Summary
Samenvatting Strategic Decision Making (441058-B-6)
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A comprehensive summary of the Strategic decision-making course.
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Lecture 1Decisions
We make decisions all the time based on information and preferences.
We sometimes ask for advice on decisions.
Some decisions are made based on pre-existing heuristics. These help us deal with
situations where we need to make certain decisions. There are pre-conditions that
influence the decisions. We try the narrow down the number of options.
Organizations constantly have to make decisions.
A key challenge for every decision is the reduction of uncertainty.
Strategic decisions are always clear in hindsight, but in the present, they are very hard to
make.
a. Fundamental characteristics of strategic decisions
Four characteristics of strategic decisions
- complexity
● large numbers of aspects
● how do different aspects influence each other
- uncertainty
● an unknown number of alternatives/solutions
- rationality
● try to reach a goal
● can be social, economic, big, small, etc.
● you try to lay out the course on how to get there
- control
● intentionality
● how to put the organization into action
● if there is no control there is no strategy
These characteristics make up each decision.
,II. The integrative frameworkforSDs (simplified version)
II. Definition of strategic decisions
Strategic decisions are defined as decisions committing substantial resources, setting
precedents, and creating waves of lesser decisions; as ill-structured, non-routine and
complex; and as substantial, unusual and all-pervading
Dimensions of interdependence:
- Inter decisional
- Interactor
- Intertemporal
The SDM process is the process by which a strategic decision is made and implemented
and the factors which affect it, i.e.the process that leads to the choice of goals and means
and the way in which means are effectively deployed
II. Key assumptions of SDM
The departure point of SDM thinking, research & theorizing:
,Reasons for this lie in a myriad of factors, amongst which analytical and organizational
complexity. To deal with this:
- Professionals develop tools based on decision analysis and/or evidence-based
approaches
- Researchers identify the factors that increase or decrease the quality of strategic
decisions from a multidisciplinary viewpoint
SDM: What’s the fuzz all about?
- Assumptions underlying the SDM Process-Effectiveness Relationship
II. Key questions for the course
How can we understand the variation and heterogeneity of the effects of context on SDM
processes?
How can we understand the variation and heterogeneity of the effects of context and SDM
processes on outcomes?
Preliminary categorical answers to questions:
- Antecedents
- Process dynamics
- Constraining & enabling factors
More elaborately:
A. The way decision-making processes unfold is subject to decision-situational factors: not
every situation is suited for an approach rooted in information gathering and analysis in
relation to goals.
B. In addition, the (collaborative) interactions between participants in the SDM process and
the dynamics of the process can unfold in different ways leading to different decisions.
, II. The integrative framework for SDs (constituent components)
II. The integrative framework: context component
The context refers to those aspects that are not subject to the choice situation to those
decision-makers present at the moment of decision.
“...refers to the top management team, strategic decision-specific characteristics, the
external environment, and firm characteristics.”
Connects mostly to question a.
A. ...subject to decision-situational factors....:
Context creates the ‘decision premise’ and ‘strategic options’
- The problem to respond to &
- The options available to remedy the problem
The combination & analysis of environmental, organizational, top management, and
decision characteristics provide us with the input for the formulation process.
The starting point for the process-effectiveness link
II. The integrative framework: SDM process component
The SDM process is the process by which a strategic decision is made and implemented
and the factors which affect it, i.e.the process that leads to the choice of goals and means
and the way in which means are effectively deployed
In our approach, the process consists of formulation and implementation.
II. The integrative framework: Outcomes component
Outcomes refer to the intended and unintended consequences of a strategic decision
Decision level vs. organizational level vs. supra-organizational level outcomes
DLO: the intended and unintended consequences of a decision considered in terms of
financial and/or nonfinancial outcomes isolated from other influences, i.e. outcomes as a
consequence of the SD that was taken
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