Topic 9 Decision making. Higher Business Management

Transcription

1 Topic 9 Decision making Higher Business Management 1

2 Learning Intentions / Success Criteria Learning Intentions Decision making Success Criteria Learners should be aware: strategic, tactical and operational decisions the role of a manager in making decisions SWOT analysis and its use as a decision making tool factors which affect quality decisions. 2

3 Strategic decision What is it? Long-term decisions concerned with the overall direction and focus of the organisation. Who makes it? Senior management Examples? To expand into a new country To diversify the product range To merge with another company To introduce a new management information system To change organisation structure 3

4 Tactical decision What is it? Medium-term decisions that are concerned with actions to achieve strategic decisions. Who makes it? Senior and middle management Examples? To find cheaper suppliers to cut costs To expand the range of goods offered - to grow To develop a new marketing campaign to increase the number of customers 4

5 Operational decision What is it? Short-term decisions that affect the day-to-day running of the organisation. Who makes it? First line management eg team leaders, supervisors Examples? What hours staff will work next week To give someone a day off 5

6 The role of a manager in making decisions Managers have the authority to make decisions on behalf of an organisation to enable it to meet its objectives, for example: delegating tasks motivating staff work with a range of people make decisions. Managers have a very important role to perform in an organisation and have been selected based on the skills, qualities and experience that they have. 6

7 Managers carry out a number of activities and, according to Henry Fayol, a known management writer, have five functions: 7

8 Managers carry out a number of activities and, according to Henry Fayol, a known management writer, have five functions: Managers have different jobs or roles they undertake in order to be efficient and effective. The French miner turned management guru, Henri Fayol was the first to really ask what management involved. He broke the role of the manager into: Plan - to prepare for the future and create action points Organise - having resources ready and putting plan into action Command - ensuring employees are working Co-ordinate - making sure all departments work together to achieve the end goal or objective Control - checking the effectiveness and efficiency of the proposed plan Implement - the art of putting the plan into physical action. 8

9 SWOT analysis It can be used to identify the different internal and external factors that may impact upon the decision-making process. Strengths and weaknesses are about the organisation and its current position, whereas opportunities and threats are concerned with the external environment. An organisation will want to build on its strengths, improve its weaknesses, take advantage of opportunities and minimise the impact of threats 9

10 Strengths Strengths are things the organisation is good at. These could be: availability of finance well-known brands or products goods/services that make the most profits products that are benchmarks in the market which competitors try to copy assets the business owns, such as a large modern factory, modern technology or a retail outlet in a prime location high quality staff and good staff morale. Opportunities Opportunities are the possible chances a business could take that arise due to something happening outside the organisation s control. These might be: a competitor going bust, so the business could take on its customers a boom period in the economy that the business could exploit customer tastes and fashions falling in line with an organisation s specialism governments introducing favourable legislation advancements in technology that the business could exploit, for example, e-commerce. Weaknesses Weaknesses are things the organisation is ineffective at. These could be: lack of finance lack of technology poor customer service reputation faulty products products or branches that are making losses assets that are in a state of disrepair, such as a crumbling factory or ageing fleet untrained staff or low staff morale. Threats Threats are things that might impact on a business achieving its aims or making positive decisions. These may be: Competitor s actions, such as cheaper prices or better-quality products a downturn in the economy, such as recession customer tastes and fashions changing, away from those the business specialises in governments introducing legislation that impacts badly on the organisation advancements in technology that could leave the business behind its rival. 10

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12 Advantages/Disadvantages of using SWOT Advantages Identifies strengths and allows a business to build upon them. Identifies weaknesses and allows them to be addressed. Identifies opportunities and allows them to be exploited. Identifies threats and allows them to be turned into opportunities, e.g. embracing advancing technology not allowing it to leave the business behind. Time is taken to analyse the business current position so no rash decisions are made. Disadvantages A SWOT analysis: is very time consuming, which can slow down decision-making is a very structured process which can stifle creativity and gut reactions from managers can generate many ideas however, it doesn t help pick the correct one produces a result that reflects the opinions of those who carry it out which could lead to bias considers information that is available at a particular moment and may become outdated quickly. 12

13 POGADSCIE There is a structured decision making model known by the acronym POGADSCIE. This is used by businesses to make an effective decision. The letters in the acronym stand for: Identify the Problem Identify Objectives of solution Gather information Analyse information Devise possible solutions Select best possible solution Communicate the decision Plan and Implement solution Evaluate effectiveness of the solution 13

14 Factors which affect quality decisions Internal Factors External factors 14

15 Internal factors Availability of finance - might mean that the most effective option cannot be chosen. Number of employees - might limit what can or cannot be achieved. Skill and training requirements of employees. Ability and skill of managers - to make more complex will demand more skills from managers. Policies and procedures of the organisation - might limit what decision can be made and, as a result, the decision might have to be modified to comply with them. Quality of information available - a lack of quality information might mean that a fully informed decision cannot be made. Employees might be resistant to change - which will make implementing the decision more difficult and time-consuming, especially if they disagree with the option chosen. Appropriate technology might not be available - to implement the best decision and therefore money needs to be spent upgrading technology. Decision-making models (e.g. POGADSClE and SWOT analysis) used in the way that they are intended. Missing out a key step could make the process flawed. 15

16 External factors Changes in the external environment impact on how the organisation functions both positively and negatively. PESTEC (political, economic, social, technological, environmental, competition) are examples of external factors. 16