StrategicDecision
DecisionMaking Process
MakingProcess
Presented By:
Arthur Haurama
Andrew Joshua
Christopher Gau
Strategic Decision Making process
Learning
LearningOutcomes:
Outcomes:
To understand the rational approach to decision making
To become aware of techniques that can be used to improve
decision making
To understand reasons why the rational approach is limited in
its practical application to understand what an effective
strategic decision making process looks like.
Strategic Decision Making process
Contents:
Contents:
What is Decision Making?
Process of Decision Making
Rational Approach to Decision Making
Risk assessment of strategic options
Limitations on rational decision making in practice
Competitors Actions
A practical model for effective strategic decision making
Conclusion
What is Decision Making
1.Programmed decision
A decision that is fairly structured or
Recurs with some frequency (or both)
2.Non programmed decision
A decision that is relatively
unstructured and occurs much less
often than a programmed decision
Process of Decision Making
Rational Models of Decision Making
Rational Approach to Decision Making
Facts
Facts
Research shows that Rational Decision-Making processes
produce better and more accurate results more often than
intuitive decision making processes.
Rational Approach to Decision Making
2.2. Be Conservative:
Be Conservative:
Ideas are cheap ;execution is difficult. It is easier to come up with many
attractive sounding proposals, but there are many hidden practical traps,
each idea takes time to implemement. Successful organization have been
found to be conservative despite growing quickly and being very
profitable. They tended to consider the downside of proposal, and try to
find ways to spread the risk among partners or by spreading the decision
overtime.
Risk Assessment
3.3.Forecast
Forecastthe alternatives: :
thealternatives
Individual Limitations
Individual Limitations
Limited/bounded rationality
Managers (and people in general) are unable to hold all the
information required at a particular time to produce the perfect
decision.
Reality and ambiguity
In reality information is known and it is believed that what an
individual perceives and experiences constitutes reality for that
person while ambiguity means that we are unsure of what is true.
Continue
Interpretation
Interpretation can provide a sense of security to an individual where
they interpret new experiences and information in ways that make them
consistent with their own beliefs.
Intuition
In time of pressured environments and faced with information overload,
uncertainty and ambiguity, many managers use intuition to simplify
their decision making.
Individual emotions and values
People have emotions and values, they work in an organizational culture
that has its own values and ethics and people are social and political,
they have their own desires, personality likes and dislikes to ensure that
rational aspect of decision making is not the same as another persons.
Organizational Limitations