Companies make decisions throughout normal business operations. These businesses use financial, marketing and operational data to make the decisions. These decisions include both managerial decision-making, such as production scheduling or offering customer discounts, and strategic decision-making, which includes decisions such as business expansion or pursuing a merger. Companies need to understand how these processes differ to be able to assign the responsibility for making the decision to the right personnel.
Managerial decision-making and strategic decision-making serve different purposes for the business. Managerial decision-making facilitates the company’s daily operations. This includes corporate operations, such as human resources activities or assigning information technology resources. This also includes customer-related operations, such as production activities or sales calls. Strategic decision-making meets the company’s needs to plan beyond its current operation. This includes planning for future business actions, such as issuing stock or introducing a new product line.
Short Term Versus Long Term
Some decisions consider a shorter time frame than others. Long-term decisions occur as a result of strategic planning. Companies consider their needs looking forward several years. Strategic decisions often require several years for the company to acquire funding or free up resources to implement. Managerial decisions consider the company’s immediate short-term goals and how to achieve them.
People Versus Actions
Managerial and strategic decisions focus on different aspects. Most managerial decisions focus on the people involved with the various options. These decisions affect employees in several ways, such as work hours, responsibilities or continued employment. Strategic decisions focus on actions. When company management decides on its future strategic moves, it considers which action to take, such as opening a new site or acquiring another company.
The financial resources required differ for managerial and strategic decisions. Managerial decisions need to fall within the current budget parameters. The company created the budget prior to the beginning of the year and allocated these funds for the department. As the manager makes her decision, she needs to consider the financial resources of the current budget. Strategic decisions fall into future periods and often require large amounts of funding to implement. These decisions require the manager to determine alternative options for obtaining the financing, which includes borrowing money and seeking investors.