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Levels of management decision

Decision making represents a process of choosing the best alternative from among many possible options available to the manager of a business unit. A manager at any given moment of making a decision concerning the business would first of all assess all the different alternative decisions which the business can take. Each of these alternative decisions will be looked at in terms of their advantages and disadvantages which are known to the managers of the business. From this evaluation, a final decision may be arrived at. Weighing the merits and demerits of each choice or option helps the managers of the company to make the best decisions.

Managers are required to make decisions at all level as part of their duties in the company. These decisions are often organizational in nature. At the various levels of management, the decision would reflect the general direction of the company. Long-term decisions which affect the firm as a whole would usually be taken by the highest levels of management. Those decisions affecting the daily operations are left for bottom level management. However, in a properly functioning firm, all decisions are expected to relate (directly or indirectly), to the wider management functions, involving: planning, organizing, leading, staffing and controlling.

Board or Owner’s Level Management Decision
Management activities are carried out in line with the firm’s grand mission (the reason why it is created as a business) This mission is formulated by the board or the owner of the company. From this mission, a mission statement is written for both those who work within the company and its external audiences. It may take several years before a company succeeds in its mission. From this mission statement, the company derives its vision. The vision describes an ideal state which the firm seeks to make happen in reality.  For example, a catering business could make becoming the first choice catering service for wedding occasions its vision. Apart from defining a mission and vision, a firm’s board or owners are also responsible for stating the firm’s core value. The company’s core value are those standards on which the business will never compromise. 

Top Management Level Decisions
Translating the company’s vision and mission into real achievements over time is a decision taken at top management level. Top management makes strategic or long term plan which must guide the decisions that will help the company accomplish its mission and realize its vision. Decisions taken at top management level regarding the firm’s strategy will affect every aspect of the firm’s operation. Top management level decision considers what the firm intends to achieve in between 1-5 years. It is therefore top management’s decision to choose the firm’s grand strategy for bringing the firm’s vision into reality. Often, these decisions involve planning. Top management also have power to interfere, terminate, or completely revise the decisions of middle level management.

Middle Management Decision
The overall direction which the company must take is dependent of the decision of middle level management. This is because middle level management must choose the smaller often short term objectives which when put together will result in achieving the strategic goal set by top management. Middle level management therefore formulates tactical or short term plans; which are more detailed than the grand strategic plan decided by top management.  Unlike strategic plans or visions of the firm, which touches on every aspect of the firm; tactical plans affect only a department or a section of the business such as production, purchasing or distribution. At this level, objective could mean some kind of measurable improvement in efficiency or quality. Middle level plans are often made for a year or less, (a quarter, a month etc). Middle level managers also monitor operational managers and other managers at similar level. 

Operational Level Management Decisions
Operational level may also be referred to as first-line management; operational management is directly responsible for workers. They make daily, weekly or monthly decision in the firm’s operation with the sole aim of achieving aims proposed by middle management level. As noted earlier decision at this level is largely departmental or sectional (inventory, scheduling or budgeting) in its scope.

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