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3.4 How do businesses operate 1

Unit 4.3

What Aids Decision Making?

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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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Informationhelps decision-making

Information can be accessed from a variety ofsources:

Internal computer files www

Newspapers/Books

Letters

CD-ROM

People

TV

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Different Types of Information

There are 4 main types of information that

you must be aware of:

Primary

Secondary

Internal

External

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Primary Information

This is information gathered by the organisationfor 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 publishedsources 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 anew store in a particular area

Firms own reports

Government statistics Libraries

Internet

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Internal Information

Gathered from within the organisation. Forexample 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

3.4 How do businesses operate 10

Primary or

Secondary?

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3.4 How do businesses operate 11

Internal or

External

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Simple Decision Making Model

Define theproblem

Implement

the solution

Measureresults

Select the

best

solutionAssess

differentoutcomes

Develop

alternative

solutions

Collectrelevant

information

Start

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Complex Decision Making Model(POCGADSCIE)

Identify the Problem

Identify the Objectives of the solution (what is the outcome tobe)

Identify the Constraints (what problems may be encountered)

Gather information

Analyse information

Devise possible solutions

Select the best possible solution

Communicate the decision

Plan andImplement the solution (put the solution into practice)

Evaluate the effectiveness of the solution (how successful wasit)

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Qualities of Good InformationFeature Description Explanation

Timely Information should be

available when required

Eg Business final accounts must be

prepared in time for shareholdersmeeting

Accurate Information should becorrect

Eg accurate market research

(field) required to make decisions

on new products

Relevant Information shouldrelate to the decisionbeing made

Eg Prices of similar products maybe used to help pricing decisions

Complete All the informationshould 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.