BM Unit 1 - LO31 Higher Business Management Unit 1 Learning Outcome 3 Decision-making in Business
BM Unit 1 - LO32 The Nature of Decisions n What to produce? n Where to locate? n Methods of production? n How many employees? n What price to charge?
BM Unit 1 - LO33 Types of Decisions n Strategic - the long-term aims of the business n Tactical - setting out the objectives; more short-term; how to achieve the strategic aims n Operational - day-to-day decisions on how to achieve the objectives
BM Unit 1 - LO34 Review/Evaluation/Alteration REVIEWEVALUATEALTER 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 - LO35 Who Makes the Decisions? Strategic n Owner/senior management Tactical n As above or middle management Operational n Junior management, section heads or even individual workers
BM Unit 1 - LO36 Mission Statements n A written summary of the strategic aims of an organisation. Well publicised and available to all stakeholders. n Often used in marketing the company’s products or services, eg Body Shop.
BM Unit 1 - LO37 The Role of Managers n Get things done through other people n Get things done by using the firm’s resources n Controls and supervises activities in the organisation n Makes decisions about running the organisation n Oversees the work of subordinates n Oversees the work of department/s n Is accountable to, and carries out the wishes of, the owner(s) of the organisation
BM Unit 1 - LO38 Functions of Management n Plans n Organises n Commands n Co-ordinates n Controls n Delegates n Motivates
BM Unit 1 - LO39 The GROUP View of Management n Management has conflicting GOALS n Managers are held responsible for RESULTS n Managers work in ORGANISATIONS n Managers must cope with UNCERTAINTY n Managers work with and through PEOPLE
BM Unit 1 - LO310 Why Make Decisions? n To achieve the long-term aims of the owners n To carry out roles and functions n To be able to give clear instructions n To give directions and purpose to employees n To compare actual performance with objectives n To judge the success or failure of previous decisions n To guide into decisions for the future n To modify existing decisions
BM Unit 1 - LO311 Structured Decision-making Model - “POGADSCIE” n Identify the PROBLEM n Identify the OBJECTIVES n GATHER information n ANALYSE information n DEVISE alternative solutions n SELECT from alternative solutions n COMMUNICATE the decision n IMPLEMENT the decision n EVALUATE
BM Unit 1 - LO312 Making a Decision Apply the “POGADSCIE” model to choosing a new digital laptop computer for the staff in your firm.
BM Unit 1 - LO313 IT and Decision-making n Huge storage capacity n Vast amounts of information from the internet n Sophisticated software for processing information n Reporting and presentation packages (PowerPoint) n Improved efficiency and lower costs (less time to find information) n Problem of ‘too much’ information?
BM Unit 1 - LO314 SWOT Analysis n Strengths n Weaknesses n Opportunities n Threats
BM Unit 1 - LO315 Internal Factors Strengths THE FIRM Weaknesses
BM Unit 1 - LO316 External Factors Threats Opportunities THE FIRM
BM Unit 1 - LO317 A SWOT Grid WeaknessesPresent ExternalOpportunitiesThreatsFuture StrengthsInternal
BM Unit 1 - LO318 Problems of Using a Structured Model n The time scale required n The ability to collect all the information n Generating alternative solutions n Lack of creativity
BM Unit 1 - LO319 Benefits of Using a Structured Model n The time scale required n The quality/quantity of the information you have n The availability of alternative solutions n Enhances innovation and responsiveness
BM Unit 1 - LO320 Aids to Decision-making Brainstorming n This be a very useful way to generate and create ideas Pest Analysis n Political, economic, social and cultural external constraints on decision-making (you could add the environment here) n NB Pest and Swot often used together to identify opportunities and threats
BM Unit 1 - LO321 Factors Affecting the Quality of Decisions n Quality and quantity of information used n Training of staff in decision- making n Risk-taking n The human element