Strategy choices and levels - Strategic vs tactical decision...

Learning Outcomes

After reading this article, you will be able to explain the differences between strategic and tactical decisions and their place within organisational planning. You will understand Anthony’s hierarchy of management activity, recognise key features of strategy formulation, and match decision types to organisational roles. You should be able to identify examples of strategic and tactical planning in a business and discuss how these levels interact for effective management.

ACCA Business and Technology (BT) Syllabus

For ACCA Business and Technology (BT), you are required to understand the role of strategy at different levels of an organisation and how strategic and tactical decisions support business objectives and operations. Focus your revision on these syllabus points:

• The distinction between strategic, tactical, and operational decisions in a business context (including Anthony's hierarchy)
• The typical time horizons, activities, and responsibilities at each level of management
• The processes for formulating and implementing strategies at strategic and tactical levels
• The impact of strategic and tactical decision-making on business effectiveness and efficiency
• Application of examples linking strategic objectives to tactical actions within business functions

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. In Anthony's hierarchy, which level of management is responsible for setting the long-term direction of the organisation?
2. Which statement best describes a tactical decision?
   a) Concerned with the overall direction of the business
   b) Related to daily processes and task scheduling
   c) Focused on medium-term plans for specific departments
3. Give one example of a strategic objective and the tactical action that might support it.
4. What is usually the main difference in time horizon between strategic and tactical decisions?

Introduction

Organisations must make many types of decisions to achieve their objectives. The most significant of these are strategic and tactical decisions, which determine the long-term direction and the specific actions needed to achieve success. Understanding these levels of planning, who is responsible, and how each supports overall business aims is essential for effective management.

Key Term: strategy
The set of long-term plans and policies an organisation adopts to achieve its major objectives, guiding overall direction and resource allocation.

Key Term: tactical decision
A medium-term plan or action designed to implement specific elements of strategy, usually within a department or function.

Levels of Decision-Making: Anthony’s Hierarchy

Organisational decisions are grouped into three levels, based on their purpose and time horizon:

• Strategic: concerned with big-picture, long-term plans made by senior management
• Tactical: relating to medium-term implementation choices by middle management
• Operational: detailing short-term, day-to-day tasks by lower management or supervisors

Senior management formulates strategy; middle managers translate strategy into practical departmental plans; operational managers and staff execute routine processes.

Key Term: Anthony's hierarchy
A three-level model distinguishing strategic, tactical, and operational management decisions within an organisation.

Strategic Decisions

Strategic decisions set the direction for the whole organisation and define future positioning relative to competitors. They are:

• Complex, involving major risks and resources
• Concerned with long-term success and response to external changes
• Made by the most senior leaders (e.g., board of directors)

Typical strategic decisions include entering new markets, mergers, diversification, investments in new technologies, and setting corporate mission and values.

Worked Example 1.1

A retail chain wants to become the national market leader within five years. What type of decision is this, and who would be responsible?

Answer:
This is a strategic decision. It would be made by the board of directors or chief executive, as it determines the long-term direction for the entire organisation.

Tactical Decisions

Tactical decisions are about how to achieve strategic aims. They are:

• Based on implementing part of the overall strategy
• Usually made by middle managers or heads of departments
• Often involve allocating budgets, selecting advertising channels, or changing workflows

Tactical planning translates the 'what' of strategy into the 'how' for key functions.

Worked Example 1.2

The marketing manager at the retailer in Example 1.1 decides to double the online advertising budget and partner with several influencers this year. What level of decision is this?

Answer:
This is a tactical decision. It is focused on medium-term actions within the marketing department to support the retailer's strategic aim to become the market leader.

How Strategic and Tactical Levels Interact

To succeed, strategies require coherent tactical plans. Each business function (e.g., marketing, operations, finance) develops tactical responses to align with the overall strategy.

Tactical planning typically involves:

• Setting departmental budgets and targets that support strategic goals
• Organising resources and staff assignments
• Coordinating actions across functions
• Monitoring progress via key performance indicators (KPIs)

If strategic direction changes, tactics must also be reviewed to remain aligned.

Key Term: tactical plan
A set of detailed medium-term measures adopted by departments to carry out elements of organisational strategy.

Operational Decisions (Contextual Overview)

Operational decisions are daily actions taken by front-line managers and staff. Their main focus is efficiency and accuracy in carrying out set processes. While not covered in this article in detail, operational excellence ensures tactical plans can be delivered.

Linking Levels: Example

A company’s strategy may be “to expand its presence in European markets over the next five years.”

• Tactical decisions: Opening two new stores per year in key EU countries, hiring regional marketing teams, adapting product ranges for local preferences.
• Operational decisions: Recruiting staff for new stores, scheduling deliveries, running staff training sessions.

Worked Example 1.3

A manufacturing firm's strategy is to improve environmental sustainability. What tactical actions might the operations manager propose?

Answer:
The operations manager could introduce energy-saving equipment, increase recycling efforts, and source sustainable materials—all medium-term changes supporting the strategic aim.

Characteristics of Strategic vs Tactical Decisions

Exam Warning

Be careful not to confuse the time horizon and scope of strategic and tactical decisions in exam scenarios. Always look at who makes the decision and its impact.

Revision Tip

Practice matching business actions to the correct decision level (strategic, tactical, operational). This will help you quickly answer scenario questions.

Summary

Strategic decisions provide overall direction, while tactical decisions make this direction achievable by translating vision into specific plans for departments and functions. Anthony’s hierarchy makes clear the relationship between decision levels, ensuring a logical flow from boardroom goals to practical actions.

Key Point Checklist

This article has covered the following key knowledge points:

• The definition and characteristics of strategic and tactical decisions in organisations
• Anthony's hierarchy as a framework for structuring decisions by level
• The role of senior and middle management in forming strategy and tactics
• How tactical planning supports and implements strategic objectives
• Examples linking strategic aims to tactical actions in business functions
• Differences between decision levels in terms of scope, time frame, and responsibility

Key Terms and Concepts

• strategy
• tactical decision
• Anthony's hierarchy
• tactical plan