There is no ambiguity around the fact that modern management requires new sets of skills and practices. These requirements might greatly vary, but the success of the outcome depends solely on how well decision-makers allocate resources, communicate and, most importantly, plan. The fundamental distinction between the types of planning concerns it being strategic or tactical, and in this paper, these two types will be examined along with the analysis of the decision-making process as a whole.
Planning refers to the process of defining how to get a business, an organization, or any other entity where it needs to get while meeting all the set objectives and employing the available resources (C. Certo, 2016; T. Certo, 2016). If not well executed, planning might end up taking up too much managerial time and harming other activities (C. Certo, 2016; T. Certo, 2016). Typical planning tools include forecasting and scheduling with a great variety of research methods, each of these imply (C. Certo, 2016; T. Certo, 2016). While it entails different tools, planning also can be strategic or tactical.
Strategic planning refers to long-range (three to five years) planning that considers the organization as a whole and determines its overall goals (C. Certo, 2016; T. Certo, 2016). The time range of this type of planning might seem problematic, but if managers follow the commitment principle, allocating funds only on the policies they can anticipate, this problem dissolves by itself (C. Certo, 2016; T. Certo, 2016).
Strategic planning usually involves five basic steps: environmental analysis, establishing organizational direction, formulating and implementing the strategy, and strategic control (C. Certo, 2016; T. Certo, 2016). In a real-life example of Burger King, this process can be tracked more efficiently – the objective of increasing productivity is met by boosting people and machine efficiency (C. Certo, 2016; T. Certo, 2016). Nevertheless, the process of strategic planning should not be underestimated based on the simplicity of the steps, as all of those include multiple trajectories and substeps.
Tactical planning sets the ground rules for regular operations during the 6-12 months and is frequently applied in retail and other sectors, sensitive to seasonal fluctuations (Dreyer, Kasper, Iskra, & Riikka, 2018). Hence, the literature on tactical planning mostly focuses on applying it to carry out specific aspects of the existing, often strategic by their nature, plans (Dreyer et al., 2018). Consequently, tactic planning is considered to be a part of the day-to-day operations of the company or organization, delegated to lower-level management. Another vital feature of tactical plans is that they are more detailed than strategic plans.
More details mean greater flexibility, as daily operations often entail a high probability of malfunctions and the necessity for crisis management, that is not covered by long-term strategic layouts (Dreyer et al., 2018). Besides, tactical plans incorporate the establishment of communication channels, as they have met the objectives of all departments involved in the process in order to be executed correctly (Dreyer et al., 2018). Thus, to some extent, tactical and strategic plans seem to be complementary.
Despite the complementary features these two approaches share, there are more differences to address. First of all, strategic plans are long-range development layouts; on the contrary, tactical plans deal with issues at hand and schedule for no longer than 12-month period. Secondly, strategic planning is the prerogative of the senior management, while tactical planning is executed on the lower level of the hierarchical chain. Finally, strategic plans represent general guidelines, that might lead to meeting the goals of the company. However, tactical plans are the detailed operational schemes employed on the way to achieving the strategic objectives set beforehand.
Steps in the decision-making process
The process of decision-making cannot be underestimated in terms of achieving the established goals, and it is key to the effective management and development of any organization. Decision-making means choosing the best alternative to reach the company’s objectives (C. Certo, 2016; T. Certo, 2016). Thus, some different tools and techniques might be employed in this process.
In the framework of this paper, rational decision-making process and exceptions from it will be analyzed. First of all, the problem is identified, and the possible solving alternatives are listed (C. Certo, 2016; T. Certo, 2016). Then, decision-makers select the best alternative and implement it and, finally, gather feedback on its the effectiveness (C. Certo, 2016; T. Certo, 2016).
This model is based on the assumption that decision-makers are rational, unbiased, and familiar with all background information and the consequences of selecting any of the alternatives (C. Certo, 2016; T. Certo, 2016). Hence, it may not be adequate in terms of bounded rationality, implying that managers are not always able to make rational decisions and assess all information on the solutions to the problem (C. Certo, 2016; T. Certo, 2016). Therefore, there are other issues to consider in the decision-making process.
The most important of these issues are intuition, biases, and the specifics of group decision-making. The decision itself is just one of the steps in the process; thus, many other problems require separate analysis (Szymaniec-Mlicka, 2017). Intuition is an inborn ability to evaluate information that contributes to the structured decision-making, making it more sophisticated and multi-faceted (C. Certo, 2016; T. Certo, 2016).
As for the bias, they refer to breakaways from the rationality that take place when decision-makers rely on the rules of thumb, hence resulting in flawed decisions (C. Certo, 2016; T. Certo, 2016). There are some characteristical biases, and they include bandwagon effect that means assuming something will happen based on someone else’s belief, confirmation bias that implies ignoring contradicting information, loss aversion, or avoiding losses over receiving gains (C. Certo, 2016; T. Certo, 2016). Besides, they include two similar biases – overconfidence and unrealistic optimism.
Another point to acknowledge during the process is whether to use groups as decision-makers or not. Undoubtedly, it is usually groups that make decisions in organizations, but recognizing their disadvantages is essential for maximizing the effectiveness. The main problems that come with groups are time inefficiency, costs, and bias (C. Certo, 2016; T. Certo, 2016). Nevertheless, as the process involves a group of people, the probability of reaching a sensible decision is higher; besides, more dimensions of the problem are likely to be considered.
Still, it is essential to note that the decision-making process varies depending on the type of organization. For instance, in public entities, it includes defining the problem, based on the capabilities of the organization and its objectives and generating the solutions according to the determined aims (Szymaniec-Mlicka, 2017). Then, the solutions are detailed, operationalized, and evaluated in order to determine their costs and benefits (Szymaniec-Mlicka, 2017). Only after all these steps, the best alternative is chosen and implemented. Therefore, decision-making varies significantly depending on the issues into consideration, type of the process that has been chosen, and the organizational structure of the entity the decision is made at in general.
References
Certo, S. C., Certo, S. T. (2016). Modern management: Concepts and skills (14th ed.). Boston: Pearson.
Dreyer, H. C., Kasper, K., Iskra, D., & Riikka, K. (2018). Proposals for enhancing tactical planning in grocery retailing with S&OP. International Journal of Physical Distribution & Logistics Management, 48(2), 114-138.
Szymaniec-Mlicka, K. (2017). The decision-making process in public healthcare entities – identification of the decision-making process type. Management, 21(1), 191-204.