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1456919478COM P12 M4 E-Text
1456919478COM P12 M4 E-Text
1456919478COM P12 M4 E-Text
Subject COMMERCE
TABLE OF CONTENTS
1. LEARNING OUTCOMES
2. INTRODUCTION :- APPROACHES TO STRATEGIC DECISION-
MAKING
3. THE DIFFERENCES BETWEEN STRATEGIC, ADMINISTRATIVE AND
OPERATIONAL DECISIONS
4. SUMMARY
1. Learning Outcomes
A strategic decision is defined as being “important, in terms of the actions taken, the
1976 p.246). The task of formulating, effecting and executing the company’s
objectives requires strategic decisions that make the company sustain in the industry as
well as stand above its competitors. The strategic decisions are at the very core of every
organization. They form the very baseline on which an organization stands. Strategic
decisions are concerned with creating an overall environment in which the organization
can operate and create an interphase between its resource set and the human capital.
Strategic decisions are often confused with organizational and working decisions. It
differs from the two. Administrative choices are repetitive judgments which help or
somewhat enable strategic decisions or operative decisions. Operational decisions, on the
other hands, are practical decisions which help implementation of strategic decisions. To
decrease cost is a planned decision which is attained through operational decision of
reducing the number of employees and how we carry out these reductions will be
administrative decision. Strategy is the direction and scope of an organization over
the long term, which helps in achieving advantage for the organization through its
configuration of resources within a dynamic environment, to meet the market needs and
fulfil stakeholder expectations.
The above stated features can be further fragmented into other umpteen characteristics.
These include:
Resource Implications:
Strategic decisions require an organization to reconfigure its resource set and human
resources and to harmonize them in a manner that would assist in implementing the
COMMERCE PAPER NO. 12: STRATEGIC MANAGEMENT
MODULE NO. 4: APPROACHES TO STRATEGIC DECISION-MAKING
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Corporate-level choices are often considered by greater risk, cost, and profit
potential; superior need for elasticity; and extended time horizons. Such choices
contain the choice of businesses, dividend policies, sources of long-term financing,
and priorities for growth.
Functional-level decisions implement the overall strategy formulated at the
corporate and business levels. They involve action-oriented operational issues and are
relatively short range and low risk. Functional-level decisions incur only modest costs
because they are dependent on available resources.
Business-level decisions help bridge decisions at the corporate and functional
levels. Such decisions are less costly, risky, and potentially profitable than corporate-
level decisions, but they are more costly, risky, and potentially profitable than
functional-level decisions
Strategic issues require top-management decisions.
Strategic issues require large amounts of the firm’s resources. (Useful Web site:
www.whirlpoolcorp.com)
Strategic issues often affect the firm’s long-term prosperity (see Exhibit 1-1).
Strategic issues are future oriented.
Strategic issues usually have multifunctional or multibusiness consequences.
Strategic issues require considering the firm’s external environment.
These are considered where These are short-term These are medium-period
The future planning is based Decisions. based decisions.
concerned.
Strategic decisions are taken These are taken These are taken in
in Accordance with according to strategic and accordance with strategic
organizational mission and operational Decisions. and administrative
vision. decision.
These are related to overall These are related to These are related to
Counter planning of all working of employees in production.
Organization. an Organization.
Some strategic decisions are made in a flash by one person (often and entrepreneur or a
powerful CEO) who has a brilliant insight and is quickly able to convince others to adopt
his or her idea. Other strategic decisions seem to develop out of a series of incremental
choices that over time push the organization more in one direction than other. According
to Henry Mintzberg, the three most typical approaches, or mode of strategic decision
making are entrepreneurial, adaptive and planning.
i. Entrepreneurial mode
-Strategy is made by one powerful person
-Focus on opportunities and problems are secondary
-Strategy is guided by the founder’s own vision of direction and is exemplified by
large, bold decisions
- Dominant goal is growth of organization
Example: Chaudhary Group, Bhat Bhateni.
4. SUMMARY
Strategic decisions are concerned with creating an overall environment in which the
organization can operate and create an interphase between its resource set and the human
capital
Strategy is the direction and scope of an organization over the long term, which helps in
achieving advantage for the organization through its configuration of resources within a
dynamic environment, to meet the market needs and fulfil stakeholder expectations.