In management strategic decision making involves great complexity, uncertainty and risk. Describe the strategic decision making process and consider the effects of bounded rationality and cognitive simplification on the performance of strategic decision makers.
Key area of the project: Strategy, Strategic decision making, Process, problems associated with strategic decision making such as complexity, uncertainty, risk, Effects, characteristics of strategic decision making, Bounded rationality, Cognitive, Simplification of the process, Performance of the strategic decision makers.
The paper discuss about the strategic decision making process with various examples and methods. This paper is related to the process of strategic decision making process and discussed about the theory of strategic decision making, its advantages and the problems related to it. The paper also discuss about the objectives and goals which have been met through strategic decision making is a complex process, thus the risks were associated also with the process of strategic decision making which has been explained in the above through various examples and through different ideas and techniques, therefore the cognitive approach has also been explained in the paper that the strategic decision making process is one of the basic cognitive approach preferred by human to achieve a set of alternatives and goals. The decision making process generates the problem solving situation. Thus the strategic decision process requires high effort and great attention and should be based on past research as well as past experience. The example of Adidas a very big company has been given to understand the advantages and the benefits of good as well as strategic decision making process.
The paper consist the information of the process, performance and role of the factors which affect the process and performance of the strategic decision making and help to make simplify for the strategic decision makers.
To understand the whole project we need to understand the defined key words and used or covered topic in the paper. The most important topic is strategic decision making. Strategic decision making is a systematic process which consist number of information. Knowledge and ability of managers to use the collect information in effective manner for better result and output, the sources of the information in terms of the reliability and proper execution by the supervisors. Past data and past experiences of the managers' also playing vital role to design and define the strategic decision plan for effective output. Uncertainty and risk are the two important factors which considers in the process of strategic decision making. There are problems related with uncertainty and if the situation is not favourable both externally and internally then also the decisions get affected. Therefore, if the decisions are made alone or if the decisions are not planned properly then also there are lot of disadvantage occur. Strategic decision process carry some risks and is a complex process in terms of selection of correct information, correct and right decision, probability of success, steps and approach to achieve the objective and target.
2.1. Purpose and goals of strategic decision making
The purpose of this report is to focus on the decision making process which is strong as well as is the strength of the organization which gives an advanced benefits to some of the important and the potential clients that gives additional advantage to the employee as well as the company. The employees of an organization occupy a certain place for developing a culture and competencies. Thus this is possible from the effective decision making procedure.
Strategic decision making provides a framework for taking important decisions to achieve the goals, resources, commitments, structure, systems and achievements. This is the basic concept of strategic decision making process.
2.2. Process of strategic decision-making
Strategic decision making deals with competition and also helps the business in making great choices as well as great selection so as it also plays a major role in success or failure in the organization from future terms or future perspectives.
Thus the best selection and the best choices create the great achievements and objectives in the organization. The strategic decision making process should fit the needs of the organization and also the capabilities and the skills of the organization should met.
2.3. Problems associated with strategic decision making process are as follows:
There is no certainty if there is no perfect knowledge and lack of talents in decision. There are problems related with uncertainty and if the situation is not favourable both externally and internally then also the decisions get affected. Therefore, if the decisions are made alone or if the decisions are not planned properly then also there are lot of disadvantage occur. Overall risks are also concerned with strategic decision making process. Thus there are also problems related with various causes and effects with respect to strategic decision making process.
2.4. Characteristics of strategic decision making:
There are different characteristics associated with strategic decision making such as proper communication is required between the stakeholders. The strategic decision making process also deals with various changes in the organization. There are basically three important characteristics associated with strategic decision making process such as rationality, politics and flexibility. These are the process which helps in the improvement of the results and outcome of effective strategic decision making. Good decision maker always have option of options that can choose the best one and can create the best for the organization. The characteristic is based on the high talent, good communication skills, and highest performance, achieves the target, manage the problems, and create effective solutions for the problem (idea generation, idea continuance, idea represent able), presentable and charming personality and all. These are the above mentioned parameters which will help the manager to judge and to assess the skills and performance of the decision making process.
2.5. Psychology of decision making
The quantitative data play the very important role in defining the real decision making by accurate data and precise information, reliable data; company can predict the future in number and in quantitative format. This shows the clear picture. It shows the accuracy, the reliability and therefore also is an important method of research tools and techniques. Thus the decision making also becomes easy and flexible.
A decision situation is suppose any company is new to the market and is forecasting the number of units required to cater the market so the company need intuitive decisions and quantitative decision to analyse the situation.
There are complexities and bounded rationality with individual decision making process. The decision making process is very much goal oriented and it is rational. Bounded rationality describes that the decision making which has been done by the top management has been done within some limits and within the boundary which has some limits and capabilities and skills of the employee to achieve the goals and objectives of the organization and of the decision making process.
Bounded rationality implies the decision making process where the information is limited and also there is a limit in terms of knowledge and judgment. Bounded rationality has two boundaries where one is quantity and the other is quality.
Strategic decision making approach are generally needs to be unique and have some constraints such as time constraints environmental conditions is also a kind of constraint and this needs to be unique approach in the organization. Strategic decision process requires high effort and great attention and should be based on past research as well as past experience.
3.1. Cognitive process of decision making
The strategic decision making process is one of the basic cognitive approach preferred by human to achieve a set of alternatives and goals. The decision making process generates the problem solving situation. This does not include calculations and numerical functions. This is based on the possibility of applications. This is based on organizational decision making. This solves the problem in the organization, creates a better approach in the program and understands the employee in the organization and to understand the factors which will influence this decision making.
3.2. Factors that influence decision making process
Past experiences influence the decision making process in log term and in achieving the goals. Commitments and outcome also relate with the process of decision making. The decisions which have been made in the past also influence the decisions that are making in present in today scenario. Cognitive biases such as the thinking styles, the pattern of different thinking, inaccurate data and inaccurate judgment and also it is related with memory errors.
Thus this also is related to the past experience and previous knowledge which is based really on observations. Sometimes this also results to poor decisions but this influence the commitment as well as outcomes. The management gives lot of hard work and effort to continue the result and to continue the outcome. Thus it is responsible for commitments, goals, achievements and experiences.
There is large amount of money and time which has been invested in the process of decision making.
3.3. Cognitive simplification on the performance of strategic decision makers
The process of strategic decision making is based on some kind of uncertainty which is related with the formulation of goals, related with the identification of the problem, related with the generation and selection of alternatives and so on. Cognitive approach plays a very important role in understanding the needs of the organization and its people because it is a mental model which helps in understanding and knowing the problems. The goals are identified in a first step; the data gathering step is the second step which helps the strategic decision maker to produce and to develop a great outcome and great result. The number of solutions helps the decision maker to decide and to select for one option and alternative which will help the organization to achieve the goals and to meet the requirements and needs of the organization. The one selection and one alternative will help the organization to meet the decisions and to come up with the solution. Then there is a requirement to find out the best of each alternative and to select the best option. Therefore, the right decision helps to select the right choice and to create the better opportunity. Thus the immediate and proper action is required to implement the right situation. This reflects the greater decision making approach and also creates the right step to put the decisions for the use.
Advantages of strategic decision maker
Advantages of strategic decision making has been explained by the example which has been followed in Adidas
Adidas group is known as a global leader in the field of footwear industry specifically in sporting shoes, goods, etc. the company believes to build the market potential to present themselves as a brand and continuous innovation and improvement in the product to complete the competitors and to make strong financial position. Company has worldwide networks and catering their products and services all over the world. Company always is concerned about the shareholder's value, the customer needs and employees concerns. Adidas also follow all rules and regulations and committed to good governance. They also believe in creating talents, enthusiasm and engagement in the employees. Adidas always focus on employee's benefits and provide certain opportunities to them to grow in future from different ways within the company. Company also introduces the reward system which is purely based on fair recognition and related to the achievements which give a feel of achievement and success towards employees. The company also believes in providing good health as well as safety to its people. The legal issues that affect the firm especially ones different from those encountered in the home country is that the company don't act in isolation. Adidas reacts in the economic and social development in the countries where the products are made. Most of the workers strike which affect the business broadly and social as well as environmental issue also created in the business which is a barrier so Adidas determine the different set up scale to resolve the issue.