NAB Dates
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Business in Contemporary Society
Information and Information Technology
Decision Making
Practice NAB – Thursday 10th October period 2. Time
allowed = ½ hour plus 10 mins reading time. Part 2
on Friday 11th October period 1.
Actual NAB – Tuesday 29th October period 5/6. Time
allowed = 1 hour plus 10 minutes reading time
Decision Making
1
Higher Business Management
Decision-making in Business
Decision Making
2
Learning Intentions:
To introduce pupils to the Nature of
Decisions and Decision Making
Success criteria:
 Describe the nature of decision making
Identify and describe objectives and
strategy
 Identify and describe types of decisions
 Identify and describe who makes decisions
Decision Making
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The Nature of Decisions
Decision making is choosing between alternative
courses of action.
Typical decisions made in business:
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What to produce?
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Where to locate?
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Methods of production?
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How many employees?
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What price to charge?
Decision Making
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Objectives
Objectives are the goals of the
organisation.
 Survival
 Profit maximisation
 Growth
 Image and Social Responsibility
Decision Making
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Objectives & Strategy
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Where are we?
Where do we want to be?
How do we get there?
Managers decide business objectives
then organised objectives into targets.
Decision Making
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Types of Decisions
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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
Decision Making
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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.
Decision Making
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Learning Intentions:
Decision Making Task
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Who makes the decision –
pyramid
Examples of decisions
Applying to real life situation
Decision Making
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Who Makes the Decisions?
Strategic
 Owner/senior management
Tactical
 As above or middle management
Operational
 Junior management, section heads
or even individual workers
Decision Making
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Learning Intentions:
To introduce pupils to structured
decision making models.
Success criteria –
You should be able to:
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Know why decisions are made in the
first place
Be able to apply decision making
models to the process
Decision Making
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Why Make Decisions?
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To achieve the long-term aims of the owners
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To carry out roles and functions
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To be able to give clear instructions
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To give directions and purpose to employees
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To compare actual performance with objectives
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To judge the success or failure of previous decisions
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To guide into decisions for the future
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To modify existing decisions
Decision Making
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?
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Structured Decision
Making Model
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?
Decision Making
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Structured Decision-making
Model - “POGADSCIE”
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Identify the PROBLEM
Identify the OBJECTIVES
GATHER information
ANALYSE information
DEVISE alternative solutions
SELECT from alternative solutions
COMMUNICATE the decision
IMPLEMENT the decision
EVALUATE
Decision Making
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Step One
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Identify the Problem
 Where do we want to go?
 What to we want to achieve?
 What exactly is wrong?
Decision Making
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Step Two
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Identify the Objectives
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What is it we want to achieve?
A business may be trying to achieve 2 or
more objectives at the same time –
especially if they are implementing major
changes.
Decision Making
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Step Three
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Gather Information
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Ensure that the information gathered is of
good quality – eg, accurate, up-to-date.
Extensive use of both internal and external
information is usually required.
Decision Making
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Step Four
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Analyse Information
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Sort out the information that is of direct
use to the decision that has to be made.
Decide what you CAN do and what you
CAN’T do.
Decision Making
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Step Five
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Devise alternative solutions
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Decide on a number of different courses of
action that will meet the aims.
This will help to make the process more
flexible.
Decision Making
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Step Six
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Select from the alternative solutions
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Select the one that you think is most likely
to meet the aims of the organisation.
Decision Making
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Step Seven
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Communicate the decision
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All those involved MUST know what is
going to happen, WHAT effects this course
of action will have and WHY that particular
course of action has been decided upon.
People will be more motivated to succeed if
they know what they are doing and why.
Decision Making
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Step Eight
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Implement the decision
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Arrange for the resources to be put into
place.
Issue appropriate instructions
Ask for feedback on how things are
progressing.
Decision Making
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Step Nine
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Evaluate
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Compare what is happening to what you
expected to happen.
This will allow you to make further changes
if necessary to ensure your final goal is
met.
Decision Making
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Making a Decision
Apply the “POGADSCIE” model to
choosing a new expensive top of
the range Computer system
computer for the staff in your
firm.
Decision Making
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Learning Intentions:
To introduce pupils to the problems and
benefits of using structured decision making
models.
Success criteria:
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Be able to identify and describe problems and
benefits
Identify how ICT helps decision making
Decision Making
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Problems/Disadvantages of
Using a Structured Model
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The time scale required to undertake the process
eg POGADSCIE
The ability to collect all the information on time to
carry out the model
Generating alternative solutions might be difficult
as there is no other solution
Lack of creativity may be stifled due to the model
being restrictive due to the process to be carried
out.
Decision Making
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Benefits/Advantages of
Using a Structured Model
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The time scale required
The quality/quantity of the information you have –
no rash decisions are made as all the info is there.
The availability of alternative solutions
Enhances innovation and responsiveness and ideas
can be fully discussed
Managers are forced to go through the process
therefore helping identify the problem
Decision Making
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Aids to Decision-making
Brainstorming/Thought showering
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This be a very useful way to generate and
create ideas
Pest Analysis
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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
Decision Making
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IT and Decision-making
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Huge storage capacity
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Vast amounts of information from the internet
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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?
Decision Making
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Learning Intentions:
To introduce pupils to decision
making models – part 2
Success criteria:
Pupils should be able to describe
SWOT analysis and link it to
POGADSCIE
Decision Making
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SWOT Analysis
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Strengths
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Weaknesses
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Opportunities
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Threats
Decision Making
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Internal Factors
Strengths
THE FIRM
Weaknesses
Decision Making
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External Factors
Opportunities
THE FIRM
Threats
Decision Making
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A SWOT Grid
Internal
External
Strengths
Weaknesses
Opportunities
Threats
Present
Future
Let’s carry out a SWOT ANALYSIS for IKEA
Decision Making
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Learning Intentions:
To introduce pupils to the benefits of using
structured decision making models along with
IT systems
Success criteria:
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Be able to identify and describe problems and
benefits
Explain how ICT helps decision making
Decision Making
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Factors Affecting the Quality of
Decisions
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Quality and quantity of information used
Training of staff in decision-making – do the managers have
the ability and experience to make good decisions
Risk-taking that is undertaken by the managers/decision
makers
Motivation of staff to become involved to implement
decision.
Finance available to carry out model
Technology available to assist in decision making
Use of model eg POGADSCIE or SWOT
Decision Making
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How would you evaluate the
effectiveness of a decision?
Ask staff for their opinion on decision
 Issue questionnaires to customers to gather
views
Compare
Practical ways –
to
 have sales increased?
previous
situation
 have profits increased?
 has the situation improved?
 has absenteeism reduced?
 has staff morale increased?
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Decision Making
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Learning Intentions:
Success criteria:
Decision Making
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Mission Statements
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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.
Gives employees an end result to work to.
Goals motivate people
Keeps focus and direction
Decision Making
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Mission Statement Examples
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“We wish to refresh everyone we
touch” - Coca-Cola
“We strive to lead in the invention.
Development and manufacture of the
industry’s most advanced information
technologies” - IBM
Decision Making
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Learning Intentions: To reinforce the
functions of management
Success criteria:
Pupils should be able to describe
and give examples of Henri Fayol
5 main functions and the 2 new
modern additions
Decision Making
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Role of Managers:
What type of things do mangers undertake?
Decision Making
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The Role of Managers
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Get things done through other people
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Get things done by using the firm’s resources
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Controls and supervises activities in the
organisation
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Makes decisions about running the organisation
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Oversees the work of subordinates
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Oversees the work of department/s
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Is accountable to, and carries out the wishes of,
the owner(s) of the organisation
Decision Making
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Functions of Management
Henri Fayol
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Plans
Organises
Commands
Co-ordinates
Controls
Delegates
Motivates
Decision Making
Modern
approach to
management
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The GROUP View of
Management
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Management has conflicting GOALS
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Managers are held responsible for RESULTS
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Managers work in ORGANISATIONS
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Managers must cope with UNCERTAINTY
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Managers work with and through PEOPLE
Decision Making
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