Decision Making1 NAB Dates Business in Contemporary Society Information and Information Technology Decision Making Practice NAB – Thursday 10 th October period 2. Time allowed = ½ hour plus 10 mins reading time. Part 2 on Friday 11 th October period 1. Actual NAB – Tuesday 29 th October period 5/6. Time allowed = 1 hour plus 10 minutes reading time

Decision Making2 Higher Business Management Decision-making in Business

Decision Making3 Learning Intentions: To introduce pupils to the Nature of Decisions and Decision Making Success criteria:  Describe the nature of decision making  Identify and describe objectives and strategy  Identify and describe types of decisions  Identify and describe who makes decisions

Decision Making4 The Nature of Decisions Decision making is choosing between alternative courses of action. Typical decisions made in business: What to produce? Where to locate? Methods of production? How many employees? What price to charge?

Decision Making5 Objectives Objectives are the goals of the organisation. Survival Profit maximisation Growth Image and Social Responsibility

Decision Making6 Objectives & Strategy Where are we? Where do we want to be? How do we get there? Managers decide business objectives then organised objectives into targets.

Decision Making7 Types of Decisions Strategic - the long-term aims of the business Tactical - setting out the objectives; more short-term; how to achieve the strategic aims Operational - day-to-day decisions on how to achieve the objectives

Decision Making8 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.

Decision Making9 Learning Intentions: Decision Making Task Who makes the decision – pyramid Examples of decisions Applying to real life situation

Decision Making10 Who Makes the Decisions? Strategic Owner/senior management Tactical As above or middle management Operational Junior management, section heads or even individual workers

Decision Making11 Learning Intentions: To introduce pupils to structured decision making models. Success criteria – You should be able to : Know why decisions are made in the first place Be able to apply decision making models to the process

Decision Making12 Why Make Decisions? To achieve the long-term aims of the owners To carry out roles and functions To be able to give clear instructions To give directions and purpose to employees To compare actual performance with objectives To judge the success or failure of previous decisions To guide into decisions for the future To modify existing decisions

Decision Making13 Structured Decision Making Model ? ? ? ?

Decision Making14 Structured Decision-making Model - “POGADSCIE” Identify the PROBLEM Identify the OBJECTIVES GATHER information ANALYSE information DEVISE alternative solutions SELECT from alternative solutions COMMUNICATE the decision IMPLEMENT the decision EVALUATE

Decision Making15 Step One Identify the Problem Where do we want to go? What to we want to achieve? What exactly is wrong?

Decision Making16 Step Two Identify the Objectives What is it we want to achieve? A business may be trying to achieve 2 or more objectives at the same time – especially if they are implementing major changes.

Decision Making17 Step Three Gather Information Ensure that the information gathered is of good quality – eg, accurate, up-to-date. Extensive use of both internal and external information is usually required.

Decision Making18 Step Four Analyse Information Sort out the information that is of direct use to the decision that has to be made. Decide what you CAN do and what you CAN’T do.

Decision Making19 Step Five Devise alternative solutions Decide on a number of different courses of action that will meet the aims. This will help to make the process more flexible.

Decision Making20 Step Six Select from the alternative solutions Select the one that you think is most likely to meet the aims of the organisation.

Decision Making21 Step Seven Communicate the decision All those involved MUST know what is going to happen, WHAT effects this course of action will have and WHY that particular course of action has been decided upon. People will be more motivated to succeed if they know what they are doing and why.

Decision Making22 Step Eight Implement the decision Arrange for the resources to be put into place. Issue appropriate instructions Ask for feedback on how things are progressing.

Decision Making23 Step Nine Evaluate Compare what is happening to what you expected to happen. This will allow you to make further changes if necessary to ensure your final goal is met.

Decision Making24 Making a Decision Apply the “POGADSCIE” model to choosing a new expensive top of the range Computer system computer for the staff in your firm.

Decision Making25 Learning Intentions: To introduce pupils to the problems and benefits of using structured decision making models. Success criteria: Be able to identify and describe problems and benefits Identify how ICT helps decision making

Decision Making26 Problems/Disadvantages of Using a Structured Model The time scale required to undertake the process eg POGADSCIE The ability to collect all the information on time to carry out the model Generating alternative solutions might be difficult as there is no other solution Lack of creativity may be stifled due to the model being restrictive due to the process to be carried out.

Decision Making27 Benefits/Advantages of Using a Structured Model The time scale required The quality/quantity of the information you have – no rash decisions are made as all the info is there. The availability of alternative solutions Enhances innovation and responsiveness and ideas can be fully discussed Managers are forced to go through the process therefore helping identify the problem

Decision Making28 Aids to Decision-making Brainstorming/Thought showering This be a very useful way to generate and create ideas Pest Analysis Political, economic, social and cultural external constraints on decision-making (you could add the environment here) NB Pest and Swot often used together to identify opportunities and threats

Decision Making29 IT and Decision-making Huge storage capacity Vast amounts of information from the internet Sophisticated software for processing information Reporting and presentation packages (PowerPoint) Improved efficiency and lower costs (less time to find information) Problem of ‘too much’ information?

Decision Making30 Learning Intentions: To introduce pupils to decision making models – part 2 Success criteria: Pupils should be able to describe SWOT analysis and link it to POGADSCIE

Decision Making31 SWOT Analysis Strengths Weaknesses Opportunities Threats

Decision Making32 Internal Factors Strengths THE FIRM Weaknesses

Decision Making33 External Factors Threats Opportunities THE FIRM

Decision Making34 A SWOT Grid WeaknessesPresent ExternalOpportunitiesThreatsFuture StrengthsInternal Let’s carry out a SWOT ANALYSIS for IKEA

Decision Making35 Learning Intentions: To introduce pupils to the benefits of using structured decision making models along with IT systems Success criteria: Be able to identify and describe problems and benefits Explain how ICT helps decision making

Decision Making36 Factors Affecting the Quality of Decisions Quality and quantity of information used Training of staff in decision-making – do the managers have the ability and experience to make good decisions Risk-taking that is undertaken by the managers/decision makers Motivation of staff to become involved to implement decision. Finance available to carry out model Technology available to assist in decision making Use of model eg POGADSCIE or SWOT

Decision Making37 How would you evaluate the effectiveness of a decision? Ask staff for their opinion on decision Issue questionnaires to customers to gather views Practical ways – have sales increased? have profits increased? has the situation improved? has absenteeism reduced? has staff morale increased? Compare to previous situation

Decision Making38 Learning Intentions: Success criteria:

Decision Making39 Mission Statements A written summary of the strategic aims of an organisation. Well publicised and available to all stakeholders. Often used in marketing the company’s products or services, eg Body Shop. Gives employees an end result to work to. Goals motivate people Keeps focus and direction

Decision Making40 Mission Statement Examples “We wish to refresh everyone we touch” - Coca-Cola “We strive to lead in the invention. Development and manufacture of the industry’s most advanced information technologies” - IBM

Decision Making41 Learning Intentions: To reinforce the functions of management Success criteria: Pupils should be able to describe and give examples of Henri Fayol 5 main functions and the 2 new modern additions

Decision Making42 Role of Managers: What type of things do mangers undertake?

Decision Making43 The Role of Managers Get things done through other people Get things done by using the firm’s resources Controls and supervises activities in the organisation Makes decisions about running the organisation Oversees the work of subordinates Oversees the work of department/s Is accountable to, and carries out the wishes of, the owner(s) of the organisation

Decision Making44 Functions of Management Plans Organises Commands Co-ordinates Controls Delegates Motivates Henri Fayol Modern approach to management

Decision Making45 The GROUP View of Management Management has conflicting GOALS Managers are held responsible for RESULTS Managers work in ORGANISATIONS Managers must cope with UNCERTAINTY Managers work with and through PEOPLE