Strategic decisions involve a change of major kind since an organization operates in ever-changing environment. This evaluation involves assessing the extent to which present strategy is meeting expectations. Following this set of ideas, then, strategic decisions are those which involve “clear and favorable differentiation from competitors,” so that one’s competitive advantage is tangible, measurable, and preservable. To reduce cost is a strategic decision which is achieved through operational decision of reducing the number of employees and how we carry out these reductions will be administrative decision. Despite the unique and complex nature of category II decision process in nevertheless generic. Operational decisions are not frequently taken. Of course, strategic decisions are part of corporate management. With overseas competitors exporting fuel-efficient automobiles to the United States, and with widely acknowledged shrinkage’s of fossil fuel supplies, they still stubbornly tried to retain their old business and corporate strategies, well into the 1970s, by changing market strategy only. Because of its importance for organizational success, the nature of Yet, it is not generic as the circumstances and the opinions of each of the decision makers’ matters a lot. Strategic decision making is a key organizational process, and strategic decisions are the most important decisions made in an organization. Sometimes, the strategist must make decisions in time frames set by other. The purpose of strategic management is to use and create new and different opportunities for future. These are taken according to strategic and operational Decisions. Nature and Scope of Strategic Management Strategic management is both an Art and science of formulating, implementing, and evaluating, cross-functional decisions that facilitate an organization to accomplish its objectives. A tendency exists in business to change functional-level strategies or organizational structure in a attempt to remedy any problem. When a firm’s performance is less than satisfactory, the reason often is a functional strategy shortcoming. The purpose of strategic management is to use and create new and different opportunities for future. Your email address will not be published. The results of trying to solve a business-level strategic problem with a functional-level solution is well illustrated by the “big four” U.S. automobile companies ( Ford, General Motors, Chrysler and American Motors). Although the process of creating strategy is often discussed as if it were an unconstrained design process, keep in mind that while strategists evaluate strategy, the firm is operating. THE NATURE OF STRATEGIC MANAGEMENT I. The Nature Of Strategic-Decision-Making Models: 10.4018/978-1-59140-976-2.ch010: In the multiple goal function problems, there is no optimum solution fully satisfying all goals at the same time. These are related to working of employees in an Organization. Strategic decision making is a key organizational process, and strategic decisions are the most important decisions made in an organization. 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Their industrial welding equipment is regarded as the top quality product of its kind and the firm has consistently passed along cost savings to customers in the form of low prices. Administrative decisions are taken daily. Strategic decisions are taken in Accordance with organizational mission and vision. Time Dimension and Strategic Choice: The timing of decisions and time pressures affect the strategic decision process and the quality of the decision. This is a decision that would bemade by the main board and is strategic. As a result, Lincoln is very difficult to compete with because of its strong price position. (b) The nature of this decision is lessclear. They are about trying to achieve some advantage for the organization eg over competition. Strategic decisions deal with the range of organizational activities. Of course, if the problem existed within the firm’s corporate-or business-level strategy, for example, changing functional-level strategy would not correct it. They included such things as cash rebates, Chrysler’s government-guaranteed loan, employee layoffs, close cooperation with UAW officials, R&D efforts focused on producing smaller, less powerful engines as a primary effort rather than as an inconvenience. These decisions relate to the implementation of strategic decisions. Because of its importance for organizational success, the nature … Administrative decisions are routine decisions which help or rather facilitate strategic decisions or operational decisions. These are related to overall Counter planning of all Organization. In fact, this move would most likely aggravate the situation. Strategic Decisions - Definition and Characteristics. These are related to production and factory growth. Strategic decisions are at the top most level, are uncertain as they deal with the future, and involve a lot of risk. South claims that the key to successful strategic decisions is the creation of competitive advantage–selection of competitive areas within which success is clearly achievable.The Japanese have taught us that there are really two very different forms of competition: Reciprocal and strategic. A set of major environmental threats, particularly at the business level, was met by minor model changes and increased efforts to convince the car-buying public that big autos were what we all really wanted. New growth rates, profit targets, market-share goals, and the like, along with related broad action plans that centered around contraction in many forms, were implemented along with new functional strategy. More generally, one could conceivably change parts of a firm’s functional strategy set without changing business-level strategy. Reciprocal competition is the traditional form in which companies in mature industries compete with other firms having similar strategic positions while attempting to distinguish themselves on the basis of operations. The purpose of this article is to put a focus on strategic decision-making – specifically how strategic decisions are made in real corporate life. One might say that a “good” business-level strategy would have been poorly implemented by part of its functional strategy set. We are a ISO 9001:2015 Certified Education Provider. For this simple example, a change in marketing strategy could improve performance while other levels of strategy would remain unchanged. Strategic decisions deal with harmonizing organizational resource capabilities with the threats and opportunities. WHAT IS STRATEGIC MANAGEMENT HAMBRICK and FREDRICKSON, two important strategic thinkers, (2001) argue that the strategy should be a central and integrated concept of how the business will achieve its objectives. Strategic decisions deal with harmonizing organizational resource capabilities with the threats and … They certainly would affect fewer people than modifications at the corporate or business levels. Learn how your comment data is processed. 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. Marketing strategy would be all that was rejected. Alternatively, a problem with the nature of a firm’s or SBU’s business brought about by a major environmental opportunity or threat, a change in that level’s goals set, or the development of some internal capability or weakness could necessitate a business-level strategy change. The Nature of Strategic Decisions. This site uses Akismet to reduce spam. The deadlines for making a strategic choice is often set not by the manager but by others. Strategic decisions are different from administrative and operational decisions.

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