In: Accounting
Question 4
The Board of Management tends to focus decisions based on events occurring in the next month, only ever considering a longer-term question when they set budgets, which typically have focused on the previous year’s events. You would like to encourage the Board of Management to adopt a stronger strategic focus rather than be operational in their approach to decision making. Explain the difference between operational and strategic decisions. Ensure you provide examples and current thinking about the role each type of decision-making plays within an organisation.
BASIS FOR COMPARISON | STRATEGIC PLANNING | OPERATIONAL PLANNING |
---|---|---|
Meaning | The planning for achieving the vision of the organization is Strategic Planning. | Operational Planning is a process of deciding in advance of what is to be done to achieve the tactical objectives of business? |
Time Horizon | Long term planning | Short term planning |
Approach | Extroverted | Introverted |
Modifications | Generally, the plan lasts longer. | The plan changes every year. |
Performed by | Top level management | Middle level management |
Scope | Wide | Narrow |
Emphasis on | Planning of vision, mission and objectives. | Planning the routine activities of the company |
For example, let’s say you have a cafe and it’s one of three in your neighborhood. Part of your strategic plan might be to attract customers away from the other cafes to come to yours instead. An operational decision might be the printing and distributing of discount coupons or the construction of a play area for children.
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