Dimensions of Strategic Decisions

Wednesday, March 31, 2010 | Strategic-Management | 1 comments »

The process of Strategic decision is an intellectual decision which is based on estimates and
facts. Decisions taken in definite circumstances are to be changed according to the changes in
such circumstances. Managers preparing for strategic arrangements are continuously doing the
valuation of circumstances and bring immediate changes in the formerly taken decisions.

For strategic decisions following dimensions can be noted:

(1) Function of Top Level Management: Strategic decisions affect directly to the various
activities of the business like finance, production marketing and staff matters. Not only this but
these types of decisions also affect directly to the risk and profitability of the business. As a
result it is taken collectively at the top level management by manager's group Managing Director
and Chief Executive Officers (CEO).

(2) Intellectual Process: Strategic decisions are not the day-to-day decisions. They are mostly
long-term decisions and affect the profitability and existence of the company. Therefore before
taking decisions the future attitude of various factors is studied through forecasting process. For
this relation of work effectiveness is developed between factors and their logical analysis and
valuation is done. In short, the process of strategic decision is said to be an Intellectual Process.

(3) Long range effects: Strategic Decisions affect the long-term activities of future. It can be
sweetly said that their result will be positive. If circumstances do not change, then the
profitability and prosperity of the unit increase in the long term. But if the forecasting of
uncontrolled factors is wrong, then these decisions can be risky and may decrease the
profitability of the business.

(4) Expert Advice: While taking the Strategically Decisions, it is essential to think about
Technical and Business matters. In these circumstances advice of the expert advisers are taken
from Technicians about Mechanical matters and from Tax Advisers about Taxation matters.
Besides these under strategic decisions cost Accountant's advice is taken to reduce the cost of
production of products. In short, the work of taking decisions is done by Top Level Management
with the help of Expert Advisers.

(5) Future Oriented Decisions: On studying the present situation the top level managers take
the decisions about which types of changes will be necessary in which activities in future
increase in the profitability of the unit. Normally the strategic decisions are future based
decisions and future activities depend upon various estimates. Estimates are prepared on the
bases of forecasting process but forecasting is not always perfect/Many times strategic decisions
make future activities risky.

(6) Functions and process fixing on strategic decisions: On the basis of strategic decisions,
which work will be done and which should not be done, which processes should be carried on
and which should be stopped, which types of changes are to be brought in existing processes etc.
are being decided. Normally on the bases of strategic decision the product mix commodity
progress and production planning are framed. Besides this, for implements of new decisions,
necessary changes in system are made and accordingly necessary training programmes are
undertaken. In this way by Strategic Decisions new works and projects are prepared and the
section doing this work is known as Strategic Business Unit (S.B.U.)

(7) Study of Internal Environment : Internal Environment includes different matters like
various skilled employees at present, mechanical situation facilities, service section,
organization, internal control method, rules and regulations of managers procedures, methods
rules and regulations of managers, procedures, methods, production capabilities etc. Before
taking any decision, the internal capabilities and weaknesses of the company have to be well
studied by the managers. The decisions taken without any such studies do not create positive
result at the time of its implementation.

(8) Study of External Environment: Factors like customer's fashions, habits and likings,
competitor's products, society's attitude and obligations, Government's regulations and controls,
ups and downs in the economic market and natural factors are included in External Environment.
These factors are not under the control of managers. Though their forecasting also helps a lot to
the managers to take the decision. Decision is like "Shooting blindly".

(9) Allocation of huge financial resources: Normally in Strategic Decision, the allocation of
financial resources is the main question. In the context of the necessity the strategically
formation for selection of financial sources to acquire finance and the strategically formation of
allotment for various activities according to the priority of financial resources of acquired
finance are the most important strategically decisions. The allotment of appropriate and balanced
financial resources is necessary for mechanical resources, facilities, beneficent activi¬ties,
invention activities, professionals and technicians and various other marketing activities.

It is a modern idea to achieve the mission of the unit through strategic management’s process. To
stay in the business competition, the maximum use of limited resources is necessary, launching
the product in the market at right time, to arrange the appropriate marketing activity in context to
competitors and it is necessary to allocate the finance to each important activity according to its
priority. By making strategic arrangements, the managers can divert all these activities towards
their mission. For this, the activity of both the internal and external environments and their
evaluation become very important.