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Dimensions of Strategic Decisions

Strategic decisions require top-management involvement because they overarch several areas of operations and require understanding broad implications. They also require large amounts of resources that must be redirected or secured from outside the firm and commit the firm to actions over an extended period. Strategic decisions have long-term, enduring effects on the firm's prosperity for better or worse by committing the firm to a particular strategy and market position. Strategic decisions are also future oriented and based on projections rather than known facts to enable the firm to select promising strategic options and take a proactive stance toward change.

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263 views1 page

Dimensions of Strategic Decisions

Strategic decisions require top-management involvement because they overarch several areas of operations and require understanding broad implications. They also require large amounts of resources that must be redirected or secured from outside the firm and commit the firm to actions over an extended period. Strategic decisions have long-term, enduring effects on the firm's prosperity for better or worse by committing the firm to a particular strategy and market position. Strategic decisions are also future oriented and based on projections rather than known facts to enable the firm to select promising strategic options and take a proactive stance toward change.

Uploaded by

sonia khatib
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Dimensions of Strategic Decisions:

Require Top-Management Decisions


Because strategic decisions overarch several areas of a firm's operations, they require top-
management involvement. Usually only top management has the perspective needed to understand
the broad implications of such decisions and the power to authorize the necessary resource
allocations.

Require Large Amounts of the Firm's Resources


Strategic decisions involve substantial allocations of people, physical assets, or moneys that either
must be redirected from internal sources or secured from outside the firm. They also commit the
firm to actions over an extended period. For these reasons, they require substantial resources.

Often Affect the Firm's Long-Term Prosperity


Strategic decisions ostensibly commit the firm for a long time, typically five years; however, the
impact of such decisions often lasts much longer. Once a firm has committed itself to a particular
strategy, its image and competitive advantages usually are tied to that strategy. Firms become
known in certain markets, for certain products, with certain technologies. They would jeopardize
their previous gains if they shifted from these markets, products, or technologies by adopting a
radically different strategy. Thus, strategic decisions have enduring effects on firms—for better or
worse.

Are Future Oriented


Strategic decisions are based on what managers forecast, rather than on what they know. In such
decisions, emphasis is placed on the development of projections that will enable the firm to select
the most promising strategic options. In the turbulent and competitive free enterprise environment,
a firm will succeed only if it takes a proactive (anticipatory) stance toward change.

Usually Have Multifunctional or Multibusiness Consequences


Strategic decisions have complex implications for most areas of the firm. Decisions about such
matters as customer mix, competitive emphasis, or organizational structure necessarily involve a
number of the firm's strategic business units (SBUs), divisions, or program units. All of these areas
will be affected by allocations or reallocations of responsibilities and resources that result from
these decisions.

Require Considering the Firm's External Environment


All business firms exist in an open system. They affect and are affected by external
conditions that are largely beyond their control. Therefore, to successfully position a firm in
competitive situations, its strategic managers must look beyond its operations. They must
consider what relevant others (e.g., competitors, customers, suppliers, creditors, government,
and labor) are likely to do.

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