3.4 How do businesses operate 1
Unit 4.3
What Aids Decision Making?
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
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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.
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Information helps decision-making
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:PrimarySecondaryInternalExternal
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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
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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
• Firm’s own reports
• Government statistics• Libraries• Internet
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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
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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
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Quick Quiz
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Primary orSecondary?
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Internal orExternal
Simple Decision Making Model
Define the problem
Implement the solution
Measure results
Select the best
solutionAssess
differentoutcomes
Develop alternative solutions
Collect relevant
information
Start
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)
Qualities of Good InformationFeature Description Explanation
Timely Information should be available when required
Eg Business final accounts must be prepared in time for shareholders meeting
Accurate Information should be correct
Eg accurate market research (field) required to make decisions on new products
Relevant Information should relate to the decision being made
Eg Prices of similar products may be used to help pricing decisions
Complete All the information should be available to allow decision to be made
Eg Information on all systems on the market should be available when deciding which new computers to buy
Up-to-date
Most recent information should be used
Eg using up-to-date ferry timetables when planning business trip
Cost Effective
Information should not cost too much to gather
Field research may be expensive. Desk research cheaper.
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