Strategic Planning and Decision Making
Domain 2 tests whether you can move a plan from aspiration to measurable commitment, and whether you can select a defensible decision method for the conditions the item describes.
Direction setting
- Vision is the future desired state; mission is the present purpose and scope; values are behavioural guardrails. Option lists routinely swap vision and mission.
- Objectives must be SMART, with the metric and the date stated. Improve service is not an objective; cut average call wait from 6 to 3 minutes by 31 December is.
Analysis tools
- SWOT classifies internal strengths and weaknesses against external opportunities and threats. A capability you lack is a weakness; a competitor entering your market is a threat.
- PESTLE scans political, economic, social, technological, legal, and environmental forces outside the organisation.
- Porter's five forces tests industry attractiveness, not the merit of a single project.
Decision models
The rational model runs: define the problem, generate alternatives, evaluate, choose, implement, evaluate. Real managers face bounded rationality (Simon) and often satisfice, accepting the first option that clears a threshold. Nominal group technique and Delphi protect against dominant personalities; groupthink is the failure mode where consensus pressure suppresses dissent.
Worked example
Two digitisation vendors are compared. Option A costs a certain 80,000. Option B costs 200,000 with a 60% probability of success and a 30,000 loss if it fails. Expected value of B = 0.6(200,000) + 0.4(30,000) = 120,000 + 12,000 = 132,000, which is worse than A's 80,000, so a risk-neutral analysis favours A. The reasoning matters: weight every outcome by its probability, sum, then compare. Do not compare only the success branch.
Traps that cost marks
- Ignoring the failure branch of a decision tree.
- Treating sunk costs as relevant; money already spent is not a reason to continue.
- Escalation of commitment: defending a failing project because of past investment.
- Selecting a tool that cannot answer the question; SWOT cannot rank options, a weighted decision matrix can.