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Making strategic decisions

Syllabus aims
the significance of information management the value of different approaches to decision making assessing influences on corporate decisionmaking. 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 its 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

If you were to put 1000 on a horse

Hunch/ Intuition

Scientific method

What is the difference?

If you were to put 1000 on a horse would you study the form or go for one you liked the sound of?

Hunch/ Intuition
Colour Name Number

Scientific method
Look at the horses form Check the going ground, weather Check the jockeys form Watch the horse in training a few days before!

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 tactics
Do you know the busines s 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 groups 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 CPA Investment appraisal Ratio analysis Break even analysis Scientific decision making Marketing research IT analysis

Boston Matrix ANSOFF Matrix Porters Matrix

Influences on corporate decisionmaking


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
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 problem to solve? Starbursting - analysing decisions by asking questions

Well look at these in more detail next lesson

Homework
Complete innocent exam style qs Due in next week (Monday)

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