Making Strategic and Tactical Decisions

1
Making Strategic and Tactical Decisions

• There are 3 elements involved in decision-making
• Experience
• Intuition
• Logic
• DO FIRMS NEED A STRATEGIC PLAN?
• In some cases (due to necessity or not seeing the
  need to plan long-term) firms appear to survive
  without any clear strategic plan.
• BUT they do help to ensure all are working to the
  same common goal. It doesnt always have to be a
  formal document.
• HOW USEFUL IS A FORMAL STRATEGIC PLAN?
• Many feel logical strategic planning is good in
  theory but in reality managers are more likely to
  use intuition and spend most of their time
  solving immediate problems. Mintzberg in his book
  The Nature of Managerial Work believes strategy
  evolves rather than being formalised in a clear
  cut process.
• NB Strategic planning can be dangerous,
  especially if
• It is inflexible
• The market is rapidly changing
• It is time consuming
• It prevents initiative
• If this is the case, the firm may be better
  stating their objectives and then leave managers
  to make tactical decisions.

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THE VALUE OF A STRATEGY The process is important
as it makes management examine their internal and
external environment. It also requires
inter-departmental discussion. Also, by defining
their objectives and strategy, individuals gain a
common sense of direction. This allows for
targets (even M.B.O.?) and improves
motivation. STRATEGIC CHANGE This is vital
strategies must change and move forward eg.
Microsoft in the 1990s decided to try to exploit
the opportunities created by the internet. This
helped it become one of the most successful firms
ever. Microsoft aims to be a crucial part of the
web work-style and lifestyle that will be an
integral part of our lives. TACTICS These are
used to implement the strategy eg. a strategy may
be to reduce costs, tactics are improved quality
control and better training. Senior managers
determine why the firm exists (mission), what it
wants to achieve (objectives) and how (strategy).
Junior managers then devise tactics to implement
the strategy. HOW DO STRATEGIC TACTICAL
DECISIONS DIFFER? Strategic decisions Tactical/
Operational decisions - Long term - Shorter
term - Complex - Simpler - Non-routine -
More routine - Difficult to reverse - Easier
to reverse - Significant use of resources -
Less use of resources