In modern business, strategic management is a key element of an organization’s success. Strategic decision making plays an important role in determining the company’s development course and achieving its goals. Effective management requires an understanding of the strategic decision making process and the use of appropriate tools and methods.
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The strategic decision making process begins with an analysis of the current situation inside and outside the organization. It is important to study the internal and external factors that may affect the company’s activities. Conducting a SWOT analysis allows you to identify the company’s strengths and weaknesses, as well as the opportunities and threats it will face.
Based on the analysis, it is necessary to define the strategic goals of the organization. The goals must be SMART – specific, measurable, achievable, relevant and time-bound. Clearly formulated goals will help determine the necessary steps to achieve them.
Management of any business system is based on the development of a strategy, its adaptation to the specifics of the organization (company) and implementation. The development, implementation and introduction of strategy are priority management tasks, therefore the area related to the formation and management of the future development of the company is usually called strategic management.
After setting goals, it is necessary to choose a development strategy for the organization. There are several basic strategies, such as a growth strategy, a retention strategy, a diversification strategy and a concentration strategy. The choice of strategy depends on the company's goals, its resources, industry characteristics and competitive environment.
Strategic management also includes making such important decisions as choosing a target audience, determining the company's competitive advantages, establishing a pricing policy, organizing marketing and advertising campaigns.
After choosing a strategy, an equally important stage is its implementation. It is necessary to develop an action plan, identify responsible employees, allocate the necessary resources and monitor the implementation of the tasks. It is important to be flexible and respond quickly to changes in the external environment.
Control is an integral part of the strategic decision-making process. Constant monitoring of results allows you to promptly adjust the strategy, if necessary, and achieve your goals more effectively.
In general, the process of making strategic decisions in the management of an organization requires deep analysis, clear setting of objectives, well-founded decisions and subsequent control. A correctly chosen strategy and its successful implementation help the company to be competitive and achieve sustainable development.
Understanding the process of making strategic decisions and its correct implementation are the basis for successful management of an organization in the modern realities of business. The key points are the analysis of the situation, the choice of goals, the development of a strategy, its implementation and control over the achievement of the set objectives. Decisions must be well-founded, targeted and taken into account the interests and needs of the company.
• reflect the management's point of view on what the organization should be and what it should do;
• take into account the organization's constant interaction with the external environment and facilitate its adaptation to changes;
• be based on the organization's own resources and ensure that business activity precisely matches the available resources;
• contain ideas about the complex of changes in all subsystems of the organization as a whole;
• take into account varying degrees of uncertainty, i.e. the organization must make assumptions about future events based on insufficiently accurate information;
• correspond to the implementation of a systems approach to managing the organization as a whole, i.e. take into account the opinions of managers at all levels of management about the organization's activities in the future;
• have long-term and prospective significance;
• reflect the opinions of influential participants in the management process within the organization and take into account their assessments and expectations;
• influence resources and operational activities, i.e. facilitate the adoption of organizational decisions at all levels of management.
The listed characteristics show that strategic decisions form a certain system of decisions, which can be presented as a "decision tree" united by a single target orientation - a strategic goal. Strategic goals are formed based on the definition of the main guidelines (the mission of the organization). They differ from corporate goals in that they are defined for a fairly long period of time (for example, 10-20 years) and do not have specific quantitative characteristics. For example, the creation of a new segment of the goods or services market, entry into international markets, etc.
Strategic decisions are associated with the process of system analysis of information about the external environment (competitors, sales markets and supply sources, trends in technical development, etc.), as well as the development and selection of the optimal strategy for the development of a specific business system. The process of developing, evaluating and selecting a strategy consists of three main stages. At the first stage, the direction of development is determined and the mission of the organization (enterprise) is formulated, i.e. its goal (setting). This is the first important strategic decision in the process of changing the state of the business system, it is the initial stage of strategy development, since it is its most stable part. The content of the mission (setting) is formed on the basis of data on a specific enterprise or firm. There are no universal rules.
1. Corporate strategy, which defines the business system as an integrated organization, dividing it into business units, the totality of which allows us to predict the state of the integrated organization and answer the question: what is the installation (mission) of the business system and what are its goals? Corporate strategy is approved by top managers. Corporate strategy includes defining the financial and organizational structure of the enterprise as a whole. At the corporate level, strategic decisions are made, such as, for example, acquiring a new business, expanding or reducing an existing one, creating joint ventures or a new enterprise abroad, etc.
2. The enterprise strategy, which determines tactical decisions related to the implementation of the corporate strategy within the framework of the business strategy in the competitive struggle, on the choice of the product range, modernization of production facilities, the formation of a development fund and others related to ensuring competitive production of products or services in the consumer market. The enterprise strategy is aimed at solving business problems - who does it compete with and by what methods? The implementation of the enterprise strategy is the responsibility of the heads of individual business units included in the organization, as well as the personnel supporting them.
3. The functional strategy determines the operational (or functional) level of solving specific operational problems of strategic management. The performers do not have the opportunity to assess the entire range of problems solved by the enterprise. However, they are responsible for the development of functional strategies that correspond to the strategic tasks set by the managers at the corporate and corporate levels. At the level of implementing the functional strategy, prerequisites and conditions are created for solving strategic tasks, for example: development and implementation of a program for automating the production process, training and education of personnel in new professions, etc.
It should be noted that all three specified levels of strategies represent a hierarchical structure of a single whole - a corporate structure, which is a decomposition of goals, objectives, resources and methods for achieving them. Consequently, decisions made at all three levels of management should represent a holistic "decision tree" and, therefore, have direct and feedback links between themselves both vertically and horizontally to implement the overall strategic goal of the organization or company.
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