Introduction to strategic decision making
Strategic decision-making is the basic fundamental of the decision-making process, which involves planning for successful implementation. Strategic decisions are important because they involve resource allocation, major actions, and procedures. It is a complex and evolving process where organizations understand the problem and provide the solution. The primary objective of strategic decision-making is to enhance organizational performance by making informed and effective decisions. This involves valuable information and alternatives. This is a process of making choices that align with the company’s overall mission (Kumar, 2024). The strategic decision considers the business perspective and available resources rather than focusing on short-term or immediate profits.
Essential Tools and Techniques for Managers
Balanced Scorecard
The Balanced scorecard is a framework that is helpful to assessing the organizational overall performance and determination of its objectives. It converts the purpose of an organization’s mission and vision into specific and measurable goals that are evaluated. Financial performance indicates both returns and profits that are involved in the organization. Customer value performance indicates customer satisfaction with the organization such as market share. The internal business process performance indicates productivity and quality of accomplishment (Macêdo, Filho, Antonio, & Mascena, 2020). In addition, innovation performance indicates employee contribution towards the success of the organization. Employee performance indicates the turnover rate and employee morale. The environmental and social factors indicate the water usage and also security incidents towards management.
Decision Trees
Decision trees are also important for strategic mission-making to analyze complex decisions and give the best outcomes. It provides a structured way to enhance decision making in a visualized way. It clarifies the choices depending on complex decisions. Especially, this evaluates the risks associated with each decision and uncertainty. It plays a long-term ability and future scenarios are planned for possible outcome analysis. Moreover, this improves strategic decisions in the long term. Also, it analyzes the risks associated with the choices depending on various cultures and various projects
Porters five forces
Generally, Porter’s five forces is an effective strategic decision-making tool to analyze the competitive analysis and improve the decision-making. In this case, there is a threat of new entrants where competitors increase. Strategic decision-making enhances the protection of the market. Offering the services and distribution of channels makes it more difficult, particularly for newcomers. The managers focus on strong relationship management with customer loyalty programs and enhancing customer retention. Moreover, the managers focus on understanding the prediction of shifting industry changes and influencing the market industry. It develops a competitive advantage with five forces and mitigates the risks that cause harm.
SWOT Analysis
Generally, the SWOT analysis is one of the effective strategic management tools that assess the performance of companies. In this case, the strength includes a competitive edge which allows the company to perform well. For example, low operational cost, diverse product range, and online presence with a loyal following. Weakness in SWOT analysis indicates the struggle or limitation in the organization. It helps in making the company get back satisfaction (Schooley, 2024). The examples indicate dissatisfied customers and delays in the development of products. The opportunities indicate how well the trends could benefit the company with enhanced opportunities and boost the business. Moreover, this example indicates social responsibility and industrial growth of prospects. The threat indicates an external challenge where they are monitored to protect the company from harmful effects. For instance, shortage of skilled workers and disruptions in the supply chain.
SWOT Analysis
Benefits of strategic decision-making
Achievement of organizational goals
It is no matter what the size of the company indicates, but all businesses have a wide range of goals. These goals are achieved with activities such as enhanced brand recognition, customer satisfaction, and a good industry leader (Aygün & Sezgin, 2021). Strategic decision-making helps to activate the process with a clear road map and effective decisions to reach the target.
Enhanced revenue generation
Strategic decision-making enables senior leadership to make critical changes in the operations of the company and boost profitability. By studying the competitors’ strategies and involving adjustments according to the model to create more revenue. The strategic planning and ideas are executed with the help of financial success and these innovations not only attract positive leadership but also continuous workflow.
Competitive edge for clients
In today’s fast-moving business landscape, down cost and downsizing are ,no longer enough to maintain an organization. Basically, to attract customers and implement impactful strategies helping business recognition and competitors to remain competitive in the marketplace.
Risk Assessment and mitigation
Certainly, every business comes with risks. Strategic decision-making involves evaluating the potential risk and taking preventive actions before it becomes a major issue (Ibeh, et al., 2024). This proactive approach avoids unnecessary damage to the organization.
Sustainability focus
In today’s society and current norms, consumers are increasingly aware of certain environmental issues and key factors for business success. Thus, strategic decision-making incorporates potential measures of environmental conditions and maintains public reach by contributing to long-term sustainability.
Strategic decision-making tools
Conclusion
Strategic decision-making is an effective process for managers to drive toward the success of the organization. Shortly, effective tools are used such as SWOT analysis, Decision trees, balanced Scorecard, and Porter’s five forces. It provides valuable insights and factors that drive business success. With the utilization of these frameworks, managers perform better with marketing conditions and techniques such as data recommendation-making and enhanced scenario planning. Allowing the managers to enhance the process affects the sustainability and success in the long term for the organization. Continuously refining both decision-making skills and good strategic tools leverages organizational growth.
References
Aygün, S., & Sezgin, O. (2021). THE METHODS AND TOOLS USED BY MANAGERS IN THEIR STRATEGIC DECISION MAKING PROCESSES. Stratejik ve Sosyal Araştırmalar Dergisi, 5(2), 282-293. Retrieved from https://www.researchgate.net/publication/351430825_THE_METHODS_AND_TOOLS_USED_BY_MANAGERS_IN_THEIR_STRATEGIC_DECISION_MAKING_PROCESSES
Ibeh, C. V., Asuzu, O. F., Olorunsogo, T., Elufioye, O. A., Nduubuisi, N. L., & Daraojimba, A. I. (2024). Business analytics and decision science: A review of techniques in strategic business decision making. World Journal of Advanced Research and Reviews, 21(02), 1761–1769. Retrieved from https://wjarr.com/sites/default/files/WJARR-2024-0247.pdf
Kumar, S. (2024). Strategic Decision Making and Strategic Decision Practices in Intelligent Organizations: A Review. International Journal of Business & Management Research (IJBMR), 12(2), 31-39. Retrieved from https://ijbmr.forexjournal.co.in/papers-pdf/ijbmr-120202.pdf
Macêdo, M. E., Filho, A. D., Antonio, & Mascena, M. B. (2020). The Balanced Scorecard as a Tool for Managing Strategic Decision Making. International Journal of Advanced Engineering Research and Science (IJAERS), 7(6), 441-448. Retrieved from https://ijaers.com/uploads/issue_files/54IJAERS-05202051-TheBalanced.pdf
Schooley, S. (2024, Oct 03). What is a SWOT Analysis? (And When To Use It). Retrieved from Businessnewsdaily: https://www.businessnewsdaily.com/4245-swot-analysis.html
Keywords
Balanced Scorecard, Porters five forces, Strategic decision-making, Customer value performance
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The methods and tools used by managers in their strategic decision making processes