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Strategic decision making

What is strategic decision making?

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.

What is strategic decision making?

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.

Hoy-Tarter Model of Decision Making

December 3rd, 2019

This article offers a practical explanation of the Hoy-Tarter Model of Decision Making. After reading, you will gain a better understanding on how best to select the right team members for the decision-making process. The main objective in…

Futures Wheel by Jerome Glenn

August 16th, 2019

This article explains the Futures Wheel by Jerome Glenn in a practical way. After reading it, you will understand the basics of this powerful decision making method. What is the Futures Wheel? The American scientist Jerome C. Glenn is mostly…

Multiple Criteria Decision Analysis (MCDA)

August 26th, 2018

This article provides a practical explanation of the concept of Multiple Criteria Decision Analysis (MCDA). After reading it, you will understand the necessity and the benefits of Risk Analysis. What is a Multiple Criteria Decision Analysis (MCDA)? A Multiple-Criteria…

Decision Matrix Analysis

June 26th, 2018

This article explains the Decision Matrix Analysis in a practical way. After reading it, you will understand the basics of this powerful decision making method. This article also contains a downloadable and editable Decision Matrix Analysis template. What is a…

Paired Comparison Method

March 14th, 2018

This article explains the Paired Comparison Method in a practical way. After reading it, you will understand the basics of this powerful Decision Making tool. What is the Paired Comparison Method? Paired Comparison Method is a handy tool for decision…

Prospect Theory (Tversky & Kahneman)

January 9th, 2018

This article explains the Prospect Theory by Amos Tversky and Daniel Kahneman in a practical way. After reading it, you will understand the basics of this powerful Decision Making tool. What is the Prospect Theory? The Prospect Theory is a…
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