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

3. 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?

4. 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

5. BM Unit 1 - LO34 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

6. BM Unit 1 - LO35 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.

7. BM Unit 1 - LO36 Review/Evaluation/Alteration REVIEW EVALUATEALTER 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.

8. 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

9. BM Unit 1 - LO38 Functions of Management n Plans n Organises n Commands n Co-ordinates n Controls n Delegates n Motivates

10. 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

11. 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

12. 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

13. BM Unit 1 - LO312 Making a Decision Apply the “POGADSCIE” model to choosing a new digital laptop computer for the staff in your firm.

14. 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?

15. BM Unit 1 - LO314 SWOT Analysis n Strengths n Weaknesses n Opportunities n Threats

16. BM Unit 1 - LO315 Internal Factors Strengths THE FIRM Weaknesses

17. BM Unit 1 - LO316 External Factors Threats Opportunities THE FIRM

18. BM Unit 1 - LO317 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

19. BM Unit 1 - LO318 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

20. BM Unit 1 - LO319 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

21. BM Unit 1 - LO320 De Bono’s Six Thinking Hats Emotional views giving gut feelings about an issue All positive benefits of the issue All negative thoughts regarding an issue Creative suggestions and ideas about the issue Question what the group thinks about the issue Control and organise the thinking of an issue

22. 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