Decisions, decisions, decisions Tuesday, 13 February 2018 Decisions, decisions, decisions Objectives; Decision making models and diagrams Strategic and tactical decisions

What decisions have you made already today? Were those decisions routine and everyday? What is the impact of the outcome of that decision? “A decision involves a specific commitment to action” (Boddy)

What is a strategy? A plan that directs the activity of the business over a long period of time

Strategic and tactical decisions Mission Objective; e.g. to increase company profits by 5% per annum Strategy; e.g. to achieve the profit increase by cutting costs Tactics; e.g. change to a cheaper supplier, cut waste

Features of strategic and tactical decisions Strategic decisions Tend to be long term Involve high levels of commitment by managers and directors, as well as in terms of being well resources and funded Difficult to reverse and change a strategy once in place Usually strategic decisions are taken by senior managers and directors, as there is normally a high degree of uncertainty “Get the strategy right and the tactics will follow…” Tactical decisions Tend to be relatively short term Less resources need to be committed to tactical decisions, and only a limited number of mangers may be involved Tactical decisions are easier to reverse Tactical decision making can be delegated to more junior managers in the business, as there will be greater certainty of outcomes

The decision-making process A2 Business Studies The decision-making process Plan – what needs to be done? Control – Make sure activities are happening Organise – How can we achieve it? Co-ordinate – The different activities

A model of scientific decision making A logical and methodical approach to decision making that should reduce risk Set objectives – determine what you want to achieve Gather data Analyse data Determine corporate plan and select strategy Implement, i.e. put the plan into action Review, i.e. check to see if the plan is being implemented correctly SWOT analysis

Factors which are likely to be taken into account… hunch / gut feeling / intuition experience Decision making data – the scientific approach to decision making The impact, size and risk that is connected to a decision is likely to influence the amount that each of these three factors play in making that decision.

The main influences on corporate decision making Corporate objectives The key determining factor in corporate decision making Ethical position Where should a business source supplies? Resources available Human resource? Finance? Relative power of stakeholder groups Environmental groups/trade unions

LOW INTEREST IN BUSINESS HIGH Stakeholder mapping Minimal effort Keep informed LOW INTEREST IN BUSINESS HIGH Keep satisfied Key players LOW POWER HIGH What might managers do with key players? How might a stakeholder group become a key player?

Information management and decisions Data – unprocessed qualitative & quantitative findings Information – processed data that gives meaning Good information is; Reliable Timely Relevant Of sufficient quantity “In 10 words or less summarise the importance of information management”

Making Strategic Decisions Following the election, some politicians were left with a strategic decision to make. Outline the decision in terms of; Routine or non-routine (programmed or non-programmed) Strategic vs. tactical features How scientific / hunch / experience approaches can be employed Stakeholder mapping How information can help

The key question… New Chief Executives have been appointed at Nokia and Thomas Cook in the last few years to try to turn around the business with a new strategy. To what extent does the success of a new strategy depend on the leader? Justify your answer with reference to Nokia, Thomas Cook and/or any other businesses that you know.

Examiner report This was by far the most popular question in Section B. Better responses were clearly focused on the relationship between a leader and a new strategy. They considered the role of leaders in determining the success of a new strategy; for example, in terms of providing the vision, allocating resources and bringing about the change successfully. Weaker responses discussed the role of leaders in general or the role leaders can play in terms of the overall success of a business rather than relating specifically to a new strategy. Students often provided examples of leaders in their responses but it is important that these examples are used in supporting an argument. Simply stating that Harriet Green transformed Thomas Cook or that Howard Schultz turned around Starbucks does not provide much insight into the role that leaders actually play in influencing the success of a new strategy or help to evaluate the factors that determine the effectiveness of a leader in this situation. Again the advice is to build the arguments with support from cases, data or other material relevant to the context rather than describe a series of business cases with no clear underlying answer to the question. This question was about leaders and the success of a new strategy and the links between these two factors needed to be examined, discussed and debated.

Research Use your time in an ICT room to research leaders and their impact on new strategies in order to prepare for the essay due in on Friday