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MindMap Gallery Business decision-making and management (Chapter 9 of Business Management)
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Business decision-making and management (Chapter 9 of Business Management)
Mind map of business decision-making and management (Chapter 9 of Business Management). Decision-making is the process in which decision-makers optimize and make decisions on multiple possible future action plans in order to achieve expected goals. It is the process by which decision-makers will supervise Will is seen in the ability application process in objective practice.
Edited at 2023-10-20 14:02:37
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Business decision-making and management (Chapter 9 of Business Management)
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- Outline
Business decision-making and management
Decision-making and business decisions
decision making concept
Decision-making is the process in which the decision-maker optimizes and makes decisions on multiple possible future action plans in order to achieve the desired goal. It is the process in which the decision-maker can apply his or her supervisor's will to objective practice.
business decision concept
Business decision-making refers to an enterprise formulating several alternative plans based on obtaining and analyzing market information and objective conditions in order to achieve a specific goal, select a satisfactory plan from among them to implement, and control the implementation situation. process
Basic elements of decision-making activities
decision maker
Decision goal
Decision variables
State variables and their probability distributions
Decision profit and loss value
Characteristics of decision-making activities
Purpose
Selectivity
Many possibilities
Dynamic
procedural
Principles of business decision-making
information principle
prediction principle
Selection principle
feasible principle
feedback principle
Business decision-making system
decision-making core system
This system is the center of the enterprise's decision-making system and consists of high-level decision-making institutions with decision-making responsibilities. The core of the decision-making system is the leadership group or individual leaders with decision-making power, such as the board of directors, chairman, general manager, and department managers. wait
decision aid system
decision information system
Set up around decision-making systems at all levels, it is an organizational structure that specializes in collecting, counting, storing, retrieving, transmitting, and displaying relevant intelligence data and information.
Decision consulting system
A research consulting system dedicated to decision-making. It is an organization that extensively develops intelligence and assists decision-making core system decision-making.
Decision execution and feedback system
execution system
A system that executes and implements various decision-making instructions of the enterprise's core decision-making system
feedback system
Closely related to each subsystem and existing in the above systems
Only when the feedback system is operating normally can the decision-making system continuously make rolling corrections to instructions to ensure correct decisions and smooth execution.
Scientific decision-making
Empirical decision-making and its limitations
The meaning of empirical decision-making
Empirical decision-making refers to decisions based on personal experience, knowledge, talents and intuitive judgment.
The decision-making behavior of the decision-maker only appears in a personal way and only reflects the subjective ability based on personal experience.
Limitations of empirical decision-making
After all, empirical decision-making is based on personal experience, and its characteristics are manifested in people's intuitive perception, superficial understanding, limitations of observation, and uncertainty in analysis during the decision-making process.
reason
Human experience is always limited
Human understanding and judgment abilities have limitations
Empirical decisions always appear in the form of personal behavior
Empirical decision-making focuses only on short-term behavioral goals
Scientific decision-making and its characteristics
The meaning of scientific decision-making
Scientific decision-making refers to the process in which people use scientific theories and methods to formulate and evaluate various action plans and select the optimal plan on the basis of fully grasping decision-making information in order to achieve one or several desired goals.
Characteristics of scientific decision-making
Scientific prediction research
Compare multiple options
Combining quantitative analysis with qualitative analysis
Emphasis on the use of various scientific methods and technical means for modern decision-making
Rely on advisory system
Scientific decision-making process
The necessity of scientific decision-making
Decision-making objects are becoming more and more complex
Decision-making goals are becoming more and more long-term
The processing of decision-making information is increasingly important
Seizing decision-making opportunities becomes increasingly difficult
Decisions become increasingly risky
The development trend of scientific decision-making
Decision-making objectives develop from single-objective decision-making to multi-objective decision-making
The form of decision-making evolves from individual decision-making to team decision-making
The focus of decision-making has evolved from corporate management business decisions to strategic decisions
Decision-making criteria develop from optimality to satisfaction
Decision-making methods are developing from hard technology to a combination of "hard" and "soft" technology
Types of empirical decisions
Strategies are divided according to importance and management level involved.
Strategic decision-making (high-level decision-making)
Refers to the overall and long-term major decisions related to the future development of the enterprise.
This kind of decision-making aims to determine the long-term development direction of the enterprise, improve the operating efficiency of the enterprise, and maintain dynamic coordination between the overall operating activities of the enterprise and changes in the external environment.
Management decision-making (middle-level decision-making)
Refers to the tactical decisions made by enterprises in all aspects of R&D, production, and marketing, as well as human, financial, and material elements, in order to implement strategic decisions.
This kind of decision-making aims to improve the management efficiency of the enterprise in order to achieve a high degree of coordination of all links within the enterprise and the effective use of various elements of resources.
Business decisions (grassroots decisions)
Refers to the decisions made in the daily production management activities of an enterprise to improve production efficiency and work efficiency and rationally organize the production process.
According to the recurrence of decision-making problems and the maturity of experience in solving problems
procedural decisions
Refers to those decisions that occur frequently and have predetermined processing procedures and processing rules.
non-procedural decision making
Refers to decisions made on non-recurring or rarely recurring problems for which it is difficult to determine the handling procedures and rules in advance
According to the status of the decision-making problem
deterministic decision making
Refers to a decision in which the decision-maker is very clear and clear about the various possible future situations (natural conditions) and their consequences for each decision-making action plan to achieve the decision-making goal. In other words, the decision-making profit and loss function of the decision-making problem does not include state variables. , the kind of decision-making in which the decision-maker only needs to optimize the various feasible action plans according to certain criteria.
Generally, mathematical models can be used to optimize solutions.
risky decisions
It means that the occurrence of various natural states faced by decision-making problems in the future is random, but decision makers can estimate the probabilities of various natural states based on historical advancement data or experimental tests of relevant situations, and make decisions based on analysis and calculation. the kind of decision
Generally, the decision-making profit and loss statement and decision tree methods are used to make optimal decisions based on the expected value principle.
Uncertain decision-making
Refers to the kind of decision-making in which the future occurrence of various natural states faced by decision-making problems is uncertain. The decision-maker cannot estimate the probability of the occurrence of various states and must make decisions based on the decision-maker's preferences, experience and attitude.
According to the content of business decisions
Business decisions can be divided into production decisions, planning decisions, product development decisions, technology introduction decisions, investment decisions, resource development and utilization decisions, price decisions, cost decisions, marketing decisions, financial decisions and organizational personnel decisions, etc.
business decision-making process
Clarify the problem
Discover and ask questions
To figure out what the problem is
problem definition
Analyze the cause of the problem
collect information
Propose decision-making goals
To accurately state the goals, the main requirement is
The concept of goals is clear and avoids vague or ambiguous interpretations
Goals should be as quantitative as possible
The deadline for achieving the goal is clear
Selected evaluation indicators
Clear constraints
Planning alternatives
Plan proposed
outline idea
Well-designed
Solution screening
Robustness (anti-interference)
Adaptability
reliability
Operability
environmental forecast
Forecasting is to speculate and predict unknown events based on known events
Forecasting is about exploring the future and speculating on the uncertainties related to the future.
Forecasting program
Clear forecast goals
gather information
Choose a forecasting method
Develop predictive models
Determine prediction results
Modeling and projected results
Each alternative has a corresponding set of outcomes. These results are measured through social, economic and technological indicators
Once you select a project outcome, you can begin building one or more models to predict the relationship between actions and outcome indicators.
The results are expected to be mostly based on intuitive judgments (or implicit thinking patterns)
To clearly explain the antecedents and consequences of an action, you need to establish a clear logical reasoning model and use tables, graphics, numbers, mathematical relationships or computer programs to express the relationship between actions and results.
Evaluate and select options
Determine evaluation indicators
Select evaluation method
empirical judgment method
mathematical analysis
Test method
Solution sorting
Options
Two basic premises for business decisions
value premise
Refers to the value criteria based on which decision-makers make cognitive interpretations of decision-making problems and choose solutions.
factual premise
Refers to the objective facts on which decision-making is based. It is an objective situation and state that people understand through actual investigation, research and scientific experiments. It is represented by a series of intelligence, information and quantities that can be tested and sometimes quantified.
Qualitative methods for business decision-making
Structural modeling techniques: a method for clarifying problems
Use directed connected graphs to describe the relationship between various elements of the system to represent the system model as a collection of elements.
Modeling steps
Relevant experts discuss with decision-makers to select relevant elements and establish an adjacency matrix
Create reachability matrix
Infer reachability matrix
Partition the reachability matrix
Reduced reachability matrix
Draw a continuous directed graph and construct a structural model
Brainstorming: How to plan a plan
Through mutual exchanges between experts, intellectual collisions occur in the mind, new intellectual sparks are generated, and experts' arguments are continuously concentrated and refined.
in principle
Strictly limit the scope of the problem and clarify specific requirements so that attention can be focused
You cannot doubt or criticize other people's opinions, and you must study any idea, regardless of whether it is appropriate and feasible.
Keep your speech concise and do not elaborate on it
Participants are not allowed to use prepared speeches and impromptu speeches are encouraged
Encourage participants to improve and synthesize the ideas that have been proposed, and provide priority opportunities for those who are ready to modify their ideas to speak.
Support and encourage participants to relieve their ideological concerns, create an atmosphere of freedom, and stimulate participants' enthusiasm
Delphi method
Experts' opinions were solicited anonymously through several rounds of correspondence. The organizers summarized the opinions of each round and sent them to each expert as a reference for them to analyze and judge and put forward new arguments. After repeating this process, the opinions of experts become increasingly consistent, and finally the organizer summarizes and draws a conclusion.
basic procedure
Determine the topic for decision-making evaluation
Choose an expert
Develop survey questionnaire
Q&A process
draw conclusions
Quantitative methods for business decision-making
Deterministic decision-making method—break-even analysis
Break-even analysis is a deterministic decision-making method that predicts profits and controls costs through a comprehensive analysis of the mutual constraints of business volume (output, sales volume, sales), costs, and profits. It uses cost characteristics, that is, the dependence between the total cost and output, to indicate the business volume limits of the company's profitable operations, thereby achieving the role of decision-making control.
Critical output = total fixed cost/(sales price per unit product - variable cost per unit product)
application
guide decision-making
Forecast sales volume to achieve target profit
carry out cost control
Determine the safety rate of business operations
Stochastic decision-making method—decision tree method
The decision tree method is a very valuable decision analysis tool, especially for decision-making problems with many alternatives or multi-stage decisions. It is more convenient to use the decision tree method, which can vividly express the decisions at each stage. Interrelationship and interaction with overall decision-making
Decision tree components
decision node
status node
result node
Additional conditions
pruning symbol
General steps for decision tree analysis
Clearly structure the decision problem. Draw a decision tree based on corresponding conditions
Determine the profit and loss value of the decision
Determine various states of nature and their probability of occurrence
Evaluation plan
Uncertain decision-making method
There is a type of decision-making problem. Although the decision-maker knows which natural states may occur in the future, he cannot estimate or predict the probability of various possible states in advance. This is an uncertain decision-making problem.
optimistic approach
Also known as "the principle of taking the big out of the big"
Find the best-case benefit value from each option, and then use the option with the largest benefit value as the decision-making option
pessimistic approach
Also known as "the principle of taking the big from the small"
Find the worst-case benefit value from each option, and then select the option with the largest benefit value among these benefit values as the decision-making solution
equal probability method
Also called "equal probability standard"
Assuming that the probability of occurrence of various natural states in the future is the same, choose the option with the highest expected value
optimistic coefficient method
Also called "compromise method"
It is an evaluation method between the optimistic method and the pessimistic method. It is neither optimistic nor pessimistic. Instead, it adopts a compromise standard and introduces an optimistic coefficient α to calculate the expected return value of the plan.
The expected return value of the plan = the most optimistic return value * α the most pessimistic return value * (1-α)
regret value method
Also called "minimum regret method"
After decision-makers make decisions, they will feel regretful if the situation does not meet their ideals. Take the maximum benefit value in each state of nature as the ideal value, and use the difference between the benefit value of each plan in the state of nature and the ideal value to measure the degree of regret of the plan. Therefore, each benefit value corresponds to a regret value. The maximum regret value of each plan is selected for comparison. The plan with the smallest maximum regret value is the optimal plan.
Implementation of business decisions
Implementation methods and requirements
The implementation of decision-making must be holistic and holistic
The implementation of decisions must be planned and operable
Decision implementation must be adaptable and innovative
procedures for implementing decisions
First of all, we must clarify the priorities and priorities in the implementation of the enterprise's decision-making plan, so that we are well aware of it.
Secondly, the specific arrangements must be clear, what measures will be introduced at what stage, who will be responsible, how the relevant levels and departments will assist and connect, how to supervise and inspect, etc. There should be clear requirements.
Management of implementation of decisions
There are two systems in the management of decision-making implementation
A total management system aimed at the implementation of decision-making throughout the enterprise
A sub-management system targeting the decision-making implementation of departments, levels, subordinate enterprises and branches
The two management systems have the same goals, but have different priorities and priorities.
The focus of management of the former is the entire enterprise, while the latter is a partial
Require
strict
Relevant indicators specified in the implementation of decision-making must be strictly required, strictly controlled, and strictly implemented.
orderly
There must be a set of rules and regulations for management work and strictly abide by them
Efficient
High efficiency and effectiveness of management work
dynamic
The management of decision-making implementation is a non-stop work, which must be carried out step by step, link by link.
Decision-making risks and their avoidance
There is always risk in any decision, including business decisions. It can be said that it is the existence of risks that makes decision-making meaningful. The correct attitude towards corporate decision-making risks should be to be fully prepared, take them seriously and deal with them in a timely manner
To effectively avoid risks, we must do
List possible types of risks and develop countermeasures
Utilize information comprehensively and scientifically to make business forecasts
Enhance operational flexibility and improve adaptability
Decision makers enhance risk awareness and implement it into the process of implementing decisions
Monitoring of the decision-making implementation process
Decision makers should increase their awareness of the importance and necessity of monitoring in the decision-making process
Establishing necessary systems is the guarantee for effective monitoring during the decision-making process.
Establish working institutions and systems in the enterprise to monitor the decision-making implementation process
Corporate decision-makers and leaders should pay attention to employees’ opinions and suggestions