In this section, we will explore the various types of decisions that individuals and organizations encounter. Understanding these types will help you recognize the nature of the decision at hand and apply the appropriate decision-making process.

Strategic decisions are long-term and have a significant impact on the overall direction of an organization. These decisions are typically made by top management and involve a high degree of uncertainty and risk.

• Long-term impact
• High stakes and risk
• Involves significant resource allocation
• Requires thorough analysis and planning

• Entering a new market
• Mergers and acquisitions
• Developing new products or services

Tactical decisions are medium-term and are made to implement the strategies set by top management. These decisions are usually made by middle management and focus on how to achieve strategic goals.

• Medium-term impact
• Moderate risk
• Involves resource allocation within departments
• Requires coordination and planning

• Marketing campaigns
• Budget allocations for departments
• Hiring plans

Operational decisions are short-term and focus on the day-to-day activities of an organization. These decisions are typically made by lower-level management and employees and are aimed at ensuring smooth operations.

• Short-term impact
• Low risk
• Involves routine tasks and processes
• Requires quick decision-making

• Scheduling employee shifts
• Ordering supplies
• Addressing customer complaints

Programmed decisions are routine and repetitive decisions that follow established guidelines or procedures. These decisions are often made in situations that are well understood and predictable.

• Routine and repetitive
• Low uncertainty
• Follows established procedures
• Often automated or standardized

• Reordering inventory when stock levels are low
• Approving standard expense reports
• Processing payroll

Non-programmed decisions are unique and non-recurring decisions that require custom solutions. These decisions are often complex and involve a higher degree of uncertainty.

• Unique and non-recurring
• High uncertainty
• Requires creative problem-solving
• Often involves significant judgment and analysis

• Responding to a sudden market change
• Handling a major crisis
• Developing a new business strategy

Decisions can also be categorized based on who makes them: individuals or groups.

• Made by a single person
• Faster decision-making process
• Less diverse input and perspectives

• Made by a team or committee
• Slower decision-making process
• More diverse input and perspectives
• Can lead to better decisions through collaboration

Exercise: Identify the Type of Decision

For each scenario below, identify the type of decision being described (strategic, tactical, operational, programmed, non-programmed, individual, or group).

1. A company decides to launch a new product line to expand its market share.
2. A manager schedules weekly team meetings to discuss project progress.
3. A team of executives decides to acquire a smaller competitor.
4. An employee follows a standard procedure to process a customer refund.
5. A department head allocates the annual budget among various projects.
6. A crisis management team develops a plan to handle a sudden PR issue.

Solutions:

1. Strategic
2. Operational
3. Strategic (Group)
4. Programmed
5. Tactical
6. Non-Programmed (Group)

Understanding the different types of decisions is crucial for effective decision-making. By recognizing whether a decision is strategic, tactical, operational, programmed, non-programmed, individual, or group-based, you can apply the appropriate processes and tools to make informed and effective choices. This knowledge will also help you anticipate the implications of your decisions and manage them more effectively.