dicision making
TRANSCRIPT
-
8/13/2019 Dicision Making
1/34
Strategic Decision making
-
8/13/2019 Dicision Making
2/34
-
8/13/2019 Dicision Making
3/34
Process
Objectives to be achieved
Alternative ways of achieving the
objectives are identified
Each alternative is evaluated in terms of
objective achieving ability
The best alternative chosen
-
8/13/2019 Dicision Making
4/34
What makes a decision strategicUnlike many other decisions, strategic
decision deals with the long-run future of
the entire organization and have three
characteristics.
1. Rare: strategic decision are unusual
and typically have no precedent to
follow
2. Consequential: strategic decisioncommit substantial resources and
demand a great deal of commitment
from people at all level
-
8/13/2019 Dicision Making
5/34
Example
One example of a strategic decision was thatmade by BPL limited to move away from
manufacturing hermetically sealed precision
panel meters to a major consumer electronics
company emphasizing utilization of the best andmost appropriate technologies, applying the finest
manufacturing disciplines and most efficiently
marketing high quality products and services to
consistently gives customers the best value fortheir money
-
8/13/2019 Dicision Making
6/34
Issues in strategic decision
making
Being a complex process,
strategic decision making is
difficult to perform, it is aincomprehensible: it can not be
analyze and explain easily.
decision makers are unable todescribe the exact manner in
which strategic decision are
-
8/13/2019 Dicision Making
7/34
For this reason, no theoretical
model , however, painstakingly
formulated can adequately
represent the different dimension of
the process of SDM. Despite this
limitation, we can still attempt to
understand SDM by considering
some important issues related to it.
-
8/13/2019 Dicision Making
8/34
Criteria for Decision- Making
The process of decision making
requires objective setting. This
objectives serves as yardsticks to
measure the efficiency and
effectiveness of the decision
making process. In this way
objective serves as criteria for
decision making. There are three
major viewpoints regarding setting
-
8/13/2019 Dicision Making
9/34
a. The first is the concept ofmaximization. It is based onthinking of economist whoconsider objectives as thoseattributes which are set at thehighest point. The behavior ofthe firm is oriented towardsachieving this objectives and , inthe process, maximizing its
-
8/13/2019 Dicision Making
10/34
B. The second view is based on
the satisfying. This envisages
setting objectives in such amanner that the firm can
achieve them realistically
through a process ofoptimization.
-
8/13/2019 Dicision Making
11/34
C.The third view point is that of theconcept of incrementalizm.
According to this, the behavior of
the firm is complex and the process
of decision making. Which includes
objective setting, is essentially a
continually evolving political, a
consensus building. Through such
an approach , the firm moves
-
8/13/2019 Dicision Making
12/34
2. Rationality in Decision-making
Rationality, in the context of SDMmeans exercising the choice among
various alternative courses of action
in such a way that it leads to the
achievement of objectives in best
possible manner. The economist
who support the maximizing criteria
consider a decision to be rational if
it leads to profit maximization.
-
8/13/2019 Dicision Making
13/34
Behaviorist, who are the proponent ofthe satisfying concept, believe the
rationality takes into account the
constraints under which a decisionmaker operates. incrementalist are of
the opinion that the achievement of
objectives depends on the bargainingprocess between different interested
coalition groups existing in an
organization and therefore, rational
decision making process should take all
-
8/13/2019 Dicision Making
14/34
Creativity in decision making
To be creative, a decision must
be original and different. A
creative decision-makingprocess may considerably affect
the search for alternative where
novel and untried means maybe looked for and adopted to
achieve objectives in an
-
8/13/2019 Dicision Making
15/34
Creativity, as a trait, normallyassociated with individual and is
sought to be developed through
techniques such as brain storming.
You may recall that one of the
attitudinal objectives of business
policy course is to develop the
ability to go beyond and think, in
other word, is using creativity in
-
8/13/2019 Dicision Making
16/34
Variability in decision making
It is a common observation that,given an identical set of condition
two decision makers may reach
totally different conclusions. This
often happens during case
discussions also. A case may
analyzed differently by individuals
in a group of learner and,
depending on the differing
-
8/13/2019 Dicision Making
17/34
. Such thing happen due tovariability in decision making. It also
suggests that every situation is
unique and there are no set
formulas that can be applied in
strategic decision making.
-
8/13/2019 Dicision Making
18/34
Person related factors in decision
making
There are a host of person-relatedfactors that play a role in decision
making. Some of these are: age,
education, intelligence, personal
values, cognitive style, risk taking
ability and creativity are generally
supposed to play a positive role in
strategic decision making
-
8/13/2019 Dicision Making
19/34
. A cognitive style which enables aperson to assimilate a lot of
information, interrelate complex
variable and develop an integrated
view of the situation is especially
helpful in SDM. Values as enduring
prescriptive beliefs are culture-
specific and important in matter of
social responsibility and business
-
-
8/13/2019 Dicision Making
20/34
Individual versus group decision
making
Owing to person related factor,there are three individual
differences among decision makers.
These difference matter in SDM. An
organization possessing special
characteristics, operates in a
unique environment are in a
vantage position to undertake SDM
-
8/13/2019 Dicision Making
21/34
Individual such as chief executivesor entrepreneurs play the most
important role as strategic decision
makers. But as organizations
become bigger and more complex
and face an increasingly turbulent
environment, individuals come
together in groups for the purpose
of SDM.
-
8/13/2019 Dicision Making
22/34
, like the working of human mind strategicdecision making is fathomless. And rightly so , for
it is based on complex mental process which are
not exposed to view. Henery mintzberg ,
componeting on the nature of SD-making saysthat the key managerial process are enormously
complex and mysterious, drawing on the vaguest
of informationa and using the least articulated of
mental process. This process seams to be morerelational and holistic then odered and sequntionl
and more intuitive then intellectual ..
-
8/13/2019 Dicision Making
23/34
Approaches towards strategic
decision making
Entrepreneurial modeAdaptive mode
Planning mode
logical incrementalism
-
8/13/2019 Dicision Making
24/34
-
8/13/2019 Dicision Making
25/34
(1) Role of Board of Directors
1. To establish and update the
company mission.
2. To elect the companys top
officers, the formost of whom is
the CEO.3. To establish the
compensation level of the top
officers, including their salaries
-
8/13/2019 Dicision Making
26/34
4. To determine the amount andtiming of the dividends paid to
stockholders.5. To set broad company policy
on such matters as labour
management relations, productor service lines of business and
employee benefit packages.
-
8/13/2019 Dicision Making
27/34
6. To set company objectives and toauthorize managers to implement
the long-term strategies that the top
officers and the board have found
agreeable.
7. To mandate company compliance
with legal and ethical dictates.
-
8/13/2019 Dicision Making
28/34
(2) Role of Chief Executives
-
8/13/2019 Dicision Making
29/34
The role modeling approaches attempt todescribe the CE in terms of the different roles that
they play in organisations. For instance, a CE
may be considered as:
Chief architect of organizational purpose,strategist or planner;
Organisation leader, organizer or organisation
builder;
Chief administrator, implementer or coordinator;and
Communicator of organizational purpose,
motivator, personal leader or mentor.
-
8/13/2019 Dicision Making
30/34
(3) Role of Senior ManagerThe senior (or top) management consists of managers
at the highest level of the managerial hierarchy.Starting from the chief executive to the level offunctional or profit centre heads, these managers are
involved in various aspects of strategic management.Some of the members of the senior management actas directors on the board usually on a rotational basis.
All of them serve on different top-level committees setup by the board to look after matters of strategicimportance and other policy issues. Executive,
committees, consisting of senior managers, areresponsible for implementing strategies and plans,and for a periodic evaluation of performance. Ad hoccommittee formed to deal with new projects hassenior managers as project
- 45 -
-
8/13/2019 Dicision Making
31/34
(4) Role of SBU-level Executive.
The rationale for organizing structure according to thestrategic business units (SBUs) is to manage adiversified company as a portfolio of businesses; each
business having a clearly defined product-marketsegment and a unique strategy. The role that theSBU-level executives play is, therefore, important instrategic management. SBU-level executives, alsoknown as either profit-centre heads or divisionalheads, are considered as chief executives of adefined business unit for the purpose of strategicmanagement. In practice, however, the concept ofSBU is adapted to suit traditions, shared facilities anddistribution channels, and manpower constraints.
-
8/13/2019 Dicision Making
32/34
(8) Role of Middle- level Managers
The major functions of middle-level managers
relate to operational matters and, therefore,
they rarely play an active role in strategicmanagement. They may, at best, be involved
as sounding boards for departmental plans,
as implementers of decisions taken above,
followers of policy guidelines and passive
receivers of communication regarding
strategic plans. Basically involved in the
implementation of functional strategies, themiddle-level managers are rarely employed
for other purposes in strategic management.
The importance of middle management
cadres lies in the fact that they form the
-
8/13/2019 Dicision Making
33/34
(9) Role of Executive AssistantThe emergence of executive assistants in the
managerial hierarchy is relatively a recent
phenomenon. An executive assistant is a
person who assists the chief executive in the
performance of his duties in various ways.
These ways could be to assist the chief
executive in data collection and analysis,suggesting alternatives where decisions are
required, preparing briefs of various
proposals, projects and reports, help in public
relations and liaison functions, coordinating
-
8/13/2019 Dicision Making
34/34
. The executive assistants assist thechief executive, they help to optimise ,
modernization, technology upgradation,
diversification and expansion, planimplementation, and new product
development. On the whole, senior
managers perform a variety of roles byassisting the board and the chief
executive in the formulation,
implementation and evaluation of
strateg