1.6 Organisational planning tools
Managers are involved in making decisions every day. There are three levels of decision-making:
A decision-making framework shows how different decisions are made. This Keynote outlines the main types.
Decision-making tools
Managers can utilise a range of tools to help them come to the right decision.
1. Business plans - Produced when a new business is set up. These help managers ensure that every aspect of the business has been planned before the business starts operating. They also help to reassure potential investors and lenders about the likely prospects of the business.
Task - Work with a partner to prepare a business plan for an imaginary business using this Business plan template.
2. PEST analysis - See 1.5 External environment
3. SWOT analysis - Auditing the strategic position of a business and helping decision-makers to be clear about the organisation's capabilities and what makes it distinctive. This is a strategic tool that helps to make long-term decisions about the future direction of the business.
SWOT Keynote
Task - XBox SWOT
4. Cost-benefit analysis (e.g. break-even analysis & investment appraisal). Used where both the costs and benefits associated with a decision can be quantified (measured). If the benefits outweigh the costs then the decision to go ahead is made. (Note - ignores the non-financial aspects of the decision).
5. De Bono's Six Hats Looks at decisions from six different perspectives.
6. Lewin's Force Field analysis Considers forces both for and against the decision. The forces are weighted according to their relative importance and an overall 'score' for both views is produced leading to a quantified and objective decision.
- Operational: Routine day-to-day decisions. Usually made by lower-level managers. Low-risk.
- Tactical: Regular and short-term decisions. Made by middle management. Medium-risk.
- Strategic: High-level long-term decisions that give direction to the business. High-risk.
A decision-making framework shows how different decisions are made. This Keynote outlines the main types.
Decision-making tools
Managers can utilise a range of tools to help them come to the right decision.
1. Business plans - Produced when a new business is set up. These help managers ensure that every aspect of the business has been planned before the business starts operating. They also help to reassure potential investors and lenders about the likely prospects of the business.
Task - Work with a partner to prepare a business plan for an imaginary business using this Business plan template.
2. PEST analysis - See 1.5 External environment
3. SWOT analysis - Auditing the strategic position of a business and helping decision-makers to be clear about the organisation's capabilities and what makes it distinctive. This is a strategic tool that helps to make long-term decisions about the future direction of the business.
SWOT Keynote
Task - XBox SWOT
4. Cost-benefit analysis (e.g. break-even analysis & investment appraisal). Used where both the costs and benefits associated with a decision can be quantified (measured). If the benefits outweigh the costs then the decision to go ahead is made. (Note - ignores the non-financial aspects of the decision).
5. De Bono's Six Hats Looks at decisions from six different perspectives.
6. Lewin's Force Field analysis Considers forces both for and against the decision. The forces are weighted according to their relative importance and an overall 'score' for both views is produced leading to a quantified and objective decision.
7. The 5 Why's Ask, five times, why a problem has occurred. Gets to the root cause of a problem. (Note, don't always have to ask 5 times).
8. Ishikawa's Fishbone analysis (HL) Looks at the contributing factors that have led to a problem or issue facing a business.
8. Ishikawa's Fishbone analysis (HL) Looks at the contributing factors that have led to a problem or issue facing a business.
9. Decision trees (HL)
Decision trees Keynote
Evaluating decision trees - Keynote
HL Task - Decision tree exam question
Decision trees Keynote
Evaluating decision trees - Keynote
HL Task - Decision tree exam question