Managers make hundreds of decisions every year. They do this to boost sales figures in the short term and think about the big picture and make decisions that take the company to where it wants to be. This is called strategic decision making. Strategic decisions are made based on of a company’s mission and vision or its objectives.
An example. A manager of a cat food company notices that his customers prefer higher quality and fresh food instead of cat food sold in very large quantities for a low price. The company’s mission is to be the best cat food company in the country.
In order to adapt the company to the changing needs of customers, the manager decides to shift the focus on his products to quality and freshness. This means a shorter best-before date, but also a higher margin due to the fact that cat owners are prepared to pay more for fresh food.
The definition of strategic decision making
Therefore, the definition of strategic decision making includes at least the mission & vision and both short and long term goals. The decisions relate to the entire environment in which the company operates, all resources within the organisation and all interaction between the company and the outside world.
Some features of strategic decision-making are set out below.
Strategic decisions often include important proposals for the distribution of resources
Strategic decisions relate to more than one activity
Strategic decisions often involve far-reaching decisions
Strategic decisions are complex in nature
Strategic decisions are made at the highest level of the organisation and involve risks
Benefits / advantages of strategic decision making
Strategic decision making is inextricably linked to strategic planning because it concerns the distribution of resources and the company’s long-term direction. Although many organisations recognise the importance of strategic planning and decision making, documents such as the company’s mission and vision may also remain untouched.
The effective use brings a number of benefits.
Strategic decision making makes it possible for organisations to be proactive.
It strengthens the organisation’s sense of direction.
It reinforces operational efficiency
Effective strategic decision-making helps the company to be profitable
Strategic decision-making helps a company operate sustainably.
Tips & tricks
What are the best-known and most effective methods? How can I assess whether my mission & vision are in line with the decisions made? Is it possible to change a mission or vision statement? How important is this for future success? The articles linked to strategic decision-making deal with various topics in the field of high-level decision-making.
Paired Comparison Method is a handy tool for decision making; it describes values and compares them to each other. It’s often difficult to choose the best option when you have different ones that are far apart.
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