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Whether you’re thinking of changing your career or starting your own business, each decision in your life requires critical thinking and time and effort on your part. It is important to have the ability to make effective decisions as no one will step in for you to do that.
The purpose of strategic decision-making is to align your short-term goals with long-term ones. So, if you’re trying to launch a new product, your strategy would include goal-setting, evaluation of customer needs and assessing the competition. At the same time, you’ll have to consider other variables like setbacks and uncertainties.
Harappa Education’s Making Decisions course will teach you the five-step process of strategic decision-making to set clear goals, simplify your strategy and weigh your options. Equip yourself with the right toolkit to tackle both personal and professional decisions. (Valium) Let’s discuss the types of decisions and the process of strategic decision-making.
Types Of Strategic Decisions
You need to make several types of strategic decisions while assessing your business needs. They might be high-impact decisions like defining your target market and ad strategy or low-stake decisions like your next lunch order.
Here are the three types of strategic decisions:
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High-Impact Decisions:
These decisions have a substantial impact on your business plan.
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Multi-Party Decisions:
These decisions engage internal and external stakeholders like teammates or clients.
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Low-Stakes Decisions:
These include everyday decisions like picking a restaurant for team dinners. These have no impact on your business strategy.
Process Of Strategic Decision-Making
In their 2012 book, Judgment In Managerial Decision Making, Professors Max H. Bazerman and Don A. Moore did extensive research on decision-making. Based on their research, here are Harappa’s five universal steps in the decision-making process:
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Define Problems
This is the most crucial step in the process. Defining your problem will provide clarity on what you want to achieve and what your intentions are. You’ll be able to identify the question you seek to answer. For instance, your business goal could be expanding, creating a new team or simplifying your payroll system.
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Identify Criteria
Categorizing different elements like cost, time and resources will help you evaluate options in a systematic manner. These are factors that determine how you select the right solution for your needs. Measuring criteria isn’t always easy and you might even have multiple factors to consider. Focus on selecting criteria that are relevant to your goals. For instance, if you want to enter a new market for your product, you’ll consider factors like your target customer, growth opportunities and marketability.
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Weigh The Criteria
Once you have your criteria laid out, you can rank them in order of importance. For instance, if you’re thinking about opening a new retail store, your criteria will include the location, budget and accessibility. Ranking each factor on the basis of importance will help you make the right decision. This requires some level of discretion combined with technical know-how. Weighing the criteria may often require inputs from multiple stakeholders.
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Rate The Options
The penultimate step in the process is ranking your options on the basis of your criteria. In the example mentioned earlier, if you narrow down to locations A and B. Based on your criteria of accessibility, you can assign numbers to each option and check which of the two is more suitable. This will simplify your rating process. You’ll reach a more rational solution if you’re focused on the holistic benefits of your decision.
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Make The Final Decision
Finally, it’s time to make your decision. After carefully considering each step in the process of strategic decision-making, go with the option that satisfies your criteria. There’s never one ideal solution and you may have to sacrifice a few things along the way. But the most important thing is arriving at a solution that fulfills your requirements. Use your judgment and intuition to reach a decision.
Your decision may depend on specific business needs and long-term objectives. Each strategic decision-making process is unique and there’s no ‘one size fits all’ approach. Harappa Education’s Making Decisions course will teach you the best practices to adopt in your decision-making process. You’ll also be introduced to key concepts on how to navigate issues in strategic decision-making. Learn about each framework with real-world examples from our expert faculty.
Explore topics such as Decision Making, the Steps of Decision Making, How to Make Decisions, Decision Making Methods, Strategic Decision Making & How to Make Good Judgements from our Harappa Diaries blog section and develop your skills.
