Strategic Thinking and Decision Making Dr. Fred Mugambi JKUAT
What is strategic thinking? Who should be doing the strategic thinking? The link between strategic thinking and decision making Decision making Process Barriers to Decision making Leveraging on stakeholders Key Questions 11/27/20152
A decision is a choice made from available alternatives. Decision making is therefore defined as the process of identifying and selecting a course of action to deal with a specific problem or take advantage of an opportunity. Decision making is essential to determine the future direction of the firm. Introduction 11/27/20153
Thinking for the future Incorporating various competing factors/ variables in the thought process to affect positively future outcomes Cognitive process where a manager critically analyses and considers many competing factors to determine future outcomes Strategic Thinking 11/27/20154
Top managers are the foremost strategic thinkers in an organization However, all managers are engaged and must be encouraged to think strategically for purposes of making strategic decisions Information must be collected by all levels of management in order to fuel strategic decision making Who should be Engaged in Strategic Thinking? 11/27/20155
Information gathering and analyses are important components of the strategic thinking process Good decisions require proper analyses of information High value decisions are therefore reliant on strategic thinking among the decision makers The link between strategic thinking and decision making 11/27/20156
In a perfect world, managers would have all the information that they need to make good decisions. In reality, however, some things are not known and this will affect the quality of the decision. Factors such as uncertainty or risk will affect whether the decision made is good or not. Nature of Decision Making 11/27/20157
Programmed Decisions Decisions made on a routine basis. Ordering of suppliers Servicing of machines Non-Programmed Decisions Decisions that are difficult to make and are made very irregularly. Complex decisions Opening a factory oversea Types of Decisions 11/27/20158
Decision making is therefore a complex yet important responsibility of managers. To ensure that effective decisions are made, managers make use of the rational model of decision making. This involves the following steps. Decision Making Process 11/27/20159
Stages in Decision making 11/27/201510
Managers often face problems arriving at good decisions by themselves. Many companies allow employees to participate in decision making. Group decision making refers to the process of decision making where employees actively participate in the various stages of decision making Group Decision Making 11/27/201511
More ideas/suggestions Commitment and loyalty Motivation improves Communication and co-ordination Advantages of Group Decision Making 11/27/201512
Time consuming and costly Dominance by one member Compromise of decision Conflicts and disagreements Limitations of Group Decision Making 11/27/201513
Cognitive blocks (e.g. lack of information and low intelligence levels) Lack of incentives/ motivators Non-supportive organizational cultures Structured decision systems Inadequate organizational research processes Barriers to Effective Decision Making 11/27/201514
Identify the Stakeholders in your Decision Making Process Use Stakeholder Mapping (where are they? What are their interests? How can they be useful?) Develop Strategies to Maximise Stakeholder Support Engage them The Role of Stakeholders in Decision Making 11/27/201515
Analyse Environmental Influences using PPESTT Analysis Analyse your Customers using the Customer Needs Assessment Grid Analyse your Competitors using the 5 Forces Model Analyse your Internal Capabilities Summarise the Analysis in a SWOT Analysis Identify and summarise Actions Test Decisions for Strategic Fitness Strategic Analysis Tools that Aid Decision Making 11/27/201516
Thank you 11/27/201517