Managing Change
Making Strategic Decisions
“Good decisions come from wisdom. Wisdom comes from experience. Experience comes
from bad decisions.”
Anonymous
“Decisions of the kind the executive has to make are not made well by acclamation. They
are made well only if based on the clash of conflicting views…The first rule in decision
making is that one does not make a decision unless there is disagreement.”
Peter Drucker
“A complex decision is like a great river, drawing from its many tributaries the innumerable
premises of which it is constituted.”
Herbert Simon
BUSS4.11 Decision Making
In this topic you will learn about:
The significance of information
management
 The value of different approaches to
decision-making
 Assessing influences on corporate
decision-making
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If only you knew!
BUSS4.11 Decision Making
Making Strategic Decisions
• Made at the top of the
hierarchy
• May require high capital
investment
• Once made difficult to
reverse
Strategic
• Long term direction of
business
• Aim at meeting
corporate objectives
• Will impact upon
different stakeholders
Tactical
Operational
BUSS4.11 Decision Making
Significance of Information
Management
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Information Management
◦ Use of accurate and up to date information to
aid decision-making
◦ Collation and sharing of information
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Management Information System
◦ The use of IT to collect, store, process and
disseminate information
Data
Raw facts and
figures
Processing to give
meaning and context
Information
Date with context
that can be used to
aid decision making
BUSS4.11 Decision Making
Information Management
Options
Quantitative
predictions
Corporate
objectives
MIS
Investment
appraisal
Break even
Ratio analysis
Profit centres
Possible
outcomes
Current
performance
BUSS4.11 Decision Making
Information Management
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Effective decision-making will require both
qualitative and quantitative information
Information can come from both internal
and external sources including:
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Financial Accounts
Market Research
Competitor Analysis
Market Analysis
SWOT Analysis
PEST Analysis
Economic Forecasts
BUSS4.11 Decision Making
Approaches to Decision-making
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Scientific
Backed by research
Outcomes are
simulated or tested
Reduces but does
not eliminate risk
Decisions are
objective
If you were to put £1000 on a
horse would you study the form
or go for one you liked the
sound of?
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Intuition
Based on gut instinct
Quicker decisions
can be made
An experienced
manager may
understand the
market
Decisions are
subjective
“Nothing slows down an organisation
more than paralysis by analysis.”
BUSS4.11 Decision Making
Decision-making – Further Reading

There are many techniques to aid decisionmaking
◦ SWOT
◦ Cost Benefit Analysis
Six Thinking Hats – look at
decisions from different angles
 Pareto Analysis – what is
the most important problem
to solve?
 Starbursting - analysing
decisions by asking questions
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Use Wikipedia and www.mindtools.com to
research these methods.
How useful would each of these approaches be
to a chain of coffee shops considering opening
stores in China?
BUSS4.11 Decision Making
Influences on corporate decisionmaking

Ethical position (real or perceived)
◦ How will the decision be viewed by key stakeholders
◦ Will moving production abroad match the business’
ethical standards?
◦ Where are materials sourced from?

Resources available
◦ Financial constraints
◦ Workforce
◦ Scarcity of materials
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Also, don’t underestimate the
importance of corporate
objectives. Remember this
has been an important theme
throughout this unit
Relative power of stakeholders
◦ How might pressure groups respond?
◦ Will TUs become involved?
BUSS4.11 Decision Making
Activity
 Ryanair reduces Stansted flights
 What information would have been collated to help
make this decision?
 What are the factors contributing to this decision?
 What are the advantages of using scientific decision
making techniques for Ryanair?
 How might different stakeholders respond to this
decision?
BUSS4.11 Decision Making
Essay
Jack Welch, CEO of GE, urges businesses
not to sit on decisions. He advices “Don't
set something aside instead of making a
decision on the spot. In order to get
speed, decisions at virtually every level
have to be made in minutes, not days or
weeks.” With reference to businesses you
have studied to what extent do you agree
with Jack’s views on making quick
decisions. Justify your answer.
BUSS4.11 Decision Making