strategic entrepreneurship topic 6
TRANSCRIPT
STRATEGIC ENTREPRENEURSHIP
TOPIC 6DR ANIS AMIRA AB RAHMAN
SITI AFIQAH BINTI ZAINUDDIN
FACULTY OF ENTREPRENEURSHIP AND BUSINESSUNIVERSITI MALAYSIA KELANTAN
Dr Anis Amira Ab Rahman 14
ENTREPRENEURIAL STRATEGIC DECISION-MAKING
Dr Anis Amira Ab Rahman 14
Strategic Entrepreneurship and Strategic Management
Source : Wheelen, T. L. and Hunger, J. D. (2000 cited in Kuratko, D. F. & Hodgetts,
R. M., 2004: 521).
Dr Anis Amira Ab Rahman 14
What is Decision-Making?
A human activity and is influenced by psycho-logical effects and subject to cognitive limitations of the human mind (Bouyssou et al., 2006).
Decision making activity is driven by reasoning and emotion (Bouyssou et al., 2006).
Dr Anis Amira Ab Rahman 14
Decision making based on 3 hypotheses:
1-decision makers always know their
problems
2-such problem can always be formulated as
an effectiveness or efficiency problem
3-the information and the resources
necessary to find a solution are always
available
What is Decision-Making?
Dr Anis Amira Ab Rahman 14
What is Decision-Making?
However, none of these hypotheses is true as inreality:
1- decision makers never have a very precise
idea of their problem;
2- often their problems can be formulated as
the search for a ‘satisfying compromise;
3- solving problem is always constrained by
the available resources and time.
Dr Anis Amira Ab Rahman 14
Decision MakingProcess
Source: www.maths.tcd.ie/~nora/FT351-3/DSS.pdf
Strategic Decision Making
Intentional choices or programmed responses aboutissues that materially affect the survival prospects,
well-being and nature of the organization (Musso &Francioni, 2012).
They guide the organization into the future and shapeits development
Dr Anis Amira Ab Rahman 14
Strategic Decision Making • Determined by comparing the organization’s inherent
capabilities with the opportunities and threats in itsexternal environment (Musso & Francioni, 2012).
• In addition, it involved in determining the objectives,resources and policies of the organization.
• Strategic decision making process includes rationality/ comprehensiveness, formalization/standardization, and centralization dimensions.
Rationality
Actors have known and predetermined objectivesand evaluate all possible consequences of theiractions. Then, they gather all relevant information,develop alternatives plans of action and finally selectthe most optimal alternative.
Dr Anis Amira Ab Rahman 14
Formalization
Formalization concerns the extent to whichorganizational policies, rules, charts and plans areexpressed clearly and formally in strategic decisionmaking processes.
Dr Anis Amira Ab Rahman 14
Centralization
It emphasizes the role of participation in decision making process and refers to the concentration of authority or decision making power in decision making process.
Dr Anis Amira Ab Rahman 14
Decision-making Theory (DMT)
DMT can be regarded as the cognitive processresulting in the selection of a belief or a course of action among several alternative possibilities(Edwards, 1954).
Every decision-making process produces a final choice that may or may not prompt action.
Dr Anis Amira Ab Rahman 14
Decision-making Theory (DMT)
For instance,
An entrepreneur standing in front of a “highly risky butprofitable project” proposal costing RM 2 Million maybe considering two states. In state A, the entrepreneurhas RM2 Million and no profitable project. In state B theentrepreneur has RM 1 Million and investing RM 1Million to a Joint Venture with other company to grabthis highly risky and profitable project.
Dr Anis Amira Ab Rahman 14
Decision-making Theory (DMT)
These theories center on the notion of the:1. subjective value, or2. utility,of the alternatives among which the decider mustchoose. They assume that people behave rationally,that is, that they have transitive preferences andthat they choose in such a way as to:1. maximize utility or,2. expected utility.
Dr Anis Amira Ab Rahman 14
Application of the entrepreneurial strategic decision making in business organization
Objectives must first be established
Objectives must be classified and placed in
order of importance
Alternative actions must be developed
The tentative decision is evaluated for more
possible consequences
The alternative that is able to achieve all the
objectives is the tentative decision
The alternative must be evaluated against all
the objectives
The decisive actions are taken
Additional actions are taken to prevent any
adverse consequences from becoming
problems
If there problems, the process should start all
over again
Source: Monahan, 2000.Dr Anis Amira Ab Rahman 14
Application of the entrepreneurial strategic decision making in business organization
Frederick et al., 2000Dr Anis Amira Ab Rahman 14
Application of the entrepreneurial strategic decision making in business organization
Dr Anis Amira Ab Rahman 14
The Decision to Exploit or Not to Exploit the New Venture Creation Opportunity
Source : Hisrich, R. D., Peters, 2009
Dr Anis Amira Ab Rahman 14
Factors That Influence the Decision to Enter the Market Now or to Delay Entry
Source: Hisrich,R. D, Peters, 2009
Dr Anis Amira Ab Rahman 14
Critical Decisions for Marketing Mix
Source : Hisrich, R. D. Peters, 2009
Dr Anis Amira Ab Rahman 14
REFERENCES
Kuechle, G., Boulu-Reshef, B., & Carr, S. (2014). Antecedents ofEntrepreneurial Decision-Making: Prediction and Control OrientedStrategies. Available at SSRN 2431953.
Maine, E., Soh, P. H., & Dos Santos, N. (2014). The role of entrepreneurialdecision-making in opportunity creation and recognition. Technovation.
Pettigrew, A. M. (2014). The politics of organizational decision-making.Routledge.
Wood, M. S., & Williams, D. W. (2014). Opportunity Evaluation asRule‐Based Decision Making. Journal of Management Studies, 51(4), 573-602.
Shepherd, D. A. (2011). Multilevel entrepreneurship research:Opportunities for studying entrepreneurial decision making. Journal ofManagement, 37(2), 412-420.
Kalinic, I. G. O. R., Sarasvathy, S. D., & Forza, C. I. P. R. I. A. N. O. (2013).Internationalization and effectation explaining entrepreneurial decision–making in uncertain international environment.
Dr Anis Amira Ab Rahman 14
REFERENCES
Uru, F. O. et al., (2011). How much entrepreneurial characteristicsmatter in strategic decision making? Procedia Social and BehavioralSciences, 538-563.
Musso, F & Francioni, B. (2012). The influence of decision makercharacteristics on the international strategic decision makingprocess: An SME perspective. Procedia Social and BehavioralSciences, 279-288.
Bouyssou, D. et al., (2006). Decision making process, concepts andmethods, Johns Wiley & Sons: USA.
Dr Anis Amira Ab Rahman 14