Tactical and Strategic Decisions free essay sample

Acceptance of a strategic investment will involve a significant change in the company’s expected profits and in the risks to which these profits will be subject. These changes are likely to lead stockholders and creditors to revise their evaluation of the company. If a private corporation undertook the development of a supersonic commercial transport (costing over $20 billion), this would be a strategic decision. If the company failed in its attempt to develop the commercial plane, the very existence of the company would be jeopardized. Frequently, strategic decisions are based on intuition rather than on detailed quantitative analysis. The investment strategy of a firm is a statement of the formal criteria it applies in searching for and evaluating investment opportunities. Strategic planning guides the search for projects by identifying promising product lines or geographic areas in which to search for good investment projects. One firm may seek opportunities for rapid growth in emerging high-technology businesses; another may seek opportunities to become the low-cost producer of commodities with well-established technologies and no unusual market problems; a third firm may look for opportunities to exploit its special knowledge of a particular family of chemicals. We will write a custom essay sample on Tactical and Strategic Decisions or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page A strategy should reflect both the special skill and abilities of the firm (its comparative advantage) and the opportunities that are available as a result of dynamic changes in the world economy. Strategic planning leads to a choice of the â€Å"forest†Ã¢â‚¬â€tactical analysis studies— and makes a choice between individual â€Å"trees. † The two activities should complement and reinforce each other. Project analysis may provide a feedback loop to verify the accuracy of the strategic plan. If there are good opportunities where the strategic plan says they should be found, and few promising opportunities in lines of business that the strategy identifies as unattractive, confidence in the strategic plan increases. Alternatively, if attractive projects are not found where the plan had expected them, or if desirable projects appear in lines of business that the strategic plan had identified as unattractive, a reassessment of both the project studies and the strategic plan may be in order. Reference link: http://classof1. com/homework-help/finance-homework-help