Strategic decisions is the decisions that look after the environment in which the operation of a firm takes place, the total resources, and the people who developed the company. These decisions have a good impact over years and decades, and even after the lifetime of a project. When a strategic decision is made, it is very difficult to change it for any reason in a short period.
A strategic decision determines the direction in which the embarkment of an entity takes place. The main objective of the strategy is to give an advantage within which action occurs.
Strategic decision making
Successful businesses hire a manager who does not simply find products and sells them to make money, but rather thinks of big opportunities and the big stuff that will pull up the company and take it where it deserves to be. This process is known as strategic decision making. These decisions are made according to the company’s needs and vision.
This type of strategic decision making is the guide for the company to fulfil its choices for further expansions and puts them with the objectives of a company.
Example of a strategic decision
Suppose a dog food company hires a manager. After joining, he notices that the owners of the pets want fresh food for their dogs and not those 10 years old kibbles, even if those kibbles provide the same nutrition to the dogs. Now there is a bar set for the company. Its only mission is to sell good, healthy, and fresh food to the owners of the pets. To meet the bar and to grow and become successful, the only thing the manager thought of was to focus on the healthiness and freshness of the dog foods. This means the reduced shelf life does not provide a very high-profit margin because the owners are more than willing to pay for good and fresh foods.
Differences between strategic decisions, administrative decisions, and operational decisions
Strategic Decisions | Administrative Decisions | Operational Decisions |
These decisions are for the long-term | These decisions are taken daily. | These types of decisions are not taken daily. |
Where the future planning is focused, the strategic decisions are considered. | These administrative decisions are based on the short-term. | Operational decisions are based on the medium period. |
Strategic decisions are taken following an organised vision and mission. | These decisions are taken according to strategic and operational decisions. | These decisions are taken according to strategic and administrative decisions. |
For all the organisations, these strategic decisions are related to the counter planning of the overall organisation. | This has a relation with working of employment in an organisation. | These are production-related. |
The strategic decision deals with the growth of organisations. | The welfare of an organisation for employees is in these decisions. | Factory growth and production are related to these decisions. |
Characteristics of strategic decision
The characteristics of strategic decisions are as follows:
- Activities match the environment.
- The main strategy is to match the organisation’s activity with the external as well as the internal environment in which it operates. Strategic decisions are best formulated when it is about environments like environmental opportunities and environmental threats.
- The scope of activity of an organisation is a concern.
- These decisions focus more on the activity of an organisation for scope. These activities change from one company to the other. Some of the companies have limited their production to only one type of product whereas many other companies have many varieties of products. To the strategic decisions, the range of these activities is fundamental.
- Activities match with the capability of resources.
- Strategies are not only focused on environmental opportunities and environmental threats; rather, they also focus on the resource base of an organisation.
- Activities match the resource base.
- Decisions like operations are affected.
- The magnitude of strategies and nature are affected.
- A company’s long term direction is also affected.
Conclusion
Strategic decisions include understanding the underlying bases, which guide the strategies of the future.
At the corporate level, a few strategic decisions are allocation strategies, directional strategies, and resource strategies. At the level of SBU, a generic strategy is an example. And lastly, at the level of function, production, HR, finance, marketing, etc. are simply related to the various functional areas of strategic decisions.
The strategic decision for marketing consists of various products to offer, along with the segments of the market to target and the strategies for positioning.
A failure in the organisation is a clear report after a product repeatedly does not meet the strategic points. These are strategic mistakes and an unsuccessful relationship or interaction between the company and its environment.
