© All Rights Reserved Information and the Organisation Use of information in decision making and strategic planning

© All Rights Reserved Use of Information in Decision Making Decisions need to be made constantly at every level in an organisation. Decisions about the day to day running of things, to decisions concerning the long term goals of the business. Some decisions have to be made instantly or very quickly whereas others such as whether to install a new system can take months. All decisions need to be based on accurate, reliable and up-to-date information.

© All Rights Reserved Use of Information in Decision Making Any decision made is only as good as the information that it was originally based on. Without accurate information, there is a high probability of the decision being wrong or not the best choice.

© All Rights Reserved Use of Information in Decision Making Computers and IT systems can help ensure that information is delivered quickly to the people who require it for decision making purposes. Fast, safe delivery of information enables decisions to be made more quickly. With well designed IT systems, information can be easily cross referenced to ensure accuracy and a better understanding of the data. For example, sales figures for this month can be compared to the same period for the previous year.

© All Rights Reserved Use of Information in Decision Making Data can be displayed graphically to enable a better understanding. Modelling can be used to try out different scenarios and the effect that a decision might have on the business. For example, a manager could ask the questions, ‘What if I give the workers a 2% pay rise. What effect will it have on the profits this year?’. Or ‘what if I lower it to 1.5%?’. Or ‘what effect will a drop in sales of 10% have on our cash available’

© All Rights Reserved Process of Decision Making Recognise a problem exists Identify a range of solutions Implement a chosen solution

© All Rights Reserved Process of Decision Making Stage 1: Recognise that a problem exists This can come from a number of different sources –Shop floor workers –Managers –Board of Directors –Customers –Complaints –Suppliers –Distributors Just because someone claims there is a problem doesn’t necessarily mean that there is. Information will be needed to verify this.

© All Rights Reserved Process of Decision Making Stage 2: Identify a range of solutions For most problems, a number of different solutions can be found – some more appropriate than others. To choose the best solution, information is required. Modelling may be performed to help analyse the situation and determine the probably outcomes. Research can be undertaken to identify solutions – talk to workers, use the Internet, analyse trends Depending on the nature of the problem, there may only be time to try out one solution

© All Rights Reserved Process of Decision Making Stage 3: Implement a chosen solution Once a range of solutions have been identified and the best one chosen, it needs to be implemented. This might require –New equipment –New procedures –Training –Supporting documentation After implementation, evaluation needs to take place to determine whether the new solution has solved the original problem

© All Rights Reserved Process of Decision Making Throughout the three stages mentioned, decisions are continually being made in order to arrive at the final solution –What possible solutions are there? –Which one should we choose? –When should we implement the solution? –How should we implement the solution? –Who needs to be involved? –What training/support will be needed? Without the relevant information at the right time, poor decisions can be made

© All Rights Reserved Use of Information in Strategic Planning Strategic planning means planning the long term future for the organisation. It usually means planning for 5-10 years time Examples: –Should we expand the business? –Should we sell abroad? –Should we diversify? –Should we move offices to a different part of the country?

© All Rights Reserved Use of Information in Strategic Planning Strategic planning is usually undertaken by the board of directors and senior managers. In order to plan for such a long time ahead, a vast amount of information is required. Historical data can be used to see how the business has been progressing. They should give an indication of trends e.g. increasing sales or profit which allow predictions for the future.

© All Rights Reserved Use of Information in Strategic Planning Types of information required for strategic planning: –Sales figures – over a number of years –Trends –Demographics –Customer data –Marketing data –Financial data – profit figures, cash available –Competitor information –Future legislation

© All Rights Reserved Use of Information in Strategic Planning Because the planning is for changes due to happen a long time in the future, there is plenty of time to undertake modelling of different scenarios. The length of time to research previous data, trends and models, should lead to well informed decisions about the future direction of the company.

© All Rights Reserved Information required The type of information required for strategic planning depends on: –The nature of the business –The possible decisions being investigated e.g. if looking at diversifying will need competitor information, market research, marketing data, financial data –The type of historical data available