Eddielogic

– Thoughts on Strategy and Management

The characteristics of strategic decisions

| 0 comments

In corporate practice it is possible to observe discussions concerning the nature of strategic decisions and strategic activities. In some case terms like “strategic” or “strategy” will be employed to emphasize the long term benefits (in detail) and / or to convince others to transfer budgets and resources to specific measures and activities. However I have also observed situations were these terms have been used simply to outline potential, but unclear benefits. Basically I recommend being very analytical when someone starts to employ such term in his or her justification.

Note:

Since this is a very popular post on Eddielogic, I wrote a follow-up which provides more detailed information, a comparison between strategic, tactical and operational decisions, and a practical illustration: Nature and characteristics of strategic decisions

Of course, strategic decisions are part of corporate 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. Such a concept needs to include activities and measures; since resources are limited in most cases or most organizations, a concept needs to include decisions. Major strategic decisions will focus on financial resources (i.e. investments), corporate culture or HR related areas. LOMBRISER and ABLANALP explain that it could be possible within each step of strategy implementation to return to a previous process step (in strategic planning) or even to decide about an unclear step in advance. To implement strategic management the following set of attributes should be taken into account:

  • Legal, political and social limitations
  • Ethical issues
  • Stakeholders’ expectations
  • Values, experiences, skills and goals of managers
  • Corporate culture
  • Financial room for maneuver

For all these attributes the management team needs to make “long-lasting” decisions. According to JOHNSON and SCHOLES strategic decisions name four key characteristics.

  • Those decisions are likely to be linked with or influence the long term direction of an organization.
  • Strategic decisions are normally concerned with attempting to achieve some advantage for the organization, e.g. over the competition.
  • Furthermore, strategic decisions are likely to be concerned with the scope of activities and address the question, whether the organization should concentrate on one area of activity, or should it have many? This is a fundamental issue to strategic decisions.
  • The scope of activities defines the way in which managers understand the boundaries of the organization.

Hence strategic decisions are very likely to have an impact on operational decisions.

———————–

Our book recommendations on strategic decision making

LIKE WHAT YOU'VE READ?
If so, subscribe to our mailing list. Just enter your best mail address and hit the Subscribe button!
100% spam free – guaranteed!

Leave a Reply

Required fields are marked *.


Show Buttons
Share On Facebook
Share On Twitter
Share On Google Plus
Share On Linkedin
Share On Reddit
Contact us
Hide Buttons