UB9 : Decision Making Flashcards
Name the 3 types of decisions
Strategic, Tactical and Operational.
Describe Strategic Decision Making
Strategic Decisions are long-term and complex. They are used to give overall direction to the organisation and made by senior management.
eg Extend market share – be the market leader
Describe Tactical Decision Making
Tactical decisions are medium-term and less complex. They set out how strategic decisions will be achieved and are made by middle managers.
eg Launching new products/opening new branches
Describe Operational Decision Making
Operational decisions are made day-to-day, they are simple and routine. These are made by junior managers.
eg Regular ordering of supplies/creating staff rota
Decision making can be…
Centralised and decentralised.
Describe centralised decision making and its adv and disadv
Centralised decision making is when most decisions are taken by senior managers or the head office.
Advantages
- decisions made by the most experienced people
- decisions made quicker
- lead to greater uniformity within the organisation
Disadvantages
- staff demotivated from lack of input in decisions
- central team slower to respond to local changes in market.
Describe decentralised decision making and its adv and disadv
Decentralised decision making is when each department within the organisation has the authority to make their own decisions.
Advantages
- 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
Disadvantages
- decisions made by less experienced people
- local decisions may be inconsistent with overall
strategy
Identify the roles of a manager into decision making
- Plan
- Organise
- Command
- Co-ordinate
- Control
- Delegate
- Motivate
Explain the role of Planning
Preparing for the future and create action points.
Explain the role of Organising
Having resources ready and putting plan into action.
Explain the role of Commanding
Maintaining worker activity.
Explain the role of Co-ordinating
Making sure all departments work together to achieve the end goal or objective.
Explain the role of Controlling
Checking the effectiveness and efficiency of the proposed plan.
Explain the role of Delegating
Entrusting a task or responsibility to another member of staff.
Explain the role of Motivating
Encouraging staff to give their best.
Explain the impact of good decision making
Increased productivity, increased profits and growth of the business.
Explain the impact of bad decision making
Employees lose motivation, production is disrupted and an increase in customer complaints.
Identify factors which may affect decision making
Finance, Human Resources, Technology and Other Factors.
Explain how Finance affects decision making
There 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.
Explain how Human Resources affects decision making
The quality of decisions made by managers can be affected by;
- their skills and expertise
- the amount and quality of information they have
available
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.
Explain how Technology affects decision making
Lack of the correct equipment or technology may restrict the decision-making process.
How may Other Factors affect decision making?
The decision-making process may also be affected by:
- amount of time available to make the decision
- external pressures such as exchange rates and economic stability
What is a SWOT analysis?
A SWOT Analysis is a managerial decision making tool used to identify a firm’s internal strengths and weaknesses, as well as external threats and opportunities.
Describe Strengths
Strengths are areas that the company is performing well in or is good at such as having a strong brand image or a good corporate culture.
Strengths identified should be matched up to potential opportunities for the company.
Describe Weaknesses
Weaknesses are areas that the company is not doing well in or is performing more poorly such as lack of investment in new technology or a poorly performing product.
Weaknesses should be improved. Threats should be allowed for and an action plan made to try and limit their impact.
Describe Opportuities
Opportunities are 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.
Describe Threats
Threats are external factors that could prevent a business from meeting its goals such as:
- a new competitor opening or reducing their prices
- a recession
Why do businesses carry out a SWOT analysis?
The main reason that a company carries out a
SWOT analysis is to help them in the decision making process. It allows them to:
- see areas where they could improve
- where they can plan for future eventualities
- highlight opportunities for future developments
