Managerial Decision Making

On the basis of the purpose of decision-making activities, the organizational decisions are
divided into 3 categories:
i. Strategic Decisions
ii. Tactical Decisions
iii. Operational Decisions
 Strategic
(Senior
management)

Tactical (middle
management)

Operational ( Junior
management)

Strategic:
- Policy decisions
- Long term
- Complex
- Non-routine
Tactical:
- How to achieve policy
- Medium term
- Less complex
Operational:
- Day to day decisions
- Simple
- Routine
 1. Strategic Decisions:

 Strategic decisions are those decisions in which the decision-maker develops

objectives and allocates resources to achieve these objectives.

 Such decisions are taken by strategic level (top level) managers.

 Strategic decisions are long term, complex decisions made by senior management.

 It describes the process of creating a company’s vision and objectives.

 They decide upon the courses of action a company should pursue to achieve those
goals.

Example:
- what new products to be made

- What would be the location/ capacity of the factory

- Whether more capacity should be added to the production system

- To become the market leader in the industry

 Generally strategic decision is unstructured. So, a manager has to apply his

business judgment and intuition to understand the problem and make decisions.
For example, a manager of a pizza restaurant might have the objective of
increasing sales. He decides to make a strategy of offering lower prices on certain
products during off hours to attract more customers.

2. Tactical Decisions:
 Tactical decisions are taken by management control level (middle level) managers
and deal with the utilization of resources in the organization to achieve strategic
objectives.
 Tactical decisions are medium term, less complex decisions made by middle
managers.

 They follow strategic decisions and aim to meet the objectives stated in any
strategic decision.
  These decisions related to the implementation of strategic decisions.

 They are directed towards developing plans, structuring workflows, establishing

distribution channels, acquisition of resources such as men, materials and money.

Example:
- What resources will be required to implement the strategic decisions?
- What would be the annual production level to meet the future demand?
- In order to become the market leader, a firm may have to launch new products/ services
or open new branches

3. Operational Decisions:

 Operational decisions deal with the day-to-day problems that affect the operation
of the organization.

 These decisions are taken by the managers at operational level (bottom level) of
the organization.

 Operational decisions are day to day decisions made by junior managers that are
simple and routine.

 These decisions are based on facts regarding the events and do not require much
of business judgment.

Example:
- Day to day scheduling of works
- Who will be assigned what tasks
- Who will be in the next shift
- Which job will be on which machine
- Ordering of supplies
- To determine how many operative staff will be required to compute a task.