Question

a. How might the three types of plans (strategic, operational, and tactical) complement one another in a company? Use examples to illustrate your answers.
b. Rationality, bounded rationality and intuition are among the management decision-making approaches. Comment on whether intuition is a valid approach to making decisions in organizations. Why or why not? How might intuition be combined with a rational decision approach?

Answer 1

In Colgate Palmolive, the three levels of plan are inter-woven and work in tandem. The Strategic plans help to derive Operational plans which help to form the tactical plans. Example: The strategic plan of the company is to have Gross Margin on product of 60%. In order to support the same, the Operational plan formed is to reduce the Production cost by 20% and Increase Margin on product by 5% through price increase. If both these plans are met, the strategic plan of 60% Gross Margin will be accomplished. Basis the Operational Goal, the Tactical Goals were determined. The production cost can be reduced by increasing the productivity, reducing maintenance cost, minimizing waste in system. Hence, the tactical plan for same was to:

• Reduce process wastage by 15%
• Reduce maintenance overhead by 5%
• Increase productivity and asset utilization by 10%

Thus, it shows how the flow is from Strategic to Operational to Tactical plans