In a company, planning and decision making should have perfect synergy in order for a company to achieve its goals and objectives. The chief executives should consider themselves as resources in their planning functions and as architects of the decision making process where strategic planning takes place.
In their research, Hammond, Keeney & Raïffa (2002) indicated that decisions shape organizations and represent the fundamental tool used by companies in facing the opportunities, the challenges, and uncertainties of life. Most organizations dread making hard decisions because they have high stakes and serious consequences involving numerous and complex considerations. In order for companies to be effective in decision making process, they should ensure that the decisions made focus on what is important, that they are logical and consistent acknowledging both subjective and objective factors (Hammond, Keeney & Raïffa, 2002). Defining the decision problem is itself a decision problem a solution of which influences a company’s ultimate choice. Hammond, Keeney & Raïffa (2002) noted that before making a decision a company should consider several possible problem definitions in the beginning and at the same time pause and examine the chosen definition.
Dell Inc is an international computer manufacturing company. Dell Inc has over the time been voted as the most successful computer company in the world for delivering the best customer experience in the global market. The company has gained competitive advantage by meeting customer expectations of the highest quality, competitive pricing, and individual as well as company accountability (Gunasekaran 2001). All these attributes have been enhanced by effective planning and decision making within the company. Gunasekaran (2001) says that Dell’s competitive advantage is an issue of a singular importance. Dell considers the strategic decision making process a result of the variations in the market place and the need to maintain the company’s competitive advantage. The company’s information systems have played a useful role in information processing and decision making. Gunasekaran (2001) says that the information systems have been significant especially in performing unstructured decisions.
Planning refers to choosing a goal and developing a method or strategy to achieve the goal. Williams (2011) says that when done right, planning brings about tremendous increases in individual and organizational performance. Planning entails setting goals, developing commitment to the goals, developing effective plans, tracking progress toward goal achievement and maintaining flexibility in planning (Williams 2011). Gunasekaran (2001) indicated that a systematic strategic planning and decision making process performed by Dell Inc on informed basis substantially influenced the profitability and growth of the company. Through proper planning and decision making Dell Inc has been able to analyze and evaluate its internal and external environments.
Managers must lead planning and decision making process and take responsibility for formulating the plans to attain a competitive advantage (Hill & Jones, 2007). Plans and decisions that made Dell Computer so successful were chosen by the company’s founder, Michael Dell and the managers he hired. Hill & Jones (2007) says that Dell’s success like the success of any company was based in large part on how well the company’s managers executed the plans and decisions made. Proper planning at Dell computers requires that the goals at the bottom and middle of the company support the objectives at the top of the company. Williams (2011) says that top management at Dell Computers develops plans that indicate how the company will serve customers and position itself against competitors over a period of 2 to 5 years.
On the one hand, Dell computers middle managers make decisions and develop tactical plans that direct behavior efforts and priorities over the next 6 months to 2 years (Williams 2011). On the other hand, lower-level managers at the company develop operational plans that guide daily activities in producing and delivering and company’s products (computers) and their related services. Operational plans and decisions typically span periods ranging from 30 days to 6 months. Williams (2011) says that in planning budgets plays a key role because it facilitates the implementations of key decisions and strategic plans in the company. Budget refers to quantitative planning through which managers decide how to allocate available money to best achieve company competitive advantage (Williams 2011).
Decision making is the process of choosing a solution from available alternatives. Williams (2011) says that at Dell Computers, “decision making enables managers to define problems, evaluate alternatives, and choose optimal solutions that provide maximum benefits to the company” (p. 118). At Dell Computers managers begin decision making process when they are aware of the gap, are motivated to reduce it and have the required resources to fix it. Hammond, Keeney & Raïffa (2002) argued that different objectives will suit different decision problems. This is because it is easier to recycle objectives than to reformulate them for each decision. Dell Computers does not focus on immediate, tangible, measurable qualities when listing objectives for use in decision making (Hammond, Keeney & Raïffa 2002).
Dell Computers has for over 20 years enjoyed tremendous success in the personal computer industry driven by its powerful planning and decision making process (Sinofsky & Iansiti 2009). Dell’s plan and decision to sell directly to its customers has given the company a competitive advantage. This plan facilitated a rapid and rich information exchange matched by high-velocity supply chain. Dell has been able to match customer orders with a lead time that was an order of magnitude shorter than competitor’s (Sinofsky & Iansiti 2009). Effective planning and decision making of the company changed Dell from a ruthless cultural focus to efficient execution to a financial emphasis on rapid cycles, closing the books, and emphasizing on a weekly and sometimes on a daily basis.
Dell evolved its plans and decisions towards an increased focus on notebooks and on consumers. The company’s plan to expand its product line breadth and focus resources on designing PCs in new ways gave it a competitive advantage (Sinofsky & Iansiti 2009). Through the company’s plan to predict features ahead of demand, stocking more inventory, and implementing new approaches of product distribution the company has positioned itself as a market leader in the industry. Sinofsky & Iansiti (2009) also noted that through its strategic planning and decision making process, Dell Computers redesigned its manufacturing process hence improving its customer support function and increasing its competency in dealing with less technical customer base.
In conclusion, effective planning and decision making process involves an interface between a company and its external environment. The effects of these plans and decisions are evident throughout a company because they entail committing substantial amount of time and budgetary resources of the company. The management should put a mechanism in place to oversee strategic planning and decision making process. Dell’s long term decisions and planning techniques gave the company undisputed profitability and growth. It is important to realize that planning and decision making process requires long term commitment of resources. Over the time managers have learned that to resolve difficult decision situation, it should be broken into small elements. With careful thought, the concerned parties can then center their attention on those specific key elements to a particular situation. From the Dell’s perspective, a company’s decision making and planning process should get it where it wants to go. This implies that careful planning and decision making in organizations is a means to achieving competitive advantage.