StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Strategic Analysis and Decision Making - Essay Example

Cite this document
Summary
It is safe to say that decision making is one of the most significant if not the most essential of all individual and group efforts within an organization. Traditionally, theorists have looked at decision making as the multi-step process by which a problem is recognized, solution objectives are defined, a pre-decision is made (that is, a decision concerning how to make a decision), alternatives are generated and assessed, and an alternative is selected implemented, and then followed up…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.6% of users find it useful
Strategic Analysis and Decision Making
Read Text Preview

Extract of sample "Strategic Analysis and Decision Making"

Download file to see previous pages

Such an ideal model of decision making also presumes that the decision maker is aware of all possible alternatives and that he or she decides subsequent to examining them all. A modern approach recognizes that decisions are made in an automatic, instinctive fashion. Specifically, image theory claims that people will take on a course of action that best fits their individual principles, current goals, and plans for the future. The decisions made in organizations can be distinguished as programmed -- routine decisions made according to preexisting guidelines -- or non-programmed -- decisions requiring novel and ingenious solutions.

Decisions also are different with respect to the amount of risk involved, ranging from those in which the decision outcomes are moderately certain to those in which outcomes are extremely uncertain. Uncertain situations are expressed as statements of prospect based on either objective or subjective information. For the rational decision maker, the question is "What is the best answer" Rational decision analysis provides a precise method for choosing among alternatives based on their estimated values.

The rational model requires the overt specification of the probabilities associated with choices and chances, as well as quantified payoffs for outcomes. For instance, consider the stock option decision tree given in figure 1.1. Here, an investor is considering buying an option on a stock with a current price of $100. The option itself has a price OP. There is a 50% chance that the stock's price will raise to $110, and a 50% chance that the price will fall to $95: - Current Stock Price = $100 - Option Price = OP - With P = .

5, S = $110 - With P=.5, S = $95The investor has two alternatives: Do not purchase the option (choice I), or purchase the option (choice II). Given the above assumptions concerning probabilities and payoffs, rational decision theory gives an exact method for ranking the alternatives. We calculate the expected value of an alternative as the product of its possibility and its payoff value. For the stock option case, we arrive at the following expected values. EV (I) = P (A) * V (A) = 1.0 * 0 = 0 EV (II) = P (B) * V (B) + P(C) * V(C) - OP = .5 * 10 + .5 * 0 - OP = 5 - OP The rational choice is to purchase the option if Option Price, OP, $5.

We note that this approach formalizes just one aspect of the decision task, that is, choosing among the alternatives. The pattern does not provide exact methods for identifying problems or alternatives, nor for estimating those alternatives. The rationalization that results from this process is always the same: The choice has the highest estimated value. The rational decision maker does not abandon the trouble even if all outcomes have negative expected values. In that case, the decision maker selects for the "best worst" case.

The model does not address the matter of generating additional alternatives. Still, rational

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Strategic Analysis and Decision Making Essay Example | Topics and Well Written Essays - 2750 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1511626-strategic-analysis-and-decision-making
(Strategic Analysis and Decision Making Essay Example | Topics and Well Written Essays - 2750 Words)
https://studentshare.org/miscellaneous/1511626-strategic-analysis-and-decision-making.
“Strategic Analysis and Decision Making Essay Example | Topics and Well Written Essays - 2750 Words”, n.d. https://studentshare.org/miscellaneous/1511626-strategic-analysis-and-decision-making.
  • Cited: 0 times

CHECK THESE SAMPLES OF Strategic Analysis and Decision Making

The Strategic Decision-Making Process

Strategic decision making process is defined as either a content approach that necessarily identifies content in the strategy or a process which identifies strategic processes associated with the decision making process (Simon, 1993).... Such strategic decision making involves not only implications but also independent and dependent factors that impact on the outcomes.... Kahn had adopted Rational decision making Model (RDMM) as his first choice in the process of changing the strategic environment at CH....
11 Pages (2750 words) Case Study

Strategic Planning Issues

In this scenario, it can be noted that as human beings, we are inclined to formalize our behavior in most instances but careful consideration has to be taken when it comes to the strategy-making process.... Strategy making is often a complex activity that requires creativity in the process.... hen it comes to the strategic-making process, intuitive thinking ought to play a pivotal role in informing and shaping the organizational vision.... A close analysis of the given article shows that it is concerned with highlighting some of the shortfalls of strategic planning that can impede the process of the strategic decision-making process which ought to be guided by creative thinking based on the changes that would be taking place both within and outside the organization....
5 Pages (1250 words) Assignment

Making the Decision

In order to come up with a good… In the analytical decision making style, the decision maker gathers considerable information and analyzes the possible alternatives (Geogr, 2012). In fact, the analytical style of decision making Making the decision making the Decision Question Decision-making is considered as one of the fundamental aspects in any businesssetting.... In the analytical decision making style, the decision maker gathers considerable information and analyzes the possible alternatives (Geogr, 2012)....
1 Pages (250 words) Research Paper

Business Strategies and Decision Making

This paper "Business Strategies and decision making" focuses on the strategy development which is a given plan that puts in place the exact goals and objectives which often can be changed in accordance to the situation to be handled owing to the dynamic changes in the business environment.... he importance of such a plan can be drawn from the point those core goals, actions and policies are integrated into a strategic plan that drives the success of a business-both large and small....
8 Pages (2000 words) Essay

Organisation Design and Organisation Delivery

Finally, it will discuss the strategic distribution of mental labor within the machine process and the human labor of the organization.... The discussion illustrates different applications of mechanization processes of mental labor that the author has experienced within the sales and marketing as well as financial activities of Great Wall Life Insurance Company....
14 Pages (3500 words) Research Paper

Strategic Technology Audit

The main focus of the paper "strategic Technology Audit" is on business strategy, innovative way, changing technology, government policies & Coca-Cola, resource auditing of Coca-Cola, physical resources, financial resources, human resources, intangible resources.... hellip; The Coca Cola's learning approach exposes its vision and sharpness as well as and its command over the changing scenario....
6 Pages (1500 words) Essay

Management Accounting at Venture Corporation Limited

 … Findings from the research have shown that in order to strategize in an organization, the management requires sources of information to be used in decision making.... nbsp;   Traditional management accounting methods such as cost-volume analysis, traditional budgeting and variance analysis are very important in the present manufacturing environment in order for a company to meet the global competition....
8 Pages (2000 words) Case Study

Strategic Decision Making in Health

This question of strategic decision making has been discussed in many conferences, seminars, workshops and other meetings .... This question of strategic decision making has been discussed in many conferences, seminars, workshops and other meetings .... However, there are obvious flaws that still need to be ironed out concerning strategic decision making.... There are also certain limitations and theoretical entailments of effort that have been placed to assist in strategic decision making....
10 Pages (2500 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us