Strategic Management and Corporate Governance

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1) What is a strategic decision and what are its 3 characteristics? I have to provide an example of such decision from the work place that supports my response.

Strategic decisions are focused on changes that will affect the long term future of the organization. These decisions are rooted in the organizations overall strategic management plan whereby managers have collected data, analyzed their current state against their competition, looked at their advantages or disadvantages, and then try to predict the best path forward. Ideally the path forward will lead to continued growth and success through gaining a competitive advantage; this is where strategic decisions are implemented in order to achieve the organizations stated goals (Wheelen & Hunger, 2010).

The three characteristics of strategic decision making are as follows; these decisions are rare, consequential, and they are directive in their intentions (Wheelen & Hunger, 2010). Strategic decisions are not typical, in fact, they are considered unusual, and therefore, there are little or no preexisting precedents to follow when implementing these tough decisions. In order to maximize the chance of success when implementing strategic decisions, organizations will have to commit a substantial amount of resources and gain overwhelming support and buy in from people throughout all levels of the organization to help support the new strategy. These decisions will be long lasting and will establish the groundwork and set precedents for the organizations future decisions and actions (Wheelen & Hunger, 2010).

An example of strategic decisions in the workplace can often be seen in the restaurant industry. Specifically, the owners of a family run Italian restaurant may decide they need to increase sales in the off peak hours to compete with the fast food restaurants in their same general area. To do this, the owner makes a strategic decision to drop pizza prices after 7PM until closing to attract more consumers. In addition, the owner makes a strategic decision to remain open 2 hours later from Thursday - Saturday nights. Finally, the owner makes a third strategic decision to begin offering delivery service for all of their food items for any order over $15.00 in an attempt to increase the amount of business the restaurant generates and give customers access to the menu and food without having to come in and eat at the business location.

So, in this example, the three major strategic decisions the owner is implementing are; lowering price points, extending operating hours on peak days, and implementing a delivery service in the local area. These strategic decisions will impact the future of the business in many ways as there will be significant and impactful changes to the business model moving forward. After a few months of operating under the new strategy, the owner will be able to determine if the strategy is paying off by calculating the overall sales and revenue being generated as compared to before the shift in strategy occurred (Wheelen & Hunger, 2010).

2) What are the responsibilities of the board of directors? Again I have to provide an example of a board of directors that did not meet its responsibilities.

The board of directors is the highest level of management authority in any publicly traded organization. This gives the board many important responsibilities. The primary responsibility of the board of directors is to ensure that their shareholders assets are protected and maintaining a decent return on their investments (Bixler, 2010).
In addition, some of the other key responsibilities of the board of directors would be; the selection of the company's Chief Executive Officer (CEO), and determining the CEO's pay and compensation rates. The board is responsible for establishing compensation and audit committees. The compensation committee is responsible for setting the executives base compensations, awards, stock options, bonus structures, and all other perks. The audit committee is responsible for independently and objectively auditing all the financial transactions and reports and ensure they are accurate and compliant will all applicable laws and regulations as is fair and reasonable (Bixler, 2010).

The board is also responsible for all stock related issues such as recommending stock splits and oversight of the share repurchase programs and other such issues. In addition, the board is in place to oversee all the primary activities of the company, evaluate the performance of the company and make recommendations where they deem it appropriate. Finally, the board will offer recommendations or discouragement on ...