Decision Making
&
Strategic Planning
Decision Making
Definition
Process
Making a choice from two or more alternative
- Identifying a problem
- Identifying decision criteria
- Allocating weights to the criteria
- Developing alternative
- Analyzing alternative
- Selecting an alternative
- Implementing the alternative
- Evaluating decision effectiveness
How Managers Make Decisions
Bounded Rationality
Intuition
Rationality
A Good Decision
Timely
Accepted by those who have to implement it
High in quality
- Experiece-based decisions
- Affect-initiated decisions
- Cognitive-based decisions
- Subconscious mental processing
- Values or ethics-based decisions
Foundations of Planning
Definition
The process of defining goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities
Elements of Planning
Goals
Plans
Documents that outline how goals are to be accomplished. Describe how resources are to be allocated and establish activity schedules
Desired outcomes for individuals, groups, or entire organizations. Provide direction and evaluation performance criteria
Types of Goals
Financial Goals
Strategic Goals
Related to the expected internal financial performance of the organization
Related to the performance of the firm relative to factors in its external environment
Types of Plans
Breadth
Time Frame
Specificity
Frequency of Use
Strategic dan Operational
Long term dan Short term
Directional dan Specific
Single use dan Standing
Steps in Goal Setting
Review
Evaluate
Determine
Write down
Review
Management By Objectives (MBO)
Key Elements of MBO
Steps in a Typical MBO
Participative decision making
An explicit performance
Goal Specificity
Feedback
- The organization's overall objectives and strategies are formulated
- Major objectives are allocated among divisional and departmental units
- Unit managers collaboratively set specific objectives for their units with their managers
- Specific objectives are collaboratively set with all department members
- Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees
- The action plans are implemented
- Progress toward objectives is periodically reviewed, and feedback is provided
- Successful achievement of objectives is reinforced by performance-based rewards.
The Strategic Management
Definitions
A six-step process that encompasses strategic planning, implementation, and evaluation
The Strategic Management Process
What managers do to develop the organization's strategies
Definitions
Process
- Identify the organisation's current mission, objectives, and strategies
- Analyse the environment
- Identify the opportunities and threats
- Analyse resources
- Identify strengths and weaknesses
- Formulate strategies
- Implement strategies
- Evaluate results