Our courses are delivered in English and will require participants to have a reasonable command of business English. If you are interested in bringing the strategic decision making workshop to your organization and would like to discuss the key needs you are seeking to address, please contact Mike Ashurst.
Strategic Decisions: An Introduction
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- Knowing God Through Fasting.
- Knowing Jazz: Community, Pedagogy, and Canon in the Information Age;
- Strategy and Strategic Decisions.
What does the course include? The content will be refined according to the needs of your organization but can include: A proven framework for improving strategic decision-making and increasing organizational effectiveness Creating high performing teams which adopt a common language for their decision-making Ensuring that key decisions are strategically aligned with organizational goals and values Harnessing the power of collective intelligence by accessing the diverse perspectives of colleagues Strategic decision-making practice in conditions of uncertainty and complexity with the unique AGILE insurance simulation Our courses are delivered in English and will require participants to have a reasonable command of business English.
- Long-Term Goals.
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- Fabulous Orients: Fictions of the East in England 1662-1785;
- Variational Principles of Continuum Mechanics: II. Applications.
When a strategic decision is made, we should analyze its value not only in terms of the decision itself but also in terms of its quantifiable impact on value creation. For example, an investment analysis might consider three possible scenarios: normal, optimistic, and pessimistic.
When the environment is likely to change, another possibility is to analyze the real options that exist for delaying, scrapping, or expanding a project. Exclusive use of the classic discounted-cash-flow method can underestimate the economic profitability of a particular investment.
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Measuring the value of a strategy requires combining traditional valuation techniques with others that include future scenarios and the real options for a project to be executed; techniques that will reinforce the crucial relationship between decision making and the creation of economic value. Sustainable economic value creation is vital for a business to survive.
To create value, the company must understand what economic advantages it has and accordingly make and implement decisions that ensure a level of profitability that exceeds the cost of the resources used. This underscores the relationship between strategy and economic value creation, however it is not an easy thing to measure in practice. If we take that approach, we can conclude that discounted cash flow DCF —a traditional method of measuring economic value—does not fully quantify the value contributed by a strategic decision, since some of the value resulting from this decision goes unmeasured.
Strategic Decisions - Definition and Characteristics
The economic value derived from DCF certainly has its limitations. For example, we must know what the actual flow is in terms of the amount and over time. The reality, however, shows that a possible future action on the project to be executed is not passive and sometimes involves a high value. One way to incorporate the value of operational flexibility into the value obtained through DCF is to discount estimated cash flow based on the probabilities that a given scenario will materialize.
How Do You Measure the Value of Strategic Decisions? | IE Insights
In this case, the traditional DCF becomes dynamic since it factors in the probabilities of possible scenarios occurring. This is best illustrated with an example of investment analysis on a future project see Chart 1 , which reflects three possible scenarios of business development: Normal, optimistic and pessimistic.
Every one of these would generate economic value, but they all have different probabilities, so the weighted average economic value would be 22, monetary units. In each case, we would need to analyze the value creation with the cash flows including the various actions that are taken based on the expected events e. Given the uncertainty in some sectors, it is not always wise to be flexible at the operational level.
Nevertheless, in order to take advantage of a market opportunity, any decision strategic or otherwise implies a series of risks when going after it decisively; those risks could entail disruptions such as changing the area of activity or technology of a business. Therefore, along with taking DCF into account, the value measurement must be rounded out with other complementary methods.
As such, it is crucial to evaluate not only the business decisions themselves, but also the model for quantifying their impact on value creation. Still, before running the numbers there are some key questions every organization must ask prior to undertaking any major project, regarding the real options of that project and whether they will have value in the future.
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- Amplify Strategic Decisions.
The act of betting on the classic method of discounted cash flow can underestimate the economic profitability of a project or particular investment. Before increasing the economic value of a decision, we must be sure that the option makes sense and has value. A real option when looking at the different possibilities of impact arises when changes in the environment are probable, since this implies, among other things, being able to delay the project, scrap it or, in the best-case scenario, expand it. When considering the possible value, it is highly practical to break down the real options into two types:.