making strategic decisions. syllabus aims the significance of information management the value of...
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Strategic Decisions Strategy = a plan for meeting your objectives Strategic is far more than this! Strategic thinking Strategic decisionsTRANSCRIPT
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Making strategic decisions
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Syllabus aims• the significance of
information management
• the value of different approaches to decision making
• assessing influences on corporate decision-making.
• Influences on corporate decision-making include ethical position (real or perceived),
• Resources available and relative power of stakeholders.
• The range of management approaches to decision making from scientific to intuition.
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Strategic Decisions
• Strategy = a plan for meeting your objectives
• Strategic is far more than this!
• Strategic thinking• Strategic decisions
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Strategic v Tactical• Strategic decisions
• Long term view
• Visualising what you want to achieve
• SWOT analysis
• Carried out on a range of senior & junior staff
• Tactical decisions
• Short term issues,
• Concerns day to day issues taken by a manager.
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Your go• Whiteboard
• Write on one side
»Strategic decision
• On the other
»Tactical decision
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To seize the opportunity to open the first chain of luxury ice cream outlets in China
Strategic: Part of a long-term goal, difficult
to reverse and requiring substantial resources
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To tackle sales weakness in the North with a major sales
promotion based on Buy One Get One Free.
Tactical: This is a short-term fix to
what may or may not be a long-term problem
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To address a potential sales threat from an Italian firm by
launching a complete range of Italian products.
Tactical launch until the Italian firm gives up,
then perhaps withdraw your own product from the market
Strategic though not necessarily sensible!
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To cut back on our training budget during this recession
Tactical no reason to suppose that it’s
part of a long-term plan to reduce training spending
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To focus the energies and resources of the business upon its
strengths (not correcting weaknesses).
Strategic: would affect the long-term
plans of all managers working for the business
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Different approaches to strategic decisions
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• Hunch/ Intuition • Scientific method
If you were to put
£1000 on a horse
What is the difference?
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• Hunch/ Intuition
– Colour– Name– Number
• Scientific method
– Look at the horse’s form– Check the ‘going’ – ground,
weather– Check the jockey’s form– Watch the horse in training
a few days before!
If you were to put £1000 on a horse would you study the form or go for
one you liked the sound of?
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Real business example
Of intuition!
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Richard Branson & Northern Rock
• In 2007 with the collapse of Northern Rock
• Branson put himself forward as a saviour
• Based on a hunch!
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Of business tacticsDo you know the
business story here?
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“Well, we were wrong...
the storm in a D cup is over!”
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The central issues• M&S have introduced a policy of price discrimination in
the lingerie department; they charge an extra £2 for bras sized over a DD cup.
• a pressure group ‘Busts 4 Justice’ has been set up on Facebook and now has over 16,000 members who were campaigning for this surcharge to be removed.
• The group’s founder, Beckie Williams, has bought a £3.40 share in the company to allow her to confront chairman Sir Stuart Rose at the next annual meeting in July.
• On Friday, M&S apologised & Saturday started a promotional campaign!
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• On Friday M&S backed down, saying "we boobed".
• Miss Williams, 26, met chairman Sir Stuart Rose, who revealed the company's response of cutting the charge has cost £3million.
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M&S comment…• "We've heard what our customers are telling us - that
they are unhappy with the pricing on our DD-plus bras and that basically we've boobed.
• So from Saturday May 9 no matter what size you buy, the price is going to be the same. We're not going to cut the quality though - they'll still be made to the same high standards so you get the best support on the high street.
• From Saturday, the chain is also offering 25% off the price of any bra in any size. The promotion will last until May 25.”
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Discuss the alternative strategies that M&S might adopt to protect
itself from sharply worsening economic circumstance in the
future.
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Scientific decision making
Logical & rational
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Scientific methods
SWOT – PEST-G CPAInvestment appraisalRatio analysisBreak even analysis
Boston MatrixANSOFF MatrixPorters Matrix
Scientific decision makingMarketing researchIT analysis
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Influences on corporate decision-Influences on corporate decision-makingmaking
• Ethical position (real or perceived)– How will the decision be viewed by key stakeholders– Will moving production abroad match the business’ ethical
standards?– Where are materials sourced from?
• Resources available– Financial constraints– Workforce– Scarcity of materials
• Relative power of stakeholders– How might pressure groups respond?– Will TUs become involved?
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Which method did they use?
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Wanted to expand into Europe
Looked at a range of possible mergers….
How did they raise the money £30m?
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Issues with joint ownership…
• Positive • Negatives
Ethics
Environmental
Different culture
Target market
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Article on Innocent…
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Decision-making Decision-making • There are many techniques to aid decision-making
– SWOT– Cost Benefit Analysis
• Six Thinking Hats – look at decisions from different angles• Pareto Analysis – what is
the most important problemto solve?
• Starbursting - analysing decisions by asking questions
We’ll look at these in more detail next lesson
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Homework
Complete innocent exam style q’s Due in next week (Monday)