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 doesn’t 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.
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 1990’s 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