Unit 1 - Intoduction to Str.mgmt

8/12/2019 Unit 1 - Intoduction to Str.mgmt.

1/32

What is Strategy?Strategy is a method orplanchosen to bringabout a desiredfuture,such as achievement of a goalor solutionto

a problem.

Strategy is the art and scienceof planningand marshalling resourcesfor their mostefficientandeffectiveuse. The term is

derived from the Greek word for generalship orleadingan army.

Strategyis a high level plan to achieve one or more goals under conditions of uncertainty.

Strategy becomes ever necessary when it is known or suspected there are insufficient resources to

achieve these goals.

Strategy is also about attaining and maintaining a position of advantage over adversaries through the

successive exploitation of known or emergent possibilities rather than committing to any specific fixed

plan designed at the outset.

Henry Mintzbergfrom McGill University defined strategy as "a pattern in a stream of decisions" to contrast

with a view of strategy as planning while Max McKeown(!# argues that "strategy is about shaping the

future" and is the human attempt to get to "desirable ends with available means".

Key Concepts for Strategic Management and

Organizational Goals

Strategic management is the process in which an organization develops and implements plans

that espouse the goals and objectives of that organization. The process of strategic managementis a continuous one that changes as the organizational goals and objectives evolve. Small

businesses engage in strategic management to ensure that they adapt to trends and externalchanges such as globalization. Several key concepts characterize strategic management and the

development of organizational goals.

Goal Setting

At the core of the strategic management process is the creation of goals, a mission statement,

values and organizational objectives. rganizational goals, the mission statement, values andobjectives guide the organization in its pursuit of strategic opportunities. !t is also through goal

setting that managers make strategic decisions such as how to meet sales targets and higher

revenue generation. Through goal setting, organizations plan how to compete in an increasingly

competitive and global business arena.

Analysis Strategy Formation

Analysis of an organization"s strengths and weaknesses is a key concept of strategicmanagement. ther than the internal analysis, an organization also undertakes external analysis

of factors such as emerging technology and new competition. Through internal and external

analysis, the organization creates goals and objectives that will turn weaknesses to strengths. The
http://www.businessdictionary.com/definition/plan.htmlhttp://www.businessdictionary.com/definition/plan.htmlhttp://www.businessdictionary.com/definition/plan.htmlhttp://www.investorwords.com/9032/bring.htmlhttp://www.investorwords.com/9032/bring.htmlhttp://www.investorwords.com/9809/future.htmlhttp://www.investorwords.com/9809/future.htmlhttp://www.investorwords.com/9809/future.htmlhttp://www.investorwords.com/2187/goal.htmlhttp://www.businessdictionary.com/definition/solution.htmlhttp://www.businessdictionary.com/definition/problem.htmlhttp://www.businessdictionary.com/definition/science.htmlhttp://www.businessdictionary.com/definition/planning.htmlhttp://www.businessdictionary.com/definition/planning.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.investorwords.com/9555/efficient.htmlhttp://www.investorwords.com/9555/efficient.htmlhttp://www.investorwords.com/9555/efficient.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/leader.htmlhttp://www.businessdictionary.com/definition/leader.htmlhttp://www.businessdictionary.com/definition/leader.htmlhttp://www.investorwords.com/9032/bring.htmlhttp://www.investorwords.com/9809/future.htmlhttp://www.investorwords.com/2187/goal.htmlhttp://www.businessdictionary.com/definition/solution.htmlhttp://www.businessdictionary.com/definition/problem.htmlhttp://www.businessdictionary.com/definition/science.htmlhttp://www.businessdictionary.com/definition/planning.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.investorwords.com/9555/efficient.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/leader.htmlhttp://www.businessdictionary.com/definition/plan.html


2/32

analyses also facilitate in strategizing ways of adapting to changing technology and emerging

markets.

Strategy Formation

Strategy formation is a concept that entails developing specific actions that will enable anorganization to meet its goals. Strategy formation entails using the information from the

analyses, prioritizing and making decisions on how to address key issues facing the organization.Additionally, through strategy formulation an organization seeks to find ways of maximizing

profitability and maintaining a competitive advantage.

Strategy Implementation

Strategy implementation is putting the actual strategy into practice to meet organizational goals.

The idea behind this concept is to gather all the available and necessary resources re#uired to

bring the strategic plan to life. rganizations implement strategies through creating budgets,

programs and policies to meet financial, management, human resources and operational goals.$or the successful implementation of a strategic plan, cooperation between management and

other personnel is absolutely necessary.

Strategy Monitoring

A final concept is monitoring of the strategy after its implementation. Strategy monitoring entails

evaluating the strategy to determine if it yields the anticipated results as espoused in theorganizational goals. %ere, an organization determines what areas of the plan to measure and the

methods of measuring these areas, and then compares the anticipated results with the actual ones.

Through monitoring, an organization is able to understand when and how to adjust the plan toadapt to changing trends.

STRATEGIC MANAGEMENT

Strategic managementanalyzes the major initiatives taken by a company's top

management on behalf of owners, involving resourcesand performance in internal

and external environments.[1!t entails specifying the organization's mission, vision

and objectives, developing policies and plans, often in terms of projects and

programs, which are designed to achieve these objectives, and then allocatingresources to implement the policies and plans, projects and programs. " balanced

scorecardis often used to evaluate the overall performance of the businessand its

progress towards objectives. #ecent studies and leading management theorists

have advocated that strategy needs to start with stakeholders expectations and use
http://en.wikipedia.org/wiki/Factors_of_productionhttp://en.wikipedia.org/wiki/Strategic_management#cite_note-1http://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Mission_statementhttp://en.wikipedia.org/wiki/Balanced_scorecardhttp://en.wikipedia.org/wiki/Balanced_scorecardhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Factors_of_productionhttp://en.wikipedia.org/wiki/Strategic_management#cite_note-1http://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Mission_statementhttp://en.wikipedia.org/wiki/Balanced_scorecardhttp://en.wikipedia.org/wiki/Balanced_scorecardhttp://en.wikipedia.org/wiki/Business


3/32

a modi$ed balanced scorecard which includes all stakeholders.

Overview

Strategic management is a level of managerial activity below setting goals and above tactics.

Strategic management provides overall direction to the enterprise and is closely related to thefield of rganization Studies. !n the field of business administration it is useful to talk about

&strategic consistency& between the organization and its environment or &strategic consistency.&

According to Arieu '())*+, &there is strategic consistency when the actions of an organization are

consistent with the expectations of management, and these in turn are with the market and thecontext.& Strategic management includes the management team and possibly the oard of

-irectors and other stakeholders.

&Strategic management is an ongoing process that evaluates and controls the business and theindustries in which the company is involved assesses its competitors and sets goals and

strategies to meet all existing and potential competitors and then reassesses each strategy

annually or #uarterly /i.e. regularly0 to determine how it has been implemented and whether it
http://en.wikipedia.org/wiki/Tactic_(method)http://en.wikipedia.org/wiki/Organization_Studieshttp://en.wikipedia.org/wiki/Stakeholder_(corporate)http://en.wikipedia.org/wiki/Tactic_(method)http://en.wikipedia.org/wiki/Organization_Studieshttp://en.wikipedia.org/wiki/Stakeholder_(corporate)


4/32

has succeeded or needs replacement by a new strategy to meet changed circumstances, new

technology, new competitors, a new economic environment., or a new social, financial, or

political environment.& /(0/10Strategic 2anagement can also be defined as &the identification ofthe purpose of the organisation and the plans and actions to achieve the purpose. !t is that set of

managerial decisions and actions that determine the long term performance of a business

enterprise. !t involves formulating and implementing strategies that will help in aligning theorganization and its environment to achieve organisational goals.&

Various approaces o! strategic management

Strategic management can depend upon the size of an organization, and the proclivity to changeof its business environment. These points are highlighted below3

" global%transnational organization may employ a more structured strategicmanagement model, due to its size, scope of operations, and need toencompass stakeholder views and re&uirements.

"n () *mall and (edium )nterprise+ may employ an entrepreneurialapproach. his is due to its comparatively smaller size and scope ofoperations, as well as possessing fewer resources. "n ()'s -) *or generaltop management+ may simply outline a mission, and pursue all activitiesunder that mission.

/hittington *01+ highlighted four approaches to strategic management.hese are -lassical, 2rocessual, )volutionary and ystemic approaches.

(intzberg stated there are prescriptive *what should be+ and descriptive*what is+ approaches. 2rescriptive schools are 3one size $ts all3 approaches

that designate 3best practice3 while descriptive schools describe howstrategy is implemented in speci$c contexts.

4o single strategic managerial method dominates, and remains a subjective and context5dependent process.

Four Phases of Strategic Management

Strategic management is not a static concept, but an ongoing process. The strategic management

process encompasses four distinct phases. !n order to succeed, a strategy must succeed in each

phase. !t is important, therefore, that anyone planning a business"s strategy understands thesefour phases and the roles that they play.

Formulation

o Strategic management begins with the formulation phase, where the firm"s

management develops an overall strategy for achieving the firm"s objectives.bjectives may include, for example, increasing market share or reducing costs.
http://en.wikipedia.org/wiki/Strategic_management#cite_note-2http://en.wikipedia.org/wiki/Strategic_management#cite_note-3http://en.wikipedia.org/wiki/Strategic_management#cite_note-2http://en.wikipedia.org/wiki/Strategic_management#cite_note-3


5/32

The top management team typically is saddled with the responsibility of

developing the firm"s overall strategy. They may, however, seek the input of line

managers and front5line workers as they develop their strategy.

Implementation

o 6ith a clear strategy formulated, managers can then go about implementing it.

Strategies are usually implemented from the top down. To begin with, the top

management team will inform line managers about the strategic changes, and line

managers will, in turn, pass this information on to their subordinates. 2any

strategies fail due to poor implementation, but managers can avoid this bycarefully introducing the new strategy and listening to any employee concerns

about the changes.

Evaluation

o 6hen a strategy is implemented, it will hopefully be successful, but managerscannot assume that every strategy will be. They will, therefore, need to measure

the success of a strategy. To measure this success, the strategy must be evaluatedagainst the firm"s goals. A gap analysis is a useful tool for evaluating the success

of a strategy. This measures the gap that exists between the desired results and a

firm"s actual results.

Mo"i#cation

o Sometimes, strategies are successful on the first attempt, but more often than not,

there is room for improvement. !f the evaluation of the strategy shows that thefirm has not achieved all its desired goals, then it is necessary to modify the

strategy. $or example, if the firm used a cost5leadership strategy to increase sales,

but the sales actually decreased, then the firm would need to modify this strategy,perhaps using a premium5pricing strategy instead.

Te strategic management process can elp

grow your $usiness%

he strategic management process is more than just a set of rules to follow. !t is a

philosophical approach to business. 4pper management must think strategically $rst, then

apply that thought to a process. he strategic management process is best implemented

when everyone within the business understands the strategy. he $ve stages of the process
http://smallbusiness.chron.com/DM-Resize/photos.demandstudios.com/getty/article/78/152/78163152.jpg?w=600&h=600&keep_ratio=1


6/32

are goal5setting, analysis, strategy formation, strategy implementation and strategy

monitoring.

Goal&Setting

he purpose of goal5setting is to clarify the vision for your business. his stage consists of

identifying three key facets6 7irst, de$ne both short5 and long5term objectives. econd,identify the process of how to accomplish your objective. 7inally, customize the process for

your sta8, give each person a task with which he can succeed. 9eep in mind during this

process your goals to be detailed, realistic and match the values of your vision. ypically, the

$nal step in this stage is to write a mission statement that succinctly communicates your

goals to both your shareholders and your sta8.

Analysis

"nalysis is a key stage because the information gained in this stage will shape the next two

stages. !n this stage, gather as much information and data relevant to accomplishing your

vision. he focus of the analysis should be on understanding the needs of the business as a

sustainable entity, its strategic direction and identifying initiatives that will help your

business grow. )xamine any external or internal issues that can a8ect your goals and

objectives. (ake sure to identify both the strengths and weaknesses of your organization as

well as any threats and opportunities that may arise along the path.

Strategy Formulation

he $rst step in forming a strategy is to review the information gleaned from completing the

analysis. :etermine what resources the business currently has that can help reach the

de$ned goals and objectives. !dentify any areas of which the business must seek external

resources. he issues facing the company should be prioritized by their importance to your

success. nce prioritized, begin formulating the strategy. ;ecause business and economicsituations are


7/32

also enable you to react to any substantial change in your business environment. !f you

determine that the strategy is not moving the company toward its goal, take corrective

actions. !f those actions are not successful, then repeat the strategic management process.

;ecause internal and external issues are constantly evolving, any data gained in this stage

should be retained to help with any future strategies.

(anaging the four phases of strategy'o you treat strategy li(e you treat Cristmas);oth events tend to fall on the

same day each year and, just as most households follow a set -hristmas routine of

attending church, opening presents and eating the turkey, the annual strategic

planning timetable will have e&uivalent routines of assessing performance, agreeing

targets and developing next year=s plan.

Te pro$lem wit tis approac is tat* unli(e Cristmas* strategy "oesn+t

!ollow an annual timeta$le%trategy is not a linear process and organisations should

de5couple the link between strategy and planning. ;y being


8/32

deliver it. trategy :evelopment is often seen as the beginning and end of strategy

work, and is commonly and mistakenly linked to the annual planning process.

In my e/perience $usy e/ecutives "isli(e tis pase o! wor( !or one o! two

reasons.*1+ !t ends up as endless form5$lling rather than real strategy development>

or *0+ !t is di?cult and exercises brain muscles that they are not used to exercising.

trategy forces choices and re&uires that people really understand their own and their

colleagues= assumptions and preconceptions.

,ase 2. Strategy Management

Te purpose o! te Strategy Management pase is to create !ocus on te !ew

tings tat will create te $iggest $ene#ts. he $rst task is to engage with

leaders across the organisation to integrate and gain alignment to the overall direction,

to agree an approach to determine resource allocation, and to set performance

objectives and key business milestones.

Clear* consistent communication is critical to e3ective strategy management.

7rom in5depth strategy dialogues between the executive team and the senior line

managers to individual shop5


9/32

Te $ottom line

6y un"erstan"ing were you sit on te Strategy Focus Matri/you will be able

to bring greater e?ciency and e8ectiveness to your strategy work. !nstead of ritualistic

form5$ling you can focus on generating and executing objectives that will enable yourorganisation to deliver great results. "nd isn=t that the present you really, really want

every -hristmasI

Four Phases of Strategic Management

7ormulation

Strategic management begins with the formulation phase, where the firm'smanagement develops an overall strategy for achieving the firm's objectives. Objectives mayinclude, for example, increasing market share or reducing costs. The top management teamtypically is saddled with the responsibility of developing the firm's overall strategy. Theymay, however, seek the input of line managers and frontline workers as they develop theirstrategy.

!mplementation

!ith a clear strategy formulated, managers can then go about implementing it.Strategies are usually implemented from the top down. To begin with, the top managementteam will inform line managers about the strategic changes, and line managers will, in turn,pass this information on to their subordinates. "any strategies fail due to poorimplementation, but managers can avoid this by carefully introducing the new strategy andlistening to any employee concerns about the changes.

-%

)valuation

o !hen a strategy is implemented, it will hopefully be successful, but managerscannot assume that every strategy will be. They will, therefore, need to measure the successof a strategy. To measure this success, the strategy must be evaluated against the firm'sgoals. # gap analysis is a useful tool for evaluating the success of a strategy. This measuresthe gap that exists between the desired results and a firm's actual results.

(odi$cation

o Sometimes, strategies are successful on the first attempt, but more often thannot, there is room for improvement. $f the evaluation of the strategy shows that the firm hasnot achieved all its desired goals, then it is necessary to modify the strategy. %or example, if


10/32

the firm used a costleadership strategy to increase sales, but the sales actually decreased,then the firm would need to modify this strategy, perhaps using a premiumpricing strategyinstead.

Stages Of Strategic Management

The strategic management process represents a logical, systematic, and objective approach fordetermining an enterprise's future direction. However, a clear separation is needed between themanagerial process by which an organization formulates, evaluates, implements, and controls therelationships between its objectives, its strategies, and its environment.

Researchers usually distinguish three stages in the process of strategic management: strategyformulation, strategy implementation, andevaluation and control.

Strategy Formulation

trategy formulation is the process of establishing the organization's mission, objectives, and choosingamong alternative strategies. ometimes strategy formulation is called !strategic planning.!

Strategy Implementation

trategy implementation is the action stage of strategic management. "t refers to decisions that aremade to install new strategy or reinforce e#isting strategy. The basic strategy $ implementationactivities are establishing annual objectives, devising policies, and allocated resources. trategyimplementation also includes the ma%ing of decisions with regard to matching strategy andorganizational structure& developing budgets, and motivational systems.

Strategy Evaluation And Control

The final stage in strategic management is strategy evaluation and control. ll strategies are subject tofuture modification because internal and e#ternal factors are constantly changing. "n the strategyevaluation and control process managers determine whether the chosen strategy is achieving theorganization's objectives. The fundamental strategy evaluation and control activities are: reviewinginternal and e#ternal factors that are the bases for current strategies, measuring performance, andta%ing corrective actions.

Strategic Management Models

trategic management is a broader term that includes not only the stages already identified but alsothe earlier steps of determining the mission and objectives of an organization within the conte#t of itse#ternal environment. The basic steps of the strategic management can be e#amined through the useof strategic management model.


11/32

The strategic management model identifies concepts of strategy and the elements necessary fordevelopment of a strategy enabling the organization to satisfy its mission. Historically, a number offramewor%s and models have been advanced which propose different normative approaches to strategydetermination. However, a review of the major strategic management models indicates that they allinclude the following elements:

(. )erforming an environmental analysis.

*. +stablishing organizational direction.

. -ormulating organizational strategy.

. "mplementing organizational strategy.

/. +valuating and controlling strategy.

trategic management is a continuous and dynamic process. Therefore, it should be understood thateach element interacts with the other elements and that this interaction often happens simultaneously.

The major models differ primarily in the degree of e#plicitness, detail, and comple#ity. Thesedifferences derive from the differences in bac%grounds and e#periences of the authors. ome of thesemodels are briefly presented below.

"ndrew=s (odel

!n 1EBJ, Kenneth Andrewsdeveloped a simple model. his model includes the

choice of a strategy, but ignores implementation and control. !n 1EK1,Andrews

formulated a more complete model that included implementation, but it still ignores

a strategic control and evaluation.

Gluec(7s Mo"el

William F. Glueckdeveloped several models of strategic management based on the general

decision5making process.

The phases of this model are as follows3

* Strategic managements elements3 &...to determine mission, goals, and values of the firm and

the key decision makers.&

* nalysis and diagnosis3 &...to search the environment and diagnose the impact of the threats

and opportunities."

* Choice3 ...to consider various alternatives and assure that the appropriate strategy is chosen."

* !mplementation3 "...to match plans, policies, resources, structure, and administrative stylewith the strategy.&

* "#aluation3 &...to ensure strategy and implementation will meet objectives."

As major contribution to the strategic management process, 7lueck considered two elements3&enterprise objectives& 'the mission and objectives of the enterprise,& and &enterprise strategists&

'who are involved in the process+.


12/32

2oreover, 7lueck broke down the planning process into analysis and diagnosis, choice,

implementation, and evaluation functions. This model also treats leadership, policy, and

organizational factors.

%owever, 7lueck omitted the important medium5 and short5range planning activities of strategy

implementation.

$he Schendel and %ofer Model

Dan chendel and !harles oferdeveloped a strategic management model, incorporating bothplanning and control functions.

Their model consists of several basic steps3

'&+ goal formulation,

''+ environmental analysis,

'(+ strategy formulation,

')+ strategy evaluation,

'+ strategy implementation, and

'++ strategic control.

According to Schendel and %ofer, the formulation portion of strategic management consists of at

least three subprocesses3

,en#ironmental analysis,

,resources analysis-

, and #alue analysis.

8esource and value analyses are not specifically shown, but are considered to be included under

other items 'strategy formulation+.

Te Tompson An" Stric(lan" Mo"el

#hompson and tricklanddeveloped several models of strategic management.

According to Thompson and Strickland strategic management is an ongoing process3 &nothing isfinal and all prior actions and decisions are su/0ect to future modification.&

This process consists of five major five ever5present tasks3


13/32

&. -eveloping a concept of the business and forming a vision of where the organization needs to

be headed.

'. 9onverting the mission into specific performance objectives.

(. 9rafting a strategy to achieve the targeted performance.

). !mplementing and executing the chosen strategy efficiently and effectively.

. :valuating performance, reviewing the situation, and initiating corrective adjustments in

mission, objectives, strategy, or implementation in light of actual experience, changing

conditions, new ideas, and new opportunities.

#hompson and tricklandsuggest that the firm"s mission and objectives combine to define&What is our /usiness and 1hat 1ill it /e;& and &1hat to do no1& to achieve organization"s

goals. %ow the objectives will be achieved refers to the strategy of firm.

!n general, this model highlights the relationships between the organization"s mission, its long5

and short5range objectives, and its strategy.

Korey2s Model

2odern theorist and writer, 3erzy Korey,Krzeczo1s4i- founder and President Canadian

School of Management, have proposed an integrated model of strategic management.


14/32


15/32


16/32


17/32


18/32


19/32

6hat !s Strategic -ecision 2aking;by Lregory Mamel, :emand (edia

ne of the essential parts of creating and running a small business is creating a mission or

vision for the business and a set of goals the company aims to achieve. trategic decision

making, or strategic planning, describes the process of creating a company's mission and

objectives and deciding upon the courses of action a company should pursue to achieve

those goals.ponsored Nink

;rain )xercises

!mprove (emory and "ttention with ;rain Lames by cientists

www.lumosity.com

trategic 2lanning ;asics

trategic decision making is an ongoing process that involves creating strategies to achieve

goals and altering strategies based on observed outcomes. 7or example, the managers of a

pizza restaurant might have the objective of increasing sales and decide to implement a

strategy of o8ering lower prices on certain products during o8 hours to attract more
http://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Fcontact%3Dabg_afc%26url%3Dhttp://smallbusiness.chron.com/strategic-decision-making-23782.html%26gl%3DNP%26hl%3Den%26client%3Dca-pub-3235755782694080%26ai0%3DCVlm4SCuiUdLRE6zaigfc4oDACOTdudYErMbPu0vc2R4QASDdj5AYUMTl7RhgjQSgAZTu5-ADyAEBqAMBqgSUAU_QNQH1WsI9ogrMYudolaD9hiIWBpdX2zz7W93tDUoYHnb_JROxng3kEalZlLgaqjy3E5KJB6Nw-bRkUSUUTb7QtyhghFdCZXuM5zLO0slqoOvp6hgb1YiifvPvxHx4je-javysh58yi3-cAnI9ycEqgjg2VDXtgq7H8Ir_kZaxmfkIzwXHfStxybzuj3Kcg9obt9KIBgGAB9SRmB8&usg=AFQjCNEBcDcjj4HvKlvD9mbeFhmiY3Oy8whttp://www.googleadservices.com/pagead/aclk?sa=L&ai=CVlm4SCuiUdLRE6zaigfc4oDACOTdudYErMbPu0vc2R4QASDdj5AYUMTl7RhgjQSgAZTu5-ADyAEBqAMBqgSUAU_QNQH1WsI9ogrMYudolaD9hiIWBpdX2zz7W93tDUoYHnb_JROxng3kEalZlLgaqjy3E5KJB6Nw-bRkUSUUTb7QtyhghFdCZXuM5zLO0slqoOvp6hgb1YiifvPvxHx4je-javysh58yi3-cAnI9ycEqgjg2VDXtgq7H8Ir_kZaxmfkIzwXHfStxybzuj3Kcg9obt9KIBgGAB9SRmB8&num=1&cid=5GhUWoN0Xu67OG03sbSXo1vj&sig=AOD64_0hWYUWAyVbFPb5rOVJBzmKMtC4lQ&client=ca-pub-3235755782694080&adurl=http://www.lumosity.com/landing%3Frefer%3D692%26a%3D%7B%7DBrainExercises_ImproveMemoryandAttention_Text%26Network%3DContent%26kw%3D%26ad%3D20182877388%26SiteTarget%3Dsmallbusiness.chron.com%26ll_ad_id%3D250http://www.googleadservices.com/pagead/aclk?sa=L&ai=CVlm4SCuiUdLRE6zaigfc4oDACOTdudYErMbPu0vc2R4QASDdj5AYUMTl7RhgjQSgAZTu5-ADyAEBqAMBqgSUAU_QNQH1WsI9ogrMYudolaD9hiIWBpdX2zz7W93tDUoYHnb_JROxng3kEalZlLgaqjy3E5KJB6Nw-bRkUSUUTb7QtyhghFdCZXuM5zLO0slqoOvp6hgb1YiifvPvxHx4je-javysh58yi3-cAnI9ycEqgjg2VDXtgq7H8Ir_kZaxmfkIzwXHfStxybzuj3Kcg9obt9KIBgGAB9SRmB8&num=1&cid=5GhUWoN0Xu67OG03sbSXo1vj&sig=AOD64_0hWYUWAyVbFPb5rOVJBzmKMtC4lQ&client=ca-pub-3235755782694080&adurl=http://www.lumosity.com/landing%3Frefer%3D692%26a%3D%7B%7DBrainExercises_ImproveMemoryandAttention_Text%26Network%3DContent%26kw%3D%26ad%3D20182877388%26SiteTarget%3Dsmallbusiness.chron.com%26ll_ad_id%3D250http://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Fcontact%3Dabg_afc%26url%3Dhttp://smallbusiness.chron.com/strategic-decision-making-23782.html%26gl%3DNP%26hl%3Den%26client%3Dca-pub-3235755782694080%26ai0%3DCVlm4SCuiUdLRE6zaigfc4oDACOTdudYErMbPu0vc2R4QASDdj5AYUMTl7RhgjQSgAZTu5-ADyAEBqAMBqgSUAU_QNQH1WsI9ogrMYudolaD9hiIWBpdX2zz7W93tDUoYHnb_JROxng3kEalZlLgaqjy3E5KJB6Nw-bRkUSUUTb7QtyhghFdCZXuM5zLO0slqoOvp6hgb1YiifvPvxHx4je-javysh58yi3-cAnI9ycEqgjg2VDXtgq7H8Ir_kZaxmfkIzwXHfStxybzuj3Kcg9obt9KIBgGAB9SRmB8&usg=AFQjCNEBcDcjj4HvKlvD9mbeFhmiY3Oy8whttp://www.googleadservices.com/pagead/aclk?sa=L&ai=CVlm4SCuiUdLRE6zaigfc4oDACOTdudYErMbPu0vc2R4QASDdj5AYUMTl7RhgjQSgAZTu5-ADyAEBqAMBqgSUAU_QNQH1WsI9ogrMYudolaD9hiIWBpdX2zz7W93tDUoYHnb_JROxng3kEalZlLgaqjy3E5KJB6Nw-bRkUSUUTb7QtyhghFdCZXuM5zLO0slqoOvp6hgb1YiifvPvxHx4je-javysh58yi3-cAnI9ycEqgjg2VDXtgq7H8Ir_kZaxmfkIzwXHfStxybzuj3Kcg9obt9KIBgGAB9SRmB8&num=1&cid=5GhUWoN0Xu67OG03sbSXo1vj&sig=AOD64_0hWYUWAyVbFPb5rOVJBzmKMtC4lQ&client=ca-pub-3235755782694080&adurl=http://www.lumosity.com/landing%3Frefer%3D692%26a%3D%7B%7DBrainExercises_ImproveMemoryandAttention_Text%26Network%3DContent%26kw%3D%26ad%3D20182877388%26SiteTarget%3Dsmallbusiness.chron.com%26ll_ad_id%3D250http://www.googleadservices.com/pagead/aclk?sa=L&ai=CVlm4SCuiUdLRE6zaigfc4oDACOTdudYErMbPu0vc2R4QASDdj5AYUMTl7RhgjQSgAZTu5-ADyAEBqAMBqgSUAU_QNQH1WsI9ogrMYudolaD9hiIWBpdX2zz7W93tDUoYHnb_JROxng3kEalZlLgaqjy3E5KJB6Nw-bRkUSUUTb7QtyhghFdCZXuM5zLO0slqoOvp6hgb1YiifvPvxHx4je-javysh58yi3-cAnI9ycEqgjg2VDXtgq7H8Ir_kZaxmfkIzwXHfStxybzuj3Kcg9obt9KIBgGAB9SRmB8&num=1&cid=5GhUWoN0Xu67OG03sbSXo1vj&sig=AOD64_0hWYUWAyVbFPb5rOVJBzmKMtC4lQ&client=ca-pub-3235755782694080&adurl=http://www.lumosity.com/landing%3Frefer%3D692%26a%3D%7B%7DBrainExercises_ImproveMemoryandAttention_Text%26Network%3DContent%26kw%3D%26ad%3D20182877388%26SiteTarget%3Dsmallbusiness.chron.com%26ll_ad_id%3D250


20/32

customers. "fter a month of pursuing the new strategy, managers can look at sales data for

the month and evaluate whether the strategy resulted in increasing sales and then choose

to keep the new price scheme or alter their strategy.

/ "nalysis

" / analysis is a common strategic planning tool that managers can use to examine

internal and external factors that may in


21/32

%ringing together the internationally renowned +S expertise in $ecision Sciences research& we adopt a hands2onapproach to teaching& with simulations and exercises to sensitise you to decision scenarios and behavioural biases.1ou will gain confidence in your analytic and intuitive skills in decision making and learn how to apply the keyprinciples and frameworks in practice.

Flaws in strategic decision making:McKinsey Global Survey results

Irrational thinking doesnt just affect individual economic decisions; it affects

corporate strategic planning as well. These results highlight the practices of

companies that have made successful strategic decisionsand also reveal

what the same companies have gotten wrong.

Since its inception nearly three decades ago, behavioral economics has upset the pristine premise of

classical economic theory&the view that individuals will always behave rationally to achieve the best

possible outcome. Today its clear that the vagaries of individual and group psychology can cause

irrational decision making by both individuals and organi(ations, resulting in less than ideal outcomes.

)ven the bestdesigned strategicplanning processes dont always lead to optimal decisions. # recent

survey by "c*insey attempts to assess the fre+uency and intensity of the most common managerial biases

in companies. Specifically, we asked executives about a single recent strategic decision at their companies

that had a clearly satisfactory or unsatisfactory outcome, focusing on the role that various biases may have

played.1

$ts evident from the results that satisfactory outcomes are associated with less bias, thanks to robust

debate, an objective assessment of facts, and a realistic assessment of corporate capabilities. # few clear

paths to making successful decisions also are apparent. ut even when a decision had a satisfactory

outcome, executives note several areas where their companies arent all that effective, such as aligningincentives with strategic objectives and forecasting competitors reactions.2#lso notable is that companies

that typically make good decisions focus more on their own ability to execute than other companies do,

regardless of the outcome of the particular decision described in the survey.

When all goes well

"ost companies work hard to make their strategic decisionmaking processes as rigorous as possible. #nd

when executives are satisfied with the outcome of their decisions, they tend to rate their companies

processes highly in terms of practices that avoid many biases, though some do creep in -)xhibit /.3

0ompanies that reach satisfactory outcomes do so in a few different ways, and three distinct themes

emerge from executives responses. The first theme is assessment1 at companies with satisfactory

outcomes, executives give their processes high marks for forecasting demand and competitor reaction,

assessing their own capabilities, and tailoring their evaluation approach to the specific decision.

The second theme is process1 executives at companies with satisfactory outcomes rate their processes

highly when it comes to seeking contrary evidence and ensuring that decision makers had all the critical

information, giving dissenting voices the floor, reviewing the business case thoroughly even though senior

executives were strongly in favor, and ensuring that truly innovative ideas reached senior managers.
http://www.mckinsey.com/insights/strategy/flaws_in_strategic_decision_making_mckinsey_global_survey_resultshttp://www.mckinsey.com/insights/strategy/flaws_in_strategic_decision_making_mckinsey_global_survey_resultshttp://www.mckinsey.com/insights/strategy/flaws_in_strategic_decision_making_mckinsey_global_survey_resultshttp://www.mckinsey.com/insights/strategy/flaws_in_strategic_decision_making_mckinsey_global_survey_resultshttp://www.mckinsey.com/insights/strategy/flaws_in_strategic_decision_making_mckinsey_global_survey_resultshttp://www.mckinsey.com/insights/strategy/flaws_in_strategic_decision_making_mckinsey_global_survey_resultshttp://www.mckinsey.com/insights/strategy/flaws_in_strategic_decision_making_mckinsey_global_survey_results


22/32


23/32


24/32

Nevels of decision making$ecisions are made at different levels in an organisation4s hierarchy5

Strategic decisions are long2term in their impact. /hey affect and shape the direction of

the whole business. /hey are generally made by senior managers. /he managers of the bakeryneed to take a strategic decision about whether to remain in the cafe business. +ong2termforecasts of business turnover set against likely market conditions will help to determine if itshould close the cafe business.

/actical decisions help to implement the strategy. /hey are usually made by middle

management. 6or the cafe& a tactical decision would be whether to open earlier in the morningor on Saturday to attract new customers. Managers would want research data on likelycustomer numbers to help them decide if opening hours should be extended.

perational decisions relate to the day2to2day running of the business. /hey are mainlyroutine and may be taken by middle or )unior managers. 6or example& a simple operationaldecision for the cafe would be whether to order more coffee for next week. Stock and sales datawill show when it needs to order more supplies.

*s these examples show& decisions at all levels need data. * business creates a trail ofdata. /his includes data on sales& employee costs and payments. 7n a large company&such as /esco& millions of data items are created every day against thousands of costand sales headings. /his data can provide a picture of trends& which the business canuse in its forward planning.6inancial accountants use recorded data to prepare the accounting statements for abusiness. very company (large and small# has a duty to keep accounting records andmust prepare annual accounts that report on the performance and activities of thecompany during the year. 6inancial accountants must ensure these accounts areaccurate and prepared in accordance with accounting rules and conventions.Management accountants need to understand these formal accounting documents.8owever& because their role involves the analysis and application of data& they mustalso be familiar with business strategy and risk management. Management accountants


25/32

use internal data (like a balance sheet# and external data (such as market information#to assess effects on the business and drive better informed decision making.

Strategic Decisions - Definition and Characteristics

Strategic decisions are the decisions that are concerned with whole environment in which the firm operates& the entireresources and the people who form the company and the interface between the two.

Characteristics/Features of Strategic Decisionsa. Strategic decisions have ma)or resource propositions for an organi0ation. /hese decisions may be

concerned with possessing new resources& organi0ing others or reallocating others.b. Strategic decisions deal with harmoni0ing organi0ational resource capabilities with the threats and

opportunities.

c. Strategic decisions deal with the range of organi0ational activities. 7t is all about what they want theorgani0ation to be like and to be about.

d. Strategic decisions involve a change of ma)or kind since an organi0ation operates in ever2changing

environment.

e. Strategic decisions are complex in nature.

f. Strategic decisions are at the top most level& are uncertain as they deal with the future& and involve a lot ofrisk.

g. Strategic decisions are different from administrative and operational decisions. *dministrative decisions areroutine decisions which help or rather facilitate strategic decisions or operational decisions. perationaldecisions are technical decisions which help execution of strategic decisions. /o reduce cost is a strategicdecision which is achieved through operational decision of reducing the number of employees and how wecarry out these reductions will be administrative decision.


26/32

/he differences between Strategic& *dministrative and perational decisions can be summari0ed as follows2

Strategic Decisions Administrative Decisions Operational Decisions

Strategic decisions are long2term decisions. *dministrative decisions are takendaily.

perational decisions are not fre'taken.

/hese are considered where /he futureplanning is concerned.

/hese are short2term based$ecisions.

/hese are medium2period baseddecisions.

Strategic decisions are taken in *ccordancewith organi0ational mission and vision.

/hese are taken according to strategicand operational $ecisions.

/hese are taken in accordance witstrategic and administrative decisi

/hese are related to overall 9ounter planningof all rgani0ation.

/hese are related to working ofemployees in an rgani0ation.

/hese are related to production.

/hese deal with organi0ational Growth. /hese are in welfare of employees

working in an organi0ation.

/hese are related to production an

factory growth.

Decision making

Purposeful selection from among a set of alternatives in light of a given objective. Decisionmaking is

not a separate function of management. !n fact, decisionmaking is intertwined with the other

functions, such as planning, coordinating, and controlling.These functions all re"uire that decisions be made. #or e$ample, at the outset, management must

make a critical decision as to which of several strategies would be followed. Such a decision is often

called a strategicdecision because of its longterm impact on the organi%ation.&lso, managers must

make scores of lesser decisions, tactical and operational, all of which are important to the

organi%ation's wellbeing.

Decision making is a vital component of small business success. Decisions that are based ona foundation of knowledge and sound reasoning can lead the company into longterm

prosperity( conversely, decisions that are made on the basis of flawed logic, emotionalism,
http://www.answers.com/topic/planninghttp://www.answers.com/topic/coordinatehttp://www.answers.com/topic/controllinghttp://www.answers.com/topic/planninghttp://www.answers.com/topic/coordinatehttp://www.answers.com/topic/controlling


27/32

or incomplete information can "uickly put a small business out of commission )indeed, baddecisions can crippleeven big, capitalrich corporations over time*. &ll businesspeople

recogni%e the painful necessity of choice. #urthermore, making these choices must be donein a timely fashion, for as most people recogni%e, indecisionis in essence a choice in and of

itself+a choice to take no action. ltimately, what drives business success is the "uality ofdecisions, and their implementation. Good decisions mean good business.

The concept of decision making has a long history( choosing among alternatives has alwaysbeen a part of life. -ut sustained research attention to business decision making hasdeveloped only in recent years. ontemporary advances in the field include progress in such

elements of decision making as the problem conte$t( the processes of problem finding,

problem solving, and legitimation( and procedural and technical aids.

The Elements of Decision Making

THE PROBLEM CONTEXT.&ll decisions are about problems, and problems shape conte$t

at three levels. The macrocontextdraws attention to global issues )e$change rates, fore$ample*, national concerns )the cultural orientations toward decision processes of different

countries*, and provincial and state laws and cultures within nations.Themesocontextattends to organi%ational cultures and structure.The microcontextaddresses the immediate decision environment+the organi%ation's

employees, board, or office.Decision processes differ from company to company. -ut all companies need to take these

three conte$t levels into consideration when a decision needs to be made. #ortunately,economical ways to obtain this information are available and keep the cost of preparing for

decisions from becoming prohibitive.PROBLEM FINDIN !ND !END! "ETTIN.&n important difficulty in decision making is

failure to act until one is too close to the decision point+when information and options aregreatly limited. /rgani%ations usually work in a 0reactive0 mode. Problems are 0found0 only

after the issue has begun to have a negative impact on the business. 1evertheless,processes of environmental scanning and strategic planning are designed to perform

problem reconnaissance to alert business people to problems that will need attention downthe line. Proactivity can be a great strength in decision making, but it re"uires a decision

intelligence process that is absent from many organi%ations.2oreover, problem identification is of limited use if the business is slow to heedor resolve

the issue. /nce a problem has been identified, information is needed about the e$act natureof the problem and potential actions that can be taken to rectifyit. nfortunately, small

business owners and other key decision makers too often rely on information sources that0edit0 the data+either intentionally or unintentionally+in misleading fashion. !nformation

from business managers and other employees, vendors, and customers alike has to beregarded with a discerningeye, then.

&nother kind of information gathering reflects the array and priority of solution preferences.

3hat is selected as possible or not possible, acceptable or unacceptable, negotiable or non

negotiable depends upon the culture of the firm itself and its environment. & third area ofinformation gathering involves determining the possible scope and impact that the problemand its conse"uent decision might have. 4nowledge about impact may alter the decision

preferences. To some e$tent, knowledge about scope dictates who will need to be involved

in the decision process.Problem Solving

Problem solving+also sometimes referred to as problem management+can be divided intotwo parts+process and decision. The process of problem solving is predicated on the

e$istence of a system designed to address issues as they crop up. !n many organi%ations,
http://www.answers.com/topic/cripplehttp://www.answers.com/topic/indecisionhttp://www.answers.com/topic/heedhttp://www.answers.com/topic/rectifyhttp://www.answers.com/topic/discerninghttp://www.answers.com/topic/unacceptablehttp://www.answers.com/topic/cripplehttp://www.answers.com/topic/indecisionhttp://www.answers.com/topic/heedhttp://www.answers.com/topic/rectifyhttp://www.answers.com/topic/discerninghttp://www.answers.com/topic/unacceptable


28/32

there does not seem to be any system. !n such businesses, owners, e$ecutives, andmanagers are apparently content to operate with an ultimately fatalistic philosophy+what

happens, happens. -usiness e$perts contend that such an attitude is simply unacceptable,especially for smaller businesses that wish to e$pand, let alone survive. The second part of

the problem management e"uation is the decision, or choice, itself. Several sets of elementsneed to be considered in looking at the decision process. /ne set refers to the rationales

used for decisions. /thers emphasi%e the setting, the scope and level of the decision, andthe use of procedural and technical aids.R!TION!LE"./rgani%ational decision makers have adopted a variety of styles in their

decision making processes. #or e$ample, some business leaders embrace processes wherein

every conceivable response to an issue is e$amined before settling on a final response,while others adopt more fle$ible philosophies. The legitimacy of each style varies in

accordance with individual business realities in such realms as market competitiveness,business owner personality, acuteness of the problem, etc.

"ETTIN".ertainly, some entrepreneurs5owners make business decisions without asignificant amount of input or feedback from others. 6omebased business owners without

any employees, for e$ample, are likely to take a far different approach to problemsolvingthan will business owners who have do%ens of employees and5or several distinct internal

departments. The latter owners will be much more likely to include findings of meetings,

task forces, and other information gathering efforts in their decision making process. /fcourse, even a business owner who has no partners or employees may find it useful to seekinformation from outside sources )accountants, fellow businesspeople, attorneys, etc.*

before making important business decisions. 0Since the owner makes all the key decisionsfor the small business, he or she is responsible for its success or failure,0 wrote David

4arlson inAvoiding Mistakes in Your Small Business.02arketing and finance are two ofseveral areas in which small business owners fre"uently lack sufficient e$perience, since

they previously worked as specialists for other people before they started their ownbusinesses. &s a result, they generally do not have the e$perience needed to make well

informed decisions in the areas with which they are unfamiliar. The demands of running andgrowing a small business will soon e$pose any achillesheel in a president5owner. !t is best

to find out your weaknesses early, so you can develop e$pertise or get help in these areas.0

"COPE !ND LE#EL.#inally, attention must be paid to problem scope and organi%ationallevel. Problems of large scope need to be dealt with by top levels of the organi%ation.

Similarly, problems of smaller scope can be handled by lower levels of the organi%ation. Thisis a failing of many organi%ations, large and small. Typically, top level groups spend much

too much time deciding lowlevel, lowimpact problems, while issues of high importance andorgani%ational impact lingeron without being addressed or resolved.

PROCED$R!L !ND TECHNIC!L!ID".!n recent years, a number of procedural and

technical aids have been developed to help business managers in their decision makingprocesses. 2ost of these have taken the form of software programs that guide individuals or

groups through the various elements of the decision making process in a wide variety ofoperational areas )budgeting, marketing, inventory control, etc.*. 7eadership seminars and

management training offer guidance in the decision making process as well.O$TCOME.3hatever decision making process is utili%ed, those involved in making the

decision need to make sure that a response has actually been arrived at. &ll too often,meetings and other efforts to resolve outstanding business issues adjournunder an

atmosphere of uncertainty. Participants in decision making meetings aresometimes unsureabout various facets of the decision arrived at. Some meeting

participants, for e$ample, may leave a meeting still unsure about how the agreeduponresponse to a problem is going to be implemented, while others may not even be sure what

the agreedupon response is. !ndeed, business researchers indicate that on many occasions,meeting participants depart with fundamentally different understandings of what took place.
http://www.answers.com/topic/achilleshttp://www.answers.com/topic/lingerhttp://www.answers.com/topic/adjournhttp://www.answers.com/topic/unsurehttp://www.answers.com/topic/achilleshttp://www.answers.com/topic/lingerhttp://www.answers.com/topic/adjournhttp://www.answers.com/topic/unsure


29/32

!t is up to the small business owner to make sure that all participants in the decision makingprocess fully understand all aspects of the final decision.

IMPLEMENT!TION.The final step in the decision making process is the implementation ofthe decision. This is an e$tremely important element of decision making( after all, the

benefits associated with even the most intelligent decision can be severely compromised ifimplementation is slow or flawed.

#actors in Poor Decision 2akingSeveral factors in flawed decision making are commonly cited by business e$perts, includingthe following8 limited organi%ational capacity( limited information( the costliness of analysis(

interdependencies between fact and value( the openness of the system)s* to be analy%ed(

and the diversity of forms on which business decisions actually arise. 2oreover, timeconstraints, personal distractions, low levels of decision making skill, conflict over business

goals, and interpersonalfactors can also have a deleteriousimpact on the decision makingcapacities of a small )or large* business.

& second category of difficulties is captured in a number of common pitfalls of the decisionprocedure. /ne such pitfallis 0decision avoidance psychosis,0 which occurs when

organi%ations put off making decisions that need to be made until the very last minute. &second problem is decision randomness. This process was outlined in the famous paper

called 0& Garbage an 2odel of /rgani%ational hoice0 by ohen, 2arch and /lsen. They

argued that organi%ations have four roles or vectors within them8 problem knowers )peoplewho know the difficulties the organi%ation faces*8 solution providers )people who canprovide solutions but do not know the problems*( resource controllers )people who do not

know problems and do not have solutions but control the allocation of people and money inthe organi%ation* and a group of 0decision makers looking for work0 )or decision

opportunities*. #or effective decision making, all these elements must be in the same roomat the same time. !n reality, most organi%ations combine them at random, as if tossing them

into a garbage can.Decision drift is another maladythat can strike at a business with potentially crippling

results. This term, also sometimes known as the &bilene Parado$ in recognition of a famousmodel of this behavior, refers to group actions that take place under the impression that the

action is the will of the majority, when in reality, there never really was a decision to take

that action.Decision coercion, also known as groupthink, is another very well known decision problem.

!n this flawed decision making process, decisions are actually coerced by figures in power.This phenomenon can most commonly be seen in instances where a business owner or top

e$ecutive creates an atmosphere where objections or concerns about a decision favored bythe owner5e$ecutive are mutedbecause of fears about owner5e$ecutive reaction.

!mproving Decision 2aking

-usiness consultants and e$perts agree that small business owners and managers can takeseveral basic steps to improve the decision making process at their establishments.

Improve the setting. /rgani%ing better meetings )focused agenda, clear "uestions, currentand detailed information, necessary personnel* can be a very helpful step in effective

decision making. &void the garbage can( get the relevant people in the same room at thesame time. Pay attention to planning and seek closure.

Use Logical Techniques.Decision making is a simple process when approached in a logicaland purposeful manner. Small businesses that are able to perceive the problem, gather and

present data, intelligently discuss the data, and implement the decision without succumbingto emotionalism are aptto make good ones that will launch the firm on a prosperous

course.valuate decisions and decision making patterns.9valuation tends to focus the attention,

and make individuals and teams more sensitive to what they are actually doing in theirdecision making tasks. 9valuation is especially helpful in today's business environment
http://www.answers.com/topic/interpersonalhttp://www.answers.com/topic/deleterioushttp://www.answers.com/topic/pitfallhttp://www.answers.com/topic/psychosishttp://www.answers.com/topic/maladyhttp://www.answers.com/topic/mutedhttp://www.answers.com/topic/apthttp://www.answers.com/topic/interpersonalhttp://www.answers.com/topic/deleterioushttp://www.answers.com/topic/pitfallhttp://www.answers.com/topic/psychosishttp://www.answers.com/topic/maladyhttp://www.answers.com/topic/mutedhttp://www.answers.com/topic/apt


30/32

because of the interdependency of individuals and departments in e$ecuting tasks andaddressing goals.

!etermine appropriate levels o" decision making.-usiness enterprises need to make surethat operational decisions are being made at the right level. 4eys to avoiding

micromanagement and other decision making pitfalls include8 giving problems their properlevel of importance and conte$t( addressing problems in an appropriate time frame( and

establishing and shifting decision criteria in accordance with business goals.

Cha%acte%istics of "t%ategic Decision Making

1. trategic decisions are likely to a8ect the long-term directionof

an organisation.

0. trategic decisions are normally about trying to achieve

some advantagefor the organisation.

A. trategic decisions are likely to be concerned with the scope of an

organisations activities6 :oes *and should+ the organisation

concentrate on one area of activity, or does it have manyI he issue

of scope of activity is fundamental to strategic decisions because it

concerns the way in which those responsible for managing the

organisation conceive its boundaries. !t is to do with what they want

the organisation to be like and to be about.

O. trategy is to do with the matching of the activities of an

organisation to the environmentin which it operates.

J. trategy can also be seen as 'stretching' an organisation's

resources and competences to create opportunities or capitalise on

them. !t is not just about countering environmental threats and

taking advantage of environmental opportunities> it is also about

matching organisational resources to these threats andopportunities. here would be little point in trying to take advantage

of some new opportunity if the resources needed were not available

or could not be made available, or if the strategy was rooted in an

inade&uate resource5base.


31/32

B. trategic decisions therefore often have major resource

implicationsfor an organisation. !n the 1EFs a number of 49 retail

$rms had attempted to develop overseas with little success and one

of the major reasons was that they had underestimated the extent

to which their resource commitments would rise and how the needto control them would take on &uite di8erent proportions. trategies,

then, need to be considered not only in terms of the extent to which

the existing resource5base of the organisation is suited to the

environmental opportunities but also in terms of the extent to which

resources can be obtained and controlled to develop a strategy for

the future.

K. trategic decisions are therefore likely to aect operational

decisions, to Pset o8 waves of lesser decisions=.

F. he strategy of an organisation will be a8ected not only by

environmental forces and resource availability, but also by

the values and expectationsof those who havepower in and around

the organisation. !n some respects, strategy can be thought of as a

re


32/32

trategic decisions are, then, often complex in nature6 it can be

argued that what distinguishes strategic management from other

aspects of management in an organization is just this complexity.

he complexity arises for at least three reasons. 7irst, strategicdecisions usually involve a high degree of uncertainty6 they may

involve taking decisions on the basis of views about the future which

it is impossible for managers to be sure about. econd, strategic

decisions are likely to demand an integratedapproach to managing

the organization. 4nlike functional problems, there is no one area of

expertise, or one perspective that can de$ne or resolve the

problems. (anagers, therefore, have to cross functional and

operational boundaries to deal with strategic problems and come to

agreements with other managers who, inevitably, have di8erent

interests and perhaps di8erent priorities. his problem of integration

exists in all management tasks but is particularly problematic for

strategic decisions. hird, as has been noted above, strategic

decisions are likely to involve major changein organizations. Dot

only is it problematic to decide upon and plan those changes, it is

even more problematic actually to implement them. trategic

management is therefore distinguished by a higher order of

complexity than operational tasks.

Documents

Unit 1 - Intoduction to Str.mgmt