Assignment of Strategic Management

Submitted to:
Mam. Farah Naz Naqvi
Submitted by:
Amina Aslam
(M13MBA032)

Article:

Strategic Decision Making

Written By:
Eisenhardt Katleen M. & Zbaracki, Mark J.

1: REVIEW OF ARTICLE
Abstract:
The article reviews the strategic decision making (SDM) literature by focusing on the dominant
paradigms:

Rationality and bounded rationality

Politics and power
Garbage can

They review the theory and key empirical support, and identify emerging debates within each
paradigm. Finally they propose a research agenda that emphasizes a more realistic view of
strategic decision making.

What Is Strategic Decision?

Strategic Decision is one which is important in terms of the (Mintzberg, Raisinghani and
Theoret, 1976: 246):
Actions taken
Resources committed, or
Precedents set
Infrequent decisions made by the top leaders of an organization that critically affect its health
and survival.

Rationality and Bounded Rationality (Br):

Rational action also called Synoptic or Comprehensive Model of Decision
According to this paradigm,
1. Actors enter decision situations with known objectives
2. These objectives determines the value of the possible consequences of the action

3. Actors gather appropriate information and develop a set of alternative actions

4. Select the optimal alternative.

Cognitive limitations:
Different researchers put different cognitive limitations. Some of these are,
Cyert and March, 1963: said that, Theory and case studies demonstrated, Goals can be
inconsistent across people and time and the search behavior of people is often local. Standard
operating procedures guide much of organizational behavior.
Carter, 1971, in a review of six top-level planning decisions, found 2 types of search process
Personnel-induced: strong executives with definite objectives in mind
Opportunity-induced: search occurs when unexpected opportunities arise.
Allison in 1971said that, How standard operating procedures applies to strategic decision in
Government? Actions arising from an organization yesterday best predict the actions today it
means people learn from past experience of organization for future success.
Anderson in 1983 said that, Goals and alternatives by objection model (at Executive
Committee): Consider simultaneously few alternatives courses of action, then participants raise
objections to a current alternative (discovery of goals and choices trough social process).

An alternative view:
Authors dont agree completely with R-BR continuum. They argue that rationality is
multidimensional, and strategic decision makers are rational in some ways but not others.

Suggest heuristics decision making tactics are effective in fast-paced, uncertain

settings.
There are many variations of bounded rationality.

Politics and Power:

Legislative process (1950s): Decision makers have different goals, they come together through
coalitions and the most powerful triumph.
What is politics?
Authors refer by politics, those observable, but often covert, actions by which people enhance
their power to influence a decision.

An alternative view:
Traditional view is that politics are fluid and is essential to organizations for creating effective
change and adaptation.

A contradictory view is emerging:

Politics are trigged by power imbalances

Frustrated executives turn to politics in autocratic situations.
Politics are static, as decision makers rely on the same allies and the same politics time
after time.
Politics is ineffective. Many people dislike it.
Authors conclude that politics create animosity, wastes times, disrupts information
channels and leads to poor performance.

Garbage Can (Gc):

The GC model describes decision making in highly ambiguous settings (organized anarchies).

GB model streams:

Decisions depends strongly on timing and luck

Decisions are fuzzy and are not the result of analysis
Individuals are not sure about what they want and change their mind often

An alternative view:

Although problematic preferences have empirical support, there are common themes
throughout the choice process
Participation is not always so random, but rather is a consequence of institutional roles,
politics and the phase of the decision process. That is participation is somewhat
predictable.
Also, according to Magjuka (1988) the GC model is supported at the individual level, but
overall patterns of participation were clearly predictable from psychological and
demographic variables. The patterns are purposive, rational and predictable
Streams of problems, people, choice opportunities and solutions are linked by the issue at
hand. They are not independent

GC model is more robust as time frames become longer, deadlines are removed, and
institutional forces are diminished

New Research Agenda:

Most scholars believe that people are boundedly rational, that decision making is essentially
political, and that chance matters.
New agenda seek that empirical findings could transcend traditional perspectives to new, more
realistic views. Future research areas:

Cognition
Normative implications
Conflict

1. Cognition

GC model ignores the cognitive capability of decision makers

At the other extreme political model assumes that people are cognitive superheroes

Both models are unrealistic. Authors propose to achieve a more realistic view of cognition
studying heuristics of strategic choice. Which, how, why and when they are most appropriate

2. Normative implications:
It is required to do more normative studies:

To find how effective strategic decision making vary with the size of the firm, degree of
government regulation, pace of technical change, different cultures
In profit-seeking firms
To examine decision outcomes at different levels of organizations

3. Conflict :
To improve realism of conflict, explore:

Benefits Vs. Costs

To answer questions like: Some sources of conflict are more beneficial than others? Is
there an optimal level of conflict? How relates to emotion (anger, frustration, animosity)
and decision speed?
Incorporate new approaches like resolving conflict trough cooperative decisions, building
trust, maintaining equity and evoking humor.

Criticism on article:
This article on strategic decision making is a Defined posture, there is use of tables, specifying
author(s), method, sample, description and conclusion, Good structure: By model and then by
dates, Summary on every model and final conclusion, Refers to authors original work, Future
agenda but there is Overloaded tables, including authors who barely are mentioned. Publishing
date of the article is not mentioned. Authors stated the need of strategies for profit seeking firms
but there is lack of studies on profit-seeking firms.
There is need of further study on strategic decision making. This article was written in 1992 and
now is 2015 too much time has passed and management and decision making requirements and
style is also changed.
This is true that people are not rationale in all times. Their decisions are influence by time and
other people. So making good decision is core responsibility of managers and it is essential for
progress of organization.