Unit 4.3 What Aids Decision Making?

3.4 How do businesses operate

By the end of the lesson, you will understand

How information helps decision making That there are different types of information How to give examples of information helping in decision making What is a simple decision making model What are the stages in a complex decision making model
3.4 How do businesses operate 2

How Information helps Decision Making

How will Helen decide whether to open on Sundays? How will Asda decide whether to open a new store in Tobermory?
Information used to decisions like the above must be ACCURATE and UP-TO-DATE.
3.4 How do businesses operate 3

Information helps decisionmaking

Information can be accessed from a variety of sources:
Internal computer files www Newspapers/Books Letters CD-ROM People TV

Different Types of Information

There are 4 main types of information that you must be aware of:
Primary Secondary Internal External

3.4 How do businesses operate

Primary Information
This is information gathered by the organisation for a specific purpose. For example, getting feedback from staff or customers by using a survey
observing interviewing questionnaires surveys

3.4 How do businesses operate

Secondary Information
This is information gathered from published sources outside the organisation. It may not be used for the purpose for which it was gathered. For example, Asda may look at published population figures to decide whether to locate a new store in a particular area

Firms own reports Government statistics Libraries Internet

3.4 How do businesses operate

Internal Information
Gathered from within the organisation. For example the company sales figures for the last 3 years
final accounts sales statistics staff turnover training costs

3.4 How do businesses operate

External Information
Gathered from outwith the organisation. For example newspaper articles.
population census information competitors company reports buying habits of 14-18 yr olds new employment regulations

3.4 How do businesses operate

Quick Quiz

Primary or Secondary?

3.4 How do businesses operate

10

Internal or External

3.4 How do businesses operate

11

Simple Decision Making Model

Measure results

Start

Define the problem

Implement the solution

Collect relevant information

Select the best solution

Assess different outcomes

Develop alternative solutions

Complex Decision Making Model (POCGADSCIE)

Identify the Problem Identify the Objectives of the solution (what is the outcome to be) Identify the Constraints (what problems may be encountered) Gather information Analyse information Devise possible solutions Select the best possible solution Communicate the decision Plan and Implement the solution (put the solution into practice) Evaluate the effectiveness of the solution (how successful was it)

Feature

Qualities of Good Information

Description Explanation Information should be Eg Business final accounts must be available when required prepared in time for shareholders meeting Information should be correct Information should relate to the decision being made All the information should be available to allow decision to be made Eg accurate market research (field) required to make decisions on new products Eg Prices of similar products may be used to help pricing decisions Eg Information on all systems on the market should be available when deciding which new computers to buy

Timely Accurate Relevant Complete

Up-todate Cost Effective

Most recent information Eg using up-to-date ferry should be used timetables when planning business trip Information should not Field research may be expensive. cost too much to gather Desk research cheaper.