Strategic decision making
Lecture 1
What will be covered in lecture 1?
a. Course organization
b. General background strategic
management
c. What are strategic decisions?
What are the aims of this course?
In this lecture, you will learn about:
Theory
• what qualifies as a strategic decision
Organization
• how the course is set up
• what you need to do to pass the course
Course organisation
a. Course organization
I. Syllabus, course goals & classes
II. Course requirements
III. Required reading
IV. The team
V. Course overview
The aims of the course are the following:
1. Students acquire insights in the historical and contemporary individual, team
and
organization level strategic decision-making perspectives in organization studies.
2. Students learn to analyze, reconstruct and to judge strategic decision-making
situations from different perspectives.
3. Students develop the skill to analyze, reconstruct and to assess decisions of
strategic decision-makers within organizations.
4. Students learn to apply various theories and strategic decision-making models
in
organizational contexts from the perspective of the strategic decision-maker.
Course requirements
To complete the SDM course and obtain the credits (6 ects):
• Your unrounded grade for the individual exam (60%) and group assignment (40%) should
be at least 5.5 out of 10 (norm used by the School of Social and Behavioral Sciences)
• You must fulfill the attendance requirement for the practicals.
Individual Written Exam: closed book exam with multiple choice and open questions (3hrs, on
campus). First opportunity on 8
th of June, Resit on 7
th of July.
Group Assignment, two parts:
I. Portfolio reflections on activities in labs (three times) → 20%
II. Discussion questions (answer questions on readings before lectures) → 20%
Attendance Requirement: Attend lab sessions (read specifics in syllabus)
,1. We need to get some of the basic strategy terminology and
background logic that we will use throughout the course and exams,
else we will lose valuable time.
2. We need to level the different knowledge bases of the different
students participating in the course.
Parts 1 & 2 of module 0 are basically a workthrough to the extent that
you need it.
General background in strategic management (module 0)
1. Basic strategy terminology
a. What is strategy?
b. What is strategic management?
c. What are the generic strategies?
d. What is competitive advantage?
2. Essential models & theories in strategy
a. Porter’s Five Forces Model
b. Environment analysis (PEST, PESTEL,
DESTEP)
c. SWOT analysis
d. Relevant organization theories
What are strategic decisions?
➢ Structure, regulations are based in strategic decisions
➢ Topmanagement plays a role
➢ Example: astrazenca was not as good as pfizer
➢ Strategic decisions are important, but which ones are strategic?
➢ 10 recurring topics: on themselves not that important, but what is important is the persons
who are important in an aspect
➢ Example: location, moving Tilburg university to Groningen
➢ Require different people and inputs to make a good decision
, ➢ Example: sunflower oil problem. How to deal with this? Production problems. Is it
replaceable? Example of inputs.
➢ Example: Chesapeake energy. They pump of gas. They can sell gas now in Europe! Boundary
decision: on which market will I be active and where do I want to expand. This is a big
decision. But are they strategic decision? Example of boundaries.
Decisions
We make decisions all day:
• Some need additional information (they are not routine)
• We ask advice for some decisions
• Some are made on the basis of pre-existing heuristics (ideas how commonly decisions are taken)
• We try to narrow down the number of alternatives (ie. Thinking locally or globally?)
• Organizations are also confronted with decision-situations
• The key challenge to any decision is the reduction of uncertainty
➢ Decision do not stand on themselves, not isolated
➢ Not reduce uncertainty for only one decisions but for the series of decisions you want to
achieve for the company
What are strategic decisions? Examples and discussion
A publisher’s decision to publish 500 copies of harry potter
• Turned down by 22 other publishers
• The 2016 worth of the franchise is
estimated at $25 billion!
• Why did Bloomsbury publish it (1996)?
Do you believe the decision behind this
to be a good business decision? Why?
➢ When do you know if this is a good decisions?
➢ You do not have all the information and a lot of information is useless
➢ You do not have the time to get that information
➢ You cannot predict what goes well and what goes wrong
Fundamental characteristics of strategic decisions
Four characteristics:
• Complexity: large number of aspects
• Uncertainty : unknown number of alternatives/solutions
• Rationality: try to reach a goal
• Control: intentionality
➢ Complexity: many things to think about
➢ Uncertainty: you don’t know if there are more books possible
➢ Rationality: information processing. See strategy to achieve a certain goal.
➢ Control: we are delibered in taking decisions or solving certain issues
, What are strategic decisions?
Strategic decisions are defined as decisions committing
substantial resources, setting precedents, and creating waves of
lesser decisions; as ill-structured, non-routine and complex; and
as substantial, unusual and all-pervading (Elbanna, 2006: 1)
Three perspectives (Leiblein et al.: 2018)
I. Strategy as important decisions
II. Strategy as critical tensions
III. Strategy as decision interdependence along three dimensions
Position Leiblein et al. (2018) about these perspectives:
III. > I.
III. > II.
I. equally bad as II., or worse?
➢ 1 and 2 are not good enough, equally bad
➢ 3 is better than 1 and 2
➢ Strategic decisions have a lot of impact and critical to survival of organization
➢ But what is the impact? What is important?
➢ Critical tensions: many interest in and around organizations, many preferences who are not
aligned.
Perspective III: Decision interdependence
Lecture 1
What will be covered in lecture 1?
a. Course organization
b. General background strategic
management
c. What are strategic decisions?
What are the aims of this course?
In this lecture, you will learn about:
Theory
• what qualifies as a strategic decision
Organization
• how the course is set up
• what you need to do to pass the course
Course organisation
a. Course organization
I. Syllabus, course goals & classes
II. Course requirements
III. Required reading
IV. The team
V. Course overview
The aims of the course are the following:
1. Students acquire insights in the historical and contemporary individual, team
and
organization level strategic decision-making perspectives in organization studies.
2. Students learn to analyze, reconstruct and to judge strategic decision-making
situations from different perspectives.
3. Students develop the skill to analyze, reconstruct and to assess decisions of
strategic decision-makers within organizations.
4. Students learn to apply various theories and strategic decision-making models
in
organizational contexts from the perspective of the strategic decision-maker.
Course requirements
To complete the SDM course and obtain the credits (6 ects):
• Your unrounded grade for the individual exam (60%) and group assignment (40%) should
be at least 5.5 out of 10 (norm used by the School of Social and Behavioral Sciences)
• You must fulfill the attendance requirement for the practicals.
Individual Written Exam: closed book exam with multiple choice and open questions (3hrs, on
campus). First opportunity on 8
th of June, Resit on 7
th of July.
Group Assignment, two parts:
I. Portfolio reflections on activities in labs (three times) → 20%
II. Discussion questions (answer questions on readings before lectures) → 20%
Attendance Requirement: Attend lab sessions (read specifics in syllabus)
,1. We need to get some of the basic strategy terminology and
background logic that we will use throughout the course and exams,
else we will lose valuable time.
2. We need to level the different knowledge bases of the different
students participating in the course.
Parts 1 & 2 of module 0 are basically a workthrough to the extent that
you need it.
General background in strategic management (module 0)
1. Basic strategy terminology
a. What is strategy?
b. What is strategic management?
c. What are the generic strategies?
d. What is competitive advantage?
2. Essential models & theories in strategy
a. Porter’s Five Forces Model
b. Environment analysis (PEST, PESTEL,
DESTEP)
c. SWOT analysis
d. Relevant organization theories
What are strategic decisions?
➢ Structure, regulations are based in strategic decisions
➢ Topmanagement plays a role
➢ Example: astrazenca was not as good as pfizer
➢ Strategic decisions are important, but which ones are strategic?
➢ 10 recurring topics: on themselves not that important, but what is important is the persons
who are important in an aspect
➢ Example: location, moving Tilburg university to Groningen
➢ Require different people and inputs to make a good decision
, ➢ Example: sunflower oil problem. How to deal with this? Production problems. Is it
replaceable? Example of inputs.
➢ Example: Chesapeake energy. They pump of gas. They can sell gas now in Europe! Boundary
decision: on which market will I be active and where do I want to expand. This is a big
decision. But are they strategic decision? Example of boundaries.
Decisions
We make decisions all day:
• Some need additional information (they are not routine)
• We ask advice for some decisions
• Some are made on the basis of pre-existing heuristics (ideas how commonly decisions are taken)
• We try to narrow down the number of alternatives (ie. Thinking locally or globally?)
• Organizations are also confronted with decision-situations
• The key challenge to any decision is the reduction of uncertainty
➢ Decision do not stand on themselves, not isolated
➢ Not reduce uncertainty for only one decisions but for the series of decisions you want to
achieve for the company
What are strategic decisions? Examples and discussion
A publisher’s decision to publish 500 copies of harry potter
• Turned down by 22 other publishers
• The 2016 worth of the franchise is
estimated at $25 billion!
• Why did Bloomsbury publish it (1996)?
Do you believe the decision behind this
to be a good business decision? Why?
➢ When do you know if this is a good decisions?
➢ You do not have all the information and a lot of information is useless
➢ You do not have the time to get that information
➢ You cannot predict what goes well and what goes wrong
Fundamental characteristics of strategic decisions
Four characteristics:
• Complexity: large number of aspects
• Uncertainty : unknown number of alternatives/solutions
• Rationality: try to reach a goal
• Control: intentionality
➢ Complexity: many things to think about
➢ Uncertainty: you don’t know if there are more books possible
➢ Rationality: information processing. See strategy to achieve a certain goal.
➢ Control: we are delibered in taking decisions or solving certain issues
, What are strategic decisions?
Strategic decisions are defined as decisions committing
substantial resources, setting precedents, and creating waves of
lesser decisions; as ill-structured, non-routine and complex; and
as substantial, unusual and all-pervading (Elbanna, 2006: 1)
Three perspectives (Leiblein et al.: 2018)
I. Strategy as important decisions
II. Strategy as critical tensions
III. Strategy as decision interdependence along three dimensions
Position Leiblein et al. (2018) about these perspectives:
III. > I.
III. > II.
I. equally bad as II., or worse?
➢ 1 and 2 are not good enough, equally bad
➢ 3 is better than 1 and 2
➢ Strategic decisions have a lot of impact and critical to survival of organization
➢ But what is the impact? What is important?
➢ Critical tensions: many interest in and around organizations, many preferences who are not
aligned.
Perspective III: Decision interdependence
