Making strategic decisions

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.

Strategic Decisions

• Strategy = a plan for meeting your objectives

• Strategic is far more than this!

• Strategic thinking• Strategic decisions

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.

Your go• Whiteboard

• Write on one side

»Strategic decision

• On the other

»Tactical decision

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

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

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!

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

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

Different approaches to strategic decisions

• Hunch/ Intuition • Scientific method

If you were to put

£1000 on a horse

What is the difference?

• 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?

Real business example

Of intuition!

Richard Branson & Northern Rock

• In 2007 with the collapse of Northern Rock

• Branson put himself forward as a saviour

• Based on a hunch!

Of business tacticsDo you know the

business story here?

“Well, we were wrong...

the storm in a D cup is over!”

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!

• 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.

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.”

Discuss the alternative strategies that M&S might adopt to protect

itself from sharply worsening economic circumstance in the

future.

Scientific decision making

Logical & rational

Scientific methods

SWOT – PEST-G CPAInvestment appraisalRatio analysisBreak even analysis

Boston MatrixANSOFF MatrixPorters Matrix

Scientific decision makingMarketing researchIT analysis

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?

Which method did they use?

Wanted to expand into Europe

Looked at a range of possible mergers….

How did they raise the money £30m?

Issues with joint ownership…

• Positive • Negatives

Ethics

Environmental

Different culture

Target market

Article on Innocent…

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

Homework

Complete innocent exam style q’s Due in next week (Monday)