Computer Based Information Systems

Week 3, Semester 1 2003

The Decision Making Process

Step 1: Problem recognition

Step 2: Problem definition and structuring

Step 3: Identifying alternative courses of action

Step 4: Making and communicating the decision

Step 5: Implementation of the decision

Step 6: Monitoring the effects of the decision

♦ a decision can not be defined without information

♦ alternative courses of action cannot be assessed without information
♦ the decision is made but must be communicated, this becomes information for the people
informed
♦ implementing the decision will require careful planning and control – for which you need
information
♦ the effects need to be monitored and information on the value of the decision gathered

Activity: Information Needs

In groups work through the above process identifying your information needs at each step.
The decision you need to make is what to do this Friday Night.

see diagram overleaf

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Information Decision-making process

Trigger Problem recognised

Preliminary information need identified

More information Problem defined and structured

Alternative courses of action identified

Information to aid review of Choose alternative

effects of alternative course of action
Make decision

Communicate decision
decision implemented as required
Implement decision

Has the decision worked? Review implementation

(performance evaluation)
Monitor effects

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Types of Decision

“A structured problem is one in which there is a defined number of

elements, and it’s possible to go about solving the problem in a
systematic way.”

“ An unstructured problem, on the other hand, is less easy to analyse

as it appears to lack any obvious logic, underlying procedures or rules for
solving it.”

♦ a structured decision can be seen as a programmable one

- they are routine and frequently repeated
- little or no human judgement is required
♦ this means we can prepare a decision structure
- a series of steps to be followed
- could be a flowchart, decision table etc.
♦ An unstructured design is non-programmable
- can’t be pre-planned
- occur infrequently and be non-routine
- no prepared decision procedure
- reliant on human judgement
♦ A semi-structured decision is in between
- in between the above
- requires human judgement but can follow a structured process

Activity: Decision Types

Enter three examples of a structured, unstructured or semi-structured decision for a business
organisation:

Structured Semi-structured Unstructured

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2
3

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Levels of Decision Making

♦ Strategic
− concerned with long-term organisational planning
− decisions are unstructured and made infrequently
− will have a wide impact and can’t be reversed very easily
− examples would be new markets, investments etc.
♦ Tactical
− medium-term planning
− time horizon is normally a year
− these decisions will form stages to achieve a strategic objective
− examples are performance monitoring, controlling budgets, stock levels and purchasing
requirements
♦ Operational
− short-term planning and day to day activities
− tend to be highly structured with a limited impact
− examples are delivery schedules or weekly production schedules

Activity: Levels of decision making

Classify the following decisions by the organisational level at which they are taken. Do you
think the decision-making process could be automated?

a) at what level should we set the budget for next year?

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b) does this customer qualify for a discount on a large order?
c) how should we deal with a take over bid?
d) should we employ more staff to cope with an urgent order?
e) should we expand abroad?
f) should we launch an advertising campaign

Information & the Anthony Hierachy

Operational Information
♦ Used to plan & ensure specific tasks properly done
♦ it is:
- derived entirely from internal resources
- task specific
- prepared constantly or at least very frequently
- largely quantitative
- highly detailed, as it is processing of raw data
- relates to the immediate term
Tactical Information
♦ used to decide & monitor how resources are used
♦ it is:
- primarily from internal sources
- summarised
- relevant in short and medium term
- prepared routinely and regularly
Strategic information
♦ used to plan objectives & assess their achievement
♦ it is:
- from both internal and external resources
- summarised at a high level
- organisational relevance
- both quantitative and qualitative
- often prepared ad-hoc

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Decision Characteristics and Management Level

The following table indicates the characteristics we would expect decisions to have at the
various levels within the organisation:

Management Type of Decision Impact on the Frequency of

Level Decision Timescale Organisation decisions
Strategic Unstructured Long Large Infrequent

Tactical Medium Medium

Operational Structured Short Small Frequent

Source, BIS chaffey et al

Information Characteristics for Decision by Management Level

The following table illustrates the characteristics we would expect each level of management to
require in it’s decision-making information:

Information
Management Type of Frequency Source Certainty Scope
Detail
Level decision
Strategic Wide Infrequent External Less Wide
Summarised
certain

Tactical

Operational Narrow Frequent Internal More Narrow

Detailed
Certain