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Presented By:
Arthur Haurama
Andrew Joshua
Christopher Gau
 To understand the rational approach to decision making
 To become aware of techniques that can be used to improve
decis...
 What is Decision Making?
 Process of Decision Making
 Rational Approach to Decision Making
 Risk assessment of strate...
What is Decision Making
Is the process of selecting the Best
Solution among Alternatives in order
to solve a problem.
Types of Decision Making
1.Programmed decision
A decision that is fairly structured or
Recurs with some frequency (or both...
Process of Decision Making
Rational Models of Decision Making
“Based on a normative approach (i.e. how decisions
should be made). ”
 Research shows that Rational Decision-Making proce...
“Based on a normative approach (i.e. how decisions
should be made). ”
 aim at achieving the end goal
 Are conscious, exp...
“There are many different approaches to strategic risk
assessment. ”
 Industry
 Technology
 Brand
 Competitor
 Custom...
.
Risk Assessment
1. Consider a range of alternatives:
A key to making the right choice is to consider several options to ...
 Ideas are cheap ;execution is difficult. It is easier to come up with many
attractive sounding proposals, but there are ...
Strategic planning is primarily qualitative;
 What strategy should we follow ?
 What position do we want to achieve in t...
It is the development of a plan for the project, incorporating
timings and action responsibilities, qualitative ideas and
...
There are three limitations in decision making:
1. Individual
2. Organizational
3. Political
 Limited/bounded rationality...
Continue………
 Interpretation
Interpretation can provide a sense of security to an individual where
they interpret new expe...
 existing organization decision making
Organization creates a set of rules for how decisions are normally made and what
t...
 Individuals/groups in conflict as decision makers
Groups can be corporative, but most groups will include individuals
wh...
 The layers of decision making
In larger organisations, a major proposal will be put up to several
individuals or groups ...
 In decision making we should allow competitor
reaction as evidence in dynamic approaches to
strategy.
 Taking action in...
.
Involve Several People
Use an ethical framework
Stop Political behaviour
A Model of effective decision making
Agree goal...
 Decision making is the process of selecting the BEST Solution
amongALTERNATIVES in order to solve problems.
 A model fo...
 Hubbard Rice Beamish, strategic Management, thinking
analysis action, www.pearsoned.com.ac/hubbard
References
Thank You
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Strategic Decision Making Process

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Strategic Decision Making Process

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  • What is Decision Making Is the process of selecting the Best Solution among Alternatives in order to solve a problem. 5. Types of Decision Making 1.Programmed decision A decision that is fairly structured or Recurs with some frequency (or both) 2.Non programmed decision A decision that is relatively unstructured and occurs much less often than a programmed decision 6. Process of Decision Making 7. Rational Models of Decision Making 8. “Based on a normative approach (i.e. how decisions should be made). ”  Research shows that Rational Decision-Making processes produce better and more accurate results more often than intuitive decision making processes. Facts Rational Approach to Decision Making 9. “Based on a normative approach (i.e. how decisions should be made). ”  aim at achieving the end goal  Are conscious, explicit and deliberate.  Intentionally consistent and logical  Are fully informed  Allow for independent means and ends  Involve choice between alternative ends and alternative means, choices which aim to maximize the end results achieved.  Assume a casual relationship between the means taken and the end results achieved. Rational Decisions have the following criteria; Rational Approach to Decision Making 10. “There are many different approaches to strategic risk assessment. ”  Industry  Technology  Brand  Competitor  Customer  Project and  Lack of growth risk Slywotsky and Drzik suggest considering 7 different types of strategic risks; Risk assessment of strategic options 11. . Risk Assessment 1. Consider a range of alternatives: A key to making the right choice is to consider several options to start with!Many organization tend to jump straight from analysis to recomendation, without considering any alternatives. Consider at least three alternatives: • Would it be best to go international into one country deeply, into several countries thinly, or to spread the risk by choosing two or three countries? • Should we introduce a new product nationally, in a major area first then roll it out, or a minor area first The first idea is not always the best. 12.  Ideas are cheap ;execution is difficult. It is easier to come up with many attractive sounding proposals, but there are many hidden practical traps, each idea takes time to implemement. Successful organization have been found to be conservative despite growing quickly and being very profitable. They tended to consider the downside of proposal, and try to find ways to spread the risk among partners or by spreading the decision overtime. 2. Be Conservative: 13. Strategic planning is primarily qualitative;  What strategy should we follow ?  What position do we want to achieve in the industry  Do we have the resources - managerial(usually the key constrains),financial,people ,productive capacity,etc..?  Often the returns are not there from the strategic ideas.Even if they are,this process gives an idea of what the soft spots are,and also gives confidence in undertaking the proposal and now the quantitative analysis support that idea. Risk Assessment 3. Forecast the alternatives: 14. It is the development of a plan for the project, incorporating timings and action responsibilities, qualitative ideas and quantitative support, provides a control tool for future implementation and demonstrate that the idea is well thought through. A standard error is to assume that the organization’s action will be the only change that occurs in the competitive landscape. Risk Assessment 5. Consider Competitive reactions:
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Strategic Decision Making Process

  1. 1. Presented By: Arthur Haurama Andrew Joshua Christopher Gau
  2. 2.  To understand the rational approach to decision making  To become aware of techniques that can be used to improve decision making  To understand reasons why the rational approach is limited in its practical application to understand what an effective strategic decision making process looks like. Strategic Decision Making process Learning Outcomes:
  3. 3.  What is Decision Making?  Process of Decision Making  Rational Approach to Decision Making  Risk assessment of strategic options  Limitations on rational decision making in practice  CompetitorsActions  A practical model for effective strategic decision making  Conclusion Strategic Decision Making process Contents:
  4. 4. What is Decision Making Is the process of selecting the Best Solution among Alternatives in order to solve a problem.
  5. 5. Types of Decision Making 1.Programmed decision A decision that is fairly structured or Recurs with some frequency (or both) 2.Non programmed decision A decision that is relatively unstructured and occurs much less often than a programmed decision
  6. 6. Process of Decision Making
  7. 7. Rational Models of Decision Making
  8. 8. “Based on a normative approach (i.e. how decisions should be made). ”  Research shows that Rational Decision-Making processes produce better and more accurate results more often than intuitive decision making processes. Facts Rational Approach to Decision Making
  9. 9. “Based on a normative approach (i.e. how decisions should be made). ”  aim at achieving the end goal  Are conscious, explicit and deliberate.  Intentionally consistent and logical  Are fully informed  Allow for independent means and ends  Involve choice between alternative ends and alternative means, choices which aim to maximize the end results achieved.  Assume a casual relationship between the means taken and the end results achieved. Rational Decisions have the following criteria; Rational Approach to Decision Making
  10. 10. “There are many different approaches to strategic risk assessment. ”  Industry  Technology  Brand  Competitor  Customer  Project and  Lack of growth risk Slywotsky and Drzik suggest considering 7 different types of strategic risks; Risk assessment of strategic options
  11. 11. . Risk Assessment 1. Consider a range of alternatives: A key to making the right choice is to consider several options to start with!Many organization tend to jump straight from analysis to recomendation, without considering any alternatives. Consider at least three alternatives: • Would it be best to go international into one country deeply, into several countries thinly, or to spread the risk by choosing two or three countries? • Should we introduce a new product nationally, in a major area first then roll it out, or a minor area first The first idea is not always the best.
  12. 12.  Ideas are cheap ;execution is difficult. It is easier to come up with many attractive sounding proposals, but there are many hidden practical traps, each idea takes time to implemement. Successful organization have been found to be conservative despite growing quickly and being very profitable. They tended to consider the downside of proposal, and try to find ways to spread the risk among partners or by spreading the decision overtime. 2. Be Conservative:
  13. 13. Strategic planning is primarily qualitative;  What strategy should we follow ?  What position do we want to achieve in the industry  Do we have the resources - managerial(usually the key constrains),financial,people ,productive capacity,etc..?  Often the returns are not there from the strategic ideas.Even if they are,this process gives an idea of what the soft spots are,and also gives confidence in undertaking the proposal and now the quantitative analysis support that idea. Risk Assessment 3. Forecast the alternatives:
  14. 14. It is the development of a plan for the project, incorporating timings and action responsibilities, qualitative ideas and quantitative support, provides a control tool for future implementation and demonstrate that the idea is well thought through. A standard error is to assume that the organization’s action will be the only change that occurs in the competitive landscape. Risk Assessment 5. Consider Competitive reactions:
  15. 15. There are three limitations in decision making: 1. Individual 2. Organizational 3. Political  Limited/bounded rationality Managers (and people in general) are unable to hold all the information required at a particular time to produce the perfect decision.  Reality and ambiguity In reality information is known and it is believed that what an individual perceives and experiences constitutes reality for that person while ambiguity means that we are unsure of what is true. Limitations on rational decision making in Practice Individual Limitations
  16. 16. Continue………  Interpretation Interpretation can provide a sense of security to an individual where they interpret new experiences and information in ways that make them consistent with their own beliefs.  Intuition In time of pressured environments and faced with information overload, uncertainty and ambiguity, many managers use intuition to simplify their decision making.  Individual emotions and values People have emotions and values, they work in an organizational culture that has its own values and ethics and people are social and political, they have their own desires, personality likes and dislikes to ensure that rational aspect of decision making is not the same as another person’s.
  17. 17.  existing organization decision making Organization creates a set of rules for how decisions are normally made and what the boundaries of acceptable decisions are.  Groups as decision makers The rational approach to decision making assumes an individual is making the decision, but as soon as more than one person is involved in the decision, the existence of individual raises the possibility of conflict, even if the individuals are all using a rational model and all perceive themselves as being part of a corporative group or as partners.  The talk trap Decisions in organizations are generally made based on verbal arguments, not on the basis of actual outcomes.  Decision making seen as an event, not a process Decision made by an individual considering all the information at one point in time, coming to a conclusion, and beginning the process of implementation leads to false emphasis on the objective facts and individual rationality as being important. Organizational Limitations
  18. 18.  Individuals/groups in conflict as decision makers Groups can be corporative, but most groups will include individuals whose personal preferences, styles, requirements and ambitions can clash resulting in conflict as much as corporation.  Relationships One reason for social business occasions, clubs, private business meetings and the formation of private networks and alliances is to develop and nurture personal relationships which provide the source of ability to influence or be influenced by other organizations through a cell phone call, to assist or be assisted to partner or be partnered. Political Limitations
  19. 19.  The layers of decision making In larger organisations, a major proposal will be put up to several individuals or groups (committees) and can fail at any one of the levels. Therefore, to be successful in getting a decision approved, it is necessary to understand what the levels are and the connections (e.g. timing, people involved, information and format of decision) between each.  Where and how decisions are made In cases where individuals make decisions, we need to understand where and how decisions are actually made.  informal or informal meetings  Inside or outside work hours  Based on a formal paper, formal discussion, informal discussion or some predictable combination.  Based on rational arguments  In a single meeting or several occasions. Continue….
  20. 20.  In decision making we should allow competitor reaction as evidence in dynamic approaches to strategy.  Taking action involving such commitments without considering the possible actions or reactions of competitors can be extremely costly. Competitors Actions
  21. 21. . Involve Several People Use an ethical framework Stop Political behaviour A Model of effective decision making Agree goals Search Evaluate Risk Make decision Communicate decision Engage implementors Assess Outcomes Seek win-win Establish clear criteriaConsider data quality & quantity
  22. 22.  Decision making is the process of selecting the BEST Solution amongALTERNATIVES in order to solve problems.  A model for practical, effective, strategic decision making and the importance in getting decisions approved is to understand the practice of organizations decision making processes and to fit the strategic proposal within that framework.  Decision making however, often tends to vary from one decision to another, providing hope for any new proposal, but gloom for those seeking consistent, rational, just and equitable decisions. Conclusion
  23. 23.  Hubbard Rice Beamish, strategic Management, thinking analysis action, www.pearsoned.com.ac/hubbard References
  24. 24. Thank You

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