1. Strategic Thinking and Decision Making Dr. Fred Mugambi JKUAT

2. Key Concerns 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 3/13/2016 2

3. Introduction 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. 3/13/2016 3

4. Strategic Thinking 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 3/13/2016 4

5. Who should be Engaged in Strategic Thinking? 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 3/13/2016 5

6. The link between strategic thinking and decision making 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 3/13/2016 6

7. Nature of Decision Making 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. 3/13/2016 7

8. Types of Decisions 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 3/13/2016 8

9. Decision Making Process 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. 3/13/2016 9

10. Stages in Decision making 3/13/2016 10

11. Group Decision Making 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 3/13/2016 11

12. Advantages of Group Decision Making More ideas/suggestions Commitment and loyalty Motivation improves Communication and co-ordination 3/13/2016 12

13. Limitations of Group Decision Making Time consuming and costly Dominance by one member Compromise of decision Conflicts and disagreements 3/13/2016 13

14. Barriers to Effective Decision Making 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 3/13/2016 14

15. The Role of Stakeholders in Decision Making 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 3/13/2016 15

16. Strategic Analysis Tools that Aid Decision Making Analyse Environmental Influences using PESTEL/PESTLE 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 3/13/2016 16

17. Thank you 3/13/2016 17