Decision Making Strategies

Topics: Decision theory, Decision engineering, Decision making Pages: 16 (2156 words) Published: October 14, 2014


Decision Making Strategies: Thompson’s Classification
A Review of the Literature

Table of Contents 2
Introduction3
Description of the main existing theories-approaches and their possible interactions..4 Presentation and discussion............................................................................................5 Relation with Managerial Decision-making...................................................................8 Analysis of the specific problems, challenges, restrictions, and limitations involved………………………………………………………………………………..9 Presentation of practical guidelines when dealing with applications at a managerial level…………………………………………………………………………………..12 Presentation of specific application………………………………………………......13 Indications for future research………………………………………………………..14 Conclusion……………………………………………………………………………15

Introduction

This paper will approach decision-making from a theoretical perspective with a focus on its influence on an organization’s strategic thinking. Analysis is conducted in the main theme of this study. The first part describes the existing theories and approaches in relation to the field under examination, while the second discusses other relevant issues. In the third section, unpredictable factors that might influence the decision-making process are looked into; the fourth discusses potential problems and limitations; while the fifth compares relevant theories. The sixth, seventh, and eighth sections discuss and present the applications to management, applications to a specific organization, and future research, respectively.

Description of the main existing theories-approaches and their possible interactions Thompson and Strickland (2001) have argued that “decision-making is synonymous to management and assists in the strategic decisions of an organization.” This view summarizes everything decision-making is about. In order to make it more easily understandable, they claim that decision-making is about finding opportunities for decision-making, developing alternative approaches, and finding possible ways of action. Management as a whole refers to all the activities of an organization related to decisions, approaching these decisions, and choosing the best possible actions for the organization. Based on this definition, by linking decision to management, Facione and Facione (2007) associate the two concepts. This association refers also to the process of competitive decision-making. More specifically, management assists an organization in being competitive, since it makes it possible for the latter to focus on strategic decision-making, taking into account the decisions of competitors (Plous 2003).

Presentation and discussion
The role of decision management within a company is to plan the directors’ activities and responsibilities. Generally, the operation of a company focuses on five key categories of decisions: i) decisions on investments; ii) decisions on financing; iii) decisions on the distribution of dividends; iv) decisions on personnel and other everyday issues; and v) decisions in relation to strategy (Cole 1994). Modern decision management theory is based on the assumption that the objective of any company is to maximize the wealth of its shareholders through the development of an appropriate strategy. In order to achieve this, the value of their share in the company should be also maximized, meaning that the value of the shares they hold should be maximized (Hill and Jones 2003). According to Goodwin and Wright (2010) forms of decision-making are: 1. Traditional (outdated) form: the person who decides alone or with other partners or family members relies on inspiration, intuition, luck, and improvisation. 2. Imitative form: the person(s) deciding do not rely on data, but rather imitate someone...

Cited: Christodoulopoulou, D. 2006. Strategic Decision-making and Decision Support Systems [Lipsi Stratigikon Apofaseon ke Sistimata Ipostiriksis Apofaseon]. Athens University of Economics and Business.
Cole, G.A. 1994. Strategic Management. DP Publication.
Facione, P., and Facione, N. 2007. Thinking and Reasoning in Human Decision-making. The California Academic Press / Insight Assessment, pp. 34-38.
Goodwin, P., and Wright, G. 2010. Decision Analysis for Management Judgment. Wiley.
Hax, A. 1988. Planning Strategies That Work. New York: Oxford University Press.
Herriot, L. 2009. “Contingency Planning Is… Disaster.” Recovery Journal.
Hill, C.W.L., and Jones, G.R. 2003. Strategic Management: An Integrated Approach. 6th ed. Boston: Houghton Mifflin Company.
Karakasidis, K. 1997. “Industrial Management & Data Systems.” Vol. 97, no. 8; Conceptual Paper.
Plous, S. 2003. The Psychology of Judgment and Decision-making. New York: McGraw-Hill.
Proctor, T. 2002. Creative Problem solving for Managers. London: Routledge.
Thompson, A.A., and Strickland, A.J. 2001. Strategic Management: Concepts and Cases. 12th ed. Boston: McGraw-Hill Irwin.
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