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Decision Making


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Decision Making

  1. 1. Business Enterprise Decision-Making
  2. 2. Nature of Decisions <ul><li>Decision-making is choosing between alternative courses of action </li></ul><ul><li>Typical decisions: </li></ul><ul><li>What to produce </li></ul><ul><li>Where to locate </li></ul><ul><li>What method of production to use </li></ul><ul><li>How many people to employ </li></ul><ul><li>What prices to charge </li></ul>
  3. 3. Objectives <ul><li>Objectives are the goals of the organisation </li></ul><ul><li>Survival </li></ul><ul><li>Profit Maximisation </li></ul><ul><li>Growth </li></ul><ul><li>Image and Social Responsibility </li></ul>
  4. 4. Objectives & Strategy <ul><li>Where are we? </li></ul><ul><li>Where do we want to be? </li></ul><ul><li>How do we get there? </li></ul><ul><li>Managers decide business objectives then organise objectives into targets </li></ul>
  5. 5. Mission Statements <ul><li>A company’s raison d’ ê tre </li></ul><ul><li>Why Define Aims/Objectives? </li></ul><ul><li>End result to work to </li></ul><ul><li>Goals motivate people </li></ul><ul><li>Keeps focus and direction </li></ul>
  6. 6. Mission Statements <ul><li>“We exist to refresh everyone we touch” </li></ul><ul><li>“We strive to lead in the invention, development and manufacture of the industry's most advanced information technologies“ </li></ul>
  7. 7. Types of Decision <ul><li>Strategic </li></ul><ul><li>Tactical </li></ul><ul><li>Operational </li></ul>
  8. 8. Strategic Decisions <ul><li>Long term </li></ul><ul><li>Made by Senior management </li></ul><ul><li>More general in nature </li></ul><ul><li>Major policy statements are strategic </li></ul><ul><li>Examples: </li></ul><ul><li>What products will business produce? </li></ul><ul><li>Which market sector will we aim for? </li></ul><ul><li>Increase market share </li></ul><ul><li>To have 100% customer satisfaction </li></ul>
  9. 9. Tactical Decisions <ul><li>Short term </li></ul><ul><li>Made by middle managers in functional areas </li></ul><ul><li>Based on aims or goals of organisation </li></ul><ul><li>More detailed and specific </li></ul><ul><li>May change due to PEST </li></ul><ul><li>Examples </li></ul><ul><li>Increase number of employees to cope with workload </li></ul><ul><li>Re-name business </li></ul><ul><li>Issue shares to fund new premises </li></ul><ul><li>Instore promotions </li></ul>
  10. 10. Operational Decisions <ul><li>Day to day, routine decisions </li></ul><ul><li>Mainly made by low-level managers/supervisors </li></ul><ul><li>Respond to usually regular problems </li></ul><ul><li>Examples: </li></ul><ul><li>Arranging work rotas </li></ul><ul><li>Dealing with customer complaints </li></ul><ul><li>Ordering materials from suppliers </li></ul>
  11. 11. 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)
  12. 12. 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
  13. 13. Strategic Decision Examples <ul><li>Increase market share </li></ul><ul><li>Invest finance into business </li></ul><ul><li>Sell off a poor performing part of the company (Divestment) </li></ul><ul><li>Expand and take-over firms </li></ul>
  14. 14. Tactical Decision Examples <ul><li>Launch new product </li></ul><ul><li>Buy/rent premises </li></ul><ul><li>Buy/rent machinery </li></ul><ul><li>Set up factory/offices </li></ul><ul><li>Employ/transfer staff </li></ul>
  15. 15. Operational Decision Examples <ul><li>Train new members of staff </li></ul><ul><li>Decide on layout of office </li></ul><ul><li>Where to advertise jobs </li></ul><ul><li>Implement production methods </li></ul><ul><li>Decide on working hours </li></ul>
  16. 16. What is Management? <ul><li>Managers are responsible for getting things done </li></ul><ul><li>This involves delegation – passing responsibility onto others </li></ul><ul><li>Managers act on behalf of owners and are accountable to shareholders </li></ul><ul><li>Managers set objectives for the organisation, and try to achieve them </li></ul>
  17. 17. Henry Mintzberg’s Nature of Managers <ul><li>Interpersonal role – relationships with others </li></ul><ul><li>Informational role – collecting and passing on information </li></ul><ul><li>Decisional role – making different kinds of decisions </li></ul>
  18. 18. Henri Fayol <ul><li>(1841-1925) </li></ul><ul><li>French Mining Engineer and Manager </li></ul><ul><li>First to ask “What is management?” </li></ul>
  19. 19. Fayol’s Role of Manager <ul><li>Plan – examining the future and drawing up a plan of action </li></ul><ul><li>Organize – building up human and material resources and putting plan into action </li></ul><ul><li>Command – maintaining worker activity </li></ul><ul><li>Co-ordinate – unifying effort between departments </li></ul><ul><li>Control – checks on efficiency of plan </li></ul><ul><li>Implement – put into pratice </li></ul>
  20. 20. Functions of Management <ul><li>Planning </li></ul><ul><li>Organising </li></ul><ul><li>Commanding </li></ul><ul><li>Co-ordinating </li></ul><ul><li>Controlling </li></ul><ul><li>Motivation </li></ul><ul><li>Delegation </li></ul>
  21. 21. POCGADSCIE <ul><li>Identify the problem </li></ul><ul><li>Identify objectives of solution </li></ul><ul><li>Identify constraints </li></ul><ul><li>Gather information </li></ul><ul><li>Analyse information </li></ul>
  22. 22. POCGADSCIE <ul><li>Devise possible solutions </li></ul><ul><li>Select best possible solution </li></ul><ul><li>Communicate the decision </li></ul><ul><li>Plan and implement solution </li></ul><ul><li>Evaluate effectiveness of the solution </li></ul>
  23. 23. 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
  24. 24. Problems with Structured Models <ul><li>Time </li></ul><ul><li>Ability to collect all relevant information </li></ul><ul><li>Lack of creativity of managers </li></ul><ul><li>Changes might affect decision </li></ul>
  25. 25. Benefits of Structured Models <ul><li>No hasty decisions will be made </li></ul><ul><li>Quality/quantity of information you will have </li></ul><ul><li>Availability of all alternative solutions </li></ul><ul><li>Enhances innovation and responsiveness </li></ul>
  26. 26. SWOT Analysis <ul><li>Strengths – strong points of business </li></ul><ul><li>Weaknesses – present problems </li></ul><ul><li>Opportunities – may arise in future </li></ul><ul><li>Threats – may arise in future and be avoided </li></ul><ul><li>Strengths and Weaknesses are Internal </li></ul><ul><li>Opportunities & Threats are External </li></ul>
  28. 28. SWOT Analysis <ul><li>THREATS </li></ul><ul><li>Competitors </li></ul><ul><li>TV </li></ul><ul><li>Piracy </li></ul><ul><li>OPPORTUNITIES </li></ul><ul><li>DVD </li></ul><ul><li>IMAX </li></ul><ul><li>Asian Market </li></ul><ul><li>WEAKNESSES </li></ul><ul><li>No new movie blockbusters </li></ul><ul><li>Outdated studio facilities </li></ul><ul><li>STRENGTHS </li></ul><ul><li>Talented workers </li></ul><ul><li>Merchandising </li></ul><ul><li>Back Catalogue </li></ul>
  29. 29. Recommendations <ul><li>Next we try to form a strategy </li></ul><ul><li>Use your strengths to: </li></ul><ul><li>exploit opportunities </li></ul><ul><li>Improve your weaknesses </li></ul><ul><li>Eliminate/deal with threats </li></ul>
  30. 30. Recommendations <ul><li>Improve & update studio facilities </li></ul><ul><li>Transfer back catalogue onto DVD </li></ul><ul><li>Tailor more films for Asian Market and push merchandising </li></ul><ul><li>Tackle TV by creating IMAX spectaculars </li></ul><ul><li>Increased copyright security tabs </li></ul>
  31. 31. Mearns Castle SWOT Analysis <ul><li>THREATS </li></ul><ul><li>HMIE </li></ul><ul><li>Local Secondary Schools </li></ul><ul><li>OPPORTUNITIES </li></ul><ul><li>ICT </li></ul><ul><li>School Extension </li></ul><ul><li>New Subjects </li></ul><ul><li>WEAKNESSES </li></ul><ul><li>Outdated facilities </li></ul><ul><li>Overcrowding & congestion </li></ul><ul><li>STRENGTHS </li></ul><ul><li>Good Leadership </li></ul><ul><li>Hard working Teachers </li></ul><ul><li>High attaining pupils </li></ul><ul><li>School Ethos </li></ul>
  32. 32. Recommendations <ul><li>Upgrade school facilities </li></ul><ul><li>Build extension including pupil ICT area </li></ul><ul><li>Revolutionise homework by using e-mail to send and receive work </li></ul><ul><li>Pupil registration via network </li></ul><ul><li>Offer unsupported subjects via ICT link </li></ul>