Made by top management that affect the long-term direction of a business
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Tactical Decisions
Decisions made by middle management that aim to meet strategic objectives
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Operational Decisions
Day-to-day decisions made by all levels of management. These decisions help the business to run smoothly.
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Strategic Decision Examples
Expand product range
Relocate premises
Diversify
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Tactical Decision Examples
Carry out research on suitable product for development
Look for suitable locations for premises
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Operational Decision Examples
How much stock to order
Which suppliers to use
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Internal Factors
Attitude to risk
Organizational objectives
Core competencies of a business
Impact on internal stakeholders
Business ethics
Financial considerations
Time
Opportunity cost
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Attitude to risk
Risk Averse - Reluctant to take risks. Risk averse businesses are less likely to gain rewards or suffer great losses.
Risk Tolerant - Willing to take risks. Risk tolerant businesses are more likely to gain rewards and suffer great losses as they are will
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Organizational objectives
Target that have an impact on the decisions made by the business. E.g. If a business target is to reduce running costs by 10%, they are less likely to employ more staff.
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Core competencies of a business
These are what a business is good at, making it stand out from its competitors. E.g. Facebooks core competence is social networking, while Apple's is product design.
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Impact on internal stakeholders
E.g. A business deciding whether to automate a production line will need to consider the amount of job losses and its impact on employees.
E.g. Before deciding whether to extend its opening hours, a business will need to think about the effect on its emp
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Business ethics
Consumer trends dictate that businesses take a strong ethical stance in their activities. Doing the right thing is not always the most natural choice, as ethical business practices cost money. A business also needs to consider its corporate social respons
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Financial considerations
The decisions that a business makes often depend on the funds available. Whether to buy or rent premises depends on what the business can afford. Internal funds - retained profit, owners' funds. External funds - bank loan, mortgage, selling shares.
It is
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Time
Complex decisions require more time to consider, than simple ones. In addition, a choice could depend on the amount of time it takes for a business to reap its rewards. For a business that priorities cash flow over long-term profit, a project with a short
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Opportunity cost
Consequences of decisions and alternatives. E.g. Due to limited resources, a business has to choose between two project, A and B. By choosing project A, the business will lose out on the benefits of project B, and vice versa.
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External Factors
Level and nature of risk
Impacts on external stakeholders
Degree of uncertainty
Changes in market
Changes in external environment
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Level and nature of risk
Risks that are beyond a business's control. E.g. natural disaster, terrorist attack, war. Before a major decision is made, businesses need to identify the likelihood of these risks and consider their options.
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Impacts on external stakeholders
External stakeholders such as customers, local community and pressure groups, can have a serious impact on a business's reputation.
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Degree of uncertainty
Some risks may be likely and difficult to control, e.g. when a competitor is know to be developing a similar product. Others are less likely and can be controlled, e.g. online shop being hacked.
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Changes in market
This refers to the changes in the demand and supply of certain goods or services in the market, mainly as a result of social factors such as changing consumer preferences. Businesses need to respond quickly to any changes in the market they operate in, in
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Changes in external environment
Changes in external factors including economic, legal, political and technological.
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Other cards in this set
Card 2
Front
Decisions made by middle management that aim to meet strategic objectives
Back
Tactical Decisions
Card 3
Front
Day-to-day decisions made by all levels of management. These decisions help the business to run smoothly.
Back
Card 4
Front
Expand product range
Relocate premises
Diversify
Back
Card 5
Front
Carry out research on suitable product for development
Look for suitable locations for premises
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