DECISION MAKING IN GLOBAL ORGANISATIONS

Presentation By: Hamna Ashraf MBA(FT)

GLOBAL ORGANISATIONS

In a true Global Company there is harmony between different cultures. Resources and materials are moved seamlessly across different countries so that the company enjoys maximum competitive advantage . Global organizations are one step ahead of the multinational organizations. Instead of establishing identical units, the Global Organization share and source resources on a global basis to provide superior quality product/service at the lowest cost possible .

UNIQUE ATTRIBUTES OF GLOBAL

ORGANISATIONS

Faced an organizational dilemma of whether it is acceptable to source from lower-cost countries, as it may affect some of their existing workforce. Most of them have successfully incorporated a value system/culture in their organizations to focus on the competitive advantage gained by going global Worked very hard to make sure there is no concentration of authority in one country, and ensured a global distribution of power .

Taken care to understand the sensitivity of different cultures. Domestic organizations that have traditionally worked hard to appreciate diversity have transformed into great global organizations Handled the change associated with going global with vision, meticulous thought process and excellent planning Always looked for the most profitable markets across the world and for products/services across the world Institutionalized Global Mindset. People with a global Mindset are leaders who can separate emotions from business decisions and make the appropriate decision that would maximize shareholder value when faced with competition, market growth, and difficult economic trends.

DECISION MAKING
Decision making can be regarded as the mental processes (cognitive process ) resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice. The output can be an action or an opinion of choice.

TYPES OF DECISION MAKING

Programmed and Non-Programmed Decisions Programmed decisions are those that are made in accordance with some policy, rule or procedure so that they do not have to be handled each time they occur. Non-Programmed decisions are novel and nonrepetitive. If a problem has not arisen before or if there is no cut and dry method for handling it, or if it deserves a custom tailored treatment, it must be handled by a non-programmed decision.

Major and Minor Decisions Major decisions are decisions which are rare and has a long-range impact. Major decisions affect all the functional areas of business. Minor decisions recur very often and does not have a long-range impact. In such case, a decision affects only one function.

Individual and Group Decisions

Individual decisions are taken by a single individual. The one manager decision set-up is still prevalent in India as many business units are owned by a single individual. Group decisions are taken by a group of people. Group decisions has greater participation of individuals and thus better quality in decisions.

DECISION MAKING CONDITIONS

Decision Making Under Certainty In situation involving certainty, we are reasonably sure what will happen when we make a decision Decision Making Under Risk In risk situation, one may have factual information , but it may be incomplete.

Decision Making Under Uncertainty Decision maker does not know all the alternatives, the risks associated with each other, or the consequences of each alternative

STEPS IN DECISION MAKING

Recognizing and Defining the Decision

1)

2)

Identifying Alternatives

3)

Evaluating Alternatives

4)

Selecting the Best Alternative 3 approaches: Experience Experimentation Research and Analysis Implementing the chosen alternative

5)

6)

Following up and Evaluating the Results

DECISION MAKING IN GLOBAL ORGANISATIONS.

Decision Making process is complex in global organisations where the organisations subsidiaries are spread across geographical regions. Depending upon the strategy , decision making process different.

The decision making in multinational organisation is widely spread across subsidiaries.

Generally the strategic decisions are decentralised and the headquarters only have a simple form of financial control on the subsidiaries. The subsidiaries have the control of modifying products and services to suit their national needs.

In international organisation, the decision making is decentralised only to a certain extend ;

the subsidiaries are dependent on the parent company for ideas, processes, products, information and services. The subsidiaries however are able to adapt to their local environment and make their own strategic choice with the guide from the headquarters.

Global organisations, however have tight central control of their decisions, resources, and information.
Since global organisations have such tight controls over their subsidiaries , senior management usually performs decision making. Subsidiaries are considered as a channel or way to deliver the goods and or services. Therefore subsidiaries do not have the ability to modify the product and or service.

In transnational organisation , the decision making process is supported by a complex process of coordination and cooperation in an environment of shared decision making. This is due to the way these organisations treat their subsidiaries, a source of valuable information and ideas.

INFORMATION SYSTEMS AND DECISION

SUPPORT FOR GLOBAL ORGANISATIONS Transaction Processing Systems, Management Information Systems, Executive Information Systems, Global Information Systems, Decision Support Systems and Knowledge Based Systems. Within these information system lies the data needed for decision making. The use of Artificial Intelligence is a relatively new field, although expert and knowledge based systems have been based on AI principles. 3 types of AI technologies for decision making process : Case Based Reasoning, Intelligent Agents, Neural Networks

DYNAMIC DECISION MAKING

Dynamic decision-making (DDM) is interdependent decision-making that takes place in an environment that changes over time either due to the previous actions of the decision maker or due to events that are outside of the control of the decisionmaker. In this sense, dynamic decisions, unlike simple and conventional one-time decisions, are typically more complex and occur in real-time.

According to Busemeyer dynamic decision making is defined by three common characteristics;

1) Series of action taken over time to achieve an overall goal 2) Actions are interdependent, since later decisions depend on these actions, and 3) Environmental changes are spontaneous and/ or a result of earlier actions.

The literature in this field is divided into two parts:

First researches conduct rigorously controlled experiments to construct rigid computational models of dynamic decision making Second they research the concerns of dynamic decision making in real world problems.

GLOBAL ORGANISATION DEPARTMENTS, DATA

AND DECISIONS Global organisations are made up of variety of different departments that work together to ensure that all data and information is made available up to date. It is often hard to synchronise data and information due to time zones, language barriers and the geographic locations. It is important to remember that global organisations have a highly centralized nature, in that all decisions are made at the head quarters and foreign subsidiaries only carry out and implement the procedures and policies set out by the head quarters.

Some decisions include:

What procedures and guidelines must this subsidiary have, depending upon the main business operations that are assigned to the subsidiary Reducing the number of employees on a global scale Hiring of local managers or overseas managers to manage subsidiaries Decisions to keep or to move executives and managers to different subsidiaries

The department must find the best person to fit the position; it must develop procedures and guidelines, and this is imperative since the organisation relies on these employees to carry out the everyday tasks of the organisation.

PRODUCTION DEPARTMENT To enable the organisation to compete globally, this department must develop standardised products that can be sold anywhere , although this may not be the case always, since the products can very depending upon the requirements of that particular market. The decisions that are likely to give the global organisation a competitive advantage may include the decisions to produce the products at a lower cost, deciding what subsidiary would best develop the product for a cost effective price, the level of products to produce, strategically placing production plants in certain areas and so on.

These decisions are also based on the tax, legislation, laws, currency and political issues of the country the subsidiary resides in.

PROCUREMENT AND PURCHASING DEPARTMENT The decisions that this dept makes can have an overall effect on the way the organisation succeeds. The types of decisions that this department make include deciding where to buy raw materials, reducing the supply chain, whether or not it will benefit the organisation to make links with suppliers. Allocating appropriate procedures and guidelines to procured goods, whether it is viable to purchase raw material in country x, when country y ( subsidiary that need raw material) is located on a different continent. minimise logistics and distribution delay, and so on.

SALES DEPARTMENT The main purpose of the sales dept is to sell goods and / or services to the consumer. The decisions made in this dept are very common in any org which include: whether or not it is worthwhile to incorporate a customer relationship management system, deciding what particular group of customers that the product is aimed for, deciding upon the cost of services and products, specials, sales and so forth, deciding if it is necessary to set up call centers or help lines for customers, types of sales strategy to various markets, and so on.

MARKETING DEPARTMENT The marketing department develops the strategies to market or advertise the organisation. The types of decisions that can be made by the marketing department include when to conduct in-depth market analysis, whether or not the alliance with other companies to promote the organisations products and services can aid the organisation, What type of marketing strategy should be used for different demographics, including country and culture and so on.

MANAGEMENT DEPARTMENT This department is responsible for the overall operation of the organisation ; to gain a competitive advantage the management department should be able to coordinate and streamline its functions and subsidiaries together. The decisions involved in this dept include: Is it viable to invest subsidiaries in country x? and what strategy is the best approach for the production of goods? and what procedures and policies must each department implement? and deciding on the management structure and personnel for a subsidiary and deciding upon the level of control that each subsidiary has, and so on.

INFORMATION TECHNOLOGY DEPARTMENT The IT departments main purpose is to create, implement, and maintain the networks, software, and system architecture of the organisation. This department works closely together with the management dept to align the business processes with IT. Decisions include: deciding upon the network structure for a subsidiary, type of system architecture and IT infrastructure, whether to store data externally or to have a local copy and mirror sites, type of technology to be used, what types of data exchange and data interchange platforms to use, strategies or methods to operate global IT infrastructure, types of network standards and policies, and so on.

RESEARCH AND DEVELOPMENT DEPARTMENT The decisions made by the R & D dept are a crucial part of staying competitive and/ or gaining a competitive advantage. The main purpose of this dept is to research and develop new innovative products or services. The types of decisions being made by this department may include decisions such as deciding on the amount of funding and manpower that is needed, strategies to detect market trends, type of product, idea, service will be researched and developed next and cost effective strategy, and so on.

BUSINESS DEVELOPMENT DEPARTMENT The purpose of this department is to research and define the business strategies that can be applied in acquiring new subsidiaries, new business opportunities , and most importantly , who the organisation has an alliance with or merges with. The types of decisions that can be made include is country x suitable for opening a subsidiary? and is it to our advantage to have an alliance with company x? and deciding on the appropriate strategy to acquire a business opportunity, and so on.

HR DEPARTMENT Human Resources Department in an organization, is the department which is charged with accomplishing strategies and policies related to the management of individuals.
The decisions made in this department include: recruitment, selection and training of personnel, compensation, hiring employees for different departments and payroll, and so on.

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