Decision making

by Business Case Studies on Monday 22nd March, 2010

Businesses would not function without making decisions. Some decisions are relatively low-level and are carried out on a day to day basis (operational decisions) whereas others can affect the long term performance of a business and are directly linked to its aims and objectives (strategic decisions). Within npower, the leading UK energy company, employees at all levels are encouraged to become involved in decision making. Its culture of trust means that npower is prepared to delegate the responsibility to make decisions to workers throughout the organisation, therefore empowering employees. This means the business can benefit from their skills and expertise within the areas they work.

Decisions need to be made for different reasons e.g. creating an opportunity or solving a problem. The government has recently announced plans which could help to solve the problem of pub closures and provide local residents the opportunity to own their own business. With almost 40 pubs closing each week, the government is planning to help fund 'community buy-outs.' This will involve matching the money raised by local residents to allow them to buy pubs in difficulty instead of allowing them to close down. It is anticipated that the buildings would then also provide other services to the community such as shops or post offices. Although it would not be the first time that the 'locals have bought the pub', this scheme would provide greater powers for the community to have a say in its pub's future.

Any decision will involve an element of risk which should be weighed up against the possible reward. For the local residents who are prepared to invest in their local pub to prevent it from closing, they are risking their money and reputation. However, the financial support and business advice that would become available as part of the scheme, should also reduce this risk.

Questions

  1. Define the terms operational decisions, tactical decisions and strategic decisions.
  2. Give an example of an operational decision, tactical decision and strategic decision that new owners of a pub may have to make.
  3. Explain the possible risks and rewards of a decision you may have to make in the near future e.g. going to university.
  4. Analyse the benefits to npower of encouraging all workers to become involved in decision making.

Answers to questions

  1. Define the terms operational decisions, tactical decisions and strategic decisions – Operational decisions are short term or administrative decisions that affect the day to day running of a business, Tactical decisions are medium term decisions that are often made by middle management, Strategic decisions are those which are likely to have long-term effects for the whole organisation.
  2. Give an example of an operational decision, tactical decision and strategic decision that new owners of a pub may have to make -Operational decision e.g. organising the staffing rota for the following week, Tactical decision e.g. whether to recruit extra staff, Strategic decision e.g. deciding upon whether to open a restaurant at the pub.
  3. Explain the possible risks and rewards of a decision you may have to make in the near future e.g. going to university.
  4. Analyse the benefits to npower of encouraging all workers to become involved in decision making, Empowering workers to make decisions can increase motivation, The business can benefit from the skills and expertise of workers all their workers when decisions are made, Those workers 'at the coalface' may be in a better position to understand how decisions will affect the operation of a business.

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