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Подписание Меморандума о взаимопонимании между университетами
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Management is fundamentally a process through which organizational goals are achieved utilizing resources. Resources are viewed as inputs, while the attainment of goals is viewed as the final output of the process. Managerial success is measured by the ratio of outputs to inputs indicating the organization’s productivity, and organizational and management performance.
Organizational productivity or the success of management is entirely based on the performance of the managerial functions of planning, organizing, directing, and controlling. To perform these managerial functions successfully, managers engage in a continuous process of making decisions. To make a decision is to make a judgement concerning what to do in a certain situation after having deliberated on the alternative courses of action available.
“At the heart of strategy lies decision-making”. After a strategic analysis of the organization’s environment, internal capabilities and core competencies, and an investigation of technological shifts, managers must select the preferred course of action. Managers need to examine the data, information, and intelligence before them and examine the possible alternatives and choose amongst them (Wilson, 2006).
Turban et al. (2007:48) define decision-making as “a process of choosing among two or more alternative courses of action for the purpose of attaining a goal or goals.” Simon is of the opinion that managerial decision-making is synonymous with the whole process of management (Turban et al., 2007). Decision-making is viewed as the essence of management (Robbins and Coulter, 2009). The managerial functions of planning, setting goals, organising, and controlling all involve decisionmaking (Turban et al., 2007).
Decision-making is considered to be one of the most significant activities that managers engage in, within all types of organisations and on all levels. Decision-making epitomises the core behaviour of managers and clearly distinguishes managers from other occupations in society (Harrison, 1996; Robbins and Coulter, 2009).
Managerial decision-making has for many years been considered an art form acquired through experience and by using intuition. Many different individual styles were used in approaching and successfully solving similar types of managerial issues. The individual styles were most often based on creativity, judgement, intuition, and experience instead of systematic quantitative methods (Turban et al., 2007).
Strategy may be regarded as the grand concept, but it is the individual strategic decisions that are important. Strategic decisions include the handful of decisions that drive or shape the organisation’s actions. They are not easily changed once made, and have a large impact upon organisation’s importance (Wilson, 2006).
Strategic decisions deal with the long-term welfare of the entire organisation. Strategic decisions most commonly fall in the sphere of top management. Strategic decisions made by top management constitute the strategy of the total organisation. The strategy is aimed at effectively matching or aligning the organisational capabilities with the environmental opportunities and threats. The decisions are often highly complex and involve a host of dynamic variables, with the pre-eminent characteristic being their significance. It is imperative that they result in a successful outcome (Harrison and Pelletier, 2001).
Strategic decisions result in dozens or even hundreds of further decisions at lower levels of management. Strategic decisions set the overall direction of decisions made by every other individual and unit throughout the organisation. Ineffective decision making at the top levels of management will affect the level of decisions made at the lower levels (Harrison, 1996).
Strategic Decisions can be identified and differentiated from normal decisions if they fulfil the following criteria (Harrison, 1996):
The decision must encompass all of the major functions performed in the organisation.
In its simplest form, strategic decision-making can be considered an instantaneous action, a choice between multiple known alternatives, made by individuals or groups. However, this simple ideal is unable to capture the richness and complexity of the processes that lead up to the point of decision, the vast number of influences that impact on putting the decision into action, and the ultimate performance of the decision (Wilson, 2006; Robbins and Coulter, 2009).
People are aware that decision-making is not a simple process that occurs in linear sequence – a period of thinking followed by a period of acting. Decision-making and the development of alternative courses of action are fashioned in their doing. It is important to understand that factors such as previous experience and “gut-feel” are likely to have as much influence over strategic choices as strategic analysis and planning. It is imperative that valid, well-timed intelligence be provided at this stage to allow the most appropriate and informed decisions be made (Wilson, 2006; Robbins and Coulter, 2009).
Wilson (2006) has identified five different (and sometimes mutually exclusive) perspectives on strategic decision-making:
Wilson (2006) argues that the process of making decisions can appear to be deceptively simple as actions are formulated toward the solution of a particular problem. Wilson (2006) furthers his viewpoint by explaining that the problem with this approach is that there may be discernable actions and there may be observable outcomes, but they need not be wholly related to each other. Problems may thus be solved by factors other than strategic decisions and, sometimes, taking a strategic decision could lead to a completely new set of problems (Wilson, 2006).
Turban et al. (2007) is of the opinion that decisions most commonly follow a four-step process of defining the problem, constructing a model that describes the real world problem, the identification of possible solutions to the modelled problem and evaluation of the solutions, and the final step of comparing, choosing, and recommending a potential solution to the problem. Harrison and Pelletier (2001), and Harrison (1996) identify the components of the strategic decision process model as the functions of decision-making which includes setting managerial objectives, searching for alternatives, comparing and evaluating alternatives, the act of choice, implementing the decision, and finally following up and controlling the decision.
Through the evaluation of alternative solutions, consequences of utilising the alternatives can be predicted, if comparisons are done properly. While this was simple to achieve in the past, in a static environment, various factors have increased the difficulty in evaluating the alternatives (Turban et al., 2007). The reasons are (Turban et al., 2007):
further factors include the need for rapid decisions, frequent and unpredictable changes make trial and error learning difficult, and the potential costs of making the wrong decision,
These trends and changes have resulted in management requiring sophisticated new tools and techniques to assist them in maintaining competitive advantage through comprehensive decisionmaking.
22.214.171.124 Phases of the decision-making process
Simon originally identified a systematic decision-making process involving three major phases: intelligence, design, and choice. Simon later included an implementation phase, while Turban et al. suggest a fifth phase which includes monitoring and feedback (Turban et al., 2007).
Robbins and Coulter (2009) defined their decision-making process as including the identification of a problem, identification of decision criteria, an allocation of weights to the identified criteria, the development of alternatives, analysis of the alternatives, selection of an alternative and the implementation of the selected alternative. Robbins and DeCenzo (2008) identify the steps within the decision-making process as including identifying the problem, selecting a solution, and evaluating the effectiveness of the solution. They further identify a single problem as a discrepancy between two states, the existing state and the desired state of affairs. Furthermore, once the problem has been defined, decision criteria are to be identified. These decision criteria are factors that are relevant in the decision making process and could eliminate certain courses of action. The criteria are then weighted and the best outcome selected and implemented. The final step in their model includes the evaluation of the results to appraise whether or not their decision corrected the problem (Robbins and DeCenzo, 2008; Robbins and Coulter, 2009).
Simon’s model is seen to be the most concise and complete characterisation of rational decisionmaking. The model includes a continuous flow of activity originating at the intelligence phase moving through design to choice to implementation while a return to the previous phase is possible (Turban et al., 2007).
The decision-making process begins with the intelligence phase, during which the decisionmaker examines reality which identifies and defines problems. During the design phase, a model that represents the system is constructed by making assumptions which simplify reality, and identify of all relationships among the variables. The proposed model is validated and criteria evaluated which leads to alternative sources of action. The choice phase includes the selection of a proposed solution to the model, which is then tested to determine its validity (Turban et al., 2007).
A major characteristic of decision-making is the use of a model, on which to analyse the effects of a decision on a model of reality rather than on the real system. Turban et al. (2007:51) define a model as “a simplified representation or abstraction of reality.” Models represent systems or problems utilising different degrees of abstraction. Models are classified based on their degree of abstraction (Turban et al., 2007).
Iconic (scale) models are the least abstract models. They are physical replicas of the system, but on a smaller scale than the original. An iconic model can be either three dimensional, such as a model of a bridge, or two dimensional, like a photograph.
The advances in computer technology have increased the use of both iconic and analogue models in conjunction with mathematical modelling. Combined, the models allow for easy manipulation, the compression of time, reduced cost, inclusion of uncertainty factors, enhance learning and training, most commonly through a web interface (Turban et al., 2007).
If the proposed solution is found to be viable, the process moves onto the implementation phase. Successful implementation would result in the solving of the real problem, while failure will lead to a return to the earlier phases of the process (Turban et al., 2007).
While the understanding of the decision-making process and the models that can be generated are critical components of decision-making within the management function, the foundation underlying organisational decision-making is the acquisition and use of information, intelligence and knowledge.
126.96.36.199 Information requirements of Strategic Decision-Making
Organisational decisions, especially those of a strategic nature, have widespread effects on organisational members, processes, and structure. Furthermore, these decisions are concerned with issues that can materially affect the organisations survival prospects, well being, and nature of the organisation. It is thus important to conceive the organisation’s external and internal environments to be a source of information. The organisation should scan the environment in order to make better informed decisions. Acquiring information and intelligence is an imperative in ascertaining environmental change and has huge implications for strategic decision-making (Frishammer, 2003).
Frishammer (2003) conducted a study to provide an insight into management information behaviour when taking strategic decisions. The study aimed to address questions such as the why, what, how, and when of the information-gathering process that underpins strategic decisions. These are discussed below (Frishammer, 2003):
How do decision makers obtain information? Previous research had shown that information was obtained through a solicited or unsolicited base. Solicited information included information explicitly sought by managers, and information given to managers through organisational requirements. Most respondents relied heavily on information received on a solicited basis but regarded unsolicited information as very important, even though rarely used.
Frishammer (2003) concluded his study by stating that an exclusive reliance on soft, internal information could endanger the quality of the decision and distance it from reality. He further argued that acquiring information from external sources could be a powerful tool for achieving organisation-environment alignment, but found that respondents believed that external sources are often difficult to reach, less accessible and time consuming to analyse. Lastly, he suggested that an ongoing monitoring of external sources would help decision-makers maximise limited resources and maximise uncertainty.
Change is constant – very little ever stays the same, even in the short term. Probing deeper into any subject matter will reveal some element of change, even if the subject matter seems unchanged at the surface. Individuals transform or grow over time, as do organisations, if their goal is long term survival. Incremental improvement through individual learning can lead to organisational transformation (Liebowitz, 2006a). He (Liebowitz, 2006a) further continues to state that individual transformation is an important component leading to organisational transformation and heightened Organisational Intelligence (Liebowitz, 2006a). Organisational transformation is important to increase the “intelligence” of the organisation (Liebowitz, 2006a).
Liebowitz (2006a:6) refers to Organisational Intelligence as “the collective assemblage of value-added benefits derived from the organisation’s intangible assets (knowledge from employees, management, stakeholders, and customers)”. To increase the IQ of an organisation, one first needs to understand the hierarchy of components that contribute to the intelligence of an organisation (Liebowitz, 2006a).
The concept of an intelligence hierarchy is discussed exhaustively in literature, and while most authors agree about the sequential base of the hierarchy in the form of data as the base, with information as the second layer, and knowledge as the third, there is much debate as to the levels that follow (Post and Anderson, 2003; Haag et al., 2007; Laudon and Laudon, 2003; Laudon and Laudon, 2007; Bali, Wickramasinghe, and Lehaney, 2009). Tobin (1996) for example, identifies the higher level as Wisdom in his hierarchy, while Beckman (1997) proposes a five level hierarchy where Expertise and Capability form the higher levels. For the purpose of this paper, the researcher will utilise the intelligence hierarchy model defined by Liebowitz (2006a).
Liebowitz (2006a:7) explains his hierarchy and how each level builds onto each other as follows:
“Data relates to discerned elements. Once the data is (sic) patterned in some way, it becomes information. Information plus insight and experience becomes knowledge. Knowledge in a specialised area becomes expertise. Expertise morphs into the nirvana state of wisdom after many years of experience and lessons learned.”
This research will continue to explore the relationship between the first three levels within this hierarchy, comprised of data, information, and knowledge to arrive at a set of fundamental definitions, and the relationship of each term with each other:
Davenport and Prusak (2000:2) view data as:
“Data is a set of discrete, objective facts about events. In an organisational context, data is usefully described as structured records of transactions”
Data can thus be viewed as the basis for information and knowledge.
Davenport and Prusak (2000:3) further believes that “Information is meant to change the way the receiver perceives something, to have an impact on his judgement and behaviour. It must inform, it is data that makes a difference” which identifies the role which individuals play in the provision, creation, and harvesting of information.
Davenport and Prusak (2000) argue that data becomes information when a specific meaning is added to it, and as such value can be added to data in order to create information. These methods are (Davenport and Prusak, 2000:4):
Information can further be transformed into knowledge.
“Knowledge is a fluid mix of framed experiences, values, contextual information, and expert insights that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organisations, it is often embedded not only in documents or repositories but also in organisational routine, processes, practices and norms.”
To create wisdom, which is the connection made between one’s own beliefs and information from knowledge, requires human interaction and analysis, while the application of wisdom leads to insight or intelligence which influences continuous innovation. Bali et al. (2009: 5) consider wisdom as “a process by which we are able to discern, or judge, between right or wrong, good and bad. In essence, it embodies more of an understanding of the fundamental principles embodied within the knowledge that are essentially the basis for the knowledge being what it is.” With the abundance of information available, much research has been done to understand how relevant intelligence can best be gathered to assist in strategic decision making. Wisdom is the human ability to learn from experience and adapt to changing conditions (Post and Anderson, 2003).
An organisation’s strategic direction can be influenced by global developments outside of management’s control. An organisation is not isolated from the environment in which it operates; its future development, the results it can achieve and the constraints within which it operates, are functions of the business environment (Mellahi et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009).
Documented organisational experiences and research suggest that the business environment affects the organisation’s growth and profitability (Hitt et al., 2005). Conditions within the business environment create threats to and opportunities for organisations which could have a major impact on strategic options as well as the decisions made in light of them (Hitt et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009).
The business or external environment consists of all the factors inside and outside the organisation which require understanding to form strategic intent, to develop its strategic mission, and allow it to take actions that result in strategic competitiveness and above-average returns (Hitt et al., 2005; Mellahi et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009).
Morden (2007:18) define Strategic Analysis as “a process by which the enterprise examines its own internal or corporate characteristics and capabilities; and identifies the most important features of the external environment within which it must operate.” The process is used by organisations to identify and understand variables such as (Morden, 2007):
the sources of value addition available to the organisation,
Strategic analysis is used to inform the process of strategy formulation, strategic decision-making, and strategic choice.
Organisations often face external business environments that are highly turbulent, complex, and global which make interpreting them extremely difficult. To cope with the ambiguous and incomplete environment data that is often collected, and to increase their understanding of the business environment, organisations often engage in a process called external environmental analysis (Hitt et al., 2005; Carpenter and Sanders, 2009; Robbins and Coulter, 2009). The process includes four activities (Hitt et al., 2005):
An integrated understanding of the organisation’s external and internal environments is critical to understand the present and predict the future (Hitt et al., 2005).
The external business environment is divided into the external macro environment, the external industry environment, the external competitive environment, and the internal organisation environment.
The macro environment of an organisation can provide both opportunities and threats, but cannot easily be changed by the organisation. The goal of the strategic decision-maker is to develop strategies based on what the organisation can do to exploit opportunities and counter threats in the macro environment. Organisations that are skilful at monitoring and analysing the macro environment can perform better than organisations that cannot (Mellahi et al., 2005; Carpenter and Sanders, 2007). Analysing the macro environment is not an easy task due to a number of reasons (Mellahi et al., 2005).
The macro environment is composed of factors in the broader society that influence an industry and the organisations within it. These factors broadly include (Pearce and Robinson, 2005; Hitt et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009):
political/legal factors define the legal and regulatory parameters in which a organisation must compete. The direction and stability of political factors are major considerations in formulating organisational strategy. Within this arena organisations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding the interactions among organisations and nations.
The industry environment consists of a set of factors that directly influences an organisation and its competitive actions and competitive responses (Hitt et al., 2005). An industry includes a group of organisations that produce products that are close substitutes, and which during the course of competition, could influence one another (Hitt et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009). It is important for an organisation to understand how changes in its external industry environment affect or do not affect the organisation (Mellahi et al., 2005).
The first step in understanding an organisation’s industry environment is to identify the precise market, which can be conducted through the utilisation of a market segmentation analysis and a strategic group analysis (Mellahi et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009):
A more comprehensive understanding of an organisation’s industry environment can be gained through a thorough analysis of the industry’s economic and technical characteristics (Mellahi et al., 2005). Porter suggested that managers should understand the rules of competition in their industry so that they become aware of the industry’s attractiveness and identify their organisation’s competitive position within the industry (Mellahi et al., 2005; Pearce and Robinson, 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009). To uncover and understand the underlying rules of an industry, Porter, developed the Five Forces Model which is used to analyse an organisation’s competitive position in a specific market segment or similar market segments (Mellahi et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009).
The Five Forces Model assumes that industry attractiveness and the organisations competitive position within an industry are influenced by five competitive forces (Hitt et al., 2005; Mellahi et al., 2005; Pearce and Robinson, 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009):
The organisation will further be required to understand the competitive situation within its environment in terms of competitive position, customer profiles, suppliers, creditors, and labour
market. These factors could provide many of the challenges that an organisation may endure in its attempts to attract or acquire needed resources to market profitably its goods and services (Pearce and Robinson, 2005; Carpenter and Sanders, 2009; Robbins and Coulter, 2009).
Through an effective industry analysis gained through the study and interpretation of data and information gathered, the organisation will develop the insights required to determine an industry’s attractiveness and the organisation’s potential to earn adequate or superior returns on invested capital.
The competitive environment is the final part of the external environment in which an organisation is interested. A competitor analysis focuses on each organisation with which the organisation competes. Many organisations are extremely interested in understanding each other’s objectives, strategies, assumptions and capabilities due to the intense rivalry for market share (Hitt et al., 2005; Carpenter and Sanders, 2009).
A competitor analysis will allow an organisation to understand (Hitt et al., 2005; Carpenter and Sanders, 2009; Robbins and Coulter, 2009):
By gaining this information about a competitor and their market activity, the information may be used (Carpenter and Sanders, 2007; Morden, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009):
Through the use of a competitive analysis an organisation can identify competitive and marketing initiatives to build on corporate strengths and position itself to gain competitive advantage (Morden, 2007).
Organisations realise that in a global landscape; traditional factors such as labour cost and a superior access to financial resources, and raw materials are no longer sufficient to create a competitive advantage (Hitt et al., 2005; Carpenter and Sanders, 2009; Robbins and Coulter, 2009). The following items are driving the new landscape (Hitt et al., 2005; Mellahi et al., 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009):
Organisations have identified the strong influence resources, capabilities, and core competencies have on strategic competitiveness and realised that above-average returns result only when core competencies of the internal environment are matched to the opportunities identified in the external environment (Hitt et al., 2005; Carpenter and Sanders, 2009; Robbins and Coulter, 2009).
An internal analysis is utilised by an organisation to analyse the quantity and quality of an organisation’s financial, human, and physical resources. It also identifies the strengths and weaknesses of an organisation’s managerial capabilities and its organisational structure and contrasts the organisation’s past successes and traditional concerns with the organisation’s current capabilities in an attempt to identify the organisation’s future capabilities (Pearce and Robinson, 2005; Carpenter and Sanders, 2007; Carpenter and Sanders, 2009; Robbins and Coulter, 2009).
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