The impact of strategic decision-making on functional decision-making


How are strategic decisions made?

Most business decisions involve middle-ranking executives making decisions based on a combination of a recomendation from decision trees and investment appraisal. Recomendations are based off of careful research.

By contrast, even though strategic decisions can be worth millions or even billions they often are made by managers that have very little to go on. Steve jobs couldnt know that his strategic decisions to get into the consumer electronics market would see apple make billions or dollars. The decision has an unknown level of risk. 

The impact of strategic decisinon making on functional decision making

When a strategic decision is made new objectives need to be set that will affect funtional departments. Each of the 4 departments will get its own objectives set, each of the four will aim to knit the objectives together in order to meet the wider objectives of the business. 

A good example would be new-looks decision to go to china in 2014. With a view to establish a major prescence in what is described as a real gap for affordable/fashionable clothes. Naturally the decision will take hold of the functional areas.

  • The marketing department had to decide where exactly to set the "affordable" prices and how best to promote the new chinese stores.
  • the finance function had to decide what budget could be afforded for china every year.
  • The operations department need…


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