Strategic Management And Decision Making

Strategic concern And end MakingWhen the benefits of actions atomic number 18 predictable, when the forces or variables that drives the firm are known and move in deterministic manner, when the deviations arent high , one can easily use banner termination qualification optimization techniques. But when the positions are unorthodox, forces are unknown and move in unpredictable and non-linear manner, and then optimization principles will not help much. And this is what we are facing today. The utter necessity of tactical, operating(a) and strategicalal approach is the solution to such dynamic situations that can be achieved through making grievous stopping points strategically.CHARACTERISTICS AND APPROCHES TO STRATEGIC DECSION MAKINGUnlike routine decisions, strategic decisions are highly substantial and significant that has permeative and long term progeny on an organization life. Such decisions must have following characteristics to be considered as a direction for fu ture actions throughout an organization, these areRare Strategic decisions are noble-minded and unusual and do not have any warning or model to follow.Consequential Since strategic decisions are substantial, therefore its demands lot of dedication from people at all levels.Percussive Good strategic decisions serve as a role model and pot standards for upcoming decisions in future.Also as stated by Cyert and March(1963) that in established organization, the scope for decision making is limited by preceding decision, either explicit or implicit, as hearty as being limited by virtuously committed to resources and departments etceteraAccording to Thompsons (1967) decisions has 2 major dimensions i.e. preference about possible takingss and cause and deed relations. And the degree of certainty and uncertainty is defined by source and outcome preference, as shown in count belowFig.1SituationCertaintyUncertaintyCertainComputationalCompromiseUncertainjudgmentalinspirationalComputa tional Decision MakingComputational decisions are the outcomes of linear relation amidst causation and favourite(a) outcomes. For examples, if high society wishes to emergence its sales by 2%, it must increase its advertisement by 4% , and for 4% sales, it must increase advertisement by 8%, knowing linear relation exists between cause and effect. Thus increasing advertisement increase sales by double and this is called programmed decisions by Simon(1997).Judgmental Decision MakingIt occurs when cause and effect relation is uncertain, but outcome preference is certain. For examples a lodge targets to increase its sales by 2% for the coming year, but is uncertain about how to much increase advertisement to reach such target. So some kind of experienced powerful individual of perpetration with high intuition is required for effective decisions.Compromise Decision makingCompromise decisions are the outcomes of situations where there is certainty about causation and uncertainty abo ut preferred outcomes. From previous examples, if company knows from its historical information that for e truly 2% increase in sales, the advertising must be increase by double, this is causation certainty, but there is uncertainty about achieving desired goals with respect to increase in sales.Inspirational Decision MakingSuch decisions are the outcomes of both uncertainty about cause and effect as well aS preferred outcomes. For an instance, a company isnt sure that how much advertising percent be increased to get certain percent of sales increment. So for such cases a entrepreneurial mode or well planned mode is required to make careful decisions.Because of uncertain business environs, decision makers count difficulty matching probability with outcomes, having galore(postnominal) decision tools in hand. However, again despite of having such tools, neediness of accuracy is also one of the biggest obstacles in making decisions strategically.In short we can summarize emblemati c problems involved in strategic decision making areUncertainty Dealing with excessive complexness and rapid changesSelf-fulfilling prophecies Coping with situations that external factors arent fixed, but are affected by decisions.Fragmentation Working to impute regional functional groups.According to Mintzberg, there are different approaches to making strategic decisions, that could be through with(p) by one person or by team.Entrepreneurial ModeThe strategy is developed by one individual with strong entrepreneurial capabilities, supported by the owners vision of direction. It is a good example of availing the available opportunities. Example AOL, Amazon.com.Adaptive ModeUnlike entrepreneurial mode, adaptive mode is the focus on the threats posed by external conditions, rather than search for opportunities.Planning ModePlanning mode is the combine of both entrepreneurial mode and adaptive mode, which consist of proactive search for opportunities and reactive solutions to flowin g problems. It is a typical form of decision making where set alternatives strategies are presented and the best are chosen and implemented. rational IncrementalismThis philosophy of decision making is characterized by achieving organisational objectives by disseminating large organizational objectives into small steps for better focus. Though it is time consuming, but offers greater flexibility.STEPS IN STRATEIC DECISION MAKING influenceOne of the distinguishing factor of strategic decisions from other decisions is mount in which decision is made. The figure below represents this context in 3 Cs form i.e. Company, Competitor and Customer. This means that managers ( company) make decision within organizational context ,with influence from other players like customers and competitors .Thus we can say that managerial strategic decision is outcome of number of players like manager himself, customers, competitors, public, media etc.As we can also see from figure that many factors, bo th external and congenital are involved in strategic decision making. There are modifiers, influencers, and controllers and so on that decides the viability of decision making.As mentioned before that most appropriate approach to strategic decision making is Planning mode, because it is more analytical, flexible in dealing with complex and changing environment, and consist of presenting set alternative strategies in response to solution for existing problems or looking for new opportunities. Following are the steps involved in strategic decision making process, shown in fig. 4Evaluate current performance resultThe first step in decision making is (a) evaluating current performance of the company in terms of various measuring tools of decision making i.e. NPV, ROI, profitability etc and (b) evaluating the current mission, vision, strategies and policies of the organization.Re enamour integrated governanceAssess the performance of the organizations board of directors and top manage ment, and agency head.Scan and assess the external environmentAnalyze the external environment. i.e. Societal and Task environment, for opportunities and threats and weigh external strategic factors.Scan and assess the internal environmentAnalyze the internal environment i.e. organization Culture, Structure and Resources for example programs, IT needs, constraints and weigh strategic factors in terms of strengths and weaknesses.Analyze strategic (SWOT) factorsConsider strategic factors in light of current department situation and review and revise the firms mission, vision, strategies and objectives.Generate, evaluate and select the best alternative strategyKeeping in view the previous step of analyzing strategic factors, operate and evaluate strategic alternatives and options and choose the best feasible options. carry out selected strategiesOnce the strategies are chosen, the next important step is to implement them keeping in considerations factors like budget, resources etc.Eval uate implemented strategiesThis is a very important step in decision making to nab for any deviation from actual desired and pre- planned outcomes.CONCLUSIONStrategic management is one of the very important areas in business environment and making decisions strategically is one of the biggest challenges in todays rapidly changing and complex environment. Strategic decision making is a process of generating alternatives and choosing the best feasible alternatives for achieving long roleplay objectives of the organization. Good strategic decisions are rare, consequential and directive, that set standard for future actions. The context in which the decisions are made is very important, as mentioned it is external players like customers, competitors, media etc along with internal input from managerial efforts that effect quality of decisions. And also it is very important to know how these factors influences the quality and effectiveness of strategic decision making and be proactive t o convert threats into opportunities, rather than being re-active in finding solutions to current problems.REFERENCEShttp//www.dol.gov/cio/programs/ITStrategicPlan2006/decisionmakingprocess.jpghttp//www.stratrisk.co.uk/about/execSummary/fig3x470x345.jpghttp//en.wikipedia.org/wiki/Strategic_managementhttp//books.google.ae/books?id=c35YVifvGekCprintsec=frontcoverdq=strategic+decision+makingsource=blots=EPD5PfXGS-sig=WcXC9bk8R0bxKf1TZpZriuic-Ashl=enei=kLUhTKazFsaLONHUiTosa=Xoi=book_resultct=resultresnum=1ved=0CBYQ6AEwAAv=onepageqf=falseRaghbir S. Basi, University Professor of Management and Glenn and Eva Olds Professor ofInternational Understanding, Alaska Pacific University, Anchorage, Alaska, Administrative decision making a contextual analysishttp//en.wikipedia.org/wiki/Strategic_managementcite_note-79Understanding Managers Strategic Decision-Making Process, WILIAM BOULDING Fuqua Shool of Bsiness, Duke Universitv Box 90121, Durham, NC 27708-1020 Retrived from uniform resource locat or http//www.springerlink.com/content/rg6770h0148641l7/fulltext.pdf(Mulcaster, W.R. Three Strategic Frameworks, Business Strategy Series, Vol 10, No1, pp68 75, 2009)Our bookWheelen T.L ( ) and Hunger J. D Strategic Management and Business PolicyStrategic decision making Applying The Analytical Herarchical ProcessNavneet Bhushan and Kanwal Rai Retrieved from URLhttp//books.google.ae/books?id=c35YVifvGekCprintsec=frontcoverdq=strategic+decision+makingsource=blots=EPD5PfXGS-sig=WcXC9bk8R0bxKf1TZpZriuic-Ashl=enei=kLUhTKazFsaLONHUiTosa=Xoi=book_resultct=resultresnum=1ved=0CBYQ6AEwAAv=onepageqf=false