Effect of strategic and tactical reasoning

Question 1

Strategic decisions

Answer 1

Set out the long-term direction that a business will take to achieve its objectives.

Question 2

Tactical decisions

Answer 2

Short-term responses to an opportunity or threat in the market.

Most day-to-day decisions in a business are tactical.

Question 3

Human resources

Answer 3

Strategic decisions:

Will have a long lasting effect on the workforce.

ex. a new growth strategy could be to increase the size of the workforce or moving existing workers to new locations.
The impact of these measure will be felt indefinitely

Tactical decisions:

May affect people for a short period of time and only a small proportion of the workforce might be affected.

ex. an ice-cream manufacturer may decide to open the factory during weekends due to the high demands brought by the warm weather.

Only production workers would be needed and affected.

This will not affect them for a long time as, as the weather gets cooler they are likely to return to normal working hours.

Question 4

Physical resources

Answer 4

Examples of physical resources in a business:
Land 
Machines 
Tools
Equipment 
Raw materials 
Vehicles 
Shops 

Strategic decisions:

Could have a variety of effects on physical resources depending in the nature of the decision.

ex. if a business decides to permanently outsource its transportation and delivery operation it would need to sell of most of its vehicles. This means only a small proportion of physical resources will be effected.

However, if a business decides to develop and launch a new product a larger proportion would be affected, as additional equipment, more factory space, new types of raw materials would be required.

Tactical decisions:

Can have an impact on physical resources but not a dramatic one.

ex. if a catering company agrees to make an unusually large order for an event outside of their geographical area, they would need to some extra kitchen equipment, utensils, dining furniture etc..
But as they are only leased they will be returned and will not have long-term affects on the company.

Question 5

Financial resources

Answer 5

Strategic decisions:

Can have a significant and long-term impact on the financial resources if a business.

ex. a company might raise $200 million by issuing some shares to pay for a planned acquisition programme. Once the shares are issued the company will need to pay back the shares in dividend payments for as long as the company trades. Meaning that it will have long-term effects.

Tactical decisions:

May only have a short-term effect.

ex. a business may willingly go overdrawn at the bank because it is waiting for a delayed payment from a customer. This may not have a long-term impacts, assuming that once the customer pays the debt the overdraft will be cleared.