Strategic Decision making

Decision making pertains to all managerial functions, while strategic decision making largely relates to the responsibility of the senior management

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

What makes a decision strategic

Unlike 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 decision commit substantial resources and demand a great deal of commitment from people at all level

Example
One example of a strategic decision was that

made by BPL limited to move away from manufacturing hermetically sealed precision panel meters to a major consumer electronics company emphasizing utilization of the best and most appropriate technologies, applying the finest manufacturing disciplines and most efficiently marketing high quality products and services to consistently gives customers the best value for their money

Issues in strategic decision making

Being a complex process,

strategic decision making is difficult to perform, it is a incomprehensible: it can not be analyze and explain easily. decision makers are unable to describe the exact manner in which strategic decision are

 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.

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

 a. The first is the concept of

maximization. It is based on thinking of economist who consider objectives as those attributes which are set at the highest point. The behavior of the firm is oriented towards achieving this objectives and , in the process, maximizing its

B. The second view is based on the satisfying. This envisages setting objectives in such a manner that the firm can achieve them realistically through a process of optimization.

 C.The third view point is that of the

concept 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

2. Rationality in Decision-making
Rationality, in the context of SDM means 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.

 Behaviorist, who are the proponent of

the satisfying concept, believe the rationality takes into account the constraints under which a decision maker operates. incrementalist are of the opinion that the achievement of objectives depends on the bargaining process between different interested coalition groups existing in an organization and therefore, rational decision making process should take all

Creativity in decision making

To be creative, a decision must

be original and different. A creative decision-making process may considerably affect the search for alternative where novel and untried means may be looked for and adopted to achieve objectives in an

 Creativity, as a trait, normally

associated 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

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

 . Such thing happen due to

variability 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.

Person related factors in decision making

There are a host of person-related

factors 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

 . A cognitive style which enables a

person 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 culturespecific and important in matter of social responsibility and business

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

 Individual such as chief executives

or 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.

 , like the working of human mind strategic

decision 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 says that 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 more relational and holistic then odered and sequntionl and more intuitive then intellectual ..

Approaches towards strategic decision making

Entrepreneurial mode Adaptive mode Planning mode

logical incrementalism

 (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

 4. To determine the amount and

timing of the dividends paid to stockholders. 5. To set broad company policy on such matters as labour management relations, product or service lines of business and employee benefit packages.

 6. To set company objectives and to

authorize 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.

 (2) Role of Chief Executives

 The role modeling approaches attempt to

describe 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.

 (3) Role of Senior Manager

The senior (or top) management consists of managers at the highest level of the managerial hierarchy. Starting from the chief executive to the level of functional or profit centre heads, these managers are involved in various aspects of strategic management. Some of the members of the senior management act as directors on the board usually on a rotational basis. All of them serve on different top-level committees set up by the board to look after matters of strategic importance and other policy issues. Executive, committees, consisting of senior managers, are responsible for implementing strategies and plans, and for a periodic evaluation of performance. Ad hoc committee formed to deal with new projects has senior managers as project - 45 -

 (4) Role of SBU-level Executive. The rationale for organizing structure according to the

strategic business units (SBUs) is to manage a diversified company as a portfolio of businesses; each business having a clearly defined product-market segment and a unique strategy. The role that the SBU-level executives play is, therefore, important in strategic management. SBU-level executives, also known as either profit-centre heads or divisional heads, are considered as chief executives of a defined business unit for the purpose of strategic management. In practice, however, the concept of SBU is adapted to suit traditions, shared facilities and distribution channels, and manpower constraints.

 (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 strategic management. 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, the middle-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

 (9) Role of Executive Assistant

The 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

 . The executive assistants assist the

chief executive, they help to optimise , modernization, technology upgradation, diversification and expansion, plan implementation, and new product development. On the whole, senior managers perform a variety of roles by assisting the board and the chief executive in the formulation, implementation and evaluation of strategy.