A process perspective on strategic decision making

E. Frank Harrison Professor of Management, San Francisco State University,San Francisco, USA

A process perspective on strategic decision making

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Posits that a processperspective on strategicdecision making is more likely to yield a successfuloutcome. Conceives thestrategic decision-makingprocess as a composite of theconcept of strategic gap andthe managerial decision-making process. Presents sixexamples of real-world strate-gic decision in support of aprocess approach to themaking and implementing ofsuch decisions. The evidencein support of a process per-spective on strategic decisionmaking suggests a need forfurther research and exposi-tion of this critically impor-tant subject.

Management Decision34/1 [1996] 46–53

© MCB University Press [ISSN 0025-1747]

In discussing decision making, it is custom-ary to focus on a decision-making process orthe decision itself. Focusing for a moment onthe decision itself, it is useful to note thevariety of definitions for the term decision.One definition, for example, avers that “tomake a decision means to make a judgmentregarding what one ought to do in a certainsituation after having deliberated on somealternative course of action”[1]. In a classicwork on the science of management decisionmaking, Herbert A. Simon treats it as aprocess synonymous with the whole processof management. In his words: “Decision mak-ing comprises three principal phases: findingoccasions for making a decision; findingpossible courses of action; and choosingamong courses of action”[2].

Another definition views a decision as onlyone step in an intellectual process of differen-tiating among relevant alternatives. Thedecision itself is the point of selection andcommitment when the decision makerchooses the preferred purpose, the most rea-sonable task statement, or the best course ofaction[3]. Still another definition notes that inmaking a decision the decision maker hasseveral alternatives and the choice involves acomparison between these alternatives andan evaluation of their respective outcomes[4].For purposes of this article, “a decision isdefined as a moment, in an ongoing process ofevaluating alternatives for meeting an objec-tive, at which expectations about a particularcourse of action impel a decision maker toselect that course of action most likely toresult in attaining the objective”[5]. Thisdefinition is generally accepted in the litera-ture of managerial decision making[6]. It alsotends to confirm the basic thesis of this arti-cle: that managerial decision making takesplace within a process composed of identifi-able decision-making functions.

Decision making is the most significantactivity engaged in by managers in all typesof organizations and at any level. It is the oneactivity that most nearly epitomizes thebehaviour of managers, and the one thatclearly distinguishes managers from otheroccupations in the society. Drucker notes, forexample, that “to make the important deci-sion is the specific executive task. Only an

executive makes such decisions”[7]. “Of allthe managerial functions that executivesperform … the act of making a decision iswithout equal in importance”[8]. To be sure,managers and executives do many thingsbesides make decisions. Nonetheless, thecurrent and lasting impact of managerialperformance is centred in the efficacy ofexecutive choices. The primary focus in thisarticle is on strategic decisions made by man-agers at the top of the organization. Thesedecisions trigger dozens or even hundreds ofother decisions of lesser magnitude atdescending levels of management. Strategicdecisions, therefore, set the tone and tempo ofmanagerial decision making for every indi-vidual and unit throughout the entire organi-zation. If the decision making at the top of theorganization is ineffective, then the choicesmade at lower levels of management will bethe same. Similarly, if top management’sstrategic choices tend to be successful, itreflects favourably on choices made in otherparts of the organization.

Strategic decisions are highly complexand involve a host of dynamic variables.Their pre-eminent characteristic is signifi-cance; “Strategic decisions deal with thelong-term health of the enterprise”[9].“Strategic decisions are those which nor-mally fall within the purview of top manage-ment”[10]. Strategic decisions constitute thecritical variable in strategic management[11].They are the means by which perenniallyscarce resources are rationally committed tofulfil managerial expectations for success.Following are five criteria for use in identify-ing and making a strategic decision:1 The decision must be directed towards

defining the organization’s relationship toits environment.

2 The decision must take the organization asa whole as the unit of analysis.

3 The decision must encompass all of themajor functions performed in the organi-zation.

4 The decision must provide constrainedguidance for all of the administrative andoperational activities of the organization.

5 The decision must be critically importantto the long-term success of the total organi-zation[12].

E. Frank HarrisonA process perspective onstrategic decision making


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The concept of strategic gap

As noted earlier, strategic decisions are ori-ented towards the relationship between agiven organization and its external environ-ment. This relationship is epitomized by theconcept of strategic gap, which focuses on thefit between the capabilities of the organiza-tion and its most significant external entities.The strategic gap is conceptualized inFigure 1. Stated most simply, the strategic gapreflects the imbalance between the currentstrategic position of the organization and itsdesired strategic position[13]. The strategicgap is determined by comparing the organi-zation’s inherent capabilities with the oppor-tunities and threats in its external environ-ment[14]. In one sense, the strategic gap is ameasure of the perennially imperfect fitbetween the organization and its externalenvironment. If the capabilities of the organi-zation were fully committed to exploiting allperceived opportunities and warding off alldiscerned threats, there would be nostrategic gap. For reasons to be discussedsubsequently, this eventuality is mostunlikely[15].

The profile of strategic gapFor the simple reason that strategic decisionsbased on a balance of internal weakness seemcertain to fail, a gap analysis begins properlywith an assessment of the major capabilitiesof the total organization in the principal cate-gories of management, technology, policiesand resources. This approach involves thedevelopment of a capability profile to ascer-tain principal areas of strength and weak-ness.

Organizational assessmentThere are at least three reasons why a capa-bility profile of strengths and weaknesses isimportant in measuring the strategic gap of a given organization:1 Capitalizing on external opportunities

usually signifies effective use of internalstrengths.

2 Protecting the organization from environ-mental threats requires a knowledge ofinternal weaknesses.

3 Few organizations excel in all areas[16].

“Thus [strategic decisions] ultimately are acompromise between offence and defencewith the optimum balance dependent onawareness of external conditions and skillfulutilization of internal resources”[16].

The principal categories of organizationalcapability to be assessed for areas of strengthand weakness in developing a capabilityprofile are as follows:• Management. The primary focus here is on

the decision-making track record of topmanagement. Have the recent successesoutnumbered the failures in sufficientquantity to constitute a measurable organi-zational strength?

• Technology. If the organization uses anadvanced technology, does it keep up withthe state of the art in its field, and is thisnew knowledge regularly transposed intonew products or services? If the organiza-tion uses a routine technology, does it regu-larly avail itself of applicable external tech-nological developments to enhance its effi-ciency and productivity?

• Policies. Are there written statements toprovide governance and guidance at alllevels and in all major activities of theorganization?

• Resources. Are the human, fiscal, physicaland institutional resources of the organiza-tion available in proper kind and sufficientquantity and are they utilized effectively inmaintaining a competitive advantage in theexternal environment?

If the aforesaid questions can be answeredaffirmatively, the organization’s strengthsexceed its weaknesses and it is ready to pur-sue the opportunities in its external environ-ment. Conversely, if there are areas of weak-ness in the basic capabilities of the organiza-tion, corrective action should be taken totransform such weaknesses into strengths, atwhich point opportunities may be developedand exploited through the distinctive compe-tence reflected in the capability profile.

Environmental assessmentLike the organization itself, the externalenvironment is composed of several principalaggregates:• Opportunities. Opportunities represent

situations with a potential to enhance thelong-term competitive advantage of theorganization. Opportunities presume thatthe organization has the capability forcapitalizing on them. The litmus test ofmanagement is to recognize an opportunity

This relationship is epitomized by the concept ofstrategic gap, which focuseson the fit between thecapabilities of theorganization and its mostsignificant external entities.

Assessment

• Opportunities• Threats• Requirements• Responsibilities

ENVIRONMENT

Positive gap(O > E)

ORGANIZATION

Strategicgap

Negative gap(E > O)

Assessment

• Management• Technology• Policies• Resources

Figure 1The concept of strategic gap



and to exploit it for the benefit and gain ofthe total organization.

• Threats. Threats include all external forceswith a potential for intruding on the organi-zation in ways that work to its disadvan-tage. The most common threats are compe-tition and technological obsolescence.

• Requirements. Requirements include statu-tory requirements, legal codes and othergovernance mechanisms that act to limitthe strategic choices of management.

• Responsibilities. Responsibilities constituteexpectations on the part of somestakeholder group or external entities thatthe strategic decisions of management willnot work to its disadvantage. Included hereis the pervasive concept of social responsi-bilities.

Strategic gap analysisThere are three conceivable variations ofstrategic gap: positive strategic gap; negativestrategic gap; and zero strategic gap. The firsttwo variations reflect the actual condition ofa given organization at different points intime. The third variation exists only in theory.

Positive strategic gapIf a concurrent assessment of the organiza-tion and its external environment revealsthat the sum of internal capabilities is clearlygreater than its principal environmentalaggregates, a positive strategic gap exists.In other words, as shown in Figure 1,if O > E, the strategic gap is balanced infavour of the organization. In this state, themanagement, technology, policies andresources of the organization are more thanadequate to exploit any opportunity, copewith any threat, or meet any requirement orresponsibility emanating from the externalenvironment.

Negative strategic gapAs shown in Figure 1, the second variation ofstrategic gap occurs when its principal envi-ronmental aggregates are greater than theinternal capabilities of the organization.This variation, symbolized by E > O, meansthat the organization is unable to exploitavailable opportunities, deal with perceivedthreats, meet its legal requirements, or fulfilits expected responsibilities. It is called anegative strategic gap; and it means that theorganization is at a significant disadvantagevis-à-vis its external environment. In general,a negative strategic gap must be transformedinto a positive strategic gap before manage-ment can avail itself of the opportunities inthe external environment.

Zero strategic gapThere will always be a strategic gap betweenthe organization and its external environ-ment. Factors such as imperfect information,time delays in responding to externally-induced change, technological breakthroughsand managerial incompetence all contributeto the unavoidability of a strategic gap. Thereis, in other words, a level of strategic gap,hopefully on the positive side, that is irre-ducible for any organization. When, in thejudgement of management, the organizationhas reached this irreducible minimum, it hasachieved a good strategic fit. This is an opti-mal state for an effectively managed organi-zation to make strategic decisions.

The managerial decision-making process

There is an increasingly abundant literaturethat places the moment of choice within anintegrated process of managerial decisionmaking[17-21]. According to this view, man-agerial decisions result from a set of decision-making functions logically connected to con-stitute a managerial decision-makingprocess. This process is depicted in Figure 2.

Decision-making functionsThe components of the decision-makingprocess are the functions of decision making.These functions are:• Setting managerial objectives. Decision

making starts with the setting of objectives,and a given cycle within the process culmi-nates on attaining the objectives that gaverise to it.

• Searching for alternatives. Search involvesscanning the internal and external environ-ment of the organization for relevant infor-mation from which to fashion a set of alter-natives likely to fulfil the objectives.

• Comparing and evaluating alternatives.By formal and informal means, alternativesare compared based on the perceived rela-tive uncertainty of cause-and-effect

Settingmanagerialobjectives

Reviseobjectives

Searchingfor

alternatives

Comparingand

evaluatingalternatives

Follow-upand control

Takecorrectiveaction asnecessary

Implementingdecisions

The act ofchoice

Revise orupdateobjectives

Renewsearch

Figure 2The managerial decision-making process

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relationships and the preferences of thedecision maker for various probabilisticoutcomes.

• The act of choice. Choice is a moment when,in the ongoing process of decision making,the decision maker chooses a given courseof action from among a set of alternatives.

• Implementing the decision. Implementationis that point in the total decision-makingprocess when the decision is transformedfrom an abstraction into an operationalreality.

• Follow-up and control. This function isintended to ensure that the implementeddecision has an outcome coincident withthe objectives that gave rise to its occur-rence.

The interrelatedness of decision makingAs shown in Figure 2, the functions of deci-sion making are highly interrelated withinthe decision-making process. The processbegins with the setting of objectives, theattainment of which invariably requires asearch for information from which to developa set of alternatives. These alternatives arecompared and evaluated using applicablecriteria; and the alternative which givesgreatest promise of attaining the objectives isnormally chosen. The selected alternative isthen implemented through existing struc-tures, systems and processes, after which it issubjected to existing follow-up and controlprocedures to ensure an outcome compatiblewith the initiating objectives. The functionsof decision making proceed sequentiallythrough the process. The process provides anorganizational framework within which thefunctions are accomplished to produce asuccessful result. The literal interrelatednessof the process can be demonstrated easily byconsidering the adverse consequences atten-dant on disregarding a function or alteringthe straightforward sequencing of all thefunctions. In the event that a given alterna-tive once selected and implemented does notappear to produce the desired result, thedecision maker may consider any one of thesubprocesses shown in Figure 2: correctiveaction, renewed search, or revised objectives.

The dynamics of decision makingThe dynamics of the managerial decision-making process result from the effects of thedecision-making functions on one anotherand in combination:

Decision making is a dynamic process:complex, redolent with feedback and side-ways, full of search, detours, informationgathering, and information ignoring, fueledby fluctuating uncertainty, fuzziness, and

conflict; it is an organic unity of both pre-decision and postdecision stages[22].

The principal manifestation of the dynamicnature of the managerial decision-makingprocess is the synergy that is produced by theinterrelated functioning of the total process.The presence of synergy means that the decision-making functions have more valueas components of the process than as functionsin their own right. In this context, synergy isanalogous to decisions more likely to resultin the attainment of the objectives. The syner-gistic results of the process mean for the mostpart that decisions made within the processhave a greater potential for success. This isthe essence of the dynamics of decision mak-ing within the process conceptualized inFigure 2.

The strategic decision-makingprocess

The strategic decision-making process is acomposite of the concept of strategic gap(Figure 1) and the managerial decision-making process (Figure 2). It is depicted inFigure 3.

Varieties of process flowsThere are three types of process flows in Figure 3, each of which contributes to thefinal outcome of the total process.

Primary flowThe primary flow encompasses the mainfunctions of the strategic decision-makingprocess. These functions cannot be circum-vented without seriously compromising theintegrity of the total process. Informationreceived from the external environment isused to assess the strengths and weaknessesof the organization along with the opportuni-ties and threats in the external environment.A gap analysis is performed to ascertain thesize and positive or negative nature of theresultant strategic gap. The results of the gapanalysis are used by management to set orreset the managerial objectives that triggerthe managerial decision-making process. Themanagerial objectives constitute the ends forwhich a strategic choice is made and imple-mented. The outputs of the implementedstrategic decision elicit feedback from theexternal environment permitting manage-ment to assess the outcome of its choice andto take corrective action as necessary, therebyensuring attainment of the managerial objec-tives. A continuous evaluation of the imple-mented strategic decision is supplemented byperiodic comprehensive reviews with annual

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updatings of the gap analysis and the man-agerial objectives.

Corollary flowThe corollary flow constitutes the ancillaryfunctions of the process conceptualized inFigure 3. These functions can be abridged orbypassed but not without some impairmentof the total process. For example, a searchmay be circumscribed but possibly at the costof an inadequate set of alternatives; or theassessment of an implemented strategic deci-sion may be accomplished less frequently atthe price of a less successful outcome. Incombination with the primary flow, the corol-lary flow enhances the prospects for a suc-cessful strategic decision.

Information flow. Information flow consti-tutes the exploration of possibilities in thesearch for alternatives or the feedback ofinformation from the external environmentsignifying the acceptance or non-acceptanceof the implemented strategic decision. As such, information flow makes its ownspecialized contribution to strategicdecision success.

Dynamics of the total processThe dynamics of the total process set forth inFigure 3 are centred on three principal rela-tionships:1 The pervasive influence of the external

environment on the total process of strate-gic decision making.

2 The pivotal coupling of strategic gap withmanagerial decision making ensuring thatmanagerial objectives reflect the currentgap analysis.

3 The continuous flow of informationthroughout the process commencing withthe initiation of gap analysis, continuingwith the search for information fromwhich to develop a set of alternatives, andfollowing with an evaluative flow from theexternal environment as corrective actionis taken and current cycles are replaced byfuture cycles.

Strategic decision applications

For purposes of this article, a successfulstrategic decision is one that results in theattainment of the objective that gave rise tothe decision within the constraints that hadto be observed to bring about each attain-ment. Because objectives constitute the foun-dation of the strategic decision-makingprocess, and because such objectives are setbased on the results of a comprehensivestrategic gap analysis, it seems reasonable toposit that a formal decision-making processis conducive to strategic decision success.The real-world applications of the strategicdecision-making process set forth in thissection are intended to validate this hypothesis.

A profile of successful strategic choiceSuccessful strategic choices tend to manifesta common set of characteristics:• The managerial objectives are compatible

with and reflective of the current strategicgap of the organization.

• There is an open search for alternativecourses of action that encompass the princi-pal stakeholders of the organization and

A continuous evaluationof the implemented strategicdecision is supplemented byperiodic comprehensivereviews with annualupdatings of the gapanalysis and the managerialobjectives.

Make choiceSet/resetobjectivesGap analysisStrategic gap

ENVIRONMENT

Environmentassessments

Organizationalassessments

Evaluatealternatives

Implementchoice

Search foralternatives

Assesschoice

Outputs

Feedbacks

• Positive gap• Negative gap

Possibilities

• Opportunities• Threats

Information

• Strengths• Weaknesses

Correctiveaction

Key Primary flow Corollary flow Information flow

Figure 3The strategic decision-making process

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which consider applicable time and costconstraints along with the cognitive limita-tions of the decision maker.

• There is an objective comparison and evalu-ation of a set of alternative courses of actionwith a principal emphasis on probabilisticconsequences attendant on the selection ofa given alternative.

• There is a tendency to select that alterna-tive most likely to result in the attainmentof the objectives within the boundaries ofrational choice.

• The implementation of a chosen alternativeproceeds within the established way ofdoing business and is reflective of propi-tious timing and balanced risk and rewardfactors in relation to the expected outcome.

• There is no presumption of success follow-ing implementation and continuous mea-surement and evaluation of emergingresults is accompanied by timely correctiveaction to ensure an outcome that attains theobjectives.

These characteristics will be used to evaluatethe success or failure inherent in the follow-ing real-world applications of strategic deci-sion making.

Successful strategic decisionsThe first successful strategic decision consid-ered here is the decision made in 1980 by theCarter administration and the US Congressto save the Chrysler Corporation from bank-ruptcy. The first and foremost objective was tosave Chrysler. The company’s capabilityprofile reflected huge weaknesses in manage-ment, technology and resources. The searchfor alternative courses of action consideredall possibilities; and it was conducted withinpervasive time and cost constraints. Theresulting decision was manifested in theChrysler Corporation Loan Guarantee Act of1979 which provided the company with $2billion in matching loan guarantees. Thesuccessful implementation of this financialbailout made it possible for Chrysler tobecome profitable again in 1983. The vitalstate of Chrysler’s finances and market posi-tion in 1995 attest to the success of this strate-gic choice made within the framework of thestrategic decision-making process.

The second example of a successful strate-gic decision was made by Philip Morris Com-panies in 1984 to reduce its dependency onprofit from tobacco products. The means toaccomplish this objective was diversification;and Philip Morris considered several alterna-tives before settling on the food processingindustry. Philip Morris had a very positivestrategic gap to finance its strategic objectivewhich was to be accomplished within ten

years. In 1985, Philip Morris purchased Gen-eral Foods for $5.5 billion, followed by theacquisition of Kraft Foods in 1988 for $12.9billion, and the subsequent acquisition ofSwiss-based coffee and confectionery com-pany Jacobs Suchard AG in 1990 for $4.1 bil-lion. In 1984, income from tobacco productsaccounted for 92 per cent of Philip Morris’income from operations. By 1992, this propor-tion had declined to 68 per cent with furtherreductions in prospect. Clearly, Philip Morrishas achieved its long-term strategic objective;and its strategic decision affords anotherpositive example of the benefits inherent inthe process set forth in Figure 3.

The last example of a successful strategicdecision involves the acquisition by the WellsFargo Bank of Crocker National Bank in 1986for $1.08 billion. This acquisition created thenation’s tenth largest holding company withabout $42.5 billion in assets. Wells’ objectivewas to establish a major presence in therapidly growing banking market in southernCalifornia. Wells had a positive strategic gapand conducted a comprehensive search foralternatives before the opportunity to pur-chase Crocker materialized. The acquisitionof Crocker promised the immediate realiza-tion of Wells’ objective. Implementation of thedecision was facilitated by compatible bank-ing technologies, complementary policies andprocedures, and continuous follow-up by themanagement of Wells Fargo. Implementationwas essentially completed within one year.

Unsuccessful strategic decisionsNearly everyone has a list of unsuccessfulstrategic decisions. The three failures pre-sented here are simply illustrative of manage-ment’s partial or complete disregard of thestrategic decision-making process conceptu-alized in Figure 3.

In 1978, General Motors set a strategicobjective to reinvent itself through the expen-diture of $40 billion. At that time, GM had 49per cent of the US automobile market. By1993, GM had spent over $60 billion in pursuitof its objective and its market share haddeclined to 32 per cent. Even today, in 1995,GM is in a kind of organizational free fall. Forexample, the company is still trying to earnan operating profit from its North Americanoperations. What went wrong?

GM’s capability profile in 1978 revealedstrength in all areas except management.GM’s management was characterized by abloated, bureaucratic structure that resistedany attempt to improve the corporation.Objectives were poorly defined, lines ofauthority were obscure; accountability forresults was non-existent, and the personalinterests of GM’s managers took precedence

There is no presumption of success followingimplementation andcontinuous measurementand evaluation of emergingresults is accompanied bytimely corrective action toensure an outcome thatattains the objectives.

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over the long-term best interests of the corpo-ration. Essentially, GM had a serious negativestrategic gap that was not apparent to itsdecision makers. Consequently, its strategicobjective was unattainable from the outset.In the context of Figure 3, GM took severalalternative actions in pursuit of its objective.In 1983, GM entered a joint venture with Toyota; in 1984, GM purchased ElectronicData Systems from Ross Perot; also in 1984,GM underwent a vast internal reorganiza-tion; and finally, in 1986, GM commencedproduction of the Saturn automobile. None ofthese alternatives was successful; nor wasGM’s exorbitant expenditures on plant mod-ernization and advanced technology. In fact,GM’s objective was flawed by the very man-agement that set it; and no amount of strate-gic decision making will reinvent GM untilits management is completely changed.

The second example of unsuccessful strate-gic decision making concerns the NorthropCorporation. In 1980, the Carter administra-tion asked the Northrop Corporation todesign, develop and produce a low-cost fighteraircraft for sale overseas. Northrup’s strate-gic objective in accepting this offer withoutthe usual formal contract was to protect itsindustry position as a producer of high-technology military aircraft. Basically,Northrop erred in not demanding a writtencontract and in assuming that a change ofadministration would not jeopardize its ver-bal agreement with the Carter administra-tion. Alternatives were not considered andnegative consequences were not envisioned.There were no safeguards to protect Northroponce the decision was implemented and costswere incurred. Essentially, it was a high-riskstrategic decision with rewards contingenton continued government advocacy of exclu-sive sales of Northrop’s aircraft to foreigngovernments. After five years and over $1billion in development costs, the F-20 fighterprogramme at Northrop was cancelled in1986. Implementation of this strategic deci-sion during the Reagan administration didnot result in the sale of a single aircraft to theexport market or any of the US armed forces.

On 23 April 1985, after 99 years, the Coca-Cola Company decided to abandon its origi-nal formula in favour of a sweeter variationdesignated “New Coke”. The strategic deci-sion to substitute new Coke for old Cokefailed and less than three months later thecompany brought back old Coke under thename “Coca Cola Classic”. It was thendecided to compete with Pepsi using bothCokes. The explanation of Coca-Cola’s failureis simple and straightforward. The companycompletely disregarded its principal stake-holders in deciding to precipitously jettison

old Coke in favour of new Coke. Alternativessuch as a gradual implementation of newCoke or a tandem marketing of both Cokeswere not considered. It was either old Coke ornew Coke with no middle ground. Essentially,proceeding on the basis of some very limitedand tenuous taste tests, Coca-Cola’s manage-ment decided to summarily dump the crownjewel of its product line. Once the premierproduct was withdrawn, there was an incred-ibly negative aftermath such that the com-pany had to reverse itself with considerableembarrassment. Clearly, the strategic deci-sion-making process was circumvented by atotal disregard of the external environmentand a lack of consideration for alternativeways of introducing a new product. The pri-mary criteria were quantitative measures ofsales, profits and market share. These criteriacaused the company to disregard the image ofa product that had been part of the US’s folk-lore for nearly a century. As such, this appli-cation affords a prime example of how not tomake a strategic decision.

Summary

This article has set forth a process perspec-tive on strategic decision making. Theprocess begins with the concept of strategicgap (Figure 1) which focuses on the fitbetween the capabilities of the organizationand its most significant external entities.Gap analysis begins with a capability profiledepicting the principal strengths and weak-nesses of the organization. If the organiza-tion’s strengths exceed its weaknesses, it hasa positive strategic gap and it is ready toexploit the opportunities and protect itselffrom the threat in its external environment.If the weaknesses outweigh the strengths, theorganization has a negative strategic gap andcorrective action is required to remedy thenegative imbalance before pursuing externalopportunities. The external environment ofthe organization is composed of opportuni-ties, threats, requirements and responsibili-ties which must be dealt with from a positionof organizational strength.

The managerial decision-making process(Figure 2) constitutes the second major partof the strategic decision-making process. Theformer process is composed of six major deci-sion-making functions which are both inter-related and dynamic in their cycling throughthe process. The strategic decision-makingprocess (Figure 3) is composed of three typesof process flows each of which contributes tothe benefits inherent in the overall process.The strategic decision-making process is

In fact, GM’s objective was flawed by the verymanagement that set it; andno amount of strategicdecision making will reinventGM until its management iscompletely changed.

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highly dynamic in its own right. Thisdynamism is centred on the external environ-ment; the continuous flow of informationthroughout the process; and the pivotal cou-pling of the concept of strategic gap with themanagerial decision-making process.

This article posited that a successful strate-gic decision is one that results in the attain-ment of the objective that gave rise to thedecision within the constraints that had tobe observed to bring about such attainment.It was also posited that a formal decision-making process is conducive to strategicdecision success. A profile of strategic deci-sion success with six principal characteris-tics was advanced as a basis for evaluatingreal-world strategic choices. Three examplesof successful strategic decisions revealed thatthe decision makers had followed the threevarieties of process flows conceptualized inFigure 3. Three other examples of unsuccess-ful strategic choices showed that the decisionmakers had disregarded all or some part ofthe process flows set forth in Figure 3. Basedon an evaluation of six strategic decisions ina cross-section of major US corporations, itmay tentatively be concluded that a processapproach to strategic decision making ismore likely to culminate in strategic decisionsuccess. Hopefully, the significance of thissubject along with the content of this articlewill elicit additional research in this criticalarea of management.

References1 Ofstad, H., An Inquiry into the Freedom of

Decision, Norwegian Universities Press, Oslo,1961, p. 5.

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7 Drucker, P.F., “The effective executive”, Harvard Business Review, January-February1967, p. 98.

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9 Bass, B.M., Organizational Decision Making,Richard D. Irwin, Homewood, IL, 1983, p. 16.

10 Hambrick, D.C. and Snow, C.C., “A conceptualmodel of strategic decision making in organizations”, in Taylor, R.L. et al. (Eds.),Proceedings of the Academy of Management,University of Colorado, Colorado Springs, CO,1977, p. 109.

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Application questions

1 Are your strategic decisions successful forthe most part?

2 Are your strategic decisions made after an objective gap analysis of your entireorganization?

3 Do your strategic choices regularlyembody the common set of characteristicsadvanced for the profile of a successfulstrategic choice set forth in this article?

4 Do you regularly employ a processapproach to your strategic decisions?

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A process perspective on strategic decision making