Chapter 4: Strategic Decision Making

Question 1

What are the characteristics of strategic decisions?

Answer 1

• Large, complex decisions affecting the entire organisation
• Often require massive resource investments and are done by a group of people as oposed to just one individual
• Future oriented
• Influence the horizontal, vertical and geographic scope of the organisation
• Horizontal= how wide is our range of products
• Vertical= what parts of the supply chain do we occupy
• Geographic= what regions do we operate in? (local, regional, national or international)
• Strategic decisions seek to link the internal and external environment
• Can be influenced by characteristics of the context and decision making team

Question 2

What are the 3 processes that strategic decision making can follow?

Answer 2

• Rational process- making a rational decision by collecting information regarding the problem/opportunity, indentify set of alternatives; select best alternative based on set of decision criteria; implement alternative (Similar to the scientific method)
• Visionary process- decision-maker envisions what needs to be achieved or where the organisation could be in the future, and then makes strategic decisions with that vision in mind.
• Experimentation process- when little is known about the situation, a goal cannot be envisioned and a rathional process cannot be applied, only alternative is action. Experiment and adjust approach as necessary based on what works

Question 3

What contextual influences are there on strategic decision making?

Answer 3

• Characteristics of decision-making team & individuals- Bounded rationality(Humans have limited ability to make rational decisions); Politics & Power(Can have large influence on strategic decisions); Diversity(More diversity=more conflict)
• Characteristics of the decision and circumstances under which it is made( Decision matter & political complexity; Uncertainty; Decision Imortance; Time pressure)
• Characteristics of organisation & external environment- Organisation Power centralisation; structure(informal vs formal); Size of the organisation (larger=more formal & extensive decision making process)
• External environment: Level of hostility; High velocity, unstable & dynamic environments; availability of resources in the environment to implement decision; uncertainty

Question 4

What the different strategic decision enablers and what are the challenges with Big data?

Answer 4

• Competitive Intelligence
• Business Intelligence
• Challenges with big data:
• Massive volume of data
• Large variety of data (Structured & unstructured)
• High velocity of data(new data and changing data)
• Reliability of data (accuracy and truthfulness cannot always be established

Question 5

Wrt Strategic decision enablers

Describe Competitive Intelligence

Answer 5

The constant process of scanning the external business environment for opportunities & threats
* CI cycle: Step 1: Identify strategic decision to be made
* Step 2: Determine key intelligence focus areas to be monitored
* Step 3: Determine sources and method of intelligence collection (reverse engineering, observation, secondary internet sources, public domains, internal sources)
* Step 4: Collect intelligence and evaluate the credibility thereof
* Step 5: CI analysis and drawing of conclusions/insights for management

Question 6

Wrt stategic decision enablers

Describe Business Intelligence

Answer 6

The process of converting internal business raw data into useful information that can aid decision making
* Source systems: Where do you get the data from? (Resource planning data, customer relations data, online transaction data, website traffic data(clicks))
* Data warehousing- facility to clean and store raw data for further analysis and use
* Data extraction & reporting- extracting value from the data & reporting it in a simple way to aid decision making: (Online Analytical Processing(OLAP); Data mining; Executive Information system(easy way to visually report data findings/trends/patterns to executives for decision making)

Question 7

What are integrating mechanisms?

Answer 7

They integrate external unstructured data (Competitve intelligence) with Internal structured data (Business intelligence) to paint a clearer picture of business situation
3 types:
* People as integrating mechanisms: Intelligence teams; Executive Intelligence Officers(EIOs) ; Intelligence Specialists
* Processes as inegrating mechanisms: Knowledge management; Amplifying weak signals; scenario planning
* Technology as integrating mechanism: Planning & decision support tools(simulation tools & productivity software); Artificial intelligence