Strategic decisions are being made by departments and are failing to consider the needs of others. Counterproductive decisions are being made in relation to the future of the business. In order to help Paragon to understand the main fundamentals of decision making, and apply it to their company this report will be looking at the different types of management structures, explaining the decision making process, and reviewing the internal and external factors that can have an impact on the decision making of an organization.
Management decisions There are different levels of decision making within an organization, which Include strategic, tactical and operational. (Appendix 1) Strategic decision-making determines the goals and purpose of a whole organization, and Is concerned with the long-term overall direction. These types of decisions are normally the responsibility of top management. Decisions at this level have an effect on how a business will specific as they must be applied to all levels in an organization.
For Example a strategic decision might be to focus efforts on a new product or to increase reduction output. These types of decisions are often complex and the outcomes uncertain as the availability of information is often limited. (Montana. PC, Chart ova. BE, 2008 ,pig. 96) Tactical decision making focuses on more intermediate-term issues, and is typically carried out by middle managers, such as division or department managers. Rather then apply to the whole organization a tactical decision may only apply to one department.
At this level the purpose of the decisions made are to help move the company closer to reaching the strategic goal. An example of a tactical session would be picking an advertising agency to promote a new product. (Montana. PC, Cochran. BE, 2008, pig. 96) Operational decision making determines the decisions that concern the day to day running of an organization. These decisions are normally made by the lower level managers or supervisors. The Decisions that are made at this level help to ensure that daily activities proceed smoothly helping to move a company towards reaching its strategic goal.
These types of decisions deal with the short-to medium- term matters and deal with part or parts of an organization. Examples of operational decisions include scheduling employees and day to day activities, purchasing raw materials needed for production, and handling employee conflicts. (chapter 1) Structured and unstructured decisions- In general a strategic decision is unstructured, a tactical decision is semi-structured, and an operational decision is structured. In a structured decision the goals are defined and the factors affecting the decision and its outcomes are known.
The information is obtainable and manageable, and procedures are clear. Decisions can be converted to programmer of actions; hence structured decisions are called programmable. The hiring process is a good example; the process is already in place. Selecting an additional head count may require some persuasion and Justification, but the process to follow is defined. (Stewart J, 2011) Unstructured decisions are the opposite; the outcome is unclear, the required information and resources are hard to access, and the context is ambiguous and ill designed.
An example of an unstructured, strategic task within an organization could be evaluating the social impact of a new product line. (Stewart], 2011) The Decision Making process The decision-making process is a crucial part of an organization such as Paragon; it is a process of evaluating situations and problems, considering alternatives and planning of strategies to follow in order to get the desired and the best results. Normative Model The Normative Model is a rational model that provides an interface to objectify decision-making.
It uses a tree-like decision path (Appendix 2) where users will ask themselves a number of questions. For example ‘Do you need to involve a team? Can you make the decision yourself? If you involve a team, how much power should they be given? (Rubberier. Mom, 2012) The model takes into account the fact that managers are bound by constraints when making decisions. These constraints resources, time, complexity and uncertainty. (Angelo Kicking, 2008) A number of empirical studies have investigated the normative models efficacy.
Field (1982) and Broom and Jag (1974) conducted research that provides strong support for the model and showed that organizations adopting the model and followed its tenets are more likely to make effective and successful decisions then when they ignore them. (scribed, 2010) The Normative model is best put into practice when making operational ND routine decisions, those that are more accessible to quantitative analysis and precise description. The Benefits of adopting the normative model is that is flexible and gives many choices of decision styles.
The model is a simple and methodological approach to the decision making process and research shows that it works in various settings. On the other hand the disadvantages can be that the model may be too systematic and it does not take into account the other variables such as characteristics and change in situations and emotions. The questions used in the roommate model are very general and vague and it may not work for large groups. (Silva F, 2012) Descriptive models Descriptive models of decision-making investigate how individuals actually make decisions.
Such models allow us to determine whether, and, if so, how, we might improve Judgments and decisions. This model takes into account that decisions are affected by a number of factors, including individual personality and values, group relationships, organizational power, and political behavior. ‘The real’ life model is particularly popular with practicing managers as it identifies key factors such as self- reservation and avoidance of responsibility. (Shafer, E. B. , Sorenson, D. N, 1993) Descriptive models are most useful when explaining departures from the normative models.
It is, however, important that the distinction between descriptive and normative remains clear. Normative is what people should do in theory and descriptive is what people actually do, or have done. The distinction acts as a useful reference point when attempting to improve managerial decision making processes. (Baron J, 2012) Factors Affecting Decision Making When making organizational decisions there are a number of factors that can have n influence on the process: Perception issues- an individual’s perception can influence how they make decisions and solve problems.
Perception can be influenced by the preserver the object or the situation. Culture- Culture concerns decisions, actions, and communication on an instrumental and symbolic level Policies and Procedures- formalized policies and procedures such as a documented disciplinary procedure that will guide managers through a process that resolve issues with members. Organizational Hierarchy- A management structure of an organization has an impact on the decisions made as he different levels of management have different degrees of authority.
An example however can make decisions about how their team can contribute to the organizations goals Organization structure- The structure of an organization I. E. Centralized, decentralized, tall, flat, matrix, have an impact on an organizations decision. For example in an organization with a flat structure where the middle managers do not exist, both the tactical and operational decisions will be made by the lower level managers. (Toolboxes, 2013) When making decisions, it is important to ‘scan’ the external environment. This can e achieved through a PESTLE analysis.
A PESTLE analysis will help paragon to determine the Political, economic, social, technological, legal, and environmental factors that can affect their business. For example the cultural aspects, beliefs and attitudes of the market, and the legal factors such as laws and regulation that will affect the way Paragon operate. Can, Y. 2002) Conclusion Different level managers will make different types of decisions. Top managers are responsible for the strategic goals of a company while middle managers make the tactical decisions. The lowest organizational management, the supervisor will make he operational decisions.
The structure of an organization makes a difference to the decision making. For example an organization with a flat structure where middle managers have been cut out, the lowest level of management will make both the tactical and operational decisions. The decision-making process is a crucial part of an organization such as Paragon; it’s a process of evaluating situations and problems, and the planning of strategies to follow in order to get the desired and the best results. The Normative Model is a rational model that provides an interface to objectify decision-making.
Research carried out suggested that companies adopting the model are more likely to make effective and successful decisions then when they ignore them. It is best used when making operational structured decisions. Descriptive models of decision-making investigate how an individual actually makes decisions. Such models allow us to determine whether, and, if so, how, an organization might improve Judgments and decisions. Both internal and external factors affect the decision-making of organization. The internal factors include culture, perception and Organizational Hierarchy.