In a financial context, risk is a synonym for uncertainty â€“ the possibility that the actual outcome will differ from the mean expected outcome. It is therefore a neutral rather than a negative concept. Investors are risk-averse in the sense that they require more return for taking on more risk. Risk itself is measured by the standard deviation of actual returns around the mean expectation. In the real world, investment risk is created by a number of different factors that affect the certain
Author(s): The Open University

Our first question was: what is the mean expected total return for next year? We calculate this by taking each of the possible returns and weighting it by its relative probability. As our table is so simple and symmetrical, it is not difficult to see that the weighted mean return is 7% per annum.

Our second question was: what is the degree of risk or uncertainty in this mean figure? In other words, how widely dispersed are the possible outcomes around the mean expected outcome? The most
Author(s): The Open University

The person managing the project is not necessarily the best one to prepare the estimates, although they should be closely involved, both as a source of information and because they need a clear understanding of what the estimates mean and what the estimators assume about outputs, inputs and the transformation process. If there are others who have more experience or more knowledge about some of the areas of work, these people may be the best ones to make estimates for the project or parts of i
Author(s): The Open University

Scheduling is about deciding the time that each task will take to do and the sequence in which the tasks will be carried out. There are a number of approaches to estimating the time and effort (and, therefore, cost) required to complete a project. Some estimates may be based on past experience but, because each project is essentially unique, this alone may not be sufficient. A clearer picture can be obtained by measuring each task in terms of the content of the work, the effort required to ca
Author(s): The Open University

One of the most difficult aspects of planning a project is estimating how long it will take to complete each key stage. An estimate might be based on:

• the size of the tasks and the effort required to complete them;

• the number of days that are not available for working on the project;

• historical data from other projects, including the experience of colleagues.

Where a project has a fixed end-date (for
Author(s): The Open University

At the end of this unit you should be able to:

• develop plans with relevant people to achieve the project's goals;

• break work down into tasks and determine handover procedures;

• identify links and dependencies, and schedule to achieve deliverables;

• estimate and cost the human and physical resources required, and make plans to obtain the necessary resources;

• allocate roles with clear lines of responsibility and accountabil
Author(s): The Open University

Online bookshops and some of the major search engines offer â€˜Alertsâ€™ services. These work by allowing you to set up a profile once you have registered on their site, and when there are items meeting your criteria you receive an email. The good thing about alerts is that you donâ€™t have to do anything once you have set up your profile. The downside, particularly with alerts services from the search engines, is that given the extent to which internet traffic is on the increase whether new
Author(s): The Open University

How do you organise yourself?

## Activity

Make a note of how you organise your:

• emails

• internet bookmarks or favorites

• computer files

Author(s): The Open University

By presentation, we mean, the way in which the information is communicated. You might want to ask yourself:

• Is the language clear and easy to understand?

• Is the information clearly laid out so that it is easy to read?

• Are the fonts large enough and clear?

• Are the colours effective? (e.g. white or yellow on black can be difficult to read)

• If there are graphics or photos, do they help
Author(s): The Open University

Before searching it is always a good idea to check what the source you have chosen covers to make sure it will unearth information that matches your search need (you will notice that all the resources weâ€™ve covered in this guide have short descriptions to enable you to decide which to use). Some of the decision makers, depending on the context of your search might be:

• Does it have full text?

• Does it cover the right subject?

Author(s): The Open University

At a basic level, a database is a collection of information which can be searched. It is a way of storing, indexing, organising and retrieving information. You may have created one yourself to keep track of your references â€“ or your friends' names and addresses. They are useful for finding articles on a topic, and can be used to search for many different types of information.

You may find some of the following databases useful for your topic. They contain different types of informatio
Author(s): The Open University

How familiar are you with the following different ways of keeping up to date with information; alerts, mailing lists, newsgroups, blogs, RSS, professional bodies and societies?

• 5 â€“ Very familiar

• 4 â€“ Familiar

• 3 â€“ Fairly familiar

• 2 â€“ Not very familiar

• 1 â€“ Not familiar at all

Author(s): The Open University

This unit will help you to identify and use information in business and management, whether for your work, study or personal purposes. Experiment with some of the key resources in this subject area, and learn about the skills which will enable you to plan searches for information, so you can find what you are looking for more easily. Discover the meaning of information quality, and learn how to evaluate the information you come across. You will also be introduced to the many different ways of
Author(s): The Open University

So far in this unit we have considered information used in making a selection. What about information about consultants thereafter? Evaluating consultantsâ€™ work was highlighted as one of the difficulties in this area, yet such information is important. You may need to evaluate a small initiative (perhaps a limited diagnosis, feedback and initial planning contract) with a view to deciding whether to work more extensively with the consultant. You may need performance measures to contribute to
Author(s): The Open University

After studying this unit you should be able to:

• appreciate the characteristics of consultancy when viewed as a service offered for sale;

• as client, identify suitable contexts for using consultants;

• as client, identify, gather information on, and evaluate the suitability of competing consultants.

Author(s): The Open University

Once its shares have been issued, a company has the option to buy back shares. Buybacks will occur if the company believes that it is overcapitalised and cannot generate a sufficiently high return on capital through its operations. Under these circumstances it is effectively saying to the investor â€˜thanks but please now have some of your money back â€“ you can probably make it work harder elsewhereâ€™. A further reason for buybacks arises when a major capital restructuring is undertaken by
Author(s): The Open University

The need for corporate governance arises out of the divorce in modern corporations between the rights of shareholders and other suppliers of capital on the one hand, and the operational control, which is in the hands of professional managers, on the other. This can be described as the â€˜principalâ€“agentâ€™ problem. Put simply, the question is: will the managers run the corporation exclusively for the long-term benefit of the shareholders, and what mechanisms can be put in place to ensure th
Author(s): The Open University

We hope this unit has set you thinking about how you and others make decisions. It has been a very brief and to some extent shallow introduction to some quite complex ideas. The reference list should give you some pointers to further resources which will help you explore this topic in greater depth.

Before you move on take some time for a final activity.

Activity 3

An important aspect of decision making which crosses all three perspectives is making decisions about risks. Risk is all-pervasive in organisational life and many decisions require us to weigh up and choose between different kinds of risk. Thus any account of decision making would be incomplete without examining how our perceptions of risk affect our decisions. In this section we will examine risk from the three different perspectives we have identified: rational-economic, psychological and s
Author(s): The Open University

Coercive pressures come from the social sanctions that can be applied if we do not act in socially legitimate ways. The law is one source of coercive pressure, but so too is the knowledge that you will get promoted only if you act in ways which fit accepted ways of doing things in your organisation.

Author(s): The Open University