theory and strategy practice

Topics: Decision making, Decision theory, Optimal decision Pages: 6 (2124 words) Published: May 14, 2014

Strategic Decision Making
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Strategic Decision Making
If we think of organizations and their surrounding environments as political systems, the phrase ‘strategic decision making’ assumes a completely different meaning. Organizations and their surrounding environments depend on each other in several ways, benefit from each other and are either positively or negatively impacted as a result of strategic decisions made by either party. Therefore, in order to be able to create situations where the relationship between both political systems is positive and both mutually benefit from each other, it is essential to deploy logic and rationale to the process of decision making. Decisions undertaken by the political systems would be of equal importance as those that have not been taken. In other words, a decision might be taken to not undertake a particular action for the mutual benefit of both political systems. This re-enforces the fact that strategic decision making lies at the very heart of strategy creation. The main aim of this essay is to critically analyse the statement that beliefs and the true meaning of strategic decision making changes if organizations and their surrounding environments are considered as political systems. As it has already been suggested that in order to be able to create an environment where both political systems would be able to mutually benefit each other, it is essential to base strategic decisions on rationale and logic. Support for this perspective might also be located in literature. Herbert Simon in the year 1956 proposed the Satisficing decision making approach which advocated the establishment of an acceptability criterion in context of decision making. According to this approach, all decisions which meet the established acceptability criterion are fit for implementation. Critics of this approach suggested that decisions in every situation need to be optimised and then implemented. The Satisficing decision making approach however was still preferred over the optimal decision making approach as it was realistic in nature. The approach strongly suggested that it might not be possible to optimise solutions in every situation as inputs and outputs might not be known. Furthermore, acceptability criteria were based on the fact that both decisions that would be implemented and those that would not be implemented would be based on a realistic rationale (Mintzberg &Waters, 1982). An example of decision based on logic and rationale might also be located in the movie Apollo 13. Two days prior to the launch of Apollo 13, a decision was taken to replace Ken from the main launch crew with Jack. Although, it might have been optimal to send Ken up in Space as he had trained for the mission he did not satisfy the acceptability criteria that all astronauts were to be medically fit. Jack was selected as he was a fine pilot and would be able to satisfactorily train for the mission in the given time period. This decision was in complete agreement with the organization and its environment acting as different political systems and both benefiting from each other. The decision was taken in order to ensure that that everyone else remained well and the mission was a success. Another example of deploying rationale to strategic decision making and creating a win-win situation might be noted from the fact that a decision to allow a ‘direct abort’ was rejected while accepting the decision to allow moon’s gravity to slingshot Apollo 13 to a return path to the earth. This decision was undertaken despite knowing that the former measure would have taken lesser time and the rationale here again was to create a benefiting situation and bring back the astronauts without risking the aircraft’s blow up. Literature also presents evidence to the fact that strategic decision making is evolutionary....

References: Cohen, M. D., J. G. March and J. P. Olsen (1972). ‘A garbage can model of organizational choice’,Administrative Science Quarterly, 17, pp. 1-25.
Eisenhardt, K. And Zbaracki, M. (1992). Strategic decision making. Strategic Management Journal,Vol. 13, 17-37
Langley, A., Mintzberg, H., Pitcher, P., Posada, E., Saint-Macary, J. (1995). Opening up decision making: the view from the black stool. Organization Science, Vol 6(3):260-279.
March, J. G. and J. P. Olsen (1976). Ambiguity and Choice in Organizations. Universitetsforlaget. Bergen
Mintzberg, H. and J. A. Waters (1982). ‘Tracking strategy in an entrepreneurial firm’. Academy of Management Journal, 25, pp. 465-499
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