Strategic decisions

Strategic decisions

Managers are at the center of every decision in an organization. The impact of their decision is experienced in the entire organization. These decisions ultimately design the success or failure of the organization. Therefore, a manager should make decisions that are strategical, tactical, and operational. While making such a decision, many managers follow varying decision-making models. Such models could be rational, intuitive, bounded rationality, or creative models. Eventually, regardless of the decision and the decision model a manger shall follow, they are aimed at improving the effectiveness of a company.

Strategic decisions overly mean that a manager should be well prepared for risk and plan for changes in the company. The changes get to influence the future trend of the organization. An example of strategic decisions includes the introduction of new manufacturing processes or a decision to change the organization’s culture. Tactical decisions majorly impact an organization in the medium term. Such kind of decision may include; determining the storage capacity or the size of pick-up zones. Finally, operational decisions affect the daily running of the business. These decisions influence strategic decisions in an organization. An operational decision may include; requesting internal authorization, calculating the customer loyalty discount, or determining the appropriate amount of credit to lend. Operational decisions determine the daily running of an organization. They have a direct impact on tactical decisions and the modeling of strategic decisions.

The rational decision-making model entails making choices among alternatives based on logic, objectivity, and analysis over subjectivity or insight. This model makes it possible to make the knowledge behind a specific decision open and explicit. This decision-making model leads to informed decisions since it is based on scientifically obtained data. An intuitive decision-making model is the opposite of a rational decision-making model. It involves making decisions based on intuition and insights. Intuition could be a source of significant errors, especially when making decisions in an organization. Some decisions require well-researched data and analysis of the same; therefore, employing intuition in such a decision could end up in a significant error which shall impact the business adversely. Decision making is a critical skill required by every manager. Creativity could be a helpful tool in making decisions. The creative decision-making model enables a person to look at the problem critically and come up with multiple options and find the most suitable solution that leads to the overall success of the company. The bounded rationality decision-making model is beneficial in a situation where the manager has to make less than the optimal decision. This happens when there is a scarcity of information, a limited amount of time to make a decision. This model favors objectivity over subjectivity, although there is an element of limited time and knowledge. Such a model could lead to rushed decisions that may impact the decision adversely.

Reference

Delbecq, A. L. (1967). The management of decision-making within the firm: Three strategies for three types of decision-making. Academy of Management Journal, 10(4), 329-339.