Effective Decision-Making Strategies for Business Success

Posted on Dec 7, 2024 in Other subjects

Making Decisions

Information Involved: Problem and/or Opportunity Situational Diagnosis – Planning – Stock – Options – Objectives and/or Options – Evaluation of Alternative Options – Selection – Decision

Decision Matrix: Planning – Programming – Programming Activities Resources – Financing Project Document

Action Performance: Plan Execution of Operations Information System – Monitoring Reports (Assessment In) – Assessment Post-Impact – Relevance – Efficiency – Effectiveness – Feasibility Results

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Strategic Management

Levels of Strategy

  • 1. Level Professionals: Determining which businesses a corporation must participate in.
  • 2. Level Business: Determining how a corporation should compete in each of their businesses.
  • 3. Level Functional: Determining how to support the business strategy level.

The Strategic Planning Process

  • Internal Analysis
  • Mission Goals – Horizon Implementation
  • Program Control

Mission

  • The major objective of UEN involves defining a group of customers.
  • It involves defining the needs that you want to meet.
  • It involves defining the type of vertical action.
  • Involves defining the geographical scope.
  • Indicates the goals and policies of the mission.

Analysis of External Factors

  • Types of Analysis:
  • Porter’s 5 Forces Analysis
  • Competition Analysis
  • Industry Analysis
  • Market Analysis

Market Analysis

  • Consumer Behavior: What, Who, Where, Why, How, When, How … buy
  • Characteristics of the Market: Size, Location, Competition, Competitive Products, Economic Conditions
  • Market Environment: Technology, Culture, Economic Trends

Opportunities and Threats

  • Opportunity: Scope for the company that allows the business to enjoy a competitive advantage.
  • Threat: Trend or unfavorable development in the environment that could erode the company’s position without organizational action.

Analysis of Internal Factors

  • Types of Analysis:
  • Financial Analysis
  • Production Analysis
  • Marketing Analysis
  • Organizational Analysis
  • Value Chain Analysis

Strengths and Weaknesses

  • Strengths: Positive aspects in the organization such as Human Resources, Technology, Image, Quality of Products, and Knowledge that enable a company to create added value.
  • Weaknesses: Areas in the organization that negatively affect business performance.

Objectives and Goals

Indicate where you want to take the business. Types of Goals and Objectives include:

  • Qualitative and Numerical
  • Profitability: 10%
  • Sales Growth: 25%
  • Market Share: 35%
  • Popularity: 90%

Strategy

The strategy indicates how to reach the objective or goal. Types of Generic Strategies include:

  • Differentiation
  • Cost Leadership
  • Focus or Niche Strategies
  • Functional Strategies: Sales, Production, Finance, Human Resources

Cost Leadership

The company seeks to achieve lower costs of production and distribution to offer lower prices than competitors and gain market share.

Differentiation

The company focuses on achieving superior performance in areas important to the customer such as Services, Quality, Style, and Technology.

Focus

The company targets one or two narrow market segments and adopts one of the two strategies outlined above.

Corporate Strategy

  • Investment/Growth: New products (diversification), targeting new markets, mergers (acquisition of other companies), integration (buying suppliers and/or distributors), partnerships/cooperation with other companies, equipment purchases, plant expansion, etc.
  • Maintenance
  • Disinvestment

Components of the Strategy

  1. Scope: Refers to the level of business strategy to be developed, where, and for how long.
  2. Resource Distribution: Relates to financial, physical, human, technological, and organizational resources. Resources are divided into tangible (land, buildings, machinery) and intangible (brand, reputation, patents, and marketing know-how) to create distinctive capabilities.
  3. Distinctive Competence: Refers to the unique strength that allows the company to achieve better conditions in efficiency, quality, innovation, or customer satisfaction. A company with distinctive ability can charge a higher price for their products or achieve substantially lower costs compared to rivals.
  4. Synergy: Empowering the skills, resources, and capabilities of the organization to produce superior results.

Programs

A set of activities and resources (human and capital) associated with a set of targets that, through efficient management over a period of time, will result in the proposed objectives by the company’s management.

Types of Programs

  • Program Purchasing
  • Sales Program
  • Revenue Budget
  • Investment Expenditures Budget
  • Remuneration Budget
  • Production Program
  • Marketing Program
  • Training Program

Control

Control is the disciplined effort to optimize the objectives of a plan. This process can take two forms:

  • Verification: Review later.
  • Guidance: A priori collective momentum.

In summary, control means taking actions to ensure that actual results match or exceed those desired.