Leverage, Debt to Equity ratio’s
Strategy or Strategic Objectives
Check the Strategic Objective chapter in Marcouse
Look at Specimen papers just to have a Q in mind
Check Porters 5 Forces
Check this document
See the AQA old unit 4 and textbook info
Making strategic decisions
Each topic is preceded by summary notes which are intended to reinforce learning and to prompt students when responding to the questions set. Most questions are designed not to reflect the structure of a real-life examination, but rather to help students to develop skills that will help them in their examinations.
1 Improving the ability to process information and make decisions with sophisticated computerised systems, means companies have powerful resources.
2 Cost and time involved — it is not always possible or desirable to access, collect and evaluate every piece of information. Established organisational rules and procedures, organisational culture and the attitudes of leadership might prevent the optimal decision being taken.
3 Scientific decision making is a logical and research-based approach to decision making. The five main stages are: setting objectives, gathering data, analysing data, selecting a strategy/ making a decision, and implementing and reviewing the decision.
4 A systematic process allows decisions to be made in an objective manner. Well-researched factual evidence removes bias and subjectivity.
5 Decisions based on hunch are based upon a manager’s gut feeling and personal views, rather than logic and research. They can be more creative and more innovative than decisions based on a scientific approach.
6 Basing decisions on hunch is much quicker than using a scientific decision-making approach.
7 Factors to consider include: whether decisions are short term or long term, tactical or strategic; whether there are reliable previous data that can be analysed in order to inform future decisions.
8 A decision made on ethical grounds might reject the most profitable solution in favour of one that is morally correct, regardless of its consequences.
9 If a company is unable to generate sufficient financial resources, this will affect its corporate decision making. For example, decisions about expansion or diversification will depend on the business having sufficient funds to support these developments.
● In some small family businesses, the interests of shareholders may be the major influence on decision making.
● For organisations whose location has a major impact on the local environment, local communities or environmental pressure groups may be powerful stakeholders and influence decision making.
●For businesses in highly competitive markets, customers are likely to be powerful stakeholders and their needs will be a major influence on decision making.
●In businesses that are dependent on a highly skilled but hard-to-find workforce, employees may be powerful stakeholders who exert significant influence on the decision-making process.
Scientific decision making should include understanding and interpreting decision trees and calculating expected value and net gains. Decision making to include an understanding of: risks rewards uncertainty opportunity costs. Influences on decision making to include: mission objectives ethics the external environment including competition resource constraints.