Types of Decision-making Models Flashcards
Strategic decisions
Strategic decisions are long term and will affect the
direction the business takes. These decisions will affect the
entire business and will be made by the owners or senior
management. Strategic decisions are often complex and
may result in major organisational change internal to the
business or in the markets, or in new markets they operate
in. Strategic decisions may also involve a large financial
commitment in order to carry out the decision. It may take
a few years, and a few million pounds, to see if strategic
decisions have had the positive affect anticipated by the
business.
Tactical decisions
Tactical decisions are not as far reaching as strategic
decisions – they tend to be medium-term. They should aim
to implement strategic decisions. Tactical decisions are less
complex than strategic decisions and are usually carried
out by middle management. Tactical decisions can also be
more flexible – if it is failing to meet its objective then it
can be changed
Operational Decisions
Operational decisions are the day-to-day decisions made
in a business. These are lower-level decisions that tend
to be short term and have little risk. A business will make
hundreds of operational decisions in a typical day by
a range of employees, as they do not need the careful
thought and planning of strategic and tactical decisions.
Many decisions at this level are routine and can be made
quickly
Scientific decision making
Scientific decision-making involves the use of facts and
data in a systematic way in order to arrive at a logical
and evidence-based decision. The scientific approach will
involve a structured approach that will involve:
Clearly identifying the objective/objectives
or problem to solve
Collect all relevant information needed to make the
decision; this can include primary or secondary data
and could take some time to gather
Analyse the information to identify possible ways forward
Make and implement the decision
Monitor and review the decision and change if needed.
The scientific approach is favoured by most businesses
making strategic and tactical decisions as it is based on
logic and evidence and should reduce the risk of failure.
The process includes the consideration of alternative
decisions, so all possible courses of action are included,
and the business will undertake a full analysis before
making any decisions
Qualitative factors
Qualitative factors will also have an influence on the
decision made, such as:
* the effects of decisions on stakeholders e.g., workforce,
management, suppliers and customers
* training costs
* recruitment costs
* capacity management
* marketing impacts.
