decision making Flashcards
what are the three types of decision in business?
- strategic
- tactical
- operational
what are the four features of strategic decisions?
- concerns the overall goals of the organisation
- long term
- made by senior managers
- usually involves high risk
what are the four features of tactical decisions?
- made to achieve the strategic objectives
- medium term
- made by middle managers
- medium risk
what are the five features of operational decisions?
- day-to day-decisions
- short term
- made to ensure smooth running of the business
- made by junior managers
- little or no risk
what are six ways of measuring the success of a decision?
- research customer’s opinions using surveys
- gather feedback from staff at meetings
- assess the situation to see if a problem has been solved
- compare profits/sales figures to see the impact of the decision
- review the number/level of complaints made
- customer reviews/press coverage
what is centralised decision making?
when most decisions are taken by senior managers or the head office
what are the advantages of centralised decision making?
- decisions are made by the most experienced people
- decisions are made more quickly
- lead to greater uniformity within the organisation
what are the disadvantages of centralised decision making?
- staff demotivated from lack of input in decisions
- central team slower to respond to local changes in market
what is decentralised decision making?
when each department within the organisation has the authority to make their own decisions
what are the advantages of decentralised decision making?
- staff motivated by opportunity to make decisions and be creative
- local teams can respond quickly to changes in local market
- can provide better level of customer service
what are the disadvantages of decentralised decision making?
- decisions are made by less experienced people
- local decisions may be inconsistent with overall strategy
what are the seven roles of a manager?
- plan
- organise
- command
- co-ordinate
- control
- delegate
- motivate
plan
preparing for the future and creating action points
organise
having resources ready and putting plan into action
command
ensuring employees are working
co-ordinate
making sure all departments work together to achieve the end goal or objective
control
checking the effectiveness and efficiency of the proposed plan
delegate
entrusting a task or responsibility to another member of staff
motivate
encouraging staff to give their best
what are the advantages of good decision making?
- increased productivity
- increased profits
- growth of the business
what are the disadvanatges of bad decision making?
- employees lose motivation
- production is disrupted
- increase in customer complaints
what are the three main factors that can impact decision making?
- finance
- human resources
- technology
how can finance impact decision making?
- may not be finance available to the business to make the decisions they would like to
- for example a business may wish to invest in new machinery to increase production but they do not have enough capital to allow them to do this
how can human resources impact decision making?
- the staff involved in implementing the decision need to be willing to cooperate and work with the decision for it to be successful
- senior managers may not agree with the decisions
- existing company policy may restrict the decisions a manger is allowed to make
what can the quality of decisions made by managers be impacted by?
- their skills and expertise
- the amount and quality of information they have available
how can technology impact decision making?
- lack of the correct equipment or technology may restrict the decision-making process
what are two other factors that decision making may be impacted by?
- amount of time available to make the decision
- external pressures such as exchange rates and economic stability
what does SWOT stand for?
- strengths
- weaknesses
- opportunities
- threats
what is a SWOT analysis?
a managerial decision making tool used to identify a firm’s internal strengths and weaknesses, as well as external threats and opportunities
what are strengths?
areas that the company is performing well in or is good at such as having a strong brand image or a good corporate culture
what are weaknesses?
areas that the company is not doing well in or is performing poorly at, such as lack of investment in new technology or a poorly performing product
what are opportunities?
things that could happen outwith the business to help them grow or become more profitable such as the chance to take over a competitor or a boom in the economy
what are threats?
external factors that could prevent a business from meeting its goals, for example a new competitor entering the market, a rise in interest rates or a possible recession
what are three other things that a SWOT analysis allows a business to do?
- see areas where they could improve
- where they can plan for future eventualities
- highlight opportunities for future developments
