Strategic decision making
As the companies try to globalize due to the boarders being more transparent, competitions is thriving from the innovation which is lowering costs resulting to the reconstructed industries turning to be stronger and leaner by lowering costs though the fuel costs remains the key decisions made. These factors are resulting to economic battlefield since the firms cannot control the prices and firms with minimum cost, highest efficiency and safety will be the future market leader. To achieve this objective there must be losers and winners as business model change with time.Strategic decision making is an important function in the management which ensures that correct investments are made, portfolio management, business strategic objective and the products developments are achieved in transportation and logistics firms. In the decision making process, the management must work closely with the al the client to sort the most immediate issues about the business and eliminate all manner of complacency and reduce the assumption made while make certain the management is in full gear. The management needs to facilitate an interactive approach that guarantees shared understanding in all the situations and strike an agreement on the way forward.
Strategic decisions in the management should ensure that it gives the firm the best management in such a way the clients derive maximum utility from the services it offers, this enables the executive to realize its financial plan, ethically be able to do away with all obstacles which can prevent it from achieving its goal and thus ensuring a sustainable value is established. One needs to focus on the available opportunities, solve the problems around wisely and ensure proper management of risk and all this results to increased value of an organization.Strategic decision in management may involve investment decision, changing cost o transport or even changing the wages or benefits of firm employees. The decisions are of paramount importance and therefore need to be made with a lot of consideration of the all the parties made. DECISION STRATEGIES IN TRANSPORTATIONDecision making strategies is a continuous process which involves a firm and its competitors, the firm in the transportation industry must ensure it beats its competitors and there this process must be carried out frequently due the continuing changes in the industry, with new machines using different kinds of fuels among other changes. Strategies need to be made, and then put in place to meet the changes and need to be evaluated to measure their effectiveness.
Strategic decision management involves three main areas of management, theses are:a. Decision formulationb. Decision implementation andc. Decision evaluation. DECISION FORMULATIONDecision formulation involves a critical look at the issues at hand and then build up an all round decision that is favorable to the firm and the clients after carefully weighing its various impacts.
The decision may be to introduce a new variety of means of transportation within a certain niche market. The decision formulation is very important on decision strategies and involves a number of steps as shown below;1) Feasibility analysis of the decision formulatedThis is the first stage of decision formulation and involves looking at the decision being made and determines whether to proceed with the decision or not2) Technology and economic analysis of the strategic decision being made.This is where the importance of the decision is considered in terms of whether its meets the demand potential and the choice of optimal technology are made. The strategic decision made may have the potential to produce services, its imperative to know if the market for demand of these services with careful consideration of the market forces. This stage gives the strategic decision a unique individuality and sets the stage for detailed designed development.3) Strategic decision design and network analysisThis is crucial because it define the individual activities which constitute the strategic decision and the interrelationships with each other decisions being made.
A detailed work plan of the decision is made after the sequence of activities has been presented, and lastly a time allocation is made for each activity in the strategic decision is made and presented in a network drawing4) Input analysis of the strategic decision are laid downTransportation require heavy investment especially if the firm need to change from an obsolete system a new one. This step assesses the input requirement to meet the decision made, supposing the decision is to retrench some workers, this may require a relative amount of money depending with the years if service and the benefits. This makes it essence to calculate the quantities required for completion of the strategy and to keep it in operation. This make it important to evaluate the resources requires though some will be recurring and others not.5) Financial analysisThis involves estimating the total cost in terms of the initial cost and operating costs. This may also entail comparing the other decision from a common scale therefore aiding the decision maker reference; some the analytical tools used in financial analysis are the ratio analysis and discounted cash flows.
6) Cost benefit analysisThis is the overall worth of the strategic decision made. It considers the decision from a rational viability point of view. This does not only the direct and indirect cost and benefits but also the costs and all the benefits enjoyed by the whole entity.7) Pre- investment analysisThe strategic decision gets a formal and final shape in this stage since all the results gotten from the above steps are put into consideration. The strategic decision is also presented to the implementing body and other consulting agencies and male a decision on whether to carry on with the planned decision or not.
STRATEGIC DECISION IMPLEMENTATIONThis involves the activation, organization and operation of the strategic decision. This is carried out after the final appraisal has been approved and financial arrangements have been completed. This is carried out according to the detailed implementation plan I which the timing of all the activities is predetermined; this is where the management can make the strategic decision a success or failure. The main activities involved in strategic decision implementing are:1) Mastering the strategic decision documentThis requires the implementing manager to understand the entire document relating to the strategic decision made; this includes the appraisal reports, charts, loan contracts, and other agreements. A strategy that is not well understood can become futile.
2) Initiating the financial managementThis is where the management makes sure that all the funds are transferred to the strategy manager responsibility. This may include putting the funds where he can easily access.3) Public relationStrategic decision are never one man show, it involves the target group and al people who are involved directly or indirectly need to be enlighten about it. If its introduction of the double deck buses, the target customers need to be informed about them.5) Selecting the strategic decision personnelThose people directly involved with the strategy must be known including their location and this eases the management of the strategic decision being put in place. STRATEGIC DECISION EVALUATIONThis is done at specific time but regularly.
This is mainly on the impacts, efficiency, relevance, effectiveness, replicability and sustainability. This is usually done to check the success of the decision i.e. whether it met and meets its long term objectives.This is carried out through the formative evaluation or summative evaluation of the decision made. THE GENERAL APPROACHES TO STRATEGIC DECISION IN MANAGEMENTThe two main approaches used in strategic decision making in transportation usually complement and are opposite each other to some extent, these are the:1.
Industrial organization approachThis usually applies the economic theory; this is mainly concerned with things like the externalities, demand, supply, resource allocation, competition and the economies of the scale. There are some underlined assumptions profit maximization and rationality.2. Sociological approachThis approaches the strategic decision making process in respect to the way human beings relate between each other and the assumption made include rationality and normal profits to be achievedThe process of strategic decision making in transportation also depends on the type of management in place, in the autocratic type of management, the top management is the decision maker without consulting and no body can question his decision. It is cohasive in terms of the relationship with the employees are usually threatened if they don’t meet the expectation. In the democratic management, there is consultation with all levels of the employee though the top management is the key decision maker but it considers the proposal and ideas of the junior employees, it employees the McGregor theory of x and y style of leadership and this stimulates the employees and gives them favorable attitude towards their job.
In the free rein type of management, the subordinate make the decisions and follow themIn the strategic decision making in transportation, the decision maker should ensure that the competitive advantage that is sustainable is achieved, and this must be proprietary and distinctive. This is achieved through integration and coordination, learning, transformation, proper use of technological innovation, proper efficient use of all resources and path dependencies.CONCLUSIONStrategic decision making in the transport industry is important because it ensures the firm to a unique structure of success by meeting its objectives and being corporative with the clients who are always served with in special ways. Performance monitoring and frequent auditing are of paramount essence in successful achievement of the expected results and that should rhyme with the objectives of the firm laid down by the chief executive office