Decisions: Strategic, Tactical & Operational

There are three types of decisions at three levels of organisation. Starting form the top these are – Strategic, Tactical and Operational.

Strategic decisions are long term and often irreversible decisions. Buying competitor’s business, selling stake to another business, launching of a new product line or expansion of existing segment are some examples of strategic decisions. Top management (like CEOs and CFOs) is entrusted with these high impact making decisions. People in such roles are people with ample experience to evaluate pros and cons of likely outcomes that might emerge as a result of implementing such decisions. This is a level where the emphasis is on broad questions that direct course of the business. It is like deciding which game to play.

Tactical decisions are decisions that device tactics given the rules of the game. Once the game is decided, middle management needs to understand and play the game with meticulous plan and preparation. Tactical decisions are like deciding on pricing, distribution channels, promotion etc. These decisions are flexible and can be mutated en-route. Managers at this level need to display highest degree of sensitivity to business environment which is made up of PESTL factors i.e. Political, Economic, Social, Technological and Legal.  

Operational decisions are like playing the game by deciding who will play, what resources players will need, where to procure those from, coaching etc. These issues need continuous attention with timely action on handicaps that occur in the process. Operations managers are the ones who execute what strategic and tactical level managers design.

All the three types of decisions are therefore important. Games that are well planned but badly executed result in cascading failures. Also, mindless replication of well executed games in past results in weak future prospects. Balance at all levels and at all times makes good companies great. 

Nokia entered the game of mobile phones, played it well, went on to set high standards of innovation for competitors but eventually collapsed due to lack of nimbleness from top to bottom. Today it got sold to Microsoft Corp. Strategic, tactical and operational concerns in ‘connecting people’ made Nokia an ‘antique’ that got auctioned to a wealthy connoisseur. Doors have closed but more windows have opened up. 

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Author: anilkshatriyablog

I work as Assistant Professor in the area of Accounting at IMT Nagpur. I love teaching, writing and cycling. I follow a simple principle, 'Help ever, hurt never'.

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