Strategic Decisions - Definition and Characteristics Strategic Decisions - Definition and Characteristics Strategic decisions are the decisions that are concerned with whole environment in which the firm operates, the entire resources and the people who form the company and the interface between the two. These decisions may be concerned with possessing new resources, organizing others or reallocating others. Strategic decisions deal with harmonizing organizational resource capabilities with the threats and opportunities.
While some decisions might seem easy based on their effect on your short-term bottom line, these decisions can stall your ability to make long-term improvements that help build your brand and increase the value of your company.
Strategic Management Strategic management is a process of setting long-term goals and objectives based on where you want to see your company in the future. For example, you might set strategic goals of becoming a national business, diversifying into new markets, franchising your company, maintaining financial benchmarks for debt and cash flow management or setting yourself apart from competitors.
Crunching the Numbers When you have a financial decision to make, the lowest cost or highest profit will not be your sole determining factor if you use strategic decision-making.
For example, if you have strategic goals of keeping debt service and overhead costs at specific levels, you might decide to fund an equipment purchase with your cash reserves, rather than credit, to maintain your debt-service goals.
You might decide to hire a more expensive contractor to get the best-quality work if the extra expense keeps you within your overhead range. When you look at your pricing, you might decide to make a smaller profit margin per item in order to boost sales to the point you hit your gross profit goals.
If your strategic goal is to reach a specific percentage return on investment, you might take the opposite tack. Managing Your Brand If you have a strong brand that helps you compete at a high level in your marketplace, many of your day-to-day decisions will have to take into consideration your strategic brand-management goals.
Your marketing messages will need to send the correct message consistently, such as not offering coupons if you sell an upscale product or service.
If your brand targets younger consumers, you might rely more on Internet sales, even if your margins are slightly lower. If your strategic goal is to increase or maintain market share, you might lower your prices to make it harder for businesses to compete with you.
Creating a strategic plan to attract and retain a high-quality workforce will impact your decision-making processes throughout the year. Any time you consider adding a new product or service, you must consider the effect it will have on your staff.
Increasing employee workloads, even with pay increases, can reduce morale or make your company less enjoyable for workers. If you try to cut costs by reducing benefits and perks or offering less training, you might find yourself losing more money in the end because of decreased productivity and high employee replacement costs.
Create a succession plan that helps keep you effectively staffed for years to come and review key decisions you make in terms of how it will affect your organization.Strategic decision-making is the process of charting a course based on long-term goals and a longer term vision.
By clarifying your company's big picture aims, you'll have the opportunity to align. Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.
Using a step-by-step decision-making process can help you make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives.
Business leaders use strategic decision-making when they plan the company's future. Strategic management involves defining long-term goals, responding to market forces and carrying out the firm's mission.
A company's mission is equivalent to its purpose -- its primary reason for existing. When. Decision making is central to all the managerial activities, be it planning, organizing, staffing, directing or controlling. Decision making is a process of making choices from alternative courses of action, based upon factual and value premises with the intention of moving towards a desired state of affairs.
When making a decision in such a situation, people tend to employ two different decision-making strategies: the availability heuristic and the representativeness heuristic.
Remember, a heuristic is a rule-of-thumb mental short-cut that allows people to make decisions and judgments quickly. Decision making is central to all the managerial activities, be it planning, organizing, staffing, directing or controlling.
Decision making is a process of making choices from alternative courses of action, based upon factual and value premises with the intention of moving towards a desired state of affairs.