Higher Business Management

1
Higher Business Management

• Unit 1
• Learning Outcome 3
• Decision-making in Business

2
The Nature of Decisions

• What to produce?
• Where to locate?
• Methods of production?
• How many employees?
• What price to charge?

3
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

4
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.
5
Who Makes the Decisions?

• Strategic
• Owner/senior management
• Tactical
• As above or middle management
• Operational
• Junior management, section heads or even
  individual workers

6
Mission Statements

• A written summary of the strategic aims of an
  organisation. Well publicised and available to
  all stakeholders.
• Often used in marketing the companys products or
  services, eg Body Shop.

7
The Role of Managers

• Get things done through other people
• Get things done by using the firms 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

8
Functions of Management

• Plans
• Organises
• Commands
• Co-ordinates
• Controls
• Delegates
• Motivates

9
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

10
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

11
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

12
Making a Decision

• Apply the POGADSCIE model to choosing a new
  digital laptop computer for the staff in your
  firm.

13
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?

14
SWOT Analysis

• Strengths
• Weaknesses
• Opportunities
• Threats

15
Internal Factors
Strengths THE FIRM Weaknesses
16
External Factors
Opportunities
THE FIRM
Threats
17
A SWOT Grid
Weaknesses
Present
Strengths
Internal
External
Opportunities
Threats
Future
18
Problems of Using a Structured Model

• The time scale required
• The ability to collect all the information
• Generating alternative solutions
• Lack of creativity

19
Benefits of Using a Structured Model

• The time scale required
• The quality/quantity of the information you have
• The availability of alternative solutions
• Enhances innovation and responsiveness

20
Aids to Decision-making

• Brainstorming
• 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

21
Factors Affecting the Quality of Decisions

• Quality and quantity of information used
• Training of staff in decision-making
• Risk-taking
• The human element