WHAT IS A DECISION?

DEFINITION

A decision is making the choice

between different options

to achieve an aim or a

goal.

DECISION MAKING

To arrive at the correct decision you must identify exactly what you are trying to

achieve.

WE ALL MAKE DECISIONS?

Most of your day is taken up with choosing one course of action over another.

Some decisions will have little impact on your future- others have a more serious impact on your life.

PERSONAL CHOICES?

What will you have for lunch?

What will you do at the week-end?

Will you stay on at school for a fifth

year?

Will you go to university?

Do you want to start work as soon as

possible?

ROUTINE DECISIONS

What choices or decisions have you made today?

When to get up

What to wear

What to have for breakfast

Which bus to catch

ROUTINE DECISIONS

These are all simple day to day decisions – they will not make a tremendous impact on our lives.

We do not spend a great deal of time on them.

They are easy to make

MAJOR DECISIONS

Can you think of any decisions you have taken which may affect the rest of your life?

Which subjects to take

Whether to stay on at school

Playing a sport

Friends made

MAJOR DECISIONS

These decisions can take a while to make.

We give them a lot of thought.

The wrong choice now could have a negative impact for a long period of time.

BUSINESS CHOICES

Which of these are routine and which are major business decisions?

Open shop for longer hours

Change range of products

Charge for carrier bags

Employ more staff

Buy another chain of supermarkets

Expand into Europe

Move a member of staff from one till to another

TYPES OF DECISION

All decisions in a business are important

Managers will decide on aims and objectives

They will organise resources They will deal with the day to day

issues that arise

3 MAIN TYPES OF DECISION

STRATEGIC

TACTICAL

OPERATIONAL

STRATEGIC DECISIONS

Long term – where does the business want to be in the future

Senior managers and owners take these decisions

There is not a great deal of detail about how these will be achieved.

PLANNING A LONG TERM STRATEGY

Where are we now

Where do we want to be in 5 years

What resources will we need

What changes do we need to make in order to achieve our goal

How can we be better than our competitors

TASK

the long term strategy of an organisations is often embedded in their mission statement.

Copy out the mission statements of the following organisations:

Body Shop Domino’s Pizzas TUC

TACTICAL DECISIONS

MediumTerm - how the ‘strategic’ decisions are going to be achieved

Made by senior or middle managers

There is a lot of detail about how resources will be used to achieve these aims

OPERATIONAL DECISIONS

‘Day to day’ decisions

Junior managers and supervisors make these decisions

They are made in response to minor problems that arise each day

JOTTER WORK

The Board of Directors of Marks & Spencers plc have decided to close down all their branches in Europe and concentrate on their UK market in an effort to improve sales and profits. They intend opening 5 new superstores and introducing a new range of clothes. Management in the larger branches are introducing coffee shops in their stores and the manager of the branch at Braehead has decided to extend the opening hours of the store and to open on a Sunday to meet the needs of local shoppers. On Tuesday the supervisor in the food hall decided to close down two of the tills and assign the staff to restock the frozen food displays. The store’s Security Manager decided to call the police to deal with suspected shoplifters.Head up 3 columns in your jotter - STRATEGIC,

TACTICAL and OPERATIONAL. List the decisions underlined in the case study under the appropriate heading.

Solution

Strategic• concentrate on their UK market in an effort to improve

sales and profits

Tactical• close down all their branches in Europe• opening 5 new superstores• new range of clothes• introducing coffee shops• extend the opening hours• open on a Sunday

Operational• close down two of the tills• restock the frozen food displays• call the police

Types of Decision - Question

Describe 3 types of decision managers might make. (6)

Tesco might have the strategic objective to increase market share by 10%.

Suggest tactical and operational decisions that could be made to achieve this. (4)

HOW TO MAKE A GOOD DECISION

Most organisations want to ensure that all decisions are to the benefit of the organisation.

The process that a manager follows in order to reach a decision is laid down and must be followed: it is known as the decision making model.

It may take a minute to follow this through or

it could take months

DECISION MAKING MODEL

1. Identifying the real problem2. Identifying a number of possible

solutions3. Deciding on the best solutions4. Communicating the decision5. Implementing the decision6. And finally, making sure the decision is

working as expected

Questions – Decision making model

1. List the 6 steps in the decision making model

2. Use the decision making model to work through the HR process when a member of staff announces that they are leaving the organisation.

3. A small clothes shop has seen sales fall for the past 6 months.

Use the decision making model to solve the above problem

Solution

1. A member of staff is leaving the organisation and therefore a vacancy needs to be filled

2. Promote a current member of staff or recruit externally or distribute work amongst other employees

3. Decide to recruit externally4. Communicate decision through a staff meeting

or display a bulletin or send out an email/fax to managers of the organisation

5. Advertise the job in a local newspaper, draw up a job description and person specification

6. Set up staff appraisal with new member of staff a few months after their start date

WHAT IS A MANAGER?

Managers get things done through

or with other people

THE ROLE OF MANAGERS

Managers take responsibility for running the business.

This involves them in taking countless decisions.

The type of decisions that managers make will depend on many things (e.g how high up they are in the organisation and the situations that they have to deal with).

They make the business decisions BUT also must make sure that any decisions they make work for the business

THE ROLE OF MANAGERS

PLAN – decide on the direction they wish to go and what is required

ORGANISE - Give the workers the resources they need to do it

COMMUNICATE - Make sure that everyone that needs to know about the decision is told

CO-ORDINATE - Bring all necessary resources together and make sure that everyone knows and understands what they have to do

CONTROL AND MONITOR - Make sure they do it, and that they do it properly

THE ROLE OF MANAGERS

Effective managers also have to be able to:

DELEGATE– give subordinates the authority to carry out tasks. This motivates workers and reduces the managers workload.

MOTIVATE – getting workers to work harder. This can be done by telling them, encouraging team-working, participation in decision making, and by giving them some authority.

The Role Of Managers - Questions

Describe the role of a manager, giving examples.

Adverts for managers usually state that the successful applicant must be able to motivate and delegate. Why do you think these are important qualities in a manager.

THE NEED TO FIT IN WITH ORGANISATIONAL OBJECTIVES

When considering possible solutions the manager must take into account the strategic objectives of the organisation

The decision must fit in with the mission statement of the organisation

Other objectives could be:Profit maximisation Social responsibilitySurvival Provision of a serviceGrowth

STAKEHOLDERS OF THE ORGANISATION

Stakeholders influence how the business performs, and are affected by the actions of the organisation.

Managers must take into account how they will react to decisions that are made.

The stakeholders are:

Shareholders CustomersOwners SuppliersEmployees CommunityGovernment

Activity

Explain how each of the following stakeholders could influence decisions taken by an organisation.

Shareholders Customers The bank (or other lenders) The government Employees The local community Suppliers

SHAREHOLDERS

Any decisions made affect the dividends shareholders receive as their share of profits.

Therefore decisions that will reduce profits will not be popular and shareholders would voice their concerns at the AGM which could have serious consequences for management.

EMPLOYEES

Any decisions made by the organisation would affect employees pay and conditions and job security.

Therefore any decisions that threaten this would be unpopular.

An unhappy workforce is less motivated and so produce less. Employees must be aware of any decisions being made and how this might affect them.

Involvement in the decision making process would be advisable to avoid trade disputes.

CUSTOMERS

Customers will be affected by the decisions made if they affect the following:

Price Quality Service of the product to be what

customers want If unhappy Customers will buy elsewhere

SUPPLIERS

Suppliers may be affected by decisions made by the organisation for example:

If there is a decision to increase production then more materials would need to be ordered from the supplier

If the supplier finds it difficult to provide the extra materials then the decision may have to be changed

COMMUNITY

The community can be affected by the decisions made in many ways:

A decision to expand the business could create more jobs in the area BUT would increase traffic congestion, pollution and loss of some of the countryside.

So it is important to take the concerns of the community into account when making decisions that could affect them.

GOVERNMENT

Governments pass legislation which affect businesses, this will have to be taken into account when decisions are being made.

Governments can at any time introduce legislation to prevent undesirable actions by businesses, so they must consider what the Government wants when making any decisions.

Any decisions taken by the business must be legal otherwise they could be prosecuted.