Page 11 - DCAP208_Management Support Systems

Management Support Systems

Notes Self Assessment

State True or False:
1. Global competitors often have different cost structures that can be exploited to render
historically successful business models obsolete.

2. Expensive information and increased competition have led to an decreased pace of change
in the business world.

1.2 Managerial Decision Making

All managers have a shortage of knowledge, resources, and time. Working within these
parameters, the management process culminates in decisions to implement various actions.
Decision-making is the focal point of all organizational dynamics, and management effectiveness
is judged on the basis of the quality of these decisions.
Managerial decisions are deliberate choices made from a range of alternatives. Before making
the decision, the manager must evaluate each choice according to its projected outcomes in
terms of the organization’s resources as well as the amount of information and time available.
Thus, every managerial decision is a best-effort compromise made in an environment of
uncertainty.

1.2.1 Types of Management Decisions

From a management perspective there are three types of decisions:
1. Long-term strategic decisions concerning the external environment of the organization.

2. Administrative decisions intended to order the functions of the organization in the most
cost-effective way.
3. Operational decisions designed to maximize a firm‘s profitability through productive
procedures.

Strategic Decisions

There are several types of strategic decisions in production and operations management
(P/OM):
1. Product or service strategies: Management decisions regarding product line market
strategies (including design, quality and cost) determine production cost parameters.
2. Process strategy: Management decisions regarding process methods are critical in
determining technological and organizational production requirements. The process
strategy decision is also crucial in determining capital and financial requirements.

3. Research and Development (R&D) strategy: R&D is critical for organizational survival in
today‘s rapidly changing marketplace. The R&D strategy includes total resources being
devoted to the effort, the type of research to be performed including pure vs. applied
research, manufacturing vs. market research, and product development vs. process
development.
4. Location strategy: Often the success or failure of a business, production, or service is
determined by a location decision.

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