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Volume 19, Issue 1, Year 2014 111
USING A DECISION-MAKING PROCESS MODEL
IN STRATEGIC MANAGEMENT
Oriana-Helena NEGULESCU^1
Abstract : The decision-making process represents an ongoing activity of managers. Contrary to the common one, the strategic decision is being made in a longer time and on a detailed basis. The managers can use models of decision-making in their activity to be more effective. This paper presents a briefing on the development of the concept of management decision and it illustrates summarized three models of decision-making process. The author’s contribution to the paper is a conceptualization of the decision making process and a new, more complex model of decision-making called CDP Model, based on literature review and own observations and experience. The model takes into account the decision-making process as a system and is a useful tool to managers in any field. Keywords : strategic management, decision making process, decision making process models, CDP model JEL Classification : M190, M100, D
1. Introduction
The main activity of a manager consists in making decisions. It is well known that the decision in management is the process of choosing between two or more alternatives to accomplish one’s purpose. The managers are making scheduled routine decisions which arise from the organization’s policy and strategic decisions, unscheduled, unique, stemming from the organization’s strategy interrelated to environmental factors. The most of the management decisions are taken under the influence of external and internal environmental constraints. As the environment is constantly changing and the
(^1) Transilvania University of Brasov, Doctoral School, Romania
Review of General Management
information is not always complete and available, management decisions can be made in certain, uncertain and risky conditions. Decisions made in uncertain and risky conditions (Rutherford-Silvers J., 2008; Dragomir, C., 2012; Stefanescu, R., 2013) are characteristic to complex, unstructured and unplanned problems, features of strategic management. Making a decision implies the following of a set of principles which support the idea of adopting a philosophy in management (Petrescu, I., 2012) and the appropriate behavior at the workplace, called ethical decision, which considers that any manager must take into account three elements of morality in the decision-making process: moral recognition, moral evaluation and moral intention and action (Baumhart, 1961). These principles refer to a type of behavior which promotes adherence to its own control and transparency and vigilance against those who violate the principles of business ethics (taking bribes, secret negotiations etc.) (Casali, G.L., 2007, Pimentel, J.R.C. et al., 2010; Savur, S., 2013; Vardaman, J.M., et al., 2014). Applying management decisions in organizations has brought new dimensions in management theory, respectively taking into consideration creativity and innovation, organizational change, organizational learning, organizational culture development theory and others. Integrating innovation ( Heyne, P. Et al, 2010; Strumsky, D. Et al, 2010; Salge, T.O. & Vera, A. 2012 ) , contributions to the development of the organizational change theory (Queen, M, 2005; Kottler, 2011; Soparnot, R. 2011; Levin, G., 2012), the organizational learning (Smith, P.A.C., 2012), as well as new approaches to organizational culture (Ravasi, D.& Schultz, M., 2006; Modaff, D.P. et al, 2011; Moldoveanu, M. & Franc, V.I., 2011, Makis, C. & Tilcsik, A., 2013) emphasize generic routines as constants of organizational renewal and evolution. New problems faced by managers lead to new challenges in the decision-making process, such as: the adopted style and the level at which decisions are made, including the delegation. The decision-making style considers the decider’s personality and depends on the way he behaves in the sense of implicating a group in decision or making the decision alone. Among the styles discussed in the literature, there are: emotional, intuitive, collaborative, rational, and cognitive. Some authors consider that 90% of decisions are made intuitively (Klain, 2004) although the truth is partial. The fact is that the intuitive style develops through learning, through accumulation of knowledge and
and the decision-making is the one related to the limits of human rationality. Decision-making does not suppose the people to be entirely rational because emotional elements occur. Solving the problem focuses on the process of thinking and the heuristics, judgment is intuitive and rapidly approaches the specific solution. In many cases, problem solving and decision-making are interchangeable terms. Since in the process of solving the problem choosing a solution is one of the steps to follow and the decision is made in limited time or under pressure, it makes the problem solving and the decision- making to be integrated. In most of the cases, problems are considered to be decisions to be made and decisions are problems to be solved.
The decision-making process in 7 steps The decision-making process is spreads out in three stages: defining, identifying and development and seven steps (Figure no. 1.)
Figure no. 1. Decision-making process in 7 steps
The seven steps followed by the author (Litherland, N., 2013) are: defining
Figure no. 1. Decision-making process in 7 steps
The seven steps followed by the author (Litherland, N., 2013) are: defining the problem, identifying and limiting the factors, development of
1. Defining the **problem
- Identifying and limiting the factors
- Development of potential solutions
- Analysis of the alternatives
- Selecting the alternative
- Implementing the decision
- Establishing a control and evaluation system**
DEFINING IDENTIFYING DEVELOPMENT
potential solutions, analysis of the alternatives, selecting the best alternative, implementing the decision and establishing a control and evaluation system. This process represents the most commonly one used by the managers.
The decision-making process in 5 steps The decision-making process in five steps (Doyle, J., 2012), presented in Figure no. 2, is also used in the managerial practice and implies: identifying the decision to make, examining the options, gathering information, decision-making and implementing the decision. In order to identify the decision to be made the decision-maker has to write all thoughts about the decision to be made and to draw it in different ways until the decision is exactly expressed to fit the wish. Identifying the decision is assisted with answering the questions: Which? What? and How? or it may have an answer to the question: What if?
Figure no.2. Decision-making process in 5 steps
Options examination : various versions and options are formulated and considered and possible options, any assumptions and missing information are written down. Brainstorming is a technique that implies the group and helps the decision maker in deciding steadily. Gathering information : missing information may be gathered on the internet, at the library or other sources (analysis of market maturity,
1. Decision identification
2. Options examination
3. Information gathering
5. Decision implementation
4. Decision making
Brainstorming Team
Building components : when presenting an alternative, the decision- maker evaluates a result for each possible decision until he or she takes into consideration all possible combinations, constraints and limitations. Then statistical and mathematical equations are applied to the problem. The result is to be a list of deciding options to which successful probabilities are associated. Implementation : in order to implement decision, a support system may be used for collecting and analyzing data inside the organization and offering useful information to managers.
3. Decisional process based on innovation conceptualization
Different decisional process models analysis allows the conceptualization of the process, where the innovation takes a distinctive role (Figure no. 4). The innovation based on decision-making process allows the creativity stimulation.
Figure no.4. The innovative decision-making process
The process components are the followings: context description, innovation, decision and management. In this process specific techniques such as brainstorming, Delphi method and others are used to stimulate the creativity. Context description : information is gathered and conditions, restrictions and criteria for decision making are determined. Innovation : options are determined and substantiated with an innovative process. Decision : version that best meets the conditions, restrictions and criteria determined is chosen.
Context Management description
Innovation
Decision
Management : it involves the management of gathering information and of defining the context in which decisions are made, innovation management in determining decision alternatives, decision-making management and decision-making results management.
4. Complex decision-making process
The managers in the organizations may choose any of the process models summarized above. According to gathered analysis models and to own observations and experience, we consider that a more complex model might be useful to managers and might be adapted to any situation. We called the model CDP (Complex Decisional Process) as is synthesized in Figure no. 5.
Figure no. 5. The Model of Decision‐making Process (CDP model) Figure no.5. The Model of Decision‐making Process (CDP model)
Figure no.5. The Model of Decision-making Process (CDP model)
Decision making inputs
Informa- tion gathering
Alternatives & possibilities Identifica- tion
Consensus Alternative selection Decision formulation
Forecast the decision making impact
Information/ data
Knowledge Teams creative ideas
Ethical principles
Decision making process
Problemdefinition Decisionapplication
Decision making outputs
Organiza- tion values & beliefes
Environment Constraints & risks
Management succes or failure
Organiza- tions learning/ knowledge
Team strength
The proposed model can be developed by adapting it to current or strategic decisions; no matter if the objectives and the activities are planned or not.
4. Conclusions
The managers’ decision-making process has developed over time not only due to the complexity of the problems they are facing, but also to the contribution of theorists and practitioners in enriching specific literature. Achieving the organization’s goals in a complex and volatile environment where managers are forced to make faster decisions and to change them as fast, decision-making models are useful. Therefore, in the decision-making process, managers can choose between several models the one which best suits to the decision-making problem. The literature, creativity and data bases are conclusive factors in the decision-making process. The paper presents briefly a few examples. In addition, the decision making process conceptualization and the CDP Model represent some contributions to their development.
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