Decision Making

Business Enterprise Decision-Making

Nature of Decisions
Decision-making is choosing between alternative courses of action
Typical decisions:
What to produce
Where to locate
What method of production to use
How many people to employ
What prices to charge

Objectives
Objectives are the goals of the organisation
Survival
Profit Maximisation
Growth
Image and Social Responsibility

Objectives & Strategy
Where are we?
Where do we want to be?
How do we get there?
Managers decide business objectives then organise objectives into targets

Mission Statements
A company’s raison d’ ê tre
Why Define Aims/Objectives?
End result to work to
Goals motivate people
Keeps focus and direction

Mission Statements
“We exist to refresh everyone we touch”
“We strive to lead in the invention, development and manufacture of the industry's most advanced information technologies“

Types of Decision
Strategic
Tactical
Operational

Strategic Decisions
Long term
Made by Senior management
More general in nature
Major policy statements are strategic
Examples:
What products will business produce?
Which market sector will we aim for?
Increase market share
To have 100% customer satisfaction

Tactical Decisions
Short term
Made by middle managers in functional areas
Based on aims or goals of organisation
More detailed and specific
May change due to PEST
Examples
Increase number of employees to cope with workload
Re-name business
Issue shares to fund new premises
Instore promotions

Operational Decisions
Day to day, routine decisions
Mainly made by low-level managers/supervisors
Respond to usually regular problems
Examples:
Arranging work rotas
Dealing with customer complaints
Ordering materials from suppliers

Policy decisions Long term Complex Non-routine How to achieve policy Medium term Less complex Day-to-day decisions Simple Routine Strategic (Senior Management) Tactical (Middle Management) Operational (Junior Management)

Examples of Decisions Arrange Please Takes for Staff absences Make Bus Mgt compulsory Increase attainment levels by 10% School Extra buses on due to increase in demand Develop new price structure to attract customers Expand market share by establishing a new route Bus Company Operational Tactical Strategic

Strategic Decision Examples
Increase market share
Invest finance into business
Sell off a poor performing part of the company (Divestment)
Expand and take-over firms

Tactical Decision Examples
Launch new product
Buy/rent premises
Buy/rent machinery
Set up factory/offices
Employ/transfer staff

Operational Decision Examples
Train new members of staff
Decide on layout of office
Where to advertise jobs
Implement production methods
Decide on working hours

What is Management?
Managers are responsible for getting things done
This involves delegation – passing responsibility onto others
Managers act on behalf of owners and are accountable to shareholders
Managers set objectives for the organisation, and try to achieve them

Henry Mintzberg’s Nature of Managers
Interpersonal role – relationships with others
Informational role – collecting and passing on information
Decisional role – making different kinds of decisions

Henri Fayol
(1841-1925)
French Mining Engineer and Manager
First to ask “What is management?”

Fayol’s Role of Manager
Plan – examining the future and drawing up a plan of action
Organize – building up human and material resources and putting plan into action
Command – maintaining worker activity
Co-ordinate – unifying effort between departments
Control – checks on efficiency of plan
Implement – put into pratice

Functions of Management
Planning
Organising
Commanding
Co-ordinating
Controlling
Motivation
Delegation

POCGADSCIE
Identify the problem
Identify objectives of solution
Identify constraints
Gather information
Analyse information

POCGADSCIE
Devise possible solutions
Select best possible solution
Communicate the decision
Plan and implement solution
Evaluate effectiveness of the solution

Example of POCGADSCIE Monitor new recruit’s progress Evaluate Look through above documents Analyse Info Appoint & training Implement CV, Application Forms Gather Info Contact successful candidate Communicate Qualifications, experience Constraints Make final choice Select Solution Select suitable candidate Objective Produce short list Devise Solution Select candidate Problem

Problems with Structured Models
Time
Ability to collect all relevant information
Lack of creativity of managers
Changes might affect decision

Benefits of Structured Models
No hasty decisions will be made
Quality/quantity of information you will have
Availability of all alternative solutions
Enhances innovation and responsiveness

SWOT Analysis
Strengths – strong points of business
Weaknesses – present problems
Opportunities – may arise in future
Threats – may arise in future and be avoided
Strengths and Weaknesses are Internal
Opportunities & Threats are External

SWOT Analysis THREATS OPPORTUNITIES WEAKNESSES STRENGTHS

SWOT Analysis
THREATS
Competitors
TV
Piracy
OPPORTUNITIES
DVD
IMAX
Asian Market
WEAKNESSES
No new movie blockbusters
Outdated studio facilities
STRENGTHS
Talented workers
Merchandising
Back Catalogue

Recommendations
Next we try to form a strategy
Use your strengths to:
exploit opportunities
Improve your weaknesses
Eliminate/deal with threats

Recommendations
Improve & update studio facilities
Transfer back catalogue onto DVD
Tailor more films for Asian Market and push merchandising
Tackle TV by creating IMAX spectaculars
Increased copyright security tabs

Mearns Castle SWOT Analysis
THREATS
HMIE
Local Secondary Schools
OPPORTUNITIES
ICT
School Extension
New Subjects
WEAKNESSES
Outdated facilities
Overcrowding & congestion
STRENGTHS
Good Leadership
Hard working Teachers
High attaining pupils
School Ethos

Recommendations
Upgrade school facilities
Build extension including pupil ICT area
Revolutionise homework by using e-mail to send and receive work
Pupil registration via network
Offer unsupported subjects via ICT link

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Decision Making

by Marcus9000 on Oct 15, 2007

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