Amity School of Business

Business Policy and Strategic Management

STRA 302
Strategic Decision Making –
Modes and Process

Course Instructor: Prof. Ruchi Khandelwal

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 Amity School of Business

Linking Strategy and Strategic

Management
•  Strategy is the direc&on and scope of an
organiza?on over the long term, which
achieves advantage for the organiza?on
through its configura?on of resources within a
changing environment and to fulfill
stakeholder expecta?ons.
•  Strategic Management includes understanding
the strategic posi&on of an organiza?on,
strategic choices for the future and turning
strategy into ac&on. 2
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Strategic Management
•  Strategic Management is defined as the set of
decisions and ac?ons that result in the
formula?on and implementa?on of plan,
designed to achieve a company’s objec?ves.
•  It includes-
–  Environmental Scanning (both external and
internal)
–  Strategy Formula?on
–  Strategy Implementa?on, and
–  Evalua?on and Control.
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Basic Model of Strategic

Management

Environmental Strategy Strategy Evaluation and

Scanning Formulation Implementation Control

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Strategic Decision Making Process

1 (a). Evaluate current performance results

1 (b). Examine and evaluate the current mission,
objec?ves, strategies and policies
2. Review Corporate governance
3 (a). Scan and assess external environment
3 (b). Analyze external factors
4 (a). Scan and assess internal environment
4 (b). Analyze internal factors
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Strategic Decision Making Process

5 (a). Select strategic factors (SWOT) in light of

current situa?on
5 (b). Review and revise as necessary the
mission and objec?ves
6 (a). Generate and evaluate strategic
alterna?ves
6 (b). Select and recommend best alterna?ve
7. Implement strategies
8. Evaluate and control 6
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Mintzberg s Modes of
Strategic Decision Making
•  Some strategic decisions are made in a flash by one person
(o\en an entrepreneur or a CEO) who has a brilliant insight and
is quickly able to convince others to adopt his or her idea.
•  Other strategic decisions seem to develop out of a series of
small incremental choices that over ?me push an organiza?on
more in one direc?on than another.

Entrepreneurial Mode Adaptive Mode

Mintzberg’s
Modes

Planning Mode Logical Incrementalism

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Mintzberg s Modes of Strategic

Decision Making

•  Entrepreneurial mode:
–  One powerful individual
–  Opportuni?es are focal point
–  Founder s own vision of direc?on
–  Centralized Decision – making
–  Growth and Expansion orienta?on
–  Business groups in India like Reliance, Jyo? Udyog,
Nirma, Dabur have followed this approach.

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Mintzberg s Modes of Strategic

Decision Making
•  Adap?ve Mode:
–  Reac?ve approach
–  Focus on solving problems
–  Priority based decisions.
–  Fragmented strategy developed to move a
corpora?on ahead incrementally
–  Commonly followed by public-sector enterprises
where decision-making power is divided among
different cons?tuents.
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Mintzberg s Modes of Strategic

Decision Making
•  Planning mode:
–  Analysis of factors influencing a strategy
–  Systema?c gathering of appropriate informa?on
for situa?on analysis, the genera?on of feasible
alterna?ves and the ra?onal selec?on of most
appropriate strategy.
–  Both proac?ve as well as reac?ve approach
–  Most big size corporate firms follow this.

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Mintzberg s Modes of Strategic

Decision Making
•  Logical Incrementalism:
–  Proposed by Quinn
–  A synthesis on planning, adap?ve an to a lesser extent
entrepreneurial mode
–  Top management sets the firm s mission and objec?ves
but in development of strategies , chooses to use, an
interac?ve process in which the organiza?on probes the
future, experiments and learns from a series of par?al
(incremental) commitments rather than through global
formula?on of total strategies.
–  Although mission is set, strategy is allowed to emerge out
of debate, discussion and experimenta?on.
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Mintzberg s Model of Strategy Development
Emergent and Deliberate Strategies

Deliberate Strategy
Planned Strategy Realized Strategy

Unpredicted
Change Unplanned
Unrealized Emergent Shi\ by Top
Strategy Strategy Level
Managers

Autonomous
Serendipity Ac?on by Lower
Level by
13 Managers
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The Risk of Strategic Drift

Environmental change
Strategic change

5 3
Amount of Change

1 4

Time
Phase 1 Phase 2 Phase 3 / 4
Incremental Flux Transformational
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Change Change or Demise
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Pagerns of Strategy Development

•  Incremental

•  Flux

•  Transformational

•  Demise
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Why does Strategic Drift

happens and how to avoid it?

WHY HOW Develop an early

warning system
Management’s
complacency with
inflexible perspectives
for change Foster a fearless
culture to prevent
unhealthy groupthink

Organizational Culture Combat Market Myopia

- Groupthink with a solid Vision
Environment Statement

Failing to understand Encourage

Customer Demand Organizational flexibility

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