.Reinforcement stage - Members finally make a decision, while justifying themselves that it was the right decision.It is said that critical norms in a group improves the quality of decisions, while the majority of opinions (called consensus norms) do not. This is due to collaboration between one another, and when group members get used to, and familiar with, each other, they will tend to argue and create more of a dispute to agree upon one decision. This does not mean that all group members fully agree - they may not want argue further just to be liked by other group members or to "fit in".[12][edit] Decision making stepsEach step in the decision making process may include social, cognitive and cultural obstacles to successfully negotiating dilemmas. It has been suggested that becoming more aware of these obstacles allows one to better anticipate and overcome them.[13] The Arkansas Program presents eight stages of moral decision making based on the work of James Rest:Establishing community: creating and nurturing the relationships, norms, and procedures that will influence how problems are understood and communicated. This stage takes place prior to and during a moral dilemmaPerception: recognizing that a problem existsInterpretation: identifying competing explanations for the problem, and evaluating the drivers behind those interpretationsJudgment: sifting through various possible actions or responses and determining which is more justifiableMotivation: examining the competing commitments which may distract from a more moral course of action and then prioritizing and committing to moral values over other personal, institutional or social valuesAction: following through with action that supports the more justified decision. Integrity is supported by the ability to overcome distractions and obstacles, developing implementing skills, and ego strengthReflection in actionReflection on actionOther decision making processes have also been proposed. One such process, proposed by Dr. Pam Brown of Singleton Hospital in Swansea, Wales, breaks decision making down into seven steps:[14]Outline your goal and outcome.Gather data.Develop alternatives (i.e., brainstorming)List pros and cons of each alternative.Make the decision.Immediately take action to implement it.Learn from and reflect on the decision.[edit] Cognitive and personal biasesBiases can creep into our decision making processes. Many different people have made a decision about the same question (e.g. "Should I have a doctor look at this troubling breast cancer symptom I've discovered?" "Why did I ignore the evidence that the project was going over budget?") and then craft potential cognitive interventions aimed at improving decision making outcomes.Here is a list of commonly debated cognitive biases.Selective search for evidence (a.k.a. Confirmation bias in psychology) (Scott Plous, 1993) - We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions. Individuals who are highly defensive in this manner show significantly greater left prefrontal cortex activity as measured by EEG than do less defensive individuals.[15]Premature termination of search for evidence - We tend to accept the first alternative that looks like it might work.Inertia - Unwillingness to change thought patterns that we have used in the past in the face of new circumstances.Selective perception - We actively screen-out information that we do not think is important. (See prejudice.) In one demonstration of this effect, discounting of arguments with which one disagrees (by judging them as untrue or irrelevant) was decreased by selective activation of right prefrontal cortex.[16]Wishful thinking or optimism bias - We tend to want to see things in a positive light and this can distort our perception and thinking.[17]Choice-supportive bias occurs when we distort our memories of chosen and rejected options to make the chosen options seem more attractive.Recency - We tend to place more attention on more recent information and either ignore or forget more distant information. (See semantic priming.) The opposite effect in the first set of data or other information is termed Primacy effect (Plous, 1993).Repetition bias - A willingness to believe what we have been told most often and by the greatest number of different sources.Anchoring and adjustment - Decisions are unduly influenced by initial information that shapes our view of subsequent information.Group think - peer pressure to conform to the opinions held by the group.Source credibility bias - We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like. (See prejudice.)Incremental decision making and escalating commitment - We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making. (See slippery slope.)Attribution asymmetry - We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other's success to good luck, and their failures to their mistakes.Role fulfillment (Self-fulfilling prophecy) - We conform to the decision making expectations that others have of someone in our position.Underestimating uncertainty and the illusion of control - We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do. We believe we have control to minimize potential problems in our decisions.Framing bias is best avoided by using numeracy with absolute measures of efficacy.[18]Reference class forecasting was developed to eliminate or reduce cognitive biases in decision making.[edit] Post-decision analysisEvaluation and analysis of past decisions is complementary to decision making; see also mental accounting.[edit] Cognitive styles[edit] Influence of Myers-Briggs typeAccording to behavioralist Isabel Briggs Myers, a person's decision making process depends to a significant degree on their cognitive style.[19] Myers developed a set of four bi-polar dimensions, called the Myers-Briggs Type Indicator (MBTI). The terminal points on these dimensions are: thinking and feeling; extroversion and introversion; judgment and perception; and sensing and intuition. She claimed that a person's decision making style correlates well with how they score on these four dimensions. For example, someone who scored near the thinking, extroversion, sensing, and judgment ends of the dimensions would tend to have a logical, analytical, objective, critical, and empirical decision making style. However, some[who?] psychologists say that the MBTI lacks reliability and validity and is poorly constructed.Other studies suggest that these national or cross-cultural differences exist across entire societies. For example, Maris Martinsons has found that American, Japanese and Chinese business leaders each exhibit a distinctive national style of decision making.[20][edit] Optimizing vs. satisficingHerbert A. Simon coined the phrase "bounded rationality" to express the idea that human decision making is limited by available information, available time, and the information-processing ability of the mind. Simon also defined two cognitive styles: maximizers try to make an optimal decision, whereas satisficers simply try to find a solution that is "good enough". Maximizers tend to take longer making decisions due to the need to maximize performance across all variables and make tradeoffs carefully; they also tend to more often regret their decisions (perhaps because they are more able than satisficers to recognise that a decision turned out to be sub-optimal).[21][edit] Combinatoral vs. positionalStyles and methods of decision making were elaborated by the founder of Predispositioning Theory, Aron Katsenelinboigen. In his analysis on styles and methods Katsenelinboigen referred to the game of chess, saying that "chess does disclose various methods of operation, notably the creation of predisposition-methods which may be applicable to other, more complex systems."[22]In his book Katsenelinboigen states that apart from the methods (reactive and selective) and sub-methods (randomization, predispositioning, programming), there are two major styles - positional and combinational. Both styles are utilized in the game of chess. According to Katsenelinboigen, the two styles reflect two basic approaches to the uncertainty: deterministic (combinational style) and indeterministic (positional style). Katsenelinboigen's definition of the two styles are the following.This article contains embedded lists that may be poorly defined, unverified or indiscriminate. Please help to clean it up to meet Wikipedia's quality standards. (February 2008)The combinational style is characterized bya very narrow, clearly defined, primarily material goal, anda program that links the initial position with the final outcome.In defining the combinational style in chess, Katsenelinboigen writes:The combinational style features a clearly formulated limited objective, namely the capture of material (the main constituent element of a chess position). The objective is implemented via a well-defined, and in some cases, unique sequence of moves aimed at reaching the set goal. As a rule, this sequence leaves no options for the opponent. Finding a combinational objective allows the player to focus all his energies on efficient execution, that is, the player's analysis may be limited to the pieces directly partaking in the combination. This approach is the crux of the combination and the combinational style of play.[22]The positional style is distinguished bya positional goal anda formation of semi-complete linkages between the initial step and final outcome."Unlike the combinational player, the positional player is occupied, first and foremost, with the elaboration of the position that will allow him to develop in the unknown future. In playing the positional style, the player must evaluate relational and material parameters as independent variables. ... The positional style gives the player the opportunity to develop a position until it becomes pregnant with a combination. However, the combination is not the final goal of the positional player-it helps him to achieve the desirable, keeping in mind a predisposition for the future development. The Pyrrhic victory is the best example of one's inability to think positionally."[23]The positional style serves toa) create a predisposition to the future development of the position;b) induce the environment in a certain way;c) absorb an unexpected outcome in one's favor;d) avoid the negative aspects of unexpected outcomes.Katsenelinboigen writes:"As the game progressed and defense became more sophisticated the combinational style of play declined. ... The positional style of chess does not eliminate the combinational one with its attempt to see the entire program of action in advance. The positional style merely prepares the transformation to a combination when the latter becomes feasible."[24][edit] Neuroscience perspectiveThe anterior cingulate cortex (ACC), orbitofrontal cortex (and the overlapping ventromedial prefrontal cortex) are brain regions involved in decision making processes. A recent neuroimaging study[25] found distinctive patterns of neural activation in these regions depending on whether decisions were made on the basis of personal volition or following directions from someone else. Patients with damage to the ventromedial prefrontal cortex have difficulty making advantageous decisions.[26]A recent study[27] of a Two-alternative forced choice task involving Rhesus monkeys found that neurons in the parietal cortex not only represent the formation of a decision but also signal the degree of certainty (or "confidence") associated with the decision. Another recent study[28] found that lesions to the ACC in the macaque resulted in impaired decision making in the long run of reinforcement guided tasks suggesting that the ACC may be involved in evaluating past reinforcement information and guiding future action.Emotion appears to aid the decision making process: Decision making often occurs in the face of uncertainty about whether one's choices will lead to benefit or harm (see also Risk). The somatic-marker hypothesis is a neurobiological theory of how decisions are made in the face of uncertain outcome. This theory holds that such decisions are aided by emotions, in the form of bodily states, that are elicited during the deliberation of future consequences and that mark different options for behavior as being advantageous or disadvantageous. This process involves an interplay between neural systems that elicit emotional/bodily states and neural systems that map these emotional/bodily states.[29]Although it is unclear whether the studies generalize to all processing, subconscious processes have been implicated in the initiation of conscious volitional movements. See the Neuroscience of free will.[edit] See also


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Why is Mata Nui a Toa?

Mata Nui was not a Toa, the Toa Inika was the mask itself. Mata Nui during Galitorian was not a toa.


In bionicle did jaller become a toa?

Yes. He became a Toa Inika then a Toa Mahri.


What do the toa masksin bionical do?

There are no Toa Masksin


What does alofa toa mean?

Literally, "Love toa"; or if you mean, "Toa alofa", it translates, "Warrior who loves".


What are names of old bionicle toys?

Toa: Vakama, Nokama, Matau, Nuju, Onewa, Whenua, Tahu, Gali, Lewa, Kopaka, Pohatu, Onua, Takanuva, Mata Nui, Jaller, Hahli, Kongu, Matoro, Hewkii, Nuparu, Lhikan, Jovan and Lesovikk.Glatorian: Certavus, Malum, Tarix, Gresh, Strakk, Skrall, Vorox, Ackar, Kiina, Vastus, Gelu, Mata Nui, Stronius, Tellirius and Sahmad.Agori: Metus, Raanu, Zesk, Tarduk, Berix, Atakus, Perditus, Crotesius and Kirbaz.Vehicles: Cendox V1, Kaxium V3, Baranus V7, Thornatus V9, Skopio XV-1, Axalara t9, Rockoh T3, Jetrax T6, Mazeka and Vultraz.Warriors:Takanuva, Toa Mata Nui, Tuma.Titans: Brutaka and Axonn.Makuta: Treidax, Icarax, Krika, Antroz, Vamparah, Chirox, adding morePiraka: Vezon, Vezok, Zaktan, Avak, Thok, Reidaka and Hakann.Visorak: Vohtarak, Boggarak, Suukorak, Oohnoorak, adding more


How do you say warrior in Samoan?

You can say TOA :)


What does toa mean in Spanish?

Toa is not an English or Spanish word.


When was Toa Fraser born?

Toa Fraser was born in 1975.


What is the population of TOA Technologies?

The population of TOA Technologies is 275.


When was TOA Technologies created?

TOA Technologies was created in 2003.


Where can you buy phantoka lewa?

i have got toa kopaka phantoka from argos, they have toa lewa there too. Hope you get toa lewa!