4. Managerial Decision Making.docx

Managerial Decision Making On the basis of the purpose of decision-making activities, the organizational decisions are divided into 3 categories: i. ii. iii.

Strategic Decisions Tactical Decisions Operational Decisions

Strategic (Senior management)

Tactical (middle management)

Operational ( Junior management)

Strategic: -

Policy decisions Long term Complex Non-routine

Tactical: -

How to achieve policy Medium term Less complex

Operational: -

Day to day decisions Simple Routine

1. Strategic Decisions: 

Strategic decisions are those decisions in which the decision-maker develops objectives and allocates resources to achieve these objectives.

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Such decisions are taken by strategic level (top level) managers.

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Strategic decisions are long term, complex decisions made by senior management.

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It describes the process of creating a company’s vision and objectives.

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They decide upon the courses of action a company should pursue to achieve those goals.

Example: -

what new products to be made

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What would be the location/ capacity of the factory

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Whether more capacity should be added to the production system

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To become the market leader in the industry 

Generally strategic decision is unstructured. So, a manager has to apply his business judgment and intuition to understand the problem and make decisions. For example, a manager of a pizza restaurant might have the objective of increasing sales. He decides to make a strategy of offering lower prices on certain products during off hours to attract more customers.

2. Tactical Decisions:  Tactical decisions are taken by management control level (middle level) managers and deal with the utilization of resources in the organization to achieve strategic objectives.  Tactical decisions are medium term, less complex decisions made by middle managers. 

They follow strategic decisions and aim to meet the objectives stated in any strategic decision.

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These decisions related to the implementation of strategic decisions.

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They are directed towards developing plans, structuring workflows, establishing distribution channels, acquisition of resources such as men, materials and money.

Example: -

What resources will be required to implement the strategic decisions? What would be the annual production level to meet the future demand? In order to become the market leader, a firm may have to launch new products/ services or open new branches

3. Operational Decisions: 

Operational decisions deal with the day-to-day problems that affect the operation of the organization.

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These decisions are taken by the managers at operational level (bottom level) of the organization.

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Operational decisions are day to day decisions made by junior managers that are simple and routine.

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These decisions are based on facts regarding the events and do not require much of business judgment.

Example: -

Day to day scheduling of works Who will be assigned what tasks Who will be in the next shift Which job will be on which machine Ordering of supplies To determine how many operative staff will be required to compute a task.