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

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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

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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

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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?

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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

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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

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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

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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

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Stages in Decision making

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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

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More ideas/suggestions Commitment and loyalty Motivation improves Communication and co-ordination

Advantages of Group Decision Making

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Time consuming and costly Dominance by one member Compromise of decision Conflicts and disagreements

Limitations of Group Decision Making

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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

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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

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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

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Thank you

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