What is a Strategic Decision?

What is a Strategic Decision?

Oxford Dictionaries says “strategic” is something related to identification of long-term or overall aims and interests and the means of achieving them. Strategy then – and all the “strategic decisions” that are part of it – are clearly the responsible of management. So how does a small business know what is strategic and what is tactical (short-term, often temporary)?

The definitions give us some hints:

• Strategic decisions assume there is a direction or future state of your business you are trying to achieve. Decisions get weighed against these aspirations. For instance, you may be trying to create an uncontested market space (see “sweet spot” diagram below and Blue Ocean strategy). You may be seeking to bundle products or services together – or split them up – to better meet the needs of a particular market. You may want to enter an entirely new line of business because demand seems to be growing more quickly for those products or services than for your current suite of offerings. Environmental considerations are likely to be part of all of these decisions.
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Ten Tips for SMEs Managing Business Transformation

Any time we are contemplating making significant changes to our business — especially trying something new — there is risk. This is certainly true if you are considering changes intended to make your business more environmentally and financially sustainable. Ironic but true: even if you are trying to make your business more sustainable, there’s still risk. Here are 10 ways to either reduce risk or increase rewards as you navigate the gap between your business today and your business tomorrow.

1. It’s all about value — as your customers define it. Make sure any changes you make deliver more value not less to your customers. This may seem obvious but it is easy to make changes that make our lives easier or keep our costs down but are meaningless or even irritating to our customers. Get around to the other side of the table so you can see the proposed change from your customer’s perspective. What does it mean to them? And don’t confuse value and cost. Not long ago, I saw a report that purported to summarize the value of a project to the client. However, the summary was just the costs that the company had incurred in executing the project. Nowhere was there an assessment of the value of the project from the client’s perspective — for instance, new information or potential business that the client might hope to gain from the project. In this case, the client assessed the value far lower than the costs that had been incurred, and the likelihood of repeat business is extremely low.
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Can an SME’s Supply Chain be the Source of Ideas for Business Sustainability?

A supply chain (or value chain) is actually a network of individuals, organizations, resources, actions and technologies involved in the creation of a product – from materials and components, supplies and services to manufacturing processes through to packaging and delivery of your product to the end user.

In trying to find ways to be environmentally and financially sustainable, many small businesses focus on environmental aspects of what goes on within their own operation. That’s great and it’s understandable because we tend to focus on what we can most easily control. However, the environmental profile of any product is determined by everyone that has influence over even a part of it, and by everything that goes into it. For instance, are there any ingredients in your product that could cause health concerns if burned or spilled? How much of your product is made from easily renewable materials? Do any of the components off-gas? How much energy does it take to produce the raw materials? Or to manufacture any parts you don’t make yourself? Is your packaging recyclable or biodegradable? Can your products be re-used or re-conditioned/upgraded?
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Life Cycle Assessment: What’s Involved? Can Small Business ‘Cut to the Chase?’

These days, more and more organizations are considering “life cycle assessment” (LCAS) to evaluate purchasing and use of various products and services. The LCA technique assesses environmental impacts associated with all stages of a product’s life – from raw material extraction and processing to manufacturing and blending, packaging, distribution, installation, use, and disposal or recycling. In this sense, a life cycle assessment parallels the product’s complete supply chain. If you want to bring a product to market, distribute someone else’s product, or incorporate components into a new or existing product, you will likely need to be able to address LCA considerations.  For instance, more and more these days, your customers may be incorporating LCA considerations into RFPs or tenders. Are you ready to respond?

Life Cycle Assessment typically uses a recognized global methodology that is transparent, holistic and balanced. (See: ISO 14040: Environmental Management – Life Cycle Assessment – Principles and Framework, Second Edition, 2006 as well as Requirements and Guidelines, First Edition, International Organization for Standardization, 2006).

LCAs involve:

  • Determining the goal and scope of the LCA
  • Conducting an inventory of all energy/material inputs and environmental releases (for instance, think about possible off-gassing from office furniture).
  • Assessment of the potential impacts associated with all inputs and releases

All of this information is used to provide an interpretation of the results to help customers make informed decisions based on sound technical analysis.

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