managing change making strategic decisions “good decisions come from wisdom. wisdom comes from...

Managing ChangeManaging Change

Making Strategic DecisionsMaking Strategic Decisions

“Good decisions come from wisdom. Wisdom comes from experience. Experience comes from bad decisions.”

Anonymous

“Decisions of the kind the executive has to make are not made well by acclamation. They are made well only if based on the clash of conflicting

views…The first rule in decision making is that one does not make a decision unless there is disagreement.”

Peter Drucker

“A complex decision is like a great river, drawing from its many tributaries the innumerable premises of which it is constituted.”

Herbert Simon

BUSS4.11 Decision Making

In this topic you will learn In this topic you will learn about:about:The significance of information

managementThe value of different approaches

to decision-makingAssessing influences on

corporate decision-making


If only you knew!

Making Strategic Making Strategic DecisionsDecisions


• Made at the top of the hierarchy

• May require high capital investment• Once made difficult

to reverse

• Long term direction of business• Aim at meeting

corporate objectives• Will impact upon

different stakeholders

Significance of Information Significance of Information ManagementManagementInformation Management

◦Use of accurate and up to date information to aid decision-making

◦Collation and sharing of informationManagement Information System

◦The use of IT to collect, store, process and disseminate information


DataRaw facts and

figures

InformationDate with context that can be used to aid decision

making

Processing to give meaning and

context

Information ManagementInformation Management


Information ManagementInformation ManagementEffective decision-making will

require both qualitative and quantitative information

Information can come from both internal and external sources including:◦Financial Accounts◦Market Research◦Competitor Analysis◦Market Analysis◦SWOT Analysis◦PEST Analysis◦Economic Forecasts


Approaches to Decision-Approaches to Decision-makingmakingScientificBacked by

researchOutcomes are

simulated or tested

Reduces but does not eliminate risk

Decisions are objective

IntuitionBased on gut

instinctQuicker decisions

can be madeAn experienced

manager may understand the market

Decisions are subjective


If you were to put £1000 on a horse would you

study the form or go for one you liked the sound

of?

“Nothing slows down an organisation more than paralysis by analysis.”

Decision-making – Further Decision-making – Further ReadingReading

There are many techniques to aid decision-making◦ SWOT◦ Cost Benefit Analysis

Six Thinking Hats – look at decisions from different anglesPareto Analysis – what is

the most important problemto solve?

Starbursting - analysing decisions by asking questions


How useful would each of these approaches be to a chain of coffee

shops considering opening stores in China?

Feel: What do you feel?

Think: What has to happen next?

Benefits: What good about it?

Judgement: What bad about it?

Facts: Evidence / Statistics?

Creative: All ideas are possible!

http://news.bbc.co.uk/1/hi/england/gloucestershire/8564814.stm

If you were Julian Dunkerton, chief executive of SuperGroup, what would your strategy be now?







http://news.bbc.co.uk/1/hi/business/8563728.stm

If you were BA boss Willie Walsh, what would your strategy be?








If you were John Lewis chairman Charlie Mayfield what would your strategy be?








If you were Toyota President Akio, what would your strategy be?

Influences on corporate Influences on corporate decision-makingdecision-makingEthical position (real or perceived)

◦ How will the decision be viewed by key stakeholders

◦ Will moving production abroad match the business’ ethical standards?

◦ Where are materials sourced from?Resources available

◦ Financial constraints◦ Workforce◦ Scarcity of materials

Relative power of stakeholders◦ How might pressure groups respond?◦ Will TUs become involved?


Also, don’t underestimate the

importance of corporate objectives. Remember

this has been an important theme

throughout this unit

ActivityActivity Ryanair reduces Stansted flights

What information would have been collated to help make this decision?

What are the factors contributing to this decision?

What are the advantages of using scientific decision making techniques for Ryanair?

How might different stakeholders respond to this decision?


EssayEssayJack Welch, CEO of GE, urges businesses not to sit on decisions. He advices “Don't set something aside instead of making a decision on the spot. In order to get speed, decisions at virtually every level have to be made in minutes, not days or weeks.” With reference to businesses you have studied to what extent do you agree with Jack’s views on making quick decisions. Justify your answer.


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