Decision Making V4

Business Enterprise

Decision-Making

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Today…  Nature of decisions  Objectives & Strategy  Mission Statements

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Nature of Decisions  Decision-making is choosing between alternative courses of action  "There is no reason anyone would want a computer in their home." - Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977 3

Objectives  Objectives are the goals of the organisation  Survival  Profit Maximisation  Growth  Image and Social Responsibility 4

Objectives & Strategy  Where are we?  Where do we want to be?  How do we get there?  Managers decide business objectives then organise objectives into targets 5

a) Identify 5 possible objectives for an organisation b) Identify 3 stakeholders and describe at least 2 ways in which they could influence decision-making within an organisation 6

 "We don't like their sound, and guitar music is on the way out." - Decca Recording Co. rejecting the Beatles, 1962. 7

Mission Statements  A company’s raison d’être  Why Define Aims/Objectives?  End result to work to  Goals motivate people  Keeps focus and direction 8

Mission Statements  “We exist to refresh everyone we touch”  “We strive to lead in the invention, development and manufacture of the industry's most advanced information technologies“

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Using your corporate target as your main objective, describe how you would then go about making sure that the company achieves its objective

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Types of Decision  Strategic

 Tactical

 Operational 11

Strategic Decisions  Long term  Made by Senior management  More general in nature  Major policy statements are strategic

 Examples:  What products will business produce?  Which market sector will we aim for?  Increase market share  To have 100% customer satisfaction 12

 "Heavierthan-air flying machines are impossible." Lord Kelvin, president, Royal Society, 1895.

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Tactical Decisions  Short term  Made by middle managers in functional areas  Based on aims or goals of organisation  More detailed and specific  May change due to PEST

 Examples  Increase number of employees to cope with workload  Re-name business  Issue shares to fund new premises  Instore promotions 14

 In 1999 the Mars Climate Orbiter failed. The two teams were using different units: one in metric and the other in imperial measurements! 15

Operational Decisions  Day to day, routine decisions  Mainly made by lowlevel managers/supervisors  Respond to usually regular problems

 Examples:  Arranging work rotas  Dealing with customer complaints  Ordering materials from suppliers

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Policy decisions Long term Complex

Strategic (Senior Management)

Non-routine How to achieve policy Medium term

Tactical

Less complex

(Middle Management) Operational (Junior Management)

Day-to-day decisions Simple Routine 17

Examples of Decisions Strategic Bus Expand Company market share by establishing a new route School Increase attainment levels by 10%

Tactical

Operational

Develop new price structure to attract customers Make Bus Mgt compulsory

Extra buses on due to increase in demand Arrange Please Takes for Staff absences

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Recap…  Nature of decisions  Objectives & Strategy  Mission Statements

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Today…  Types of decisions  Strategic decisions examples  Tactical decisions examples  Operational decisions examples

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Strategic Decision Examples  Increase market share  Invest finance into business  Sell off a poor performing part of the company (Divestment)  Expand and take-over firms

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Tactical Decision Examples  Launch new product  Buy/rent premises  Buy/rent machinery  Set up factory/offices  Employ/transfer staff

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Operational Decision Examples  Train new members of staff  Decide on layout of office  Where to advertise jobs  Implement production methods  Decide on working hours

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Recap…  Types of decisions  Strategic decisions examples  Tactical decisions examples  Operational decisions examples

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Today…  Mintzberg’s Nature of Management  Fayol’s Role of the Manager

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What is Management?  Managers are responsible for getting things done  This involves delegation – passing responsibility onto others  Managers act on behalf of owners and are accountable to shareholders  Managers set objectives for the organisation, and try to achieve them 26

Henry Mintzberg’s Nature of Managers  Interpersonal role – relationships with others  Informational role – collecting and passing on information  Decisional role – making different kinds of decisions 27

Henri Fayol  (1841-1925)  French Mining Engineer and Manager  First to ask “What is management?”

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Fayol’s Role of Manager  Plan – examining the future and drawing up a plan of action  Organize – building up human and material resources and putting plan into action  Command – maintaining worker activity  Co-ordinate – unifying effort between departments  Control – checks on efficiency of plan  Implement – put into pratice 29

Functions of Management  Planning  Organising  Commanding  Co-ordinating  Controlling  Motivation  Delegation 30

a) Identify Mintzberg’s 3 main roles of management b) Describe Fayol’s 6 functions of management and identify 2 other functions modern managers would employ 31

Recap…  Mintzberg’s Nature of Management  Fayol’s Role of the Manager

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Today…  POGADSCIE  Example of POGADSCIE  Problems with Structured Models

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Identify the main constraints that are placed on managers when making decisions

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POCGADSCIE  Identify the problem  Identify objectives of solution  Identify constraints  Gather information  Analyse information 35

POCGADSCIE  Devise possible solutions  Select best possible solution  Communicate the decision  Plan and implement solution  Evaluate effectiveness of the solution 36

Example of POCGADSCIE Problem

Select candidate

Devise Solution

Produce short list

Objective

Select suitable candidate

Select Solution

Make final choice

Constraints Qualifications, experience

Communicate Contact successful candidate Gather Info CV, Application Implement Appoint & Forms training Analyse Info

Look through above documents

Evaluate

Monitor new recruit’s progress 37

Describe the 9 steps involved in the decision-making model

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What are the main benefits of using a structured decisionmaking model?

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Problems with Structured Models  Time  Ability to collect all relevant information  Lack of creativity of managers  Changes might affect decision

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Identify the main problems in using a structured decisionmaking model

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Recap…  POGADSCIE  Example of POGADSCIE  Problems with Structured Models

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Today…  SWOT Analysis  Recommendations

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SWOT Analysis  Strengths – strong points of business  Weaknesses – present problems  Opportunities – may arise in future  Threats – may arise in future and be avoided  Strengths and Weaknesses are Internal  Opportunities & Threats are External 44

SWOT Analysis STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

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SWOT Analysis STRENGTHS Talented workers Merchandising Back Catalogue OPPORTUNITIES DVD IMAX Asian Market

WEAKNESSES No new movie blockbusters Outdated studio facilities THREATS Competitors TV Piracy

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Recommendations  Next we try to form a strategy  Use your strengths to:  exploit opportunities  Improve your weaknesses  Eliminate/deal with threats 47

Identify the main internal influences (strengths and weaknesses) in an organisation

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Briefly describe the main external influences on an organisation

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Recommendations  Improve & update studio facilities  Transfer back catalogue onto DVD  Tailor more films for Asian Market and push merchandising  Tackle TV by creating IMAX spectaculars  Increased copyright security tabs 50

Conduct a SWOT Analysis for the school Include recommendations

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Hamilton Grammar SWOT Analysis STRENGTHS Good Leadership Hard working Teachers Hard working pupils

WEAKNESSES Outdated facilities Overcrowding & congestion

OPPORTUNITIES ICT School Extension New Subjects

THREATS HMIE Local Secondary Schools

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Recommendations  Upgrade school facilities  Build extension including pupil ICT area  Revolutionise homework by using e-mail to send and receive work  Pupil registration via network  Offer unsupported subjects via ICT link 53