Approaches to Strategic Decision Making , Phases In

7/31/2019 Approaches to Strategic Decision Making , Phases In

1/22

APPROACHES TO STRATEGIC DECISION

MAKING ,

PHASES IN STRATEGIC DECISION

MAKING &

STRATEGIC BUSINESS UNITS


2/22

APPROACHES TO STRATEGIC

DECISION MAKING


3/22

In practice, there are two basic approaches todecision making

1. PRESCRIPTIVE APPROACH

2. DESCRIPTIVE APPROACH


4/22

Based on the degree of formalization in

decision making ,managerial control and

nature of environment, 3 types ofapproaches to strategic decision making are :

1. Formal Structured Approach

2. Entrepreneurial Approach3. Incremental Approach

4. Intuitive Approach

5. Adaptive Approach


5/22

FORMAL STRUCTURED APPROACH

Systematic procedures and planning programmes

are set .

Strategic decisions are on the right path since the

job is assigned only to experienced planners.

Makes best use of different planning systems.


6/22

ENTREPRENEURIAL APPROACH

Strategy is made by one powerful individual whohas entrepreneurial competencies like innovation

and risk taking. The focus is on opportunities.

Problems are secondary. Generally the founder isthe entrepreneur and the strategy is guided by his

or her own vision of direction and is exemplified

by bold decisions.


7/22

INCREMENTAL APPROACH

Used only in unavoidable situations.

Decisions are taken by considering few

alternatives.

Usually adopted by public companies .


8/22

INTUITIVE APPROACH

Based on the intuition or anticipation of thepromoters of the business unit.

The CEO or the promoter makes decisions based

upon forecasting the future.

Success depends on promoters intuition,

experience, judgement,etc.


9/22

ADAPTIVE APPROACH

Decisions are taken on the basis of how thechanges in the environment is going to have its

impact at a given time.

That is adapting to the environment.

This mode is typical of most universities, many

large hospitals and a large number of

governmental agencies.


10/22

PHASES IN STRATEGIC

DECISION MAKING


11/22

PHASES

1. Identifying the problem

2.Diagnosis of the problem

3. Development of solution4. Evaluation

5. Implementation of decision

6. Control


12/22

IDENTIFYING THE PROBLEM


13/22

DIAGNOSIS OF THE PROBLEM


14/22

DEVELOPMENT OF THE SOLUTION


15/22

EVALUATION


16/22

IMPLEMENTATION OF DECISION


17/22

CONTROL


18/22

STRATEGIC BUSINESS UNIT


19/22

SBU

A strategic business unit is a separate and self-sufficient business unit operating in the market.

Each SBU should be an individual business entity

with an individual planning process.


20/22

The best example of strategic business unit would

be to take organizations like HUL, P&G or LG in

focus. These organizations are characterized by

multiple categories and multiple product lines.

l h li f d i


21/22

For example, HUL may have a line of products in

the shampoo category, Similarly LG might have a

line of products in the television category. Thus to

track the investments against return, they may

classify the category as a different SBU itself.


22/22

THANK YOU

Documents

Approaches to Strategic Decision Making , Phases In