Strategic Decision Making

• Strategic decision-making is the process of charting a course based

on long-term goals and a longer term vision.

• Strategic decision making is the prominent task of the senior

management.

• While decision making pertains to all managerial functions,

strategic decision making largely relates to the responsibilities of
the senior management.

• Basically decision making is the process of selecting a course of

action from among many alternatives.
 Issues in the strategic decision making
1) Criteria for decision making:- The process of decision making
requires objective setting . These objectives serve as yardsticks
to measure the efficiency and effectiveness of the decision
making process. Objectives serve as the criteria for decision
making.
There are three major viewpoints regarding setting criteria for
decision making.
Concept of maximization
Concept of satisfying
Concept of incrementalism
 Issues in the strategic decision making

2) Rationality in decision making:

In the context of strategic decision making, rationality

means exercising a choice from among various
alternative course of action in such a way that it may
lead to the achievement of the objectives in the best
possible manner.
 Issues in the strategic decision making

3) Creativity in decision making:- A creative strategic decision

making process may considerably affect the search for alternatives
where novel and untried means may be looked for and adopted to
achieve objectives in an exceptional manner.

4) Variability in decision making:- It is a common observation that

given an identical set of conditions two decision makers may reach
totally different conclusion.
 Issues in the strategic decision making

5) Person related factors in decision making: There are a host of

person related factors that play a role in decision. Some of these are
age, education, intelligence, personal values, risk taking ability, and
creativity.
6) Individual verses group decision making: Individuals such as chief
executives or entrepreneurs play the most important role as
strategic decision makers. But as organizations become bigger and
more complex, and face increasingly turbulent environment,
individuals come together in groups for the purpose of strategic
decision making.
 Dimensions of strategic decisions

• Function of Top Level Management

• Intellectual Process

• Long range effects

• Expert Advice

• Future Oriented Decisions

• Functions and process fixing on strategic decisions

 Elements of Strategic decision making

1. Classifying the Problem.

2. Defining the Problem

3. Specifications of a Decision

4. Deciding on What is Right.

5. Building Action into the Decision

6. Testing the Decision Against Actual Results.

 Strategic Intent
• It refers to purpose for what organization
strives for.

• Organization must define “what they want to

do” , “why they want to do”.

• This “why they want to do” underlines the end

result and in management terms it is known as
strategic intent
 Elements of strategic intent

• Vision

• Mission

• Business definition

• Goals, and

• Objectives
 Vision statement
• A vision is a statement about what an organization
wants to become. It should resonate with all
members of the organization and help them feel
proud, excited, and part of something much bigger
than themselves.
• According to Kotter “Vision is a description of
something(an organization, corporate culture, a
business, a technology, an activity) in the future”
 VISION
Burt Nanus defined vision as “ a realistic, credible and
attractive future for an organization
• Realistic: Vision must be based on reality to be meaningful
for an organization; It should not be a merely day dreaming
but a dream to be converted into reality
• Credible: Vision must be believable to be relevant to the
members of organization. One of the purpose of vision is to
aspire those in org. to achieve a level of excellence
• Attractive: Vision must be attractive as to inspire and
motivate the org. members. People must want to be a part of
future of org.
• Future: Vision is always for future
A vision should be
1) An organizational charter of core values and principles
2) The ultimate sources of our priorities, plans and goals
3) A puller (not pusher) into the future
4) A determination and publication of what makes us unique
5) A declaration of independence
Benefits:
1. Good visions are inspiring and exhilarating
2. Good visions are competitive, original and unique
3. Good visions foster risk taking and experimentation
4. Good visions foster long term thinking
5. Good visions represent integrity and shared sense of
purpose
 Features:

• Mental exercise • Time-bound

• Selects the target
market • Anticipates
• Constitutes future
organizations • Simple and
objectives and focus
concise
• Reflects future plans
• Dynamic and • Effective
flexible • Pervasive
• Comprehensive
• Objective
• Well-defined
 Examples of vision
Infosys:
To be globally respected company that provides best of
breed software solutions by best-in-class people
Tata tea:
To be India’s foremost tea based beverage company
JK Tyre:
To be amongst the most admired companies in India,
committed to excellence
ITC:
Sustain ITC's position as one of India's most valuable
corporations through world class performance, creating
growing value for the Indian economy and the
Company's stakeholders
 The components of an effective business vision

Davidson identifies six requirements for

success:

• Provides future direction

• Expresses a consumer benefit
• Is realistic
• Is motivating
• Must be fully communicated
• Consistently followed and measured
The process of envisioning

Well conceived vision

Core Envisione
ideology d future
Core Core Long term
values purpose audacious goal
Vivid description
of achievement
 Mission
“Mission is the purpose or reason for the
organization’s existence.”
Hunger and Wheelen
“A mission describes the organization's basic
function in society, in terms of the products and
services it produces for its customers”.
Mintzberg
A mission should be
1. Full of enthusiasm
2. Marked by grandeur
3. Unique and personal
4. Indicate how objectives are to be accomplished
Characteristics
1) Feasibility
2) Precision
3) Clarity
4) Motivation
5) Distinctiveness
Need for mission statement
1. It gives a unified direction to the company’s growth
2. Allocation of resources
3. It outlines a framework for organizational planning,
assigning, definite tasks and responsibilities to each
business unit
4. It helps to set-up and develops a control mechanism
for achievement of objectives
Components of mission statement

1. Customers
2. Products or services
3. Markets
4. Concern for survival, growth and profitability
5. Technology
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
 Difference b/w Vision and mission

• Vision is forward looking and mission states what

org. is and why it exists

• Vision emphasis on long term concept with very

high level of achievement and mission deals with
products , services offers, way these are offered.
 Mission

• A mission statement is a short statement of

why an organization exists, what its overall
goal is, identifying the goal of its operations:
– what kind of product or service it provides

– its primary customers or market

– its geographical region of operation

 Mission

A mission statement is a short statement of an

organization's purpose that:
• Identifies the scope of its operation
• Identifies what kind of products or services it
provides
• Identifies it's intended audience
• Identifies what values it adheres it.
 Mission Statement
The mission statement is very important:
• Identifies and responds to various stakeholders.
• Helps the firm present itself favorably to its
stakeholders.
• Forms the foundation for all the other objectives
and strategies.
– “What is the business of the firm?”
– “Whom does the firm want to serve?”
– “What does the firm want to become?”
• Has performance implications - High performers
have more comprehensive mission statements
than low performers.
 Mission Statements
Mission Statement:
• Enduring statement of purpose
• Distinguishes one organization from another in
similar enterprises
• Declaration of an organization’s “reason for
being”
• Reveal what an organization wants to be and
whom it wants to serve
• Essential for effectively establishing objectives
and formulating strategies
Example:
JK Tyre:
• Be a Customer Obsessed Company - Customer First
24x7
• No.1 Tyre Brand in India
• Most profitable Tyre Company in India
• Motivated and Committed team for excellence in
performance
• Be a Green Company
 Example
ITC
• To enhance the wealth generating capability of the
enterprise in a globalizing environment, delivering
superior and sustainable stakeholder value
Infosys:
Examples
• To achieve our objectives in a environment of
fairness, honesty and courtesy towards our
clients, employees, vendors and society at
large
•Tata tea:
o Achieve market and thought leadership for
branded tea in India
o Drive long term profitable growth
 Business Definition
• Is clear cut statement of the business or a set of
business, the org. engages in presently or wishes to
pursue in future. Then it prescribes the area in
which the org will play compete
• Business can defined along three dimensions–
product, customer and technology.
• Business must reflect two features : Focus and
Differentiation
Attributes of a good business
definition
– It must be related to the basic human need which
the product seeks to satisfy and should not be
limited to just the product
– It must be related to the functions performed by
the product and not limited to just the product
– It must be related to the basic benefits the product
offers
– It must encompass in its fold, as many related
functions as possible