B301B: Making Sense of Strategy II

B301B: Making Sense of Strategy II Question 1: (week 2) The diamond model of Michael Porter for the Competitive Advantage of Nations offer a model that can help in understanding the competitive position of a nation in global competition. A. Discuss the four (4) attributes that constitute the diamond of national competitive advantage? Elaborate with examples. 1. Factor conditions(i.e. the nation's position in factors of production, such as skilled labour and infrastructure), 2. Demand conditions(i.e. the nature of home-market demand for the industry's product or service, sophisticated customers in home market), 3. Related and supporting industries, the presence or absence in the nation of supplier industries and other related industries that are internationally competitive. 4. Firm strategy, structure and rivalry(i.e. conditions in the nation governing how companies are created, organize, and managed, as well as the nature of domestic rivalry). Factor Conditions: • By factor condition: it is meat the nations position in terms of factors of production such skilled labor or infrastructure necessary to compete in a given industry. Most of the factors of production that are required in today’s sophisticated and knowledge-intensive industries are created factors (such as skilled human resources or a scientific base). Thus a nation does not inherit but instead creates the most important factors of production. This is in contract to the old doctrine of factors of production labor, land, natural resources, capital, and infrastructure. Even educated workface is not enough what matters most is specialized workface e.g. in chemical industries, optics……….etc. • Governments may have an important role in creating or supporting the creation of factors of production by funding training and support specialized scientific institutions. Demand Conditions: • Porter argues that a sophisticated domestic market is an important element to producing competitiveness. Firms that face a sophisticated domestic market are likely to sell superior products because the market demands high quality and a close proximity to such consumers enables the firm to better understand the needs and desires of the customers. • Nations gain competitive advantage in industries where the home demand gives their companies a cleared or earlier picture of emerging buyer needs, and where demanding buyers

of 21 pressure companies to innovate faster and achieve more sophisticated competitive advantages than their foreign rivals. • Demanding and sophisticated consumers in the home market can pressure companies to meet high standards and innovate faster that their foreign rivals. • Government policy can aid this process by instituting and strict productsafety and environmental standards Related and Supporting Industries: • Innovation may require consideration interaction between, a firm, and its users or supplies and between firms themselves. Geographies and cultural closeness can be crucial factors in this process: agents located near each other can take advantage of shorter lines of communication and an ongoing exchange of ideas and information which may also be helped by the development of dose and high-trust working relationship. • The illustration of the Italian footwear cluster (fig.9.2) offers a graphic example of how a group of dose-by, supporting industries creates competitive advantage in a range of interconnected industries that are all internationally competitive Firm Strategy, Structure and Rivalry: National circumstances and context create strong tendencies in how companies are created, organized, and managed, as well as what the nature of domestic rivalry will be. Government policy can influence a firm’s behavior through its taxation policies towards long-term investment and through the nature of its competition policies. Competitiveness in a specific industry results from convergence of the management practices and organizational modes favored in the country and the sources of competitive advantage in the industry. A. Strategy (such as Capital Markets) B. Structure C. Rivalry B. Discuss the role of government to support the national competitive advantage. The government plays an important role in Porter’s diamond model. Like everybody else, Porter argues that there are some things that governments do that they should not, and other things that they do not do but should. He says, "Government’s proper role is as a catalyst and challenger; it is to encourage - or even push - companies to raise their objectives and move to higher levels of competitive performance

of 21 1. Focus on specialized factor creation Government should provide national infrastructure like education or research institutions connected with industry and encourage privet investment to create factors. 2. Avoid intervention in factor and currency market Intervene to create lower factor cost or favorable exchange rate that help firm to compete internationally 3. Enforce strict product, safety and environmental standards Enforce strict product, safety, and environmental standards which pressure companies to upgrade technology, improve quality and provide features that respond to consumer demands. 4. Limit direct cooperation among industry rivals • Allowing more cooperative R&D to achieve economy of scale to reduce duplication of resources and cost 5. Promote goals that lead to sustained investment Government shape the goal of firms to encourage innovative creation to encouraging investment in human skill and assets 6. Deregulate competition Through maintain monopoly, restricting entry leading to static market structure and less dynamics. 7. Impose strong domestic antirust policies Real national competitiveness requires policies to disallow merger and alliance because they reduce the incentive to innovate. 8. Reject managed trade Managed trade guaranteed markets for inefficient companies, so trade agreement would reduce motivation to innovate. Therefore, Policies should follow open market access to every foreign nation and remove its barriers. C. Nations are more competitive than others, following Porter’s reasoning, why is that? Elaborate with examples. Porter argued that a nation can create new advanced factor endowments such as skilled labor, a strong technology and knowledge base, government support and culture. A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade. Companies gain advantage against the world’s best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home-base suppliers, and demanding local

of 21 customers. According to Porter, a nation attains a competitive advantage if its firms are competitive. Firms become competitive through innovation. Innovation can include technical improvements to the product or to the production process. Porter used a diamond shaped diagram as the basis of a framework to illustrate the determinants of national advantage. This diamond represents the national plying field that countries establish for their industries. Question 2: (week 3) Parenting is an important concept in strategic management. A. Discuss and elaborate on the conditions and opportunities that allow parent companies to add value for SBUs. • Corporate parent assisting its SBUs in 4 areas: 1. Providing corporate functions and services such as international treasury management and HRM 2. R&D and new acquisition or merging. 3. Additional finance for growth and problem areas. 4. Develop formal links between business like transfer technology or core competencies between SBUs. B. Discuss Porter’s Updated competitive strategies (cost and differentiation leadership) with examples and the reason for the update. Second, Differentiation: pp. 241-244 • Organization is unique in its industry. • Valued by its buyers. • Ex. Apple Products. Integrated Cost Leadership and Differentiation: pp. 244-250 Question 3: (week 3) Ansoff argues that any organization can be conserved of as an assembly of distinctive Strategic Business Areas (SBAs). On the other hand, Grant (2008, p. 227) suggests eight (8) drivers of Cost Advantage. A. Discuss Ansoff growth vector components. Market Penetration: • Emphasize stability at least in terms of the products or services provided or the market served.

of 21 • Ansoff’s terms it also emphasizes an attempt to increase the amount or value (or both) of the products of services sold as a means of achieving growth. Ex. receive a call from STC to upgrade Diversification: • Implies a degree of variation from the usual. • Both products and missions are new to the firm. • Conglomerates concept B. Briefly discuss Grant’s eight drivers of Cost Advantage. 1. Economies of scale 2. Economies of learning 3. Process technology 4. Process design 5. Product service design 6. Capacity utilization 7. Input costs 8. Residual differences in operating efficiency. Question 4: (week 4) For the modern business organization, ensuring that decision-making is as effective as possible is extremely important. A. What’s a decision? • A specific commitment • A choice made between alternative courses of action in a situation of uncertainty • Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. • Others argue that a decision to do nothing needs to be included, as long as it is part of a rational process leading to a conscious choice between alternative. Harrison says” simply a moment in an ongoing process of evaluating alternatives for meeting objectives “ B. Discuss the levels of decision making as explained by Simon. • Programmed decision:-these can be readily mapped on to a diagram or computer program and are repetitive and routine, to the extent that a definite procedure has been worked out of handling them.

of 21 • Non- programmed decision:-there are so complex that the system they follow cannot be predetermined, as each decision is unique so that there is no cut and dried method for handling the problem, it is complexity and novelty require a customized solution. C. Discuss the levels of decision making as explained by Drucker. • Generic decision:- are routine, deal with predictable cause and effect relationship , use defined information channels and have definite decision criteria, there is frequently reliance on rules and set procedure . • Unique decision: -are novel and require judgment and creativity, since they are complex and are characterized by incomplete information anduncertainty. D. Discuss the levels of decision making as explained by Ansoff. • Strategic decision : -it is subset of non- programed and unique decision, and it concerned with objectives and long range plans, which are usually the province of top management. • Administrative decision : -it is programmed &generic decision, the area of middle management ,more complex more than operating decision and concerned with control ,motivation & organization system . • Operating decision :-for the low management , concerned with routine decision and can be explained by rules , method and procedures, they are programmed by firms ,such as automatic re-ordering ,also it may be delegated but control can be maintained by the use of decision rules. E. Elaborate the Rational decision making approach and its assumptions (7). • It refers to a decision based on a logical process of adopting means to achieve a particular end or objectives . • Objectives may include the firm desire to maximize its profits, or an individual’s desire to maximize his or her utility. • An act is rational if a. It is oriented to clearly formulated unambiguous( clear) goal or set of value which are logically consistent. b. The means chosen to achieve the goal use the best available information . Assumption of Rationality in economics 1. An economic objective that can be quantified and that maximizes the utility of the decision –maker . 2. Transitive and consistent preferences of decision makers for there objectives.

of 21 3. Unlimited information process abilities by those involved and an ability to see their own self –interest and act accordingly . 4. Well defined mutually exclusive alternative . 5. Perfect estimate of outcome and calculation of the expected value of each alternative ,which may include an estimate of the probability of each outcome. 6. Selection of the alternative that maximizes expected utility . Unlimited information and so no time or cost constraints Question 5: (week 4) A decision process is concerned with the whole range of activities involved in making a decision, not merely the point of decision. A. Discuss and explain the decision-making models Simon, Mintzbirg / Chris Gore / Hofer &Schen / Higgein's . Simon (programmed &non-programmed) • Programmed decision :-these can be readily mapped on to a diagram or computer program and are repetitive and routine , to the extent that a definite procedure has been worked out of handling them. • Non- programmed decision:-there are so complex that the system they follow cannot be predetermined, as each decision is unique so that there is no cut and dried method for handling the problem, it is complexity and novelty require a customized solution. Chris Gore &others • setting objective:- is vital in business decision- making as solution can only be seen as successful or not in the light of both the problem or opportunity and the overall objective of the firm • Problemdefinition :-to recognizing a problem or need for a decision , this stage can determine the results looked for and so needs careful attention . • Problem formulation activities :- this stage absorbs most time for firms and can never be taken for granted . • Implementation:- monitoring no matter how excellent a solution or decision is, if it is not translated into action and no attempt is made to ensure that implementation is in according with plans then the whole effort spent on the previous stages will be wasted . Chris Gore &others

of 21 Hofer &Schen model • There normative model sees goal formulation as outside the strategy formulation process, this model is based on the ideas of limited rationality, so it encompasses uncertainty, complexity of decision and bounded rationality, Hofer &Schen provides a model for decision making that takes account of these feature :- 1. Goal formulation as outside strategy formulation process 2. Identification of the issues :-this is not necessary simple or obvious because of the problem of partial ignorance , so they advise the inclusion of contingency planning in the strategy formulation process. 3. Alterative generation :- including social and political analyses as well as economic and market forecasts. 4. Alterative evaluation:- clarifies dimensional issues . 5. Choice:-to be done in the most rational way, the choice situation will involve the use of criteria, or choice model, these form part of what are called strategic tools . Implantation :they exclude it from the strategy formulation process Higgein's Model • The main issue in this model is the identification of information system needs , which overcome the problem of assimilation that fully rational models would have . • Objectives are compared with required performance , and any performance gap is looked at in the light of forecasts. • This comparisons of different information inputs an overall corporate plan results , followed by individual business plans and finally operation budget, he sees the process as one imposed from top of an organization using data that can mostly be easily quantified Mintzbirg Model This model fall into three stages :- 1. Identification :- consists of two parts a.The recognition of the problem which it affected by the availability of an answer, or occur if actual deviate from stander, (the number of stimuli needed before a problem is recognized depend on whether the situation is perceived as being problem or an opportunity.) b. Diagnostic :-involves attempts to clarify issues , open information channels and establish task forces. 2. Development :-consists of two parts

of 21 a. Search :-search for solution begins with organization's memory; that is, its information system and experiences of established members of the organization. b. Design:-the design of solution is a complex and iterative process. The problem is broken into smaller parts which are handled is a sequential manner, with decision to move on to the next stage effectively meaning that certain possibilities are ruled out as the decision processes. 3. Selection :-consists of three parts:- a. Screening :- to eliminate unfeasible solutions and so this stage is often part of the search phase. b. Evaluation:-judgment the most important technique , followed by bargaining between interested parties . c. Choice:-Mintzbirg warns that the ignorance of those with authority to choose and the bias of sponsor should remembered . B. Discuss the practical consideration that should be taken in the decision-making. • An analysis of the way decision are taken within an organization can help to give an overall picture of the process normally followed for each organization that develops its own distinctive of doing things because of the influence of its culture. • The interrelationship between the stages can be viewed , so that management can review the function of the whole decision –making . It may be that is great deal of back- tracking or recycling of events, so that the stage are repeated . • The dynamism of the process must not be forgotten and frequently the systematic remodeling of a decision enables management better to coordinate and control the groups involved in making a decision. Question 6: (week 4): A. Discuss the decision making research. • Most research has investigated decision making from ‘information processing’ perspective • There has been a focus on the role of heuristic and biases with less attention to developing a more sociological or sensemaking perspective, concerned with how managers socially construct their organizational worlds and their competitive environment • A sensemaking perspective pays attention to how people “deal with” constraints imposed by their information processing limitations and their organizational context, delving into the socio-political nature of organizations to show that the answer to better decision making

of 21 does not necessary lie with the provision of greater quantities of more accurate, objective and timely data. • • Decision-makers face a dilemma over whether to exploit current information or to explore the environment further B. Define the sensemaking and the relation with decision / sensewriting. • The intertwined concepts of framing, sensegiving , sensereadingand sensewritingare all related to the resources, process and meaning of power effects in organizational decision making • Framing: shaping the meaning of a subject and sharing it with others. • Sensegiving: attempts to influence sensemaking and construction of meaning toward a preferred redefinition of social reality • Sensereading: perception of circumstances and aligning of interpretation • Sensewriting: inheriting, shaping and reflecting the understanding of the world. • In tradition, of sensemaking, image theory suggests that decision makers use their image (a individual store of knowledge) to set standards that guide decisions about goals and plans. • In image theory: a frame consists of the principles, goals and plans and is used to set standards that influence decisions C. Skillful practitioners: influencing meaning and aligning interpretations, describe and elaborate these skills practitioners. • Three types of power to help make sense of influencing 1. Resources power :- is to do with overt decision making , enacted through the use of resources , such funds , information ( hire, fire, reward). 2. Process power :- In addition , those who control the agendas of meeting ,for example, are able to draw on process power so that other actors are effectively prevented from participating and therefore influencing decision making 3. Meaning power:-is to do symbolic power and the use of symbols , rituals, language and co-option ,for example, to shape perception cognition and preferences, Question 7: (week 5): Many executives and managers embrace intuition as an effective approach to important decisions. A. Define the intuition and describe its types. • Neither the opposite of rationality nor a random process of guessing.

of 21 • It corresponds to thoughts, conclusions, or choice produced largely or in part through subconscious mental process. • Intuition can be conceptualized in two distinct ways: as holistic hunch and as automated expertise. • Intuition as holistic hunch : corresponds to the judgment or choice made through a subconscious synthesis if information drawn from diverse experience. It is wereinformation stored in memory is subconsciously combined in complex ways to produce judgment or choice that feels right. • Intuition as automated expertise: it is less magical, corresponding to recognition of a familiar situation and the straightforward but partially subconscious application of previous learning related to that situation. It develops over time as relevant experience is accumulated in a particular domain. B. What’s intuition’s value? • Intuition characterizes the heroic gambler in the case of intuition as holistic hunch and the well-travelled expert in the case of automated expertise. • Both Intuitions have value in exploring the environment for new technologies and strategies • Holistic Hunch can be valuable for exploration • Automated expertise can be valuable for exploitation. C. Discuss Intuition as holistic hunch when exploring • Intuition as holistic hunch could play a supportive role when an organization has adopted exploration as a goal, playing hunches often involve actions consistent with exploration ;- 1. risk-taking

2. Experimentation with novel approach,

3. Variation in an organization’s experiences through departure from current practice. • Intuition as hunch best in combination with an exploration goal would seem to provide the best opportunity for positive outcome of intuitively driven decisions. In the spite of this optimistic observation and subsequent expectation, obstacles do exist. • Hunch are often imperfect, a high rate of failure, though , is not necessarily bad exploration. Failure and learning from it, is part of the exploratory approach, because not all experiments can be expected to yield positive results.

of 21 D. Discuss Intuition as holistic hunch when exploiting • Exploiting existing capabilities involves working in familiar terrain, where events and outcomes can be evaluated against a backdrop of substantial prior learning. • Exploitation of currents capabilities can be positive, at least in the immediate and possible intermediate future. E. Discuss Intuition as automated when exploring • Emphasis on past learning in automated expertise yields disappointing outcomes in a situation calling for discovery, innovation, risk taking and experimentation • Exploration find firms seeking new technology and strategies , because automated expertise involve the application of previous experiences and approaches in familiar ways and places , it would seem to fall short the wrong tool from the toolbox. F. Discuss Intuition as automated when exploiting • The decision maker focusingon issues related primarily to execution and building on past investment , efficiency improvement in organization routines , refinement to how key tasks are performed , and incremental market response and initiative are the emphases as organization seek success by exploiting existing capabilities . • Such characteristics expertise seem perfectly matched to situations where organization’s goals is to exploit existing capabilities , several problem exist a. Reliability :- in which a decision maker uses past learning over time , is one problem for intuition and automated expertise, , memory failures, fatigue , information overload and distraction can create inconsistencies in how a manager or executive uses prior learning when that learning and its application are not raised to an explicit level. b. Validity :- difficulty in fully understand key cause –effect relationships cause poor judgment / choice for managers who do not raise issues to an explicit level. G. Discuss Suggested managerial actions to make acting on hunches as useful as possible. • To make acting on hunches as useful as possible ,the problem of limited commitment among those affected by the decision and the problem of high failure rate must be directly confronted, To handle low commitment , there is two promising tactic :- 1. Inspirational stories :-story telling is a key tool of persuasion and influence , because good stories capture the imagination and trigger emotional responses.

of 21 2. Organizational culture :- upper –level executive could develop an organizational culture supporting of risk taking and failure ( such as a culture promotes the ideas that winner take risks and some time fail). H. Discuss Suggested managerial actions to make acting on automated expertise as useful as possible. • Automated expertise should be treated with caution in an organization emphasizing exploitation of its current capabilities , the potential pitfalls of subconscious processing are many , to avoid the pitfalls the organization have to follow steps:- • First:- executive should assess the emphasis placed on automated expertise in strategic decision making , if key decision makers have difficulty discussing explanatory factors , but can do so After prompting and probing , then expertise may be involved , and is probably involved if the decision context has an exploitation focus. • Second :- if a determination is made that automated expertise is being emphasized to substantial degree , manager can adopt tactics to generate a more explicit process (Devil’s advocacy , multi- attribute decision making , root cause , seven whys are examples for TQM movement). • Third:- in the context of advice to make knowledge explicit , it is important to contrast • a. Automated expertise refer to subconscious knowledge and processing that was once part of conscious thought., over time , conscious thoughts has become less necessary in applying this knowledge • b. Tactic knowledge involve knowledge that has never been held in the conscious mind, decision maker has never consciously known all that he knows , knowledge developed through implicit learning that bypasses the conscious mind altogether . • Fourth :-Visuals and symbols may seem distant from sound business practice, but it has a long history of success, (Einstien used drawing , diagrams , graphs as crucial aids in capturing and expressing their understanding). Question 8: (week 5) Making decisions is the most important job of any executive. It’s also the toughest and the riskiest. Bad decisions can damage a business and c career sometimes irreparably. A. Outline the hidden traps in decision making as advanced by Hammond, Keeney and Raffia.

of 21 • Executive is someone trying to familiarize themselves with the trap-trap and the trap is useful to improve their decision-making and recommend proposals on subordinates and co- workers • In this research there are various forms of entrapment, among others:  Anchoring Trap  The Status-Quo Trap  The Sunk-Cost Trap  The Confirming-Evidence Trap  The Framing Trap  Estimating and Forecasting Traps B. Discuss the actions that can be taken to avoid these traps.  To avoid Anchoring Trap -Managers who are aware of the dangers of anchors can reduce their impact by using the following techniques -Always view a problem from different perspectives. -Think about the problem on your own before consulting others to avoid becoming anchored by their ideas. -Be open-minded. Seek information and opinions from a variety of people -Be careful to avoid anchoring your advisers, consultants, and others from whom you solicit information and counsel. Tell them as little as possible -Be particularly wary of anchors in negotiations. Think through your position before any negotiation begins in order to avoid being anchored by the other party’s initial proposal  To avoid The Status-Quo Trap Always remind yourself of your objectives and examine how they would be served by the status quo. You may find that elements of the current situation act as barriers to your goals.  Never think of the status quo as your only alternative. Identify other options and use them as counterbalances, carefully evaluating all the pluses and minuses.  Ask yourself whether you would choose the status-quo alternative if, in fact, it weren’t the status quo.  Avoid exaggerating the effort or cost involved in switching from the status quo.  Remember that the desirability of the status quo will change over time. When comparing

of 21 alternatives, always evaluate them in terms of the future as well as the present. If you have several alternatives that are superior to the status quo, don’t default to the status quo just because you’re having a hard time picking the best alternative. Force yourself to choose  To avoid The Sunk-Cost Trap Seek out and listen carefully to the views of people who were uninvolved with the earlier decisions and who are hence unlikely to be committed to them.  Examine why admitting to an earlier mistake distresses you. If the problem lies in your own wounded self-esteem, deal with it head-on. Remind yourself that even the best and most experienced managers are not immune to errors in judgment.  Be on the lookout for the influence of sunk-cost biases in the decisions and recommendations made by your subordinates. Reassign responsibilities when necessary.  Don’t cultivate a failure-fearing culture that leads employees to perpetuate their mistakes. In rewarding people, look at the quality of their decision making (taking into account what was known at the time their decisions were made), not just the quality of the outcomes.  To avoid The Confirming-Evidence Trap It’s not that you shouldn’t make the choice you’re subconsciously drawn to. It’s just that you want to be sure it’s the smart choice;  Always check to see whether you are examining all the evidence with equal rigor. Avoid the tendency to accept confirming evidence without question.  Get someone you respect to play devil’s advocate, to argue against the decision you’re contemplating. Better yet, build the counterarguments yourself. What’s the strongest reason to do something else? The second strongest reason? The third? Consider the position with an open mind.  Be honest with yourself about your motives. Are you really gathering information to help you make a smart choice, or are you just looking for evidence confirming what you think you’d like to do?  In seeking the advice of others, don’t ask leading questions that invite confirming evidence. And if you find that an adviser always seems to support your point of view, find a new adviser. Don’t surround yourself with yes-men.  To avoid The Framing Trap

of 21 Don’t automatically accept the initial frame, whether it was formulated by you or by someone else. Always try to reframe the problem in various ways. Look for distortions caused by the frames. Try posing problems in a neutral, redundant way that combines gains and losses or embraces different reference points. For example: Would you accept a fifty-fifty chance of either losing $300, resulting in a bank balance of $1,700, or winning $500, resulting in a bank balance of $2,500? Think hard throughout your decision-making process about the framing of the problem. At points throughout the process, particularly near the end, ask yourself how your thinking might change if the framing changed. When others recommend decisions, examine the way they framed the problem. Challenge them with different frames  To avoid Estimating and Forecasting Traps Taking a multidisciplinary approach to forecasting and probability judgment. Reduce the influence of overconfidence in making an estimation. Carefully examine all your assumption to ensure they’re not unduly influenced by your memory. Question 9: (week 1, 5 and 6) According to Eisenhardt (1999), many executives realize that to prosper in the coming decade, they need to turn to the fundamental issue of strategy. A. What do we mean by ‘strategy’? What is the common aspects that are shared in different strategy definitions? Essentially, developing a competitive strategy is developing a broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals”. ~ Michael Porter  “Every business organisation, any sub-unit of organisation, and even every individual [ought to] have a clearly defined set of purposes or goals which keeps it moving in a deliberately chosen direction and prevents it drifting in undesired directions”. ~ Kenneth Andrews  “The determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for those goals”. ~ Alfred Chandler

of 21 • Each of these quotations emphasises different aspects of strategy, but they have much in common. Here are some themes which run through them: • Strategy concerns the long term. • It determines goals and objectives. • It deliberately, and selectively, allocates resources in order to achieve goals and objectives. • It analyses what options are available to the organisation, and chooses which to pursue. • It takes place in a competitive environment where some organisations succeed and others do not. B. Define Strategy and identify how effective decision makers create strategy. (Reading 20 pp. 332) C. Refereeing to Eisenhardt (1999), what are the four (4) actions that need to be taken by effective decision makers to create strategy, choose only tow (2) to discuss. 1. Building collective intuition .

2. Stimulating quick conflict .

3. Maintaining a disciplined pace .

4. Defusing political . 1- BUILD COLLECTIVE INTUITION (Building collective intuition that enhances the ability of a top management team to see threats and opportunities sooner and more accurately.) One myth of strategic decision making in highvelocity markets is that there is no time for formal meetings and no place for the careful consideration of extensive information. Executives, the thinking goes, should consider limited, decisionspecific data, concentrate on one or two alternatives, and make decisions on the fly.  Sharing information at "must attend" meetings is an essential part of building collective intuition. The interplay of ideas during these meetings enhances managers' understanding of the data.  Why do realtime information and "must attend" meetings lead to more effective strategic decision making? Intense interaction creates teams of managers who know each other well. Familiarity and friendship make frank conversation easier because people are less

of 21 constrained by politeness and more willing to express diverse views. The strategic decision process then moves more quickly and benefits from highquality information.  In addition, with intense interaction, managers naturally organize antipodal teammember roles, such as shortterm versus longterm or status quo versus change.  A range of perspectives improves decision quality by ensuring that managers consider different sides of the issue.  This patterned processing (what we term "intuition") is faster and more accurate than processing single pieces of information  This intuition gives managers a head start in recognizing and understanding strategic issues 2- STIMULATE QUICK CONFLICT (Stimulating quick conflict to improve the quality of strategic thinking without sacrificing significant time.) In highvelocity markets, many executives are tempted to avoid conflict. They assume that conflict will bog down the decisionmaking process in endless debate and degenerate into personal attacks. They seek to move quickly toward a few alternatives, analyze the best ones, and make a quick choice that beats the competition to the punch. Reality conflict stimulates innovative thinking, creates a fuller understanding of options, and improves decision effectiveness. Given the value of conflict, effective strategic decision makers in rapidly changing markets not only tolerate conflict, they accelerate it. 1. One way that executives accelerate conflict is by assembling executive teams that are diverse in age, gender, functional background, and corporate experience.  An alliance decision served to demonstrate the difference in outlook. Several of the experienced managers had been involved with both successful and unsuccessful alliances. They described an alliance as a "marriage between equals.“ 2. Another way that effective strategic decision makers accelerate conflict is by using "framebreaking" tactics that create alternatives to obvious points of view. One technique is scenario planning.  scenario planning: Teams systematically consider strategic decisions in the light of several possible future states. Other techniques have executives advocate alternatives that they

of 21 may or may not favor and perform roleplays of competitors, the point is to use and switch among them to prevent stale thinking.  3. The most powerful way to accelerate conflict is by creating multiple alternatives. The idea is to develop alternatives as quickly as possible so that the team can work with an array of possibilities simultaneously.  The power of multiple alternatives comes from several sources:-  a. Pushing for multiple alternatives speeds up conflict by stimulating executives to develop divergent options.  b. Enables them to rapidly compare alternatives, helping them to better understand their own preferences.  c. Provide executives with the confidence that they have not overlooked a superior option.  d. Multiple alternatives defuse the interpersonal tension that can accompany conflict by giving team members room to maneuver and save face when they disagree. 3- MAINTAIN THE PACE (Maintaining a disciplined pace that drives the decision process to a timely conclusion) Less effective strategic decision makers face a dilemma. On the one hand, they believe that every strategic decision is unique. Each requires its own analytical approach, and each unfolds in its own way. On the other hand, these same decision makers believe that they must decide as quickly as possible. Yet making quick choices conflicts with making oneofakind choices. • Effective strategic decision makers avoid this dilemma by focusing on maintaining decision pace, not pushing decision speed They launch the decisionmaking process promptly, keep up the energy surrounding the process , and cut off debate at the appropriate moment. They drive strategic decisionmaking momentum. • One way that these decision makers maintain decision pace is by following the natural rhythm of strategic choice. They use rules of thumb for how long a major decision should take. • Executives maintain pace by prototyping decisions as they analyze them. Instead of merely analyzing options in the abstract, they test them. • Effective strategic decision makers skillfully cut off debate, typically using a twostep method called "consensus with qualification" to bring decision making to a close.

of 21 • managers conduct the decision process itself with the goal of consensus in mind. If they reach consensus, the choice is made. If consensus does not emerge, they break the deadlock using a decision rule such as voting or, more commonly, allowing the manager with the largest stake in the outcome to make the decision. • Consensus with qualification maintains the pace by taking a realistic view of conflict as valuable and inevitable. • Consensus with qualification allows decision makers to resolve conflict (and so maintain pace) • Consensus with qualification lets decision makers drive decision pace by providing an effective way to reach closure without consensus 4- DEFUSE POLITICS (Defusing political behavior that creates unproductive conflict and wastes time.) Some executives believe that politics are a natural part of strategic choice. They see strategic decision making as involving high stakes that compel managers to lobby one another, manipulate information, and form coalitions. The game quickly becomes a competition among ambitious managers. More effective strategic decision makers see political activity as wasting valuable time. Their perspective is collaborative, not competitive, setting limits on politics and, more generally, interpersonal conflict. • One way in which effective executives defuse politics is by creating common goals. These goals do not imply homogeneous thinking. Rather, they suggest that managers have a shared vision of where they want to be or who their external competitors are • A more direct way to defuse politics is through a balanced power structure in which each key decision maker has a clear area of responsibility, but in which the leader is the most powerful decision maker. • Humor defuses politics. Effective strategic decision makers often relieve tension by making business fun. They emphasize the excitement of fastpaced markets and the "rush" of competing in these settings, Humor strengthens the collaborative outlook. It puts people into a positive mood, Humor also allows managers to convey negative information in a less threatening way Question 10: (week 6) Making good decisions is the fundamental to the success of every engineer.

of 21 A. Discuss in details the eight keys elements for making smart choices and informed decision.

B. W hat are the (4) Four keys to strategy as strategic decision making 1. Set the stage by building collective intuition through frequent meetings and realtime metrics that enhance a management team's ability to see threats and opportunities sooner and more accurately. 2. Stimulate quick conflict by assembling diverse teams, challenging them through frame breaking heuristics, and stressing multiple alternatives in order to improve the quality of decision making. 3. Discipline the timing of strategic decision making through time pacing, prototyping, and consensus with qualification to sustain the momentum of strategic choice. 4. Defuse politics by emphasizing common goals and clear turf, and having fun. These tactics keep decision makers from slipping into destructive interpersonal conflict and time wasting politics.