Who makes Strategic Decisions? What are the Characteristics of Strategic Decisions? (2024)

FAQs

Who makes Strategic Decisions? What are the Characteristics of Strategic Decisions? ›

Strategic decisions are made by the top level management and by the strategists whereas the operational decisions are made by the managers at lower levels. Strategic decisions are related to the contribution to the organizational objectives and goals significantly.

Strategic decisions are made by the top-level, they determine the scope and direction of the organization and always aim at achieving a competitive advantage. They are guided by organizational policies, available resources, insights into strategies, long-term objectives, and competitiveness of the firm.

The three characteristics of strategic decisions are: Activities match the resource base. Operational decisions are affected. The magnitude of strategies and nature are affected.

Strategic decision-making refers to identifying the best way to achieve goals and objectives. These goals and objectives are long-term, and strategic decision-making assists in describing a company's main objectives to achieve shorter-term goals with a broad mission.

Normally organizational lines run from a Chief Executive Officer (CEO) who is responsible for broader strategic decisions and management to functionary activities such as a financial officer, operations officer, marketing officer and each of these oversees respective employees.

The shareholders of a corporation are its owners, and they vote their shares to elect the directors. The directors sit as a board, which, typically acting through a majority, oversees the corporation's management and sets the overall corporate strategy and direction.

Characteristics of Strategy

Strategies are the long-term action plans which are formulated and implemented considering potential consequences and potentialities of external and internal environmental factors in order to achieve goals in the best possible way.

Strategic decisions are those decisions that have an influence over years, decades, and even beyond the lifetime of the project. Once a strategic decision is made, it is very unlikely to be altered in the short term.

What are examples of strategic decisions? ›

Strategic decisions are made based on of a company's mission and vision or its objectives. An example. A manager of a cat food company notices that his customers prefer higher quality and fresh food instead of cat food sold in very large quantities for a low price.

Role of Chief Executive: The chief executive of an organization is responsible for overall performance. Therefore, his role is quite crucial in strategic control.

Decision making is one of the most important functions of the managers in the organization. It is central managerial activity. Making decisions is a matter of a huge responsibility for the managers not only for the organization itself, but also for the employees and other stakeholders, as well.

Strategic leadership consists of the top-level executives responsible for the broad, long-term strategic direction of an organization. Organizational leadership is made up of the midlevel leaders responsible for implementing near- and midterm goals and for developing the plans and processes used by the lower levels.

The Prefrontal Cortex (PFC) and hippocampus are the most critical parts of the human brain for decision making. The decision-making process contains four steps.

A manager plans, organizes, staffs, leads, and controls her team by executing decisions. The effectiveness and quality of those decisions determine how successful a manager will be. Managers are constantly called upon to make decisions in order to solve problems.

Decision making can also be classified into three categories based on the level at which they occur. Strategic decisions set the course of organization. Tactical decisions are decisions about how things will get done. Finally, operational decisions are decisions that employees make each day to run the organization.

Laws and the Government

Just like the government has the power to make decisions, similarly it has the power to enforce its decisions.

All important policy decisions of the government are taken by the Prime minister and Cabinet ministers. According to Constitution of India the decision making power of the government is given to Prime minister as he is the head of government, unlike the President who is the head of the state.

Autocratic leaders make all the decisions themselves. They do not consult their team, or let them make decisions. Once the decision has been made, they impose it and expect obedience. Democratic leaders take an active role in the decision-making process but they involve others.

What are 5 characteristics of an effective strategic plan? ›

The five attributes of strategic thinkers include understanding your place in the market; focusing on the goal; understanding past, present, and future events; asking the right questions; and identifying opportunities.

Business experts say that each objective should be: Specific, Measurable, Achievable , Relevant, and Time-related. We will examine what each of these characteristics means and how they contribute to the overall strategy of the business.

The four decision-making styles, analytical, directive, conceptual, and behavioral, are strategies leaders and individuals employ to make choices.

After in-depth work on 1,021 of the responses, study authors Dan Lovallo and Olivier Sibony identified five decision-making styles. They are: Visionary, Guardian, Motivator, Flexible, and Catalyst.

To Perform Strategic Business Analysis, You Need To:

Conduct capability analysis. Identify business opportunities and threats. Recognize organizational strengths and weaknesses. Analyze business problems.

Strategic decision-making refers to when a business bases its shorter-term decisions on the longer-term vision for the direction of the organisation. This method typically entails using small, quantifiable goals that contribute to its overall mission.

Strategic decision making aligns short-term objectives with long-term goals, and a mission that defines your company's big picture purpose. Shorter term goals are expressed in quantifiable milestones that give you the capacity to measure your success and your adherence to your vision.

Importance of Strategic Decision

Aligns with organizational goals: Strategic decision making helps to align decisions with the overall goals and objectives of the organization, ensuring that resources are being used effectively and efficiently to achieve long-term success.

Which is one of the main characteristics of strategic control? ›

Such decision-making freedom is one of the characteristics that differentiates Strategic Control from other forms of control exercised by managers such as Operational Control - the management of operational processes.

Key stakeholders to be involved in strategic planning are those having a vested interest in the success of the organization. They include employees, unions, customers, vendors, shareholders, regulatory agencies, owners, supply chain partners, community members, and others who depend on and/or serve the organization.

Information sources such as trade magazines, newspapers, financial journals, conferences and economic forums are all strategic surveillance controls that can identify potential changes in an industry and offer possible responses.

Examples Of Strategic Leadership

This phenomenal increase can be attributed to the strategic management and leadership of Jeff Bezos. His strategy focused on things that don't change. Instead of short-term gains, he has focused on long-term growth.

The CEO is in the in the driver's seat, taking charge and managing the strategic planning process. They often are the visionary, hoping to articulate the options available for the future and then get the board's blessing.

The strategy creation process will normally involve key people in the organisation. These will be people who have an interest in or input to its future direction and may include: The Owner, CEO or MD: The person who is in charge of the business must be involved in the business strategy creation process.

Key stakeholders to be involved in strategic planning are those having a vested interest in the success of the organization. They include employees, unions, customers, vendors, shareholders, regulatory agencies, owners, supply chain partners, community members, and others who depend on and/or serve the organization.

Responsibility for strategic risk management

Strategic risks are determined by board decisions about the objectives and direction of the organisation. Board strategic planning and decision-making processes, therefore, must be thorough.

The CEO and the senior leadership team must own the strategic plan. The board's job is to monitor progress and hold the CEO accountable for results.

Who should be involved in strategic thinking? ›

The board's role in strategic thinking is to bring an outside perspective, accumulated wisdom and to test the consistency of management's thinking. The role of senior management is to then, initiate the process of strategic thinking and setting the agenda by posing the questions and issues.

Approval Process

Strategic plans must be approved by the bank's regulator in advance and must provide measurable performance goals sufficient for a satisfactory rating.

If we look at best practices, we can see that board directors are responsible for setting the ultimate direction for their corporations. Their responsibility also lies in reviewing, assessing, understanding, and approving specific strategic projects and plans.