BM Unit 1 - LO31 Higher Business Management Unit 1 Learning Outcome 3 Decision-making in Business.

BM Unit 1 - LO3 1

Higher Business Management

Unit 1Learning Outcome 3

Decision-making in Business

BM Unit 1 - LO3 2

The Nature of Decisions

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

BM Unit 1 - LO3 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

BM Unit 1 - LO3 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.

BM Unit 1 - LO3 5

Who Makes the Decisions?

Strategic Owner/senior management

Tactical As above or middle management

Operational Junior management, section

heads or even individual workers

BM Unit 1 - LO3 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 company’s products or services, eg Body Shop.

BM Unit 1 - LO3 7

The Role of Managers

Get things done through other people Get things done by using the firm’s

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

BM Unit 1 - LO3 8

Functions of Management

Plans Organises Commands Co-ordinates Controls Delegates Motivates

BM Unit 1 - LO3 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

BM Unit 1 - LO3 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

BM Unit 1 - LO3 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

BM Unit 1 - LO3 12

Making a Decision

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

BM Unit 1 - LO3 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?

BM Unit 1 - LO3 14

SWOT Analysis

Strengths Weaknesses Opportunities Threats

BM Unit 1 - LO3 15

Internal Factors

Strengths

THE FIRM

Weaknesses

BM Unit 1 - LO3 16

External Factors

Threats

Opportunities

THE FIRM

BM Unit 1 - LO3 17

A SWOT Grid

Weaknesses Present

External Opportunities Threats Future

StrengthsInternal

BM Unit 1 - LO3 18

Problems of Using a Structured Model

The time scale required The ability to collect all the

information Generating alternative

solutions Lack of creativity

BM Unit 1 - LO3 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

BM Unit 1 - LO3 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

BM Unit 1 - LO3 21

Factors Affecting the Quality of Decisions

Quality and quantity of information used

Training of staff in decision-making

Risk-taking The human element