Strategy: Analysis and Practice

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13. Process analyses for strategic decision making

Strategy: Analysis and Practice

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Outline

● Introduction● Perspectives on strategic decision-

making● Making choices● Game theory● Sensitivity analysis● Options

Strategy: Analysis and Practice

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Outline (continued)

● Decision-making processes● The architecture of strategic decision

making● Strategic decision-making and

performance

Strategy: Analysis and Practice

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Strategy as Process

Strategy: Analysis and Practice

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The 5 P’s of Strategy

● Plan – consciously intended course of action

● Ploy – a set of actions to outwit competitors

● Pattern – the outcome of multiple decisions

● Position – relating the organization to its environment

● Perspective – how strategists in an organization see it in the world

Mintzberg, Quinn & Ghoshal 1998

Strategy: Analysis and Practice

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Planning and Forecasting Techniques

Strategy: Analysis and Practice

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Example of Game Theory

Strategy: Analysis and Practice

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Sensitivity Analysis

A technique for investigating what happens if the assumptions underlying a strategic decision are changed.

Strategy: Analysis and Practice

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Strategic Options

Strategy: Analysis and Practice

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A Typology of Decision Processes

Strategy: Analysis and Practice

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Wicked Problems● Difficult to define precisely● Understanding the problem is part of understanding the solution● Rarely one best solution● Each solution involves different trade-offs and priorities● Difficult to assess in terms of performance● Highly inter-connected with other problems● Accompanied by high levels of uncertainty● Involve high risk in decision-making● Involve decisions that are difficult to reverse● Often discontinuous and political

Strategy: Analysis and Practice

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The Organizational Context

● Systems● Structure● Ownership and control● Organizational culture

Strategy: Analysis and Practice

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Artefacts and Assumptions in Strategic Decision-making

Strategy: Analysis and Practice

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Factors of Success● The knowledge base of managers

– How familiar managers are with the problem– The ability to plan and to resource decisions

● The receptivity of the organizational context– How ready the organization is to adopt

changes once decided– Involves organizational structure and culture

Strategy: Analysis and Practice

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Concluding Remarks● Decision-making is a complex activity involving:

– The choices made– The decision-making process

● Key features of decision-making processes:– Knowledge– Planning– Resourcing– Specifying– Alignment of stakeholders, structure and culture