The impact of strategic decision-making on functional decision-making

Even though strategic decisions can be worth £billions instead of £millions, there may be relatively little for the senior manaers to go on, so many business leaders don't know the downside risk if their strateic vision goes wrong. Making decisions such as these is likely to be make-or-break in terms of the reputation of the business leader - and may also be make-or-break for the business itself. 

The decisions are usually made by a combination of boardroom discussion backed by independent managemennt consultancy advice. Ultimately, having taken surroundings from the most trusted advisors, the chairman and CEO simply have to go with their gut.

When a major strategic decision has been made, new objectives need to be set which in turn will affect functional objectives, strategies and decision-making. Together the 4 sets of objectives must match the organisation's corporate objectives; then, together, make a strategy that makes the overall targets reachable.

Functional objectives are the targets of the individual business departments. They will stem from the corporate objectives and are either set by the CEO or may be the result of discussion between directors. 

Having set the company's objectives, the key is to take care over each department's objectives. They must work seperately and together, so that the overall goal can be achieved. 

Success requires that the leaders within each department/ function do the following:

• Co-ordinate what they are doing - what, when and how. Marketing and HR may use an ERP to make sure that the whole project is kept on track.
• Make sure that all witin their own department know the overall objective as well as the functional one, and that all are motivated towards achieving it. 
• Work together to achieve a common goal.

A strategy is a medium- to long-term plan for meeting objectives. This shoud be the result of a careful process of thought and discussion throughout the business, though key decisions will almost alwaye be made at the top.To make the right decision about strategy, a useful approach is known as the scientific decision-making model. It shows that strategy decisions must:

• be based on clear objectives
• be based on firm evidence of the market and the problem/ opportunity, including as muct factual quantative evidence as possible
• look for options )alternative theories - as to which would be the best approach)
• be based on as scientific a test of the alternatives as possible 
• control the approach decided on.

Within this process, the singlemost important thing is that the business should make sure that the functional strategies are all part of one overall strategy.