The success of a business depends on the decisions made by key personnel in the organization. However, these individuals can make poor decisions that will be detrimental to the organization. Strategy and operational decisions address different aspects of the organization. Strategy influences the overall direction of the organization, whereas operational decisions affect its day-to-day operations.
Strategic decisions consider the entire organization and represent a complex aspect of business planning. Strategy entails making major changes for the organization and recognizing that the business environment is not static and will continue to evolve. The goal of making strategic decisions is to implement policy that aims to move the organization toward its long-term goals. Strategy takes into account an organization's resources, threats to it and available opportunities.
A business always assumes risk when deciding to change its methods. Strategic decisions always represent a risk because these decisions deal with the future. While a company can make strategic decisions based on relevant information, the organization can never predict the future with certainty. Because of this, a business must take precautions when implementing strategic decisions.
Operational decisions relate to the daily operations of an organization. The countless interactions that take place on a daily basis represent the result of operational decisions. These decisions, therefore, can bog down an organization and make it ineffective. To prevent this, operational decisions should be consistent with strategic decisions. Good operational decisions will have measurable results such as higher revenues, increased profits, increased productivity and customer satisfaction.
A business does not make frequent decisions regarding operations because of constraints of time, resources and the workforce. Instead, a business should make operational decisions after key personnel agree on an overall strategic plan for the organization. In many organizations, operational decisions result from strategy related to production and growth. The operational decisions then help the organization to bring about changes that move the business toward its strategic goals.