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Management of Business


Business and its environment


Decision Making


Sixth Form


80 minutes


Mr. Edgar Gordon

Previous Knowledge
Students are already aware of the different business organization existing already at the CSEC level.
General Objectives:
At the end of this lesson students should be able to:
1. Appreciate the process of decision making and its impact on the environment
2. The process of decision making
Specific objectives:
Students should be able to:
1. The process.
2. Essential features of information for decision making.
3. Stages of decision making. (in relation to objectives)
4. Factors affecting decision making
Teaching Methods:
Questioning – to encourage students to participate in lesson during class/lesson
Explanation – of the relevant terms relating to the lesson and the instructions for classroom activities
Cooperative learning – this will allow students to do their own research and analysis in order to enhance
the detailed aspects of the lesson.
Brain-storming – This will allow students to think of the meaning of the important concepts before
explanations of these concepts are given.
Role-play – to reinforced the concepts discussed
Power Point Presentation – to recap lesson and enable students to work through the topic
Teaching Aids/Materials:


Internal Constraints These are constraints that come from within the business itself. economical. regulations and contracts that must apply 2|Page . DMP is also a key component of time management skills. and societal life. It is not always practical to re-write business policy to accommodate one decision . Choosing what to change. seeing whether a decision makes financial sense.Government Regulation Legal and regulatory constraints have significant impact on business success. Constraints on Decision-Making While establishing a business there are various limitations that one needs to consider. Business should not overlook the importance of such constraints. Business Constraints are nothing but the non-functional requirements that need to be considered or else will have a significant impact on the smooth running of operations. In fact. and analyzing whether an idea is financially viable are a few important parts of the decision making process.White board – to write main points and student’s comments Charts – to be used as a visual aid in remembering the main points Laptop – to assist in power point presentation Preparatory Activity: Preparing the environment for learning and marking register Procedure: Teacher will start by introducing the topic “The Process of Decision Making” Decision making process (DMP) is a strategic activity to organizational.Existing Business Policy. The decisions that businesses will make is dependent on internal and external sources/information. Various legal constraints that business faces are confidentiality and privacy of information.Availability of finance.  . External Constraints These come from the business environment outside the business.People’s abilities and feelings. Certain decisions will be rejected because they cost too much . Different governments have different regulations for setting up business operations in their respective countries. the manager that wants to lead effectively needs to be able to make correct decisions. . or if the decision is so unpopular no-one will work properly on it. looking at a decision from different perspectives. A decision cannot be taken if it assumes higher skills than employees actually have.

and it is very difficult to get people to make rational decisions about things they feel very strongly about. Business must both use and adapt to technology because firms compete and the market is both global and highly sensitive for most of the major products and services. 5. If the competition in the sector is highly stiff. 3. Business Thinkers -John Pierpoint Morgan & Good Management Self-Assessment 3|Page . balance of payment problems and exchange rate stability  Customers and Suppliers Quality of Decision-Making Some managers and businesses make better decisions than others. Attempt should be made to limit the effect of competition in the market. 4. 6. People are people. People simply take different views on the same facts. Experience and natural ability in decision-making. Good decision-making comes from:1. there is no doubt that technology has had an impact on business behaviour and will continue to do so. especially Information Technology (IT). this have to do with the economic system that is being practice by the government whether it is free market or mixed or planned economic system. Risk and attitudes to risk. Emotional responses come before rational responses. target rate of inflation. Technology. Rivalries and vested interests also come into it. and people also simply make mistakes. Training of managers in decision-making skills.  Economic Climate.  Lack of Technology. Good information in the first place. Human factors. Therefore government will pass law which will help them to govern the country or control the economy. See Developing Managers 2. and their likely response to decisions your business makes.when consumers and providers are located in different countries. creates both new business opportunities and threats for existing business activity.  Competitors’ Behaviour. then this could lead to major constraint on business success. low level of unemployment. Management skills in analysing information and handling its shortcomings. Target rate of economic growth.

They could even be written as computer program 2. as far as possible. their suppliers and their customers. Cost-Effective The MIS needs to be a cost-effective and efficient system for gathering information. As such. Information outside of the requested time frame may skew information and lead to an improperly informed decision. Each decision is not quite the same as any previous decision. These have to be. avoiding information not relating to the decision is essential. they can be written down into a series of fixed steps which anyone can follow. Essential Features of Information for Decision Making Relevance Information should be relevant to the strategic decision that company management is currently reviewing. taken into account before decisions are made. These are non-standard and non-routine. Types of Business Decisions 1. Timely Many management decisions are based on information from a certain time period. Making decisions based on estimates can lead to cost overruns or lower profits from future operations. Accurate Information should be accurate and avoid any inclusions of estimates or probable costs. creating costs that cannot be passed to clients. The effects of any decision will depend critically on the reactions of other groups in the market. Decisions are not taken in isolation. such as quarterly or annual periods. Because companies may review several business opportunities at one time. 4|Page .Interdependence Businesses are highly interdependent on each other. Most of these systems are developed internally. Programmed Decisions These are standard decisions which always follow the same routine. Non-Programmed Decisions.

Operational Decisions. or how many extra staff to recruit 5. These are short-term decisions (also called administrative decisions) about how to implement the tactics eg which firm to use to make deliveries. These are medium-term decisions about how to implement strategy eg what kind of marketing to have.3. Figure 1: Levels of Decision-Making Figure 2: The Decision-Making Process/Stages of Decision mkaing 5|Page . Strategic Decisions. Tactical Decisions. These affect the long-term direction of the business eg whether to take over Company A or Company B 4.

Decisions can either be qualitative or quantitative Qualitative This type of decision making is not very reliable and effective because it relies heavily on opinions. hunches. as it is numbers base and can be easily proven. it is not number base which makes it difficult to prove. gut feeling etc. 6|Page . Quantitative This type of decision making is very reliable and effective to decision making. example financial statements are used to back up or support quantitative decision making.