You are on page 1of 53

Business Enterprise

Decision-Making

1
Today…
 Nature of decisions
 Objectives & Strategy
 Mission Statements

2
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“

9
Using your corporate target as
your main objective, describe
how you would then go about
making sure that the company
achieves its objective

10
Types of Decision
 Strategic

 Tactical

 Operational
11
Strategic Decisions
 Long term  Examples:
 Made by Senior  What products will
management business produce?
 More general in  Which market sector
nature will we aim for?
 Major policy  Increase market share
statements are  To have 100%
strategic customer satisfaction

12
 "Heavier-
than-air flying
machines are
impossible." -
Lord Kelvin,
president,
Royal
Society, 1895.

13
Tactical Decisions
 Short term  Examples
 Made by middle  Increase number of
managers in functional employees to cope
areas with workload
 Based on aims or goals
 Re-name business
of organisation
 More detailed and  Issue shares to fund
specific new premises
 May change due to  Instore promotions
PEST
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  Examples:
decisions  Arranging work rotas
 Mainly made by low-  Dealing with
level customer complaints
managers/supervisors  Ordering materials
 Respond to usually from suppliers
regular problems

16
Policy decisions
Long term
Complex
Strategic Non-routine
(Senior Management)
How to achieve
policy
Medium term
Tactical
Less complex
(Middle Management)

Day-to-day
Operational decisions
(Junior Management) Simple
Routine

17
Examples of Decisions
Strategic Tactical Operational
Bus Expand Develop Extra buses
Company market share new price on due to
by structure to increase in
establishing attract demand
a new route customers
School Increase Make Bus Arrange
attainment Mgt Please
levels by compulsory Takes for
10% Staff
absences 18
Recap…
 Nature of decisions
 Objectives & Strategy
 Mission Statements

19
Today…
 Types of decisions
 Strategic decisions examples
 Tactical decisions examples
 Operational decisions examples

20
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

21
Tactical Decision Examples
 Launch new product
 Buy/rent premises
 Buy/rent machinery
 Set up factory/offices
 Employ/transfer staff

22
Operational Decision Examples
 Train new members of staff
 Decide on layout of office
 Where to advertise jobs
 Implement production methods
 Decide on working hours

23
Recap…
 Types of decisions
 Strategic decisions examples
 Tactical decisions examples
 Operational decisions examples

24
Today…
 Mintzberg’s Nature of Management
 Fayol’s Role of the Manager

25
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?”

28
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

32
Today…
 POGADSCIE
 Example of POGADSCIE
 Problems with Structured Models

33
Identify the main constraints
that are placed on managers
when making decisions

34
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 Produce short
Solution list
Objective Select suitable Select Make final
candidate Solution choice

Constraints Qualifications, Communicate Contact


experience successful
candidate
Gather Info CV, Application Implement Appoint &
Forms training

Analyse Look through Evaluate Monitor new


Info above recruit’s
documents progress 37
Describe the 9 steps involved in
the decision-making model

38
What are the main benefits of
using a structured decision-
making model?

39
Problems with Structured
Models
 Time
 Ability to collect all relevant
information
 Lack of creativity of managers
 Changes might affect decision

40
Identify the main problems in
using a structured decision-
making model

41
Recap…
 POGADSCIE
 Example of POGADSCIE
 Problems with Structured Models

42
Today…
 SWOT Analysis
 Recommendations

43
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

45
SWOT Analysis

STRENGTHS WEAKNESSES
Talented workers No new movie
Merchandising blockbusters
Back Catalogue Outdated studio
facilities
OPPORTUNITIES THREATS
DVD Competitors
IMAX TV
Asian Market Piracy 46
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

48
Briefly describe the main
external influences on an
organisation

49
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

51
Hamilton Grammar
SWOT Analysis
STRENGTHS WEAKNESSES
Good Leadership Outdated facilities
Hard working Teachers Overcrowding &
Hard working pupils congestion

OPPORTUNITIES THREATS
ICT HMIE
School Extension Local Secondary
New Subjects Schools 52
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