Decision Making

Question 1

What is a routine decision?

Answer 1

The decisions business managers make on a regular basis, as often as daily or weekly. Routine decisions do not require CEO or board approval. The expenditure on regular items is generally revenue expenditure (not capital expenditure) because it does not affect business profits beyond the current accounting period (its not a loan).

Examples:
The personal manager may prepare a staff roster on a weekly basis.

The production manager will decide on a regular basis the quantity of materials that needs to be ordered on a weekly or monthly basis.

Question 2

What is a strategic decision?

Answer 2

Strategic decisions are the big decisions. Typically involving capital expenditure which will have an impact on the business beyond the current accounting period which leads strategic decisions generally requiring CEO or board approval.

Examples:
The decision may be change of product, market or production technique for the business.

The purchase of a new warehouse or office.

Buying new machinery.