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

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 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

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

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“

“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

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

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

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

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

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

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

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

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

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?”

(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

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

Planning

Organising

Commanding

Co-ordinating

Controlling

Motivation

Delegation

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

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

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

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

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

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

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

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

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

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

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