Analysis and Intuition in Strategic Decision Making: The Case of California

Analysis and Intuition in Strategic Decision Making: The Case of California

Zita Zoltay Paprika (Corvinus University of Budapest, Hungary)
DOI: 10.4018/978-1-59904-843-7.ch002
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Abstract

Many management scholars believe that the process used to make strategic decisions affects the quality of those decisions. However, several authors have observed a lack of research on the strategic decisionmaking process. Empirical tests of factors that have been hypothesized to affect the way strategic decisions are made are notably absent (Fredrickson, 1985). This article reports the results of a study that attempts to assess the effects of decision-making circumstances, focusing mainly on the approaches applied and the managerial skills and capabilities the decision makers built on during concrete strategic decision-making procedures. The study was conducted in California between September 2005 and June 2006 and it was sponsored by a Fulbright research scholarship grant.

Key Terms in this Chapter

Nonprogrammed or Ill-Structured Decisions: Unique and unstructured decisions with long-term impacts are nonprogrammed decisions. Programmed and nonprogrammed decisions naturally set the two extreme poles of one continuum and the appearance of interim cases is much more probable. In the course of company operations, it happens very rarely that a decision situation clearly corresponds to the terminology of the programmed or nonprogrammed decisions. On the other hand, most managers develop some kind of practice for the handling of nonprogrammed-decision situations that can be successfully applied if a ready-made solution can be fitted to an actual situation. Certain nonprogrammed decisions may become programmed in the course of time in a company’s practice. It is rather meaningful that programmed and nonprogrammed decisions are sometimes referred to as well-structured and ill-structured decisions as well.

Intuition 3: Intuition is a rational process in which an individual reaches a conclusion on the basis of less explicit information than is ordinarily required to reach that decision.

Intuitive Skills: Intuitive thinking and problem solving are best supported by the following skills: the willingness to take risks, a sense for business, the ability to represent ideas, and practice-minded behaviour and expertise.

Strategic Decisions: Strategic decisions are those that affect the direction of the firm. These major decisions concern areas such as new products and markets, product or service developments, acquisitions and mergers, subsidiaries and affiliates, joint ventures, strategic alliances, finding a site for a new investment, reorganisation, and other important matters. Strategic decision making is usually conducted by the firm’s top management, led by the CEO or president of the company.

Intuition 2: Intuition has been described as a perception of reality not known to consciousness, in which the intuition knows, but does not know how it knows.

Intuition 1: Intuition is usually defined as knowing or sensing something without the use of rational processes.

Programmed or Well-Structured Decisions: Herbert Simon was the first to distinguish between the two extreme types of decisions. He called recurring, routine-like, or ready-made ones programmed decisions.

Analytical Skills: The skills that most support the analytical approach in problem solving are determined as follows: analytical skills, computer skills, organising skills, professional expertise, problem-solving skills, and communication skills.

Intuition 4: Intuition is a nonsequential information processing mode, which comprises both cognitive and affective elements and results in direct knowing without any use of conscious reasoning.

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