In carrying out management functions, such as planning, organising, motivating and controlling, a manager will be continually making decisions. Decision-making is a key management responsibility.
Some decisions are of routine kind. They are decisions which are made fairly quickly, and are based on judgment. Because a manager is experienced, he knows what to do in certain situations. He does not have to think too much before taking action. For example, a supervisor in a supermarket may decide, on the spot, to give a refund to a customer who has brought back a product. The manager does not have to gather a great deal of additional information before making the decision.
Other decisions are rather intuitive ones. They are not really rational. The manager may have a hunch or a gut feeling that a certain course of action is the right one. He will follow that hunch and act accordingly. Thus, when looking for an agent in an overseas market, a sales manger may have several companies to choose from. However, he may go for one organization simply because he feels that it would be the most suitable agent. He may think that the chemistry between the two firms is right. Such a decision is based on hunch, rather than rational thought.
Many decisions are more difficult to make since they involve problem-solving. Very often, they are strategic decisions involving major courses of action which will affect the future direction of the enterprise. To make good decisions, the manager should be able to select, rationally, a course of action. In practice, decisions are usually made in circumstances which are not ideal. They must be made quickly, with insufficient information. It is probably rare that a manager can make an entirely rational decision.
When a complex problem arises, like where to locate a factory or which new products to develop, the manager has to collect facts and weigh up courses of action. He must be systematic in dealing with a problem. A useful approach to this sort of decision-making is as follows: the process consists of four phases: 1) defining the problem; 2) analyzing and collecting information; 3) working out options; 4) deciding on the best solution.
As a first step, the manager must identify and define the problem. And it is important that he does not mistake the symptoms of a problem for the real problem he must solve. Consider the case of a department store which finds that profits are falling and sales decreasing rapidly. The falling profits and sales are symptoms of a problem. The manager must ask himself what the store’s real problem is. Does the store have the wrong image? Is it selling the wrong goods? Or the right goods at the wrong prices? Are its costs higher than they should be?
At this early stage, the manger must also take into account the rules and principles of the company which may affect the final decision. These factors will limit the solution of the problem. One company may have a policy of buying goods only from home suppliers; another firm might be against making special payments to secure the contract. Rules and polices like these act as constraints, limiting the action of the decision-taker.
The second step is to analyse the problem and decide what additional information is necessary before a decision can be taken. Getting the facts is essential in decision-making. However, the manager will rarely have all the knowledge he needs. This is one reason why making decisions involves a degree of risk. It is manager’s job to minimize the risk.
Once the problem has been defined and the facts collected, the manager should consider the options available for solving it. This is necessary because there are usually several ways of solving a problem. In the case of a department store, the management may decide that the store has the wrong image. New products could be introduced and existing lines dropped; advertising could be stepped up; the sore might be modernized and refurbished or customer service might be improved.
It is worth noting that, in some situations, one of the options may be to take no actions at all.
Before making a decision, the manager will carefully assess the potions, considering the advantages and disadvantages of each one. Having done this, he will have to take a decision. Perhaps, he will compromise, using more than one option. Thus, the manager of the department store may solve his problem by making changes in the product range, increasing advertising, and improving the interior of the store.
Ex.2. Decide whether the following statements are true or false. Put “+” or “ –“ in a box.
1. Before taking a routine decision managers must collect a great deal of information.
2. When choosing an overseas agent most managers rely on their intuition.
3. When a firm dismisses one of its junior managers it is making a strategic decision.
4. Managers cannot always wait until they have all the necessary information before taking important decisions.
5. The first thing managers must do when solving a problem is to collect all the facts.
6. Because of their company’s rules and policies managers may not be able to take certain actions in order to solve a problem.
7. After collecting all of the necessary information managers have to identify the various actions they could take to solve a problem.
8. When important decisions have to be made managers need to use a systematic process of decision-making.
Ex.3. Find words or phrases in the text which mean the same as the following:
1. very important (paragraph 1)
2. immediately, without hesitation (2)
3. occurs, appears (5)
4. put, build, establish (5)
5. consider carefully, assess (5)
6. bear in mind, consider, remember (7)
7. choices, possible courses of action (9)
8. increased (9)
9. take a middle course of action (11)
Ex.4. Find in the text and translate the collocations and complete the following sentences with appropriate verbs.
Make a decision
Take a decision
Take into account
Solve a problem
1. Although our company wants to expand rapidly, we must __________ in mind that we have limited cash to do so.
2. It is important to _________ into account al options before ________ a decision.
3. The Financial Director has _________ the conclusion that we must reduce costs by 10%.
4. Finally, the Chairman ________ his opinion about the matter. After we had listened to him, we were able to ________ to an agreement.
5. Patricia _______ an interesting suggestion at the meeting.
6. If we don’t come up with new products, we _______ the risk of falling behind our competitors.
7. Our chairman is too old for the job. Some of the directors have ________ pressure on him to resign.
8. The writer has _________ some recommendations in his report.
9. What conclusion have you _________ from the facts given in his letter?
10. I have ________ a great deal of thought to our financial problems.
11. I don’t want to ________ action until I’ve heard everyone’s opinion.
12. After five hours’ negotiation, we finally _________ agreement.
Ex.5. Complete the following passage with the correct forms of the words below.
arise (v.) rise (n.) rise (v.) raise (v.)
A serious problem has _______ (1) in my company. Because the cost of living ______ (2) by 6% last year, management decided to ______ (3) the salaries of all the staff. For this reason, they gave everyone a ______ (4) of £10 a week. However, later on, they had to pay for this by ______ (5) the prices of all our products by 10%. Such a large ______ (6) in prices made our products uncompetitive. So now, management is talking of lowering our salaries again!
Ex.6. Making a presentation.
David Sibley is the new Executive Director of the Yorkshire and Humberside Development Association in the north of England. The work of the Association is to encourage British and overseas companies to set up factories in the area. This region of England needs more business and industry so that more employment opportunities will be provided for young people living in the area.
In David Sibley’s office at the moment are the Managing Director and Production Manager of a company. They are about to tell Sibley about their company’s activities.