Q
Cognitive Biases Challenge
What is a major challenge caused by cognitive biases in strategic decision-making?
A
Answer
Managers may make subjective judgments that cloud objective evaluation.
Problems hindering effective strategic implementation include:
Strategic drift happens when an organisation’s strategy gradually becomes misaligned with the external environment.
To assess strategic success, organisations use various methods:
Strategic planning provides a roadmap for the future, aligning resources and efforts to long-term objectives. Benefits include:
The Value: Contingency planning prepares organisations for unexpected events or risks by outlining alternative courses of action. These practices minimise damage, reduce uncertainty, and enhance resilience.
What is a major challenge caused by cognitive biases in strategic decision-making?
Managers may make subjective judgments that cloud objective evaluation.
How does information overload affect strategic decisions?
It causes confusion and hampers clear decision-making.
What risk does a rapidly changing environment pose to strategy implementation?
Conditions may change before the strategy can be executed, making it obsolete.
What is resistance to change in strategy implementation?
Stakeholders oppose new strategies that threaten their power or routines.
Why can a strong strategy still fail in an organization?
Poor execution or weak implementation can cause failure.
Define planned strategy.
A deliberate, future-oriented plan with clear goals devised by top management.
Define emergent strategy.
A flexible, informal strategy developed in response to unexpected challenges or opportunities.
What is strategic drift?
When an organization’s strategy gradually becomes misaligned with the external environment.
Name one cause of strategic drift.
Complacency, incremental changes, failure to scan environment, or organizational inertia.
What is benchmarking in strategic evaluation?
Comparing performance against competitors or industry standards.
What does the balanced scorecard evaluate?
Financial, customer, internal processes, and learning/growth perspectives.
List two benefits of strategic planning.
Provides clarity and coordinates efforts across the organization.
What is the purpose of contingency planning?
To prepare alternative actions for unexpected events or risks.
Why is crisis management important?
To minimize damage and ensure quick recovery during disruptive incidents.