Strategic Decision Making Flashcards
How do you make good strategic decisions?
Accumulate organizational knowledge through organizational learning and enhancing culture and climate.
Get help through the wisdom of the crowd, obtaining and using data and marketing management support systems
Be responsive to business cycles, competition (game theory), and implementations intentions.
Think and decide rationally through rational decision-making (expected value knowledge) and cognitive biases in decision making.
What is organizational learning? (paper)
Organizational learning is individual learning where individuals share or transfer their knowledge, assumptions, models with multiple levels > group > organization > inter-organizational.
Why is some knowledge/information not easy to transfer, and how would you transfer this information?
Explicit knowledge is systematic, formal, can be codified, and therefore easy to understand, and share/transfer through for example manuals, etc. Tacit knowledge information is hard to encode, often complex, personal, subjective, and context-specific, and therefore more difficult to share/transfer. Transferring tacit knowledge requires frequent social interaction, education, and training.
Would you use a single loop or double loop learning to find out why certain problems arise? Explain.
Single loop learning, also called adaptive learning, is used to make an adjustment to correct a mistake or a problem.
Double-loop learning, also called generative learning, focuses on identifying why the problem occurred in the first place. The organization is willing to question its own mission, customers, capabilities, or strategy.
What are your options when you seek wisdom from the crowd?
You can learn from experts, analysis, your own gut, etc. However, the best option is to take (when possible) the average or weighted average of a group. You can take the average if opinions are diverse, independent, and averageable. The weighted average can be based on experience (more experience = heavier weighted) or based on predictions of distribution.
When would you use primary data and when secondary data?
Obtaining and using data derives from first having questions, then answers through data. Therefore, you need to establish what kind of data you need, how to use every piece of data, and how to respond to every outcome.
Primary data is collected specifically for the current purpose.
Secondary data is collected for some other purpose. This data is cheaper in time and money but derived from the past (backward-looking).
Within business, why would you obtain and use Exploratory data?
You use exploratory data to generate ideas. You can do this by in-depth interviews and focus groups (qualitative) or observational (quantitative).
Within business, why would you obtain and use Causal data?
Causal data assess cause-effect relationships through experiments, test markets > quasi-experiment (quantitative). It is also necessary to identify and understand causality using double-loop learning
What is the ORAC model?
Optimizing (calculating optimal solution)
Reasoning (using mental models)
Analogizing (starting from prior experience and solutions)
Creating (thinking out of box)
What is the impact on marketing effectiveness during the recession?
R&D investments and pricing (reductions) are more effective in a recession.
Advertising -> research is mixed but leans towards more effective.
Customer satisfaction -> more effective.
What is the Decision-making theory?
Analytic and systematic approach to the study of decision making.
Good decision is:
• Based on logic
• Uses all available information
• Considers all possible alternatives (including doing nothing)
• Applies appropriate quantitative techniques
What is game theory?
Considers the impact of the strategies of competing firms on our own strategy outcome.
What is a zero-sum game?
The zero-sum assumption means that their payoff is the opposite of ours.
What strategy will management go for when they are risk-averse?
Minimize the maximum loss. In game theory calculate the worse payoff of both companies.
What is a saddle point?
A saddle point is when neither of us will change our behavior given what the other is doing. (Min row max column)
