Strategic Decision Making
I. Introduction
- The basic thrust of strategic decision making in the process of strategic management is to make a choice regarding the courses of action to adopt which is primary task of the senior management.
- This is so because the basic concern in strategic management is to seek answers to questions.
- What is our business?
- What will it be?
- And what should it be?
II. Characteristics of Strategic Decisions
- Strategic decisions are concerned with the long-run future of the entire organization and typically have certain defining characteristics.
- These decisions are
- Consequential (they have a major impact),
- Rare (they are not taken frequently), and
- Directive (they provide guidance for operational and tactical decisions).
III. Modes of Strategic Decision Making: Henry Mintzberg: 1973
Henry Mintzberg, in his 1973 article titled “Strategy-Making in Three Modes, identified 3 modes of strategic decision-making that organizations can use to develop their strategies:
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Entrepreneurial Mode: In this mode, strategic decisions are largely driven by the vision and boldness of a single leader or entrepreneur. It focuses on innovation and risk-taking decisions aimed at growth.
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Adaptive Mode: This mode reflects a reactive approach where decisions evolve based on changing circumstances. It focuses on incremental changes and adjustments rather than large strategic shifts.
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Planning Mode: A more formal and structured approach, the planning mode involves a systematic analysis of goals, resources, and strategies through formalized processes, aiming for long-term stability.
A fourth mode of ‘logical incrementalism’ was later added by James Brian Quinn.
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Logical Incrementalism Mode: This mode is a blend of planning and adaptation, where decisions are made in small steps, allowing for gradual adjustments based on learning and feedback.