Pre se n te d b y

A sh w in N a ir P IM S R C O LLE G E

Strategic Change and

Decision Making
DECISION MAKING
Definition

The process of examining your possibilities and options, comparing them, and
choosing a course of action.

RELATED QUOTES

“Be sure you are right -- then go ahead.”

-Davy Crocket.
“Doing what's right isn't hard -- Knowing what's right is.”
-Lyndon B. Johnson.
“Mine own applause is the only applause which matters.”
-Cicero.
“Once you've made your mark, watch out for erasers!”
-Will Rogers.
Strategic Decision Making

• Construct a clear picture of precisely what

must be decided.
• Compile a list of requirements that must be
met.
• Collect information on alternatives that meet
the requirements
• Compare alternatives that meet the
requirements.
• Consider the "what might go wrong" factor
with each alternative.
• Commit to a decision
So in short In managing a business, an

objective, a goal, a target serves to determine

what action is to taken today to obtain results
tomorrow. It requires decision to mould the
future
Strategic Decision Making

• In strategic decisions, management may

consider both short range and long
range goals.
• Any business exists as a part of a larger
economic context and what
management needs are, to decide
What business conditions will be like
five or ten years ahead.
• What management needs are tools that
enable it to free its thinking and
planning from dependence on the
business cycle.
• Business cycle are ups and downs
 Grow larger (General Electrics)
Downsize (Avon, Sara Lee)
Diversify (Wal-Mart)
Some Strategies of Well-

Dominate niche (Starbucks)

Outsource production process (Nike)
Integrate production process (Armani)
known Companies

Become quality leader (Samsung, BMW)

Cooperate with rivals (Sony, Philip Morris)
Power of Strategy – ‘Samsung’

• Early 2000s, Samsung launched a strategy to revitalize its

consumer electronics business
• Long regarded as a low quality brand
• Sought a quality leadership position
 – Ex: Embraced DLP for HDTVs
 – DLP is cheaper – but ‘fatter’ than Plasma
 – Rave reviews
 – Reputation improved since launch of DLP – more high end
products

DECISION MAKING TOOLS

In the case of strategic decision making a

business
organization may use following three tools of

decision
making.

• Firstly, the assurance that there will always be

fluctuations in the business cycle without
attempting to guess what stage of the cycle
the national economy is passing through.
• Management can free decisions from cyclical
guess work by testing the business decision
against the worst possible.
• But this method does not indicate whether a
decision is right or not. It indicates however,
the extremes of cyclical risk involved.
Decision making tools contd…

•
• The second tool is more difficult to handle but also more
productive and consists of biasing a decision on events which
is going to heavily impact the future.
•
• For example, a company may base the population growth in zone
for raising the capacity of a FMCG item.


• Trend Analysis is the most widely used tool in strategic decision

making. Trend analysis answers the questions ‘how likely’ and
‘how fast’ in respect to a strategic decision.
•
• Electrical power consumption in the domestic sector, passenger
services on the road, railway and transport sectors, health
and life insurance services, business and higher education
services in the professional courses are covered under the
trend analysis.

•
Strategic Decision Making

1. Define
Problem
2. Data
Collection
3. Analysis
4. Developing
Options
5. Evaluation
6. Make your
decision
7. Move Forward
 Analysi
PROBLEM s

Data
Collection
Define Problem

Make
Assumptions
Give
Directions
Simplifies
the Process

1
5 Q and 1 H
Cont…
analysis

?What
?Where
?How
?When
?Whom
?Why
 Cont…

• Set The Desired

Outcome
• C u rre n t S ta te D e sire d S ta te
•
•
•
• Link with the Big
Picture
Data Collection

§Determine alternative
courses of action before
gathering data .
§
§Getting Data from the
deepest ocean if
necessary
§
§Group Techniques
§Look Outside the Library as well
as in

2
§
§Avoid allowing your data to stack
up .
§
§Define Limit
Step 3: Lay it all
• What options do
you have ?
• Going for new ?

Four Situations to tackle

Something’s Going


Wrong

Fin d a n d co rre ct th e ch a n g e s th a t a cco u n t fo r th e fa ll- o ff in

re su lts.
Situation 2

Increased or


Changing
Expectations

Fin d n e w w a ys o f o p e ra tin g .
Situation 3

The Double


Whammy

Fin d w a ys to re e n g in e e r th e syste m – co rre ct a n d invent .

Situation 4

It never did work



right

Fin d w a ys to o ve rh a u l – o r co m p le te ly re b u ild .
SWOT
Six Thinking Hats
ELEMENTS IN MANAGERIAL DECISIONS
Kinds of decisions
Ø Organizational and
personal decisions
Ø Long term or futurity
decisions
Ø
Ø Basic or routine
decisions
Ø
Ø Departmental decisions
Ø
Ø Non economic decisions

Approaches to decision maki

Ø Rational approach
Ø
Ø Intuitive approach
Ø
Ø Indecisive approach
Ø
Ø Impulsive approach
Ø

 When things go wrong :

Ø Work each problem

Ø
Ø Re-prioritize if necessary
Ø
Ø Maintain focus on desired
outcomes
Ø
Ø After a fair trial, change
options
•
 Issues in Strategic
Decision Making
Criteria for decision
making
There are three major
The company would need to decide on criteria in decision
what criteria it should make its making :
decision. Thus it need a process of
objective setting, which serve as
benchmarks for evaluation of the 1.Concept of maximization
efficiency and effectiveness of the 2.Concept of satisficing
decision making process. 3.Concept of
instrumentalism
4)
5)
6)
Issues in Strategic Decision-Making
contd..

Ø Creative Thoughts
Creative thought is a mental process
involving creative problem solving and the
discovery of new ideas or concepts, or new
associations of the existing ideas or
concepts.
Issues in Strategic Decision - Making

Ø Rationality in decision-making
 Rational decision is one that is optimal, with
the available information, in terms of achieving
a goal, and individuals or organizations are
called rational if they take rational decisions in
pursuit of their goals. Thus one speaks, for
example, of a rational allocation of resources, or
of a rational corporate strategy. In this concept
of "rationality” the individual's goals or motives
are taken for granted and not made subject to
criticism, ethical or otherwise. Thus, rationality
simply refers to the success of goal attainment.

Issues in Strategic Decision - Making

Ø Person-related factors in decision-making

A company would have different people in decision
making at different periods of time. Decision often
require judgments and thus is important to note that the
person related factors are important in decision making
and the decision make differ as that person changes.
This happens because of the following personal
differences:
1) Intellectual Ability
2) Experience
3) Sentiments and Values
4) Courage
5)
Ø
Issues in Strategic Decision - Making

Individual versus group decision-making



Ø In establishing objectives: groups are probably

superior to individuals because of the greater
amount of knowledge available to groups.
Ø In identifying alternatives: the individual efforts
of group members encourage a broad search in
various functional areas of the organization.
Ø In evaluating alternatives:the collective
judgement of the group, with its wider range of
viewpoints, seems superior to that of the
individual decision maker.
Ø

Issues in Strategic Decision - Making

Ø In choosing an alternative: group

interaction and the achievement of
consensus usually result in the
acceptance of more risk than would be
accepted by an individual decision
maker.
Ø Implementing a decision: whether
made by a group, is usually
accomplished by individual managers.
Steps in problem solving

Ø Describe the problem

Ø Search out the cause, get the facts
Ø Define the real problem and set objectives
Ø Develop alternative solutions
Ø Decide on the best solution
Ø Implement the decision
Ø Follow up
•
Type of problem Solving

• Based on Style • Based on outcome

• Participative • Win –lose
• Group • Lose-win
Decision • Lose-Lose
making
• Win-Win
Solving people problem

Tips :


• Listen to people
• Keep emotions
away
• Identify real
problem
• Avoid arguments
Group Decision Making

B e n e fits D ra w b a ck s
Takes longer time
• More info as
Participants involve in
experience counts
arguments
• More ideas and
Mediocre decisions
alternatives
• Better Co-ordination
and communication
• Participants Are
committed
• Better decision as it
gets tested for all
sorts of arguments
Strategic Management

• Strategic Management is a stream of decision with a

view to develop effective long term and short term
planning and policies to help the organization
achieve its super-ordinate goals
• Strategy is a unified, comprehensive, integrated and
interpretative plan that relats the strategic
advantage to the challenges of the environment.
• Such strategic decision result in the strategies for new
product development, product designing, up
gradation, marketing, technology, new customers,
finance, geographic areas and entry into new
markets
•
Data Analysis

Sort and Arrange


Mind Mapping

Look into Causes
but Don ’ t Bog
Down

Encourage
Participation


3
Be sure to
choose based on
what is right ,
not who is right .
CONCLUSION