Strategic Management And Decision Making

strategical Management And ratiocination MakingWhen the benefits of actions atomic number 18 predictable, when the forces or variables that drives the firm be cognise and move in deterministic manner, when the deviations arent high , one(a) cigaret easily use standard end making optimization techniques. But when the situations are unpredictable, 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, operational and strategical approach is the solution to much(prenominal) dynamic situations that can be achieved through making in-chief(postnominal) endings strategically.CHARACTERISTICS AND APPROCHES TO STRATEGIC DECSION MAKINGUnlike routine closes, strategic decisions are highly substantial and significant that has pervasive and long term effect on an organization life. Such decisions must have following characteristics to be considered as a direction for future actions throughout an organization, these areRare Strategic decisions are rare and unusual and do not have any face 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 exercise as a role model and set 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 prior decision, either explicit or implicit, as well as being limited by morally act to resources and departments etc.According to Thompsons (1967) decisions has 2 major dimensions i.e. preference about possible outcomes and driveway and effect relations. And the degree of certainty and uncertainty is defined by former and outcome preference, as shown in figure belowFig.1SituationCertaintyUncertaintyCertaincomputationalCompromiseUncertainJudgmentalInspirationalComputationa l Decision MakingComputational decisions are the outcomes of linear relation between causation and preferred outcomes. For examples, if company wishes to increase its sales by 2%, it must increase its ad 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, exclusively outcome preference is certain. For examples a company 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 committee 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 about preferred outcomes . From previous examples, if company knows from its historical data that for any 2% increase in sales, the advertising must be increased by double, this is causation certainty, but there is uncertainty about achieving desired goals with pry to increase in sales.Inspirational Decision MakingSuch decisions are the outcomes of twain 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 environment, decision makers face trouble matching probability with outcomes, having many decision tools in hand. However, again despite of having such tools, lack of accuracy is also one of the biggest obstacles in making decisions strategically.In short we can summarize typical problems involved in strategic decision making areUncerta inty Dealing with excessive complexity and rapid changesSelf-fulfilling prophecies Coping with situations that outdoor(a) factors arent fixed, but are affected by decisions.Fragmentation Working to connect regional functional groups.According to Mintzberg, there are diametric approaches to making strategic decisions, that could be done 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 combination of both entrepreneurial mode and adaptive mode, which consist of proactive search for opportunities and reactive solutions to current problems. It is a typical form of decision making where set ut ility(a)s strategies are presented and the best are chosen and implemented.Logical IncrementalismThis philosophy of decision making is characterized by achieving organizational objectives by disseminating large organizational objectives into small go for offend focus. Though it is time consuming, but offers greater flexibility.STEPS IN STRATEIC DECISION MAKING PROCESSOne of the distinguishing factor of strategic decisions from other decisions is linguistic context in which decision is make. 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, both external and internal 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 dealings 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 graduations involved in strategic decision making summons, shown in fig. 4Evaluate current performance resultThe first step in decision making is (a) evaluating current performance of the company in scathe 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.Review corporate memorial tabletAssess the performance of the organizations board of directors and top management, and agency head.Scan and assess the external e nvironmentAnalyze 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.Implement selected strategies erst the strategies are chosen, the next important step is to implement them keeping in considerations factors like budget, resources etc.Evaluate implemented strategiesThis is a very important step in decision making to check 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 run 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 smell 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 to 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 URL http//www.springerlink.com/content/rg6770h0148641l7/fulltext.pdf(Mulcaster, W.R. Three Strategic Frameworks, argumentation 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