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Objectives and Strategy Business Strategy _ Emma
Management and Decisions
Management is all about making decisions. Managers are in charge of various resources
(such as people, money, machines and materials) and must decide how to use these most
effectively. This involves hundreds of decisions every week.
Making the right decisions is crucial to effective management and to a successful business.
Managers must be able to offer customers the right products, at the right price, in the
right place and in the right way; to do this they must get their decisions right. No manager
will get everything right all of the time but the good managers are the ones who get it right
most of the time and who make sure the big decisions are correct.
Strategic and Tactical Decisions
The business strategy is a long term plan to achieve the business objectives.
Strategic decisions tend to be long term, involve a major commitment of resources and are
difficult to reverse. Strategic decisions also tend to involve a high level of uncertainty.
Over time market conditions change significantly and so firms must change their
strategies to cope with unfamiliar conditions.
The value of producing a clear strategy is that it sets out the firms overall plan; this helps
employees develop their own plans to implement this strategy. The decisions made about
how to implement the strategy are called `tactical decisions'. Compared with strategic
decisions tactics tend to be
Involve less resources
Made more regularly and involve less uncertainty
Taken by junior management rather than senior managers
Making a Decisions
There are many different ways of making a decision: in some cases managers will research
the decisions thoroughly they will gather data and analyse it before deciding what to do;
in other cases they may rely on their own experience from the past or on their gut feeling.
It depends on what the decision is, the risk involved and their own personality.
When you gather data and analyse it before making a decision this is known as a scientific
approach to decision making. It is scientific because it is rational and logical and is based
on data. Break even analysis, ratio analysis, investment appraisal and correlation analysis
are all ways in which managers analyse the data to try and make the right decision.
Scientific decision making should reduce the risk of error because decisions are based on
information. On the other hand the usefulness of this method will inevitably depend on the
quality of data. The better the information the more likely it is the right decisions will be
made; this is why market research is important and why managers need to ensure they have
effective ways of gathering, analysing and circulating information within the organisation
to ensure each manager has the information he or she needs at the right time.