WHAT IS A DECISION? DEFINITION A decision is making the choice between different options to achieve an aim or a goal.

DECISION MAKING To arrive at the correct decision you must identify exactly what you are trying to achieve.

WE ALL MAKE DECISIONS? Most of your day is taken up with choosing one course of action over another. Some decisions will have little impact on your future- others have a more serious impact on your life.

PERSONAL CHOICES? What will you have for lunch? What will you do at the week-end? Will you stay on at school for a fifth year? Will you go to university? Do you want to start work as soon as possible?

ROUTINE DECISIONS What choices or decisions have you made today? When to get up What to wear What to have for breakfast Which bus to catch

ROUTINE DECISIONS These are all simple day to day decisions – they will not make a tremendous impact on our lives. We do not spend a great deal of time on them. They are easy to make

MAJOR DECISIONS Can you think of any decisions you have taken which may affect the rest of your life? Which subjects to take Whether to stay on at school Playing a sport Friends made

MAJOR DECISIONS These decisions can take a while to make. We give them a lot of thought. The wrong choice now could have a negative impact for a long period of time.

BUSINESS CHOICES Which of these are routine and which are major business decisions? Open shop for longer hours Change range of products Charge for carrier bags Employ more staff Buy another chain of supermarkets Expand into Europe Move a member of staff from one till to another

TYPES OF DECISION All decisions in a business are important Managers will decide on aims and objectives They will organise resources They will deal with the day to day issues that arise

3 MAIN TYPES OF DECISION STRATEGIC TACTICAL OPERATIONAL

STRATEGIC DECISIONS Long term – where does the business want to be in the future Senior managers and owners take these decisions There is not a great deal of detail about how these will be achieved.

PLANNING A LONG TERM STRATEGY Where are we now Where do we want to be in 5 years What resources will we need What changes do we need to make in order to achieve our goal How can we be better than our competitors

TASK the long term strategy of an organisations is often embedded in their mission statement. Copy out the mission statements of the following organisations: Body Shop Domino’s Pizzas TUC

TACTICAL DECISIONS MediumTerm - how the ‘strategic’ decisions are going to be achieved Made by senior or middle managers There is a lot of detail about how resources will be used to achieve these aims

OPERATIONAL DECISIONS ‘Day to day’ decisions Junior managers and supervisors make these decisions They are made in response to minor problems that arise each day

JOTTER WORK The Board of Directors of Marks & Spencers plc have decided to close down all their branches in Europe and concentrate on their UK market in an effort to improve sales and profits. They intend opening 5 new superstores and introducing a new range of clothes. Management in the larger branches are introducing coffee shops in their stores and the manager of the branch at Braehead has decided to extend the opening hours of the store and to open on a Sunday to meet the needs of local shoppers. On Tuesday the supervisor in the food hall decided to close down two of the tills and assign the staff to restock the frozen food displays. The store’s Security Manager decided to call the police to deal with suspected shoplifters. Head up 3 columns in your jotter - STRATEGIC, TACTICAL and OPERATIONAL. List the decisions underlined in the case study under the appropriate heading.

Solution Strategic concentrate on their UK market in an effort to improve sales and profits Tactical close down all their branches in Europe opening 5 new superstores new range of clothes introducing coffee shops extend the opening hours open on a Sunday Operational close down two of the tills restock the frozen food displays call the police

Types of Decision - Question Describe 3 types of decision managers might make. (6) Tesco might have the strategic objective to increase market share by 10%. Suggest tactical and operational decisions that could be made to achieve this. (4)

HOW TO MAKE A GOOD DECISION Most organisations want to ensure that all decisions are to the benefit of the organisation. The process that a manager follows in order to reach a decision is laid down and must be followed: it is known as the decision making model. It may take a minute to follow this through or it could take months

DECISION MAKING MODEL 1. Identifying the real problem 2. Identifying a number of possible solutions 3. Deciding on the best solutions 4. Communicating the decision 5. Implementing the decision 6. And finally, making sure the decision is working as expected

Questions – Decision making model 1. List the 6 steps in the decision making model 2. Use the decision making model to work through the HR process when a member of staff announces that they are leaving the organisation. 3. A small clothes shop has seen sales fall for the past 6 months. Use the decision making model to solve the above problem

Solution 1. A member of staff is leaving the organisation and therefore a vacancy needs to be filled 2. Promote a current member of staff or recruit externally or distribute work amongst other employees 3. Decide to recruit externally 4. Communicate decision through a staff meeting or display a bulletin or send out an /fax to managers of the organisation 5. Advertise the job in a local newspaper, draw up a job description and person specification 6. Set up staff appraisal with new member of staff a few months after their start date

WHAT IS A MANAGER? Managers get things done through or with other people

THE ROLE OF MANAGERS Managers take responsibility for running the business. This involves them in taking countless decisions. The type of decisions that managers make will depend on many things (e.g how high up they are in the organisation and the situations that they have to deal with). They make the business decisions BUT also must make sure that any decisions they make work for the business

THE ROLE OF MANAGERS PLAN – decide on the direction they wish to go and what is required ORGANISE - Give the workers the resources they need to do it COMMUNICATE - Make sure that everyone that needs to know about the decision is told CO-ORDINATE - Bring all necessary resources together and make sure that everyone knows and understands what they have to do CONTROL AND MONITOR - Make sure they do it, and that they do it properly

THE ROLE OF MANAGERS Effective managers also have to be able to: DELEGATE– give subordinates the authority to carry out tasks. This motivates workers and reduces the managers workload. MOTIVATE – getting workers to work harder. This can be done by telling them, encouraging team-working, participation in decision making, and by giving them some authority.

The Role Of Managers - Questions Describe the role of a manager, giving examples. Adverts for managers usually state that the successful applicant must be able to motivate and delegate. Why do you think these are important qualities in a manager.

THE NEED TO FIT IN WITH ORGANISATIONAL OBJECTIVES When considering possible solutions the manager must take into account the strategic objectives of the organisation The decision must fit in with the mission statement of the organisation Other objectives could be: Profit maximisationSocial responsibility SurvivalProvision of a service Growth

STAKEHOLDERS OF THE ORGANISATION Stakeholders influence how the business performs, and are affected by the actions of the organisation. Managers must take into account how they will react to decisions that are made. The stakeholders are: ShareholdersCustomers OwnersSuppliers EmployeesCommunity Government

Activity Explain how each of the following stakeholders could influence decisions taken by an organisation. Shareholders Customers The bank (or other lenders) The government Employees The local community Suppliers

SHAREHOLDERS Any decisions made affect the dividends shareholders receive as their share of profits. Therefore decisions that will reduce profits will not be popular and shareholders would voice their concerns at the AGM which could have serious consequences for management.

EMPLOYEES Any decisions made by the organisation would affect employees pay and conditions and job security. Therefore any decisions that threaten this would be unpopular. An unhappy workforce is less motivated and so produce less. Employees must be aware of any decisions being made and how this might affect them. Involvement in the decision making process would be advisable to avoid trade disputes.

CUSTOMERS Customers will be affected by the decisions made if they affect the following: Price Quality Service of the product to be what customers want If unhappy Customers will buy elsewhere

SUPPLIERS Suppliers may be affected by decisions made by the organisation for example: If there is a decision to increase production then more materials would need to be ordered from the supplier If the supplier finds it difficult to provide the extra materials then the decision may have to be changed

COMMUNITY The community can be affected by the decisions made in many ways: A decision to expand the business could create more jobs in the area BUT would increase traffic congestion, pollution and loss of some of the countryside. So it is important to take the concerns of the community into account when making decisions that could affect them.

GOVERNMENT Governments pass legislation which affect businesses, this will have to be taken into account when decisions are being made. Governments can at any time introduce legislation to prevent undesirable actions by businesses, so they must consider what the Government wants when making any decisions. Any decisions taken by the business must be legal otherwise they could be prosecuted.