Copyright © 1999 Houghton Mifflin Company. All rights reserved E. FRANK HARRISON Fifth Edition The Managerial Decision-Making Process

Copyright © 1999 Houghton Mifflin Company. All rights reserved The Managerial Decision-Making Process Fifth Edition Author: E. Frank Harrison, Ph.D. Slides by Monique A. Pelletier, Ph.D. Author: E. Frank Harrison, Ph.D. Slides by Monique A. Pelletier, Ph.D.

Copyright © 1999 Houghton Mifflin Company. All rights reserved Strategic Decision Success Strategic Decision Success Chapter 11

Copyright © 1999 Houghton Mifflin Company. All rights reserved A Profile of Strategic Decision Success A Profile of Strategic Decision Success n Attainment of objective(s) n Interdependent means and ends

Copyright © 1999 Houghton Mifflin Company. All rights reserved Determinants of Strategic Decision Success Determinants of Strategic Decision Success n Decision quality l operating constraints l optimum time l optimum amount of information l decision maker’s influence n Decision implementation l risk/reward factor l risk/reward factor l degree of understanding l degree of understanding

Copyright © 1999 Houghton Mifflin Company. All rights reserved Table 11.1 Actual Distribution of Responses for Selected Factors of Strategic Choice at the CEO Level a Compatibility with Operating Constraints Nearness to Optimum Timing Proximity to Optimum Amount of Information Decision Maker’s Influence Risk-Reward Factor Degree of Understanding Total Actual Responses Un- Mean Decision Factors ExcellentGood Satisfactory Marginal satisfactory Response CEO Responses b a n = 61 CEOs. Values of CEO responses: 1 = Excellent; 2 = Good; 3 = Satisfactory; 4 = Marginal; and 5 = Unsatisfactory. b

Copyright © 1999 Houghton Mifflin Company. All rights reserved A Model for Strategic Decision Success A Model for Strategic Decision Success n Managerial attitudes toward process l attainability of the objectives l openness of the process n Managerial attitudes toward decision l judgmental versus computation decision- making strategies making strategies l satisficing versus maximizing outcomes

Copyright © 1999 Houghton Mifflin Company. All rights reserved Figure 11.1 Strategic Decision Matrix Attitude toward the decision-making process Attitude toward the decision Judgmental DM strategy/ Satisficing outcome Computational DM strategy/ Maximizing outcome Attainable objectives/ Open DM process Unattainable objectives/ Closed DM process Type A Type CType D Type B

Copyright © 1999 Houghton Mifflin Company. All rights reserved Types of Strategic Decisions Types of Strategic Decisions n Type A: most likely success n Type B: unlikely success n Type C: unlikely success n Type D: least likely success

Copyright © 1999 Houghton Mifflin Company. All rights reserved Strategic Decision Applications n Type A: l Pepsico, 1997 l Sears, 1995 l IMB, 1995 l Microsoft, 1993

Copyright © 1999 Houghton Mifflin Company. All rights reserved Strategic Decision Applications (cont’d) n Type B: l Seagram, 1995 l American Express, 1987 l Eastern Airlines, 1985 l General Motors, 1983

Copyright © 1999 Houghton Mifflin Company. All rights reserved Strategic Decision Applications (cont’d) n Type C: l AT&T, 1995 l Chase Manhattan/Chemical Bank, 1995 l Time-Warner, 1995 l Eurodisney, 1990

Copyright © 1999 Houghton Mifflin Company. All rights reserved Strategic Decision Applications (cont’d) n Type D: l Apple Computer, late 1980s l SEGA Enterprises, 1994 l Coca-Cola, 1985 l R. H. Macy, 1980s

Copyright © 1999 Houghton Mifflin Company. All rights reserved Evaluation of Strategic Decision Success n Evaluative frameworks l managerial decision-making process (figure 2.1) process (figure 2.1) l bounded rationality (figure 3.1) l strategic gap (figure 10.2) l strategic decision-making process (figure 10.3) l determinants of strategic decision success (table 11.1)

Copyright © 1999 Houghton Mifflin Company. All rights reserved Evaluation of Strategic Decision Success (cont’d) n Evaluative Concepts l Judgmental versus computational decision-making strategies l Satisficing versus maximizing outcomes l Open versus closed decision-making processes l Attainable versus unattainable objectives