Managing Change Making Strategic Decisions “Good decisions come from wisdom. Wisdom comes from experience. Experience comes from bad decisions.” Anonymous “Decisions of the kind the executive has to make are not made well by acclamation. They are made well only if based on the clash of conflicting views…The first rule in decision making is that one does not make a decision unless there is disagreement.” Peter Drucker “A complex decision is like a great river, drawing from its many tributaries the innumerable premises of which it is constituted.” Herbert Simon BUSS4.11 Decision Making

In this topic you will learn about: The significance of information management The value of different approaches to decision-making Assessing influences on corporate decision-making BUSS4.11 Decision Making If only you knew!

Making Strategic Decisions Strategic Tactical Operational BUSS4.11 Decision Making Made at the top of the hierarchy May require high capital investment Once made difficult to reverse Long term direction of business Aim at meeting corporate objectives Will impact upon different stakeholders

Significance of Information Management Information Management ◦ Use of accurate and up to date information to aid decision-making ◦ Collation and sharing of information Management Information System ◦ The use of IT to collect, store, process and disseminate information BUSS4.11 Decision Making Data Raw facts and figures Information Date with context that can be used to aid decision making Processing to give meaning and context

Information Management MIS Options Quantitative predictions Investment appraisal Break even Current performance Possible outcomes Ratio analysis Profit centres Corporate objectives BUSS4.11 Decision Making

Information Management Effective decision-making will require both qualitative and quantitative information Information can come from both internal and external sources including: ◦ Financial Accounts ◦ Market Research ◦ Competitor Analysis ◦ Market Analysis ◦ SWOT Analysis ◦ PEST Analysis ◦ Economic Forecasts BUSS4.11 Decision Making

Approaches to Decision-making Scientific Backed by research Outcomes are simulated or tested Reduces but does not eliminate risk Decisions are objective Intuition Based on gut instinct Quicker decisions can be made An experienced manager may understand the market Decisions are subjective BUSS4.11 Decision Making If you were to put £1000 on a horse would you study the form or go for one you liked the sound of? “Nothing slows down an organisation more than paralysis by analysis.”

Decision-making – Further Reading There are many techniques to aid decision- making ◦ SWOT ◦ Cost Benefit Analysis Six Thinking Hats – look at decisions from different angles Pareto Analysis – what is the most important problem to solve? Starbursting - analysing decisions by asking questions BUSS4.11 Decision Making How useful would each of these approaches be to a chain of coffee shops considering opening stores in China?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were Julian Dunkerton, chief executive of SuperGroup, what would your strategy be now?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were Julian Dunkerton, chief executive of SuperGroup, what would your strategy be now?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were BA boss Willie Walsh, what would your strategy be?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were BA boss Willie Walsh, what would your strategy be?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were John Lewis chairman Charlie Mayfield what would your strategy be?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were John Lewis chairman Charlie Mayfield what would your strategy be?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were Toyota President Akio, what would your strategy be?

Feel: What do you feel? Think: What has to happen next? Benefits: What good about it? Judgement: What bad about it? Facts: Evidence / Statistics? Creative: All ideas are possible! If you were Toyota President Akio, what would your strategy be?

Influences on corporate decision- making Ethical position (real or perceived) ◦ How will the decision be viewed by key stakeholders ◦ Will moving production abroad match the business’ ethical standards? ◦ Where are materials sourced from? Resources available ◦ Financial constraints ◦ Workforce ◦ Scarcity of materials Relative power of stakeholders ◦ How might pressure groups respond? ◦ Will TUs become involved? BUSS4.11 Decision Making Also, don’t underestimate the importance of corporate objectives. Remember this has been an important theme throughout this unit

Activity  Ryanair reduces Stansted flights  What information would have been collated to help make this decision?  What are the factors contributing to this decision?  What are the advantages of using scientific decision making techniques for Ryanair?  How might different stakeholders respond to this decision? BUSS4.11 Decision Making

Essay Jack Welch, CEO of GE, urges businesses not to sit on decisions. He advices “Don't set something aside instead of making a decision on the spot. In order to get speed, decisions at virtually every level have to be made in minutes, not days or weeks.” With reference to businesses you have studied to what extent do you agree with Jack’s views on making quick decisions. Justify your answer. BUSS4.11 Decision Making