Decision Making 1

NAB Dates Business in Contemporary Society Information and Information Technology Decision Making

Practice NAB – Thursday 10th October period 2. Time allowed = ½ hour plus 10 mins reading time. Part 2 on Friday 11th October period 1.

Actual NAB – Tuesday 29th October period 5/6. Time allowed = 1 hour plus 10 minutes reading time

Decision Making 2

Higher Business Management

Decision-making in Business

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Learning Intentions:

To introduce pupils to the Nature of

Decisions and Decision Making Success criteria:

 Describe the nature of decision makingIdentify and describe objectives and strategy Identify and describe types of decisions Identify and describe who makes decisions

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The Nature of Decisions

Decision making is choosing between alternative

courses of action.

Typical decisions made in business: What to produce? Where to locate? Methods of production? How many employees? What price to charge?

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Objectives

Objectives are the goals of theorganisation. Survival Profit maximisation Growth Image and Social Responsibility

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Objectives & Strategy Where are we? Where do we want to be? How do we get there? Managers decide business

objectives then organised objectives into targets.

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Types of Decisions

Strategic - the long-term aims of the business

Tactical - setting out the objectives; more short-term; how to achieve the strategic aims

Operational - day-to-day decisions on how to achieve the objectives

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Review/Evaluation/Alteration

REVIEW EVALUATE

ALTER

There must be a continuous process of review in order to respond to change.

Take, for example, how airlines across the world reacted after the terrorist attacks on America.

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Learning Intentions:

Decision Making Task Who makes the decision –

pyramid Examples of decisions Applying to real life situation

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Who Makes the Decisions?

Strategic Owner/senior management

Tactical As above or middle management

Operational Junior management, section

heads or even individual workers

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Learning Intentions:

To introduce pupils to structured decision making models.

Success criteria – You should be able to: Know why decisions are made in

the first place Be able to apply decision making

models to the process

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Why Make Decisions?

To achieve the long-term aims of the owners To carry out roles and functions To be able to give clear instructions To give directions and purpose to employees To compare actual performance with objectives To judge the success or failure of previous decisions To guide into decisions for the future To modify existing decisions

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Structured Decision Making Model

? ?

? ?

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Structured Decision-making Model - “POGADSCIE”

Identify the PROBLEM Identify the OBJECTIVES GATHER information ANALYSE information DEVISE alternative solutions SELECT from alternative solutions COMMUNICATE the decision IMPLEMENT the decision EVALUATE

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Step One Identify the Problem

Where do we want to go? What to we want to achieve? What exactly is wrong?

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Step Two Identify the Objectives

What is it we want to achieve? A business may be trying to achieve 2

or more objectives at the same time – especially if they are implementing major changes.

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Step Three Gather Information

Ensure that the information gathered is of good quality – eg, accurate, up-to-date.

Extensive use of both internal and external information is usually required.

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Step Four Analyse Information

Sort out the information that is of direct use to the decision that has to be made.

Decide what you CAN do and what you CAN’T do.

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Step Five Devise alternative solutions

Decide on a number of different courses of action that will meet the aims.

This will help to make the process more flexible.

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Step Six Select from the alternative

solutions Select the one that you think is most

likely to meet the aims of the organisation.

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Step Seven Communicate the decision

All those involved MUST know what is going to happen, WHAT effects this course of action will have and WHY that particular course of action has been decided upon.

People will be more motivated to succeed if they know what they are doing and why.

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Step Eight Implement the decision

Arrange for the resources to be put into place.

Issue appropriate instructions Ask for feedback on how things are

progressing.

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Step Nine Evaluate

Compare what is happening to what you expected to happen.

This will allow you to make further changes if necessary to ensure your final goal is met.

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Making a Decision

Apply the “POGADSCIE” model to choosing a new expensive top of the range Computer system computer for the staff in your firm.

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Learning Intentions:

To introduce pupils to the problems and benefits of using structured decision making models.

Success criteria: Be able to identify and describe problems

and benefits Identify how ICT helps decision making

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Problems/Disadvantages of Using a Structured Model

The time scale required to undertake the process eg POGADSCIE

The ability to collect all the information on time to carry out the model

Generating alternative solutions might be difficult as there is no other solution

Lack of creativity may be stifled due to the model being restrictive due to the process to be carried out.

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Benefits/Advantages of Using a Structured Model

The time scale required The quality/quantity of the information you

have – no rash decisions are made as all the info is there.

The availability of alternative solutions Enhances innovation and responsiveness and

ideas can be fully discussed Managers are forced to go through the process

therefore helping identify the problem

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Aids to Decision-making

Brainstorming/Thought showering This be a very useful way to generate and

create ideas

Pest Analysis Political, economic, social and cultural

external constraints on decision-making (you could add the environment here)

NB Pest and Swot often used together to identify opportunities and threats

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IT and Decision-making

Huge storage capacity Vast amounts of information from the internet Sophisticated software for processing

information Reporting and presentation packages

(PowerPoint) Improved efficiency and lower costs (less time

to find information) Problem of ‘too much’ information?

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Learning Intentions:

To introduce pupils to decision making models – part 2

Success criteria:Pupils should be able to

describeSWOT analysis and link it toPOGADSCIE

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SWOT Analysis

Strengths Weaknesses Opportunities Threats

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Internal Factors

Strengths

THE FIRM

Weaknesses

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External Factors

Threats

Opportunities

THE FIRM

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A SWOT Grid

Weaknesses Present

External Opportunities Threats Future

StrengthsInternal

Let’s carry out a SWOT ANALYSIS for IKEA

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Learning Intentions:

To introduce pupils to the benefits of using structured decision making models along with IT systems

Success criteria: Be able to identify and describe problems

and benefits Explain how ICT helps decision making

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Factors Affecting the Quality of Decisions

Quality and quantity of information used Training of staff in decision-making – do the managers

have the ability and experience to make good decisions Risk-taking that is undertaken by the

managers/decision makers Motivation of staff to become involved to implement

decision. Finance available to carry out model Technology available to assist in decision making Use of model eg POGADSCIE or SWOT

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How would you evaluate the effectiveness of a decision? Ask staff for their opinion on decision Issue questionnaires to customers to

gather viewsPractical ways – have sales increased? have profits increased? has the situation improved? has absenteeism reduced? has staff morale increased?

Compare to

previous situation

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Learning Intentions:

Success criteria:

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Mission Statements

A written summary of the strategic aims of an organisation. Well publicised and available to all stakeholders.

Often used in marketing the company’s products or services, eg Body Shop.

Gives employees an end result to work to. Goals motivate people Keeps focus and direction

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Mission Statement Examples “We wish to refresh everyone we

touch” - Coca-Cola

“We strive to lead in the invention. Development and manufacture of the industry’s most advanced information technologies” - IBM

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Learning Intentions: To reinforce the functions of management

Success criteria:Pupils should be able to

describe and give examples of Henri Fayol 5 main functions and the 2 new modern additions

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Role of Managers:

What type of things do mangers undertake?

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The Role of Managers

Get things done through other people Get things done by using the firm’s resources Controls and supervises activities in the

organisation Makes decisions about running the organisation Oversees the work of subordinates Oversees the work of department/s Is accountable to, and carries out the wishes of,

the owner(s) of the organisation

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Functions of Management

Plans Organises Commands Co-ordinates Controls Delegates Motivates

Henri Fayol Modern

approach to management

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The GROUP View of Management

Management has conflicting GOALS Managers are held responsible for

RESULTS Managers work in ORGANISATIONS Managers must cope with UNCERTAINTY Managers work with and through PEOPLE