1 / 5100%
Strategic Decision Making
DDBA 8560 - Seminar in Healthcare Managerial Decision Making
Walden University
Strategic Decision Making
Strategic leadership is the ability to anticipate change, to envision the future and to empower
others to create strategic change in an organization. It is a multifunctional form of leadership,
and it involves delegation, and managing an entire organization rather than a particular division
of it." It also requires flexibility to change, and leadership by example through being role models
for the behaviour and thoughts which they wish to inculcate in their staff.
A crucial task for a strategic manager is to determine the strategic direction of the firm." This
requires the strategic manager to develop, and implement, a long term vision of the strategic
goals of the organization, over the next five to ten years. The strategic direction consists of two
components: the organization’s core ideology and its envisioned future. The core ideology
motivates employees to live up to the principles and policies established during the
organization’s history, while the envisioned future encourages employees to embrace change and
to perform superlatively in order to attain the organization’s vision. .
The decision making process for strategic managers is no different than for any other type of
manager. However, as strategic management is tied to goals, the decision making process should
use those goals as a guide. In this way, management can improve decision making through a
“problem decomposition” strategy, which involves breaking a large decision problem into
smaller parts. According to Simon (1957), cognitive processing limitations leave managers with
little option but to construct simplified mental models of the world. "Thus a manager “behaves
rationally with respect to this model . . . "(although) such behaviour is not even approximately
optimal with respect to the real world.” This suggests that the decision making process relies on
information that has been simplified into schematic models that can be readily understood.
Therefore effective decision making consists of making a series of optimal decisions, with each
subsequent decision building on its predecessors, rather than making a single decision that
transforms the fortunes of an organization.
Huber (1980) cites two approaches to management decision making, including the development
and application of normative decision rules based on formal logic derived from economics or
statistics, and descriptive accounts of the actual making of judgments, decisions, and choices.
Practically, Dewey ([1910] 1978) breaks down problem solving into five stages: (1) perceiving a
problem (2) defining the character of that problem, (3) suggesting possible solutions to the
problem (4) evaluating the most probable of the possible solutions, and (5) further observation
and experiment leading to acceptance or rejection of the suggested solution.
This procedure is mirrored by Simon (1960) who states that decision-making consists of three
principal phases, intelligence, design and choice, which are defined respectively as: “finding
occasions for making a decision; finding possible courses of action; and choosing among courses
of action.” According to Simon (1960), executives spend a large fraction of their time in
intelligence activities, an even larger fraction in design activity and a small fraction in choice
activity. Similarly, Brim et al. (1962) divided the decision process into five steps: identification
of the problem; obtaining necessary information; production of possible solutions; evaluation of
such solutions, and; selection of a strategy for performance. These models are all sequential in
the sense that they divide decision processes into parts that always come in the same order.
A strategic manager in a Kenyan hospital has to align his decision making with the strategic
direction of the national healthcare system. In Kenya, the healthcare policy is to be consistent
with the Millennium Development Goals (MDGs). .
"Three of the eight goals refer specifically to health, and one goal refers to access to affordable
drugs in developing countries. The attainment of these goals requires the setting aside of a
significant proportion of public revenues to ensure universal and equitable access to quality
health services (Kangwana et al, 2009). This figure has been set at 15% of the national budget by
the Abuja Declaration of 2001, but Kenya is yet to meet this target. Although the MDGs are
laudable goals to strive for, especially in healthcare, there may need to be a review of strategy
once the MDG period expires in 2015.
Below the overarching strategy of attaining MDGs related to health, the strategic direction of the
health sector in Kenya is managed by a national health policy framework programme, which is
implemented through plans, such as the Health Sector Reform Programme, the Sector Wide
Approach (SWAp), the National Health Sector Strategic Plan II, the strategic plans for the
ministries of health (Medical Services and Public Health) and the National Human Resources for
Health Strategic Plan, the Kenya National HIV and AIDS Strategic Plan III (KNASP III)
2009/2010 – 2012/2013 and the Legal Framework for Health among other reforms (Kangwana et
al, 2009).
The national healthcare strategy, as set out in the plans, places emphasis on improving human
resource in the healthcare sector. The National Health Sector Strategic Plan II (NHSSP II 2005-
2010) aims at “reversing the trends” in declining health indicators by developing and
strengthening the health workforce, and ensuring that they are equipped with skills,
competencies and professional attitudes necessary to offer quality health services and able to
respond to the current and emerging priorities. It is hoped that the perennial drug shortages in
Kenyan hospitals are among the priorities which healthcare workers, particularly managers, will
be able to respond to. Unfortunately these ambitious yet noble ideas remain unachieved because
of too many policy frameworks that operate at cross purpose rather than complementarily, and
because the emphasis on human resource obscures the need for proper logistics, even though it
recognizes the importance of managers.
One way of easing the drug shortages is by rationalizing the structure of the healthcare system.
For instance, level six and five facilities (tertiary/referral and provincial hospitals respectively)
should be used for specialized treatment only and adequate medical personnel and drugs should
be provided to level one to four facilities for efficient and effective healthcare delivery (Quick,
2003). This is because the current system of drug supply does not take into account the
requirements of different levels of hospitals, leading to overstocking of drugs in facilities where
they are not needed, while other health centres do not have adequate stocks and/or erratic
supplies. .
Despite the importance of logistics in ensuring that drug supplies are maintained, there can be no
gainsaying the importance of competent management, as the fragmentation of health services in
Kenya and sub-Saharan Africa in general is an indicator that strong management is absolutely
essential. ". unfortunately, studies show that Africa has the lowest healthcare management ratio in
the world; only 17% of its total healthcare workers are employed as managers or support
workers, compared to 43% "in America and 33% globally, (World Bank, 2008). This skill deficit
has drastic ramifications on the improvement of health programmes, including decision making
that will result in the proper distribution and supply of drugs.
Students also viewed