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.
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
- The Decision Book: 50 Models for Strategic Thinking
by Mikael Krogerus and Roman TschÃ¤ppeler
This book presents fifty models for better structuring, and subsequently understanding, lifeâ€™s steady challenges. Interactive and thought-provoking, this illustrated workbook offers succinct summaries of popular strategies.
- The Strategy Book: How To Think and Act Strategically to Deliver Outstanding Results
- The Sustainability Mindset: Using the Matrix Map to Make Strategic Decisions
by Steve Zimmerman and Jeanne Bell
Drawing ontheir in-depth experience, the authors provide an easy-to-follow process complete with tools and templates to help organizationsvisualize their business model and engage in strategic inquiry.