Strategic decisions

Strategic decisions are the decisions that are concerned with whole environment in which the
firm operates, the entire resources and the people who form the company and the interface
between the two.

Characteristics/Features of Strategic Decisions

a. Strategic decisions have major resource propositions for an organization. These
decisions may be concerned with possessing new resources, organizing others or
reallocating others.
b. Strategic decisions deal with harmonizing organizational resource capabilities with
the threats and opportunities.
c. Strategic decisions deal with the range of organizational activities. It is all about what
they want the organization to be like and to be about.
d. Strategic decisions involve a change of major kind since an organization operates in
ever-changing environment.
e. Strategic decisions are complex in nature.
f. Strategic decisions are at the top most level, are uncertain as they deal with the future,
and involve a lot of risk.
g. Strategic decisions are different from administrative and operational decisions.
Administrative decisions are routine decisions which help or rather facilitate strategic
decisions or operational decisions.

Operational decisions are technical decisions which help execution of strategic

decisions.

To reduce cost is a strategic decision which is achieved through operational decision

of reducing the number of employees and how we carry out these reductions will be
administrative decision.

The differences between Strategic, Administrative and Operational decisions can be

summarized as follows-

Strategic Decisions Administrative Decisions Operational Decisions

Strategic decisions are long- Administrative decisions Operational decisions are

term decisions. are taken daily. not frequently taken.

These are considered where These are short-term based These are medium-period
The future planning is Decisions. based decisions.
concerned.

Strategic decisions are taken These are taken according These are taken in
in Accordance with to strategic and accordance with strategic
 organizational mission and operational Decisions. and administrative
vision. decision.

These are related to overall These are related to These are related to
Counter planning of all working of employees in production.
Organization. an Organization.

These deal with These are in welfare of These are related to

organizational Growth. employees working in an production and factory
organization. growth.

Strategy is an action that managers take to attain one or more of the organization’s goals.

Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed
strategic planning process”.

A strategy is all about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment so as to meet the present objectives.

While planning a strategy it is essential to consider that decisions are not taken in a vaccum
and that any act taken by a firm is likely to be met by a reaction from those affected,
competitors, customers, employees or suppliers.

Strategy can also be defined as knowledge of the goals, the uncertainty of events and the need
to take into consideration the likely or actual behavior of others.

Strategy is the blueprint of decisions in an organization that shows its objectives and goals,
reduces the key policies, and plans for achieving these goals, and defines the business the
company is to carry on, the type of economic and human organization it wants to be, and the
contribution it plans to make to its shareholders, customers and society at large.

Features of Strategy
1. Strategy is Significant because it is not possible to foresee the future. Without a
perfect foresight, the firms must be ready to deal with the uncertain events which
constitute the business environment.
2. Strategy deals with long term developments rather than routine operations, i.e. it deals
with probability of innovations or new products, new methods of productions, or new
markets to be developed in future.
3. Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee behavior.
Strategy is a well defined roadmap of an organization. It defines the overall mission,
vision and direction of an organization. The objective of a strategy is to maximize an
organization’s strengths and to minimize the strengths of the competitors.
Strategy, in short, bridges the gap between “where we are” and “where we want to be”.

The Levels Of Strategy

Strategists often refer to three levels of strategy: corporate level strategy, business
level strategy, and functional level strategy.
But, they are missing a fundamental level that is key for successful strategy
execution: operational level strategy.
We’ll explain the differences and how to apply all four of them in your organization. We also
have separate articles on all 4 levels if you're only interested in learning about a certain level.
 Corporate Level Strategy
 Business Level Strategy
 Functional Level Strategy
 Operational Level Strategy

Strategy levels diagram

No matter the level of strategy, "organizations that promote a transparency and collective
culture when it comes to strategy, generate a stronger commitment and sense of
accountability from their employees." This statement by Guillermo Hermosillo Cue, Global
Innovation Director at Burger King in our state of strategy report echoes the importance of
strategic communication regardless of the strategy level.
Corporate Level Strategy

Corporate level strategy

The corporate level strategy is the highest level strategy in an organization.
The corporate strategy defines the organization’s overall direction and the high-level ideas of
how to move towards it. These plans are usually created by leadership, such as the CEO and
top management.
Generally, this is the group involved because they have a deep understanding of the company
and the strategic business knowledge needed to steer the organization in the right direction.
A corporate strategy is generally broader than the other strategy levels. Strategies at this level
are more conceptual and futuristic than the other level strategies. They usually span a 3-5
year period.
A corporate strategic plan generally encompasses:
 The core business metrics
 The strategic focus areas
 The corporate goals
 The strategic objectives
 The most important KPIs
⚠️Important! The corporate level strategy needs to take into account the foundational
elements of the organization: its vision statement, mission statement, and company values.
Why create a corporate strategy?
In the corporate strategic plan, you're essentially mapping out where your organization should
play.
This master plan sets the stage for developing business-unit-level and functional-level
strategies, along with nitty-gritty operational plans.
These strategies, in turn, will guide the downstream decisions made by employees of all
levels. Therefore, every decision made in the organization should directly or indirectly
contribute to the strategy's corporate objectives.
Every organization needs a corporate strategy. There is no such thing as a too-small
organization nor a too-large one to define what they want to achieve and how they will do it.
Business Level Strategy

Business level strategy

The business level strategy is the second tier in the strategy hierarchy.
Sitting under the corporate strategy, the business strategy is a means to achieve the goals of
the specific business units in the organization.
The initiatives and objectives within each business unit’s strategy will be focused on gaining
a competitive advantage in the particular market in which the business unit operates.
There are different types of business level strategies organizations adopt depending on the
competitive advantage they want to gain. Organizations face crucial decisions here, with
options like adopting a differentiation strategy or embracing a cost leadership approach.
Each business area must make a strategic decision and define the approach they’ll choose to
get closer to their goals.
One thing to note, implementing this strategy level is only useful for organizations with
multiple business units. An organization with multiple business units may sell products and
services or may sell multiple product lines and services in different industries.
A business level strategy examples
A large bank is a prime example of an organization selling multiple services in different
industries.
To name a few, it has business units like retail banking, investment management, and
insurance company. Each of these business units would have distinct goals and a distinct
business unit strategy to achieve these goals.
Strategy levels example
Include middle managers at the business level strategy
Strategies at the business level should be constructed by VPs and—global or regional—
business unit heads. However, also including other middle managers within each unit is a best
practice.
Including a range of managers from each unit to participate in the strategy process has two
main benefits:
1. It increases buy-in:
Managers who've had a chance to contribute to the strategy formulation feel included
in the decision-making. Therefore, they’re more likely to accept the strategy and jump
on board with its execution.
2. It improves ownership:
Employees who are given the opportunity to contribute to the strategy development
are more likely to take ownership of its completion.
Functional Level Strategy
Functional level strategy
This level of strategy designs the approach for the different functional areas or departments—
we’ve already given you a little spoiler with the previous image of the bank strategy levels
example. These functions can include the marketing department, finance, supply chain,
manufacturing, human resources, and more.
The primary objective of functional strategy is to align the activities and efforts of these
individual departments with the broader goals and objectives set at higher strategic levels,
such as business and corporate strategy.
Functional strategy deals with a fairly narrow focus. They are designed to address the unique
challenges and opportunities within each functional area.
Your marketing strategy, finance, IT, and other departments all have goals and
responsibilities to deliver. Having a visible functional level of strategy that aligns back to the
overall corporate strategy will increase the chances of success.
These strategies involve resource allocation, measurable goals, and a focus on continuous
improvement, all within the context of individual functions.
The secret to a successful functional level strategy
Now, having each department equipped with a well-defined functional strategy is an
excellent beginning. But beware of the pitfalls of isolating each functional area in its own
strategy bubble; that's venturing into siloed territory.
There are two pivotal aspects to keep in mind for a successful functional strategy:
 Cross-functional collaboration: The magic happens when different departments join
forces. When you foster collaboration between these functions, you open the door to
innovation and synergy.
 Strategic alignment: Ensuring that the strategy of each functional area seamlessly
matches the overarching organizational goals is the foundation of success.
In Cascade, you can create strategic plans for each function in your organization, which link
back to the main corporate plan to ensure everything is moving in the right direction.
"A journey of a thousand miles begins with one step,” as the saying goes.
Operational Level Strategy

Operational level strategy

Operational level strategy, situated at the lowest tier of the strategic hierarchy, focuses on the
day-to-day actions and tactics needed to run the business, manage processes, and
implement change effectively. It’s the “boots-on-the-ground” aspect of strategy, ensuring
that plans are translated into tangible actions and results.
In simple terms, this is the strategy that will inform the day-to-day work of employees and
will ultimately keep your organization moving in the right direction.
It's primarily concerned with short-term objectives and the practical execution of plans,
detailing the specific actions, procedures, and activities that need to be executed to meet
organizational goals.
The operational level strategy involves roles like PMOs, team leaders, individual
contributors, and team members, and plays a pivotal role in the
successful implementation of broader strategies.
It’s probably the most important level of strategy because, without it, your organization can
quickly lose traction and “get stuck” while the competition moves forward.
Key characteristics of operational level strategy
1. Tactical Execution: Operational strategies focus on executing tactical steps to
achieve business objectives, offering a detailed roadmap for execution.
2. Short-Term Focus: Geared towards short-term goals and might encompass quarterly,
monthly, or even daily activities.
3. Resource Utilization: Deals with resource allocation at a detailed level, including
workforce management, budget allocation, and technology deployment for specific
projects and initiatives.
4. Project Management: Operational strategies often include project management to
coordinate teams and meet time and budget constraints.
5. Feedback and Adaptation: They incorporate feedback loops, allowing adjustments
as circumstances change.
 6. Immediate Impact: Success at the operational level directly contributes to achieving
broader business and corporate goals, serving as a linchpin in strategy execution.
The Four Levels Of Strategy Are The First Step
Of course, having a good (or great) strategy isn’t guaranteed success.
But it's definitely the place to start. Understanding the levels of strategy is a big part of
getting the creation right. However, with increased levels, there can be increased confusion.
Our dedicated strategy execution platform, Cascade, allows you to centralize your strategy
into one central hub. It empowers you to build your strategic plans and visualize how they
work together. Easily see how your corporate strategy breaks down into business, functional,
and operational plans, all in one cohesive platform.
Cascade simplifies the alignment of projects and encourages collaboration across plans and
departments, making strategic execution a breeze.

The Role of Strategist in Organizations

A powerful strategist plays the major important roles like sooth sayer, sculptor,
politician, guru and jail buster.

 A strategist must be a soothsayer or seer who helps his team to imagine the future
world within which they will be competing. They begin by reading the palm of the
organisation and also identify its competencies and unique strengths. They then use
the crystal ball of scenarios, and imaginative thinking to help the team to visualize
the future within which the business will operate.
 A strategist should also be a sculptor like an artist ‘who carves a form’ out of raw
materials. The sculptor strategist creates a unique role or purpose for the
organisation. They predict the reason why the organisation will be successful within
the soothsayer’s imagined future. The sculptor begins by defining the organisation’s
future target markets. They then provide the future shape of the organisation by
defining why its future customers will choose to support it, rather than any future
imagined competitor. So the strategist changes systems, structures, rewards,
alliances, products and services to ensure that everything supports the organisational
purpose.
 A politician is someone who is ‘skilled in the art of maneuvering and manipulation.’
The politician strategist knows the power players in the organisation. They know
what drives each leader and they also know who is motivated by what external and
internal factors.
 A guru is ‘a person who gives personal spiritual guidance to his disciples.’ The
strategist guru, shows how each individual employee in the company, can contribute
to the greater, noble goal. They help individual employees to discover their
inimitable personal purpose. Then they show them how to channel their energy and
talent towards living their purpose, whilst acting in ways that support the company’s
goal.
 A strategist must also plays a role of jail buster, while at work, many employees find
that their talents, passions, creativity, imagination, and energy are locked behind bars
of the company culture. Timid managers who want to ‘be in control’, and ‘avoid
making mistakes’, often hide the keys to creativity, energy, passion, self-assurance,
and innovation. The jail buster strategist shows employees how to break out from
their prison of tediousness and fear without alerting their fearful managers. They
provide the key to unlocking their talents, creativity, and energy.
10 Benefits of Strategic Management with Examples
(Financial & Non-Financial)

Some of the advantages of implementing a strategic management system are

discussed here.
What are the Financial Benefits of Strategic Management?
Benefits of Strategic management results in higher profits, sales, and productivity in
firms. Main financial benefits include:
 Profitability Management
Enables senior executives to get feedback from department heads. This feedback
helps them understand the bottlenecks at different hierarchy levels in the
organization and take relevant action to improve profits.
Based on existing conditions, the senior management can develop their strategic
vision and improve financial gains. Consider the example of South Korea based LG
Electronics. The company faced stiff competition and low profitability almost two
decades ago.
Its pricing strategy to offer products at lower costs in rural areas helped increase
revenue and sales volumes. It also worked on improving brand visibility, which made
LG a household name in many countries.
 Solvency Planning
Since strategic management deals with long-term goals, leaders analyze the existing
assets, liabilities, and net worth in the balance sheet to know whether they can meet
expenses in the long run.
The organization takes all necessary measures to optimize the asset-debt ratio and
maintain solvency. Solvency planning is necessary to accomplish goals like growth
and expansion.
 Liquidity Monitoring
Benefits of strategic management allows companies to ensure that their
cash flow aligns with their long-term goals. They check it by constantly tracking cash
flow statements or liquidity reports.
A company facing the liquidity crisis often strains its relationship with vendors due to
delayed payments. Businesses can undertake activities that result in monetary gains
for performing operations by knowing about the situation on time.
For example, the electric vehicle (EV) manufacturer Tesla partnered with Panasonic
for lithium batteries. The company also opened a factory to facilitate battery
production.
Later, it acquired battery manufacturer Maxwell Technologies. The aim was to cut
down battery costs and decrease the selling price of the vehicle to customers. This
helped improve cash flow.
 Improved Revenue Generation
Strategic management enables the senior management to make necessary changes
in the existing operating processes. By looking at competitors’ strategies, the
company can develop better ideas and tweak its processes to outperform them.
It helps them look for innovative ideas that can bring long-term benefits to the
company in terms of revenue. It also helps bring more investors and maintain
relationships with the existing ones.
 Prevents Legal Risks
The companies can include employee-related policies, conflict of interest policies for
board members and other partner stakeholders, and other internal controls as part of
the strategic management process.
They can consult their insurance provider, attorney, and other professionals who can
help maintain legal compliance. Consultation helps avoid the risk of penalties due to
failure in fulfilling legal obligations.
KEY TAKEAWAY: Creating the right strategy through strategic management would
help businesses to allocate and utilize the finances judiciously to increase
profitability. With it, businesses can easily monitor liquidity and ensure they have
enough finances to meet the long-term objectives.
What are the Non-Financial Benefits of Strategic Management?
Strategic management allows an organization to be more logical, rational, and
systematic in its strategies.
 Revitalize Human Resources
Often includes proactive staffing practices that help hire the best talent and be more
competitive. Companies can prepare detailed job descriptions, improve recruiting
practices, provide 360-degree feedback, and take other steps that reduce turnover
and boost employee satisfaction.
According to a case study published on Kesko Ltd., a trading sector company, the
strategy development started from a generic level and was later devised at field level
for different industries. Due to mutual trust and cooperation among the involved
members, the company witnessed growth in sales, customer numbers, and market
share.
 Identify Problems
Enables a detailed analysis of the organization’s strengths, weaknesses,
opportunities, and threats. Based on the problems, the company can take relevant
actions like changing the pricing model, recruiting more staff, adding distribution
channels, etc.
For example, a new competitor opening a shop nearby can be a threat to your
business. You can plan loyalty campaigns, discounts, special offerings and other
strategies on time to keep your customers away.
 Better Decision Making
You can make better decisions in a shorter time with benefits of strategic
management. For example, if you get the opportunity to take up a new project, you
can make a better decision whether to invest resources in it or not. Given that a
project aligns with your ideas, you can plan and allocate resources to the project.
 Improved Understanding of Competitors’ Strategies
Enables organizations to learn all the practices followed by their competitors. They
can then implement their strategies without imitating them. This move can help in
strengthening your business and meeting brand awareness goals.
For instance, HP maintained competitive advantage over the years by refining the
marketing strategy and re-branding from time to time. This helped ensure that its
products met its customers’ evolving technological needs.
 Higher Stability
By selling into new markets, acquiring new businesses, and adding new products,
you reduce your dependency on individual entities. Your profits do not depend on the
success of a single product or client.
If you have just a few clients, you might have to work completely on their terms to
prevent your business from shutting down.
KEY TAKEAWAY: Leveraging the strategic management will leave a positive impact
on the business procedures. From understanding the market trends, analyzing the
external environment to formulating effective strategies, businesses will greatly
benefit from it.