1. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 0 E. FRANK HARRISON Fifth Edition The Managerial Decision-Making Process

2. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 1 The Managerial Decision-Making Process Fifth Edition Author: E. Frank Harrison, Ph.D. Slides by Monique A. Pelletier, Ph.D. Author: E. Frank Harrison, Ph.D. Slides by Monique A. Pelletier, Ph.D.

3. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 2 Strategic Decision Perspectives Strategic Decision Perspectives Chapter 10

4. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 3 The Nature of Strategic Decisions The Nature of Strategic Decisions n Defines relationship with external environment n Focuses on total organization n Multifunctional in character n Provides direction for administrative and operational areas n Crucial for long-term success

5. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 4 The Environment of Strategic Decision Making The Environment of Strategic Decision Making n The environmental system n The environmental domain n Environmental forces l economic system l political system l social system l technology

6. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 5 Figure 10.1 Decision Making in the Open Environmental System Decision maker Group Organization Permeable boundaries Intrusion of environmental forces System inputs (information, energy, and materials) System outputs (satisficing decisions) The political systemTechnology The economic systemThe social system

7. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 6 Uncertainty in Strategic Decision Making Uncertainty in Strategic Decision Making n Originates in external environment n Related to rate of external change n Results from change over time l slow change/present time l rapid change/present time l slow change/future time l rapid change/future time n Limits ability to control outcomes

8. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 7 The Concept of Strategic Gap The Concept of Strategic Gap n Organizational assessment l management l technology l policies l resources n Environmental assessment l opportunities l threats l requirements l responsibilities

9. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 8 Figure 10.2 The Concept of Strategic Gap ENVIRONMENTENVIRONMENT ORGANIZATIONORGANIZATION ASSESSMENT: Opportunities Threats Requirements Responsibilities ASSESSMENT: Management Technology Policies Resources Positive gap (O>E) STRATEGIC GAP Negative gap (E>O)

10. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 9 The Variations of Strategic Gap The Variations of Strategic Gap n Positive strategic gap n Negative strategic gap n Zero strategic gap

11. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 10 The Strategic Decision-Making Process The Strategic Decision-Making Process n Flow of the process l primary flow l corollary flow l information flow n Application of the Process l Figure 10.3 l Figure 10.3 l Figure 10.2 l Figure 10.2 l Figure 2.1

12. Copyright © 1999 Houghton Mifflin Company. All rights reserved. 10 - 11 Figure 10.3 The Strategic Decision-Making Process Environmental assessment STRATEGIC GAP Organizational assessment Search for alternatives SET/RESET OBJECTIVES Assess choice Evaluate alternatives MAKE CHOICE IMPLEMENT CHOICE GAP ANALYSIS Opportunities Threats Strengths Weaknesses Positive gap Negative gap Corrective action Feedback Outputs Legend: Primary flow Corollary flow Information flow Information ENVIRONMENTENVIRONMENT Possibilities