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Higher Business Management

Higher Business Management. Unit 1 Learning Outcome 3 Decision-making in Business. The Nature of Decisions. What to produce? Where to locate? Methods of production? How many employees? What price to charge?. Types of Decisions. Strategic - the long-term aims of the business

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Higher Business Management

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  1. Higher Business Management Unit 1 Learning Outcome 3 Decision-making in Business BM Unit 1 - LO3

  2. The Nature of Decisions • What to produce? • Where to locate? • Methods of production? • How many employees? • What price to charge? BM Unit 1 - LO3

  3. Types of Decisions • Strategic - the long-term aims of the business • Tactical - setting out the objectives; more short-term; how to achieve the strategic aims • Operational - day-to-day decisions on how to achieve the objectives BM Unit 1 - LO3

  4. Review/Evaluation/Alteration REVIEW EVALUATE ALTER There must be a continuous process of review in order to respond to change. Take, for example, how airlines across the world reacted after the terrorist attacks on America. BM Unit 1 - LO3

  5. Who Makes the Decisions? Strategic • Owner/senior management Tactical • As above ormiddle management Operational • Junior management, section heads or even individual workers BM Unit 1 - LO3

  6. Mission Statements • A written summary of the strategic aims of an organisation. Well publicised and available to all stakeholders. • Often used in marketing the company’s products or services, eg Body Shop. BM Unit 1 - LO3

  7. The Role of Managers • Get things done through other people • Get things done by using the firm’s resources • Controls and supervises activities in the organisation • Makes decisions about running the organisation • Oversees the work of subordinates • Oversees the work of department/s • Is accountable to, and carries out the wishes of, the owner(s) of the organisation BM Unit 1 - LO3

  8. Functions of Management • Plans • Organises • Commands • Co-ordinates • Controls • Delegates • Motivates BM Unit 1 - LO3

  9. The GROUP View of Management • Management has conflicting GOALS • Managers are held responsible for RESULTS • Managers work in ORGANISATIONS • Managers must cope with UNCERTAINTY • Managers work with and through PEOPLE BM Unit 1 - LO3

  10. Why Make Decisions? • To achieve the long-term aims of the owners • To carry out roles and functions • To be able to give clear instructions • To give directions and purpose to employees • To compare actual performance with objectives • To judge the success or failure of previous decisions • To guide into decisions for the future • To modify existing decisions BM Unit 1 - LO3

  11. Structured Decision-making Model - “POGADSCIE” • Identify the PROBLEM • Identify the OBJECTIVES • GATHER information • ANALYSE information • DEVISE alternative solutions • SELECT from alternative solutions • COMMUNICATE the decision • IMPLEMENT the decision • EVALUATE BM Unit 1 - LO3

  12. Making a Decision Apply the “POGADSCIE” model to choosing a new digital laptop computer for the staff in your firm. BM Unit 1 - LO3

  13. IT and Decision-making • Huge storage capacity • Vast amounts of information from the internet • Sophisticated software for processing information • Reporting and presentation packages (PowerPoint) • Improved efficiency and lower costs (less time to find information) • Problem of ‘too much’ information? BM Unit 1 - LO3

  14. SWOT Analysis • Strengths • Weaknesses • Opportunities • Threats BM Unit 1 - LO3

  15. Internal Factors Strengths THE FIRM Weaknesses BM Unit 1 - LO3

  16. External Factors Opportunities THE FIRM Threats BM Unit 1 - LO3

  17. A SWOT Grid Internal Strengths Weaknesses Present External Opportunities Threats Future BM Unit 1 - LO3

  18. Problems of Using a Structured Model • The time scale required • The ability to collect all the information • Generating alternative solutions • Lack of creativity BM Unit 1 - LO3

  19. Benefits of Using a Structured Model • The time scale required • The quality/quantity of the information you have • The availability of alternative solutions • Enhances innovation and responsiveness BM Unit 1 - LO3

  20. Aids to Decision-making Brainstorming • This be a very useful way to generate and create ideas Pest Analysis • Political, economic, social and cultural external constraints on decision-making (you could add the environment here) • NB Pest and Swot often used together to identify opportunities and threats BM Unit 1 - LO3

  21. Factors Affecting the Quality of Decisions • Quality and quantity of information used • Training of staff in decision-making • Risk-taking • The human element BM Unit 1 - LO3

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