Strategic Management

Assignment-1

Topic name: Who Has the D? How Clear Decision Roles

Enhance Organizational Performance

Course: Strategic Management

MGT4802(GEN)

Submitted to:
Major General (Retired), Bir Protik
Prof. Alauddin M A Wadud

Submitted by:
Group-1
Fabliha Anbar B18231006
Nabil Bin Saif B18231028
Jehad Sadi B18231054
Md Sharier Alam B18231074
Tahiratul Elma B18231068

Monday Bangladesh University of Professionals

August 16, 2021 Mirpur Cantonment, Dhaka-1216.

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Introduction 

Decision-making can be defined as the process of selecting a right and effective course of action
from two or more alternatives for the purpose of achieving a desired result. It is mainly through
making decisions that an organization achieves it short-term and long-term goals. For a business to
perform well and to sustain, they need to make decisions quickly, effectively, and they also need to
execute them in a continuous manner.

The trademark of high-performing organizations are the ability to make good decisions fast, but the
key differentiating point for organizations making decisions is not only how fast they make
decisions, but also the quality and execution of the decisions. If a company does well in major
strategic decisions like the markets to enter or exit, the businesses to buy or sell, allocation of
resources, product innovations, brand positioning techniques, then it shows that the company is
critically handling their decision-making process. The accountability of the decisions is also an
important issue in the decision-making procedure.

Bottlenecks
A company can face four bottlenecks in their decision-making process: global versus local, center
versus business unit, function versus function, and inside versus outside partners.

Global versus local: The company struggles to decide the amount of authority to give to local
businesses/products and the amount of tailoring of local products to enter global markets. Deciding
the marketing, pricing, and advertising strategies catering to local or global market is also an issue
here.
Center versus business unit: This bottleneck affects parent companies and their subsidiaries. The
problem occurs in deciding the party which will have the decision-making power, that is, should the
business units which are the front-liners of the of the organization make the decision, or should it be
the center which has broader goals into perspective?
Function versus function: Cross-functional decision making is often a concern for businesses as
there should be a balance in allocating the resources and coming to a compromising solution which
benefits the different functions.
Inside versus outside partners: Companies often face trouble deciding which decisions should be
made through external partners (strategic alliances, outsourcing, joint ventures, etc.) and which ones
should be made internally.

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Clearing the Bottlenecks

The key to clearing bottlenecks is to assign roles and responsibilities clearly. This results in better
coordination and faster response time. An approach called “RAPID”, which developed over the
years, helps companies to develop clear decision-making guidelines.

Recommend: The person or persons in this role recommend a course of action or present a series of
options. They should back up their recommendations using facts, figures, and research.
Agree: These are the people who must agree with a recommendation before it can move forward.
This group has the power to veto the decision if appropriate. It is important to keep this group to as
few people as possible or decision making can slow down.
Perform: This role corresponds to the people who will perform the decision. It is important that each
decision is acted on quickly. A decent decision executed quickly is often better than a great decision
executed slowly.
Input: The Input role provides the foundation for good decision making. This role is consulted to
provide hard facts, data, and evidence as input to a recommendation.
Decide: When all the options are on the table, a decision must be made. This role is the decision
maker and it should be a single person. This role is usually filled by a senior leader within the
organization. Once a decision has been made, it is important action commences on it quickly. The
decision maker delegates implementing the decision to the Perform role. They maintain
responsibility for the work whilst it is under execution.

Global Versus Local

Most of the MNC’S that operates in the global market are trying to simultaneously build local
presence and expertise and achieve economies of scale. And in such cases, companies often get
derailed during the decision-making process by either going mindlessly global or hopelessly local. It
is important to strike the right balance between this. A company must recognize its most important
sources of value and make sure its decision roles align with them. RAPID is one of the tools that
helps companies to achieve this.

British American Tobacco’s former CEO, Martin Broughton, faced a similar issue when he was
appointed CEO in 1993. Back then, BAT was not able to utilize its global scale properly and hence
was losing to its key competitor. And hence, Broughton realized that they needed to achieve
consistency among global brands, but he also did not want to lose its competitiveness in the local
market.

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Broughton set up global procurement and regional procurement teams were also given input about
global strategies. The decision-making roles in global and local markets were assigned properly and
once the decision-making process in procurement gained momentum, the company set clear roles in
other sectors as well. Broughton also created working groups led by earmarked people who helped in
the decision-making process and later overtook leadership roles in the company.

The new decision roles provided the foundation the company needed to operate successfully on a
global basis while maintaining flexibility at the local level. The company continued to have one of
the best performing stocks in the UK market and re-emerged as a major global player in the tobacco
industry.

Center Versus Business Unit

We know that business unit is close to the customer, whereas centre sees the bigger picture. The
issue of deciding which party should make the decision arises here. The first rule for making good
decision is to involve the right people at the right level of the organization.

If too many decision-making processes flow to the centre, a single management team might not have
the expertise in every business in its corporation. However, if every decision is made in the business
unit, it might miss the big picture of the company. To solve this issue, a company needs to find where
the expertise resides and let these people to make the decision.

For many companies like BAT and others they maintain a balancing act takes place between
executives at the centre and managers in business units. Because, if too many decisions flow to the
centre, decision making can grind to a halt. But in case of medium and small organizations a single
leader handles all the major decisions so there create different flaws in decision making process.
Again, a change in management style can be triggered by the arrival of a new CEO, which can create
similar problems.

For example, British American Tobacco struck a new balance between global and local decision
making to take advantage of the company's scale while maintaining its agility in local markets. At
Wyeth Pharmaceuticals, a growth opportunity revealed the need to push more decisions down to the
business units. When rebuilding its decision-making process, a company must take some practical
steps: Align decision roles with the most important sources of value, make sure that decisions are
made by the right people at the right levels of the organization.

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Function Versus Function
Decisions regarding functions are among the most important decisions a company confronts. Despite
cross-functional collaboration being essential for businesses to provide the best answers for the
company and its customers, it remains a constant challenge.

Often, one group thinks that making decisions without consulting other functions might be more
effective or less time consuming, but they may end up omitting relevant input to other groups leading
in organizational barriers. Many of the most important cross-functional decisions are, by nature, the
most difficult to arrange, and that can chain the process and lead to division between sectors, finally
resulting in companies’ inability to meet their goals. The problem here is the lack of clarity about
who has the letter D.

For example, even John Lewis, the leading department store at UK with its legacy of collaboration
and teamwork, faces cross-functional decision-making challenges. Once they stocked 50 SKUs of
salt and pepper mills, whereas their competitors stocked around 20. And when the company launched
their new range, their sales deteriorated greatly because the buyers took decisions prior to involving
themselves with the sales staff and hence they couldn’t understand the strategy. Once the
communication problem was fixed and their shelf space restored, their sales skyrocketed.

It is relatively easy to build a decision-making process that connects buying and selling functions for
salt and pepper mills; deploying it across the entire business is more difficult. This scale factor is one
reason why bottlenecks between functions are not easily untied. Different functions have different
incentives and goals, which are often at odds with each other. When it comes to the struggle between
the two functions, there can be good reason to position the letter D in one of two places buying or
selling, marketing or product development.

The key to solving the problem here is to think objectively, assigning roles accordingly, and to have
clear communication among parties which have relevant information.

Inside Versus Outside Partners

Decision making, the process itself is hard enough. It gets more complicated when organizations run
on different continents. In that case organizations face a very important question, which decisions
should be made internally? Which can be delegated to outsourcing partners? Strategic partners of a
company can resolve these questions. For example, let’s have a look at a media company that

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acquires content from a studio. As they run their business through franchisees, there is no right
answer to who should have the power to decide what.
Another example can, an outdoor equipment company based in the USA recently found out that they
need to scale up their production. Although the company had some success manufacturing high-end
products in China, they could no companies like Wal-Mart, Target, and Home Depot who could
provide customers with lucrative discounts. Although the Chinese manufacturing partners
understood costs, they didn’t have a proper idea about what consumers wanted. To fix these he
executives made these changes:
 The company created 5 step design and manufacturing process and analysed importance of
decision making at each stage.
 The company was also much more explicit about what the manufacturing specs would
include and what the manufacturer was expected to do with them.
 The objective was to make sure those roles corresponded directly to the sources of value in
the business

To solve these hurdles, we need to understand what factors contribute to a Decision-Driven

Organization. These are:
1. Some decisions matter more than others: The crucial decisions which add value to the
organization matter most.
2. Action is the goal: Good decision making ends with proper implementation strategy.
3. Ambiguity is the enemy: there should be a clear accountability of distribution of work among
contributors.
4. Speed and adaptability are crucial: The best decision makers create an environment where
people can come together quickly and efficiently to make the most important decisions.
5. Decision roles trump the organizational chart: Although no decision-making structure will be
perfect for every decision, the key is involving right people in the right role at the right time.
6. A well-aligned organization reinforces roles: A organization must reinforce right roles among
contributors for clear and efficient decision making.
7. Practicing beats preaching: The last one is involving participants to make sure they can adopt to
the new decisions.
After taking these factors into consideration the decision makers should ask these set of questions to
themselves to find if their approach is going in the right way or not. These questions are here below:
 Were the decisions, right?
 Were they made with appropriate speed?
 Were they executed well?
 Were the right people involved, in the right way?
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  Was it clear for each decision?
 Were the decision roles, process, and time frame respected?
 Were the decisions based on appropriate facts?
 To the extent that there were divergent facts or opinions, was it clear
 Were the decision makers at the appropriate level in the company?
 Did the organization’s measures and incentives encourage the people involved to make the
right decisions?

Conclusion
To make organizations better, managers should create an environment where meetings would start
with a common understanding about who is responsible for providing valuable input and who has the
D. There’s no blueprint for all the contingencies a company might face, but the successful companies
use simple tools help them recognize potential bottlenecks and think through decision roles and
responsibilities with each change in the business environment. Every company can become decision
driven if they take practical decisions at each stage.