Strategic and Functional Objectives (AQA A Level Business): Revision Note

Strategic and functional decision making

• Strategic decisions are long-term, high-level choices that set the overall direction of an entire business

  • They are made by senior management (e.g. the board of directors or CEO

  • Their timescale is typically 3–5 years or more

  • They focus on the whole organisation and its position in the market

• Functional decisions are day-to-day or medium-term choices within a single department or function, such as marketing, production or HR

  • They are made by middle managers or department heads

  • Their timescale is typically months, up to about a year.

  • They focus on one area of the business, and support corporate and functional strategy

Examples of strategic and functional decisions

Internal influences on functional objectives and decisions

• A range of factors affect the ability of business functions to set objectives and make decisions that drive the whole business forward

1. Corporate objectives and strategy

• Each business function must shape its plans to help the business hit its corporate objectives

2. Organisational structure

• How departments are arranged and report up the hierarchy affects who makes decisions and how quickly they can act

3. Available resources

• Budgets, staff numbers, equipment and technology set the limits of what each function can do

4. Company culture and leadership style

• The firm’s shared values, such as its approach to innovation or risk-aversion and managers’ attitudes determine whether functions push boundaries or play it safe

  • For example, at a design agency with a creative risk culture, the marketing team may experiment with bold promotional campaigns, while a cautious insurance company may be more likely to stick to tried-and-tested advertising approaches

5. Staff skills and expertise

• The training, experience and motivation of employees in each functional area shape which projects are realistic

6. Internal processes and data

• Business procedures and measures of performance guide functional decisions

  • For example, a retailer’s weekly sales data might reveal an under-performing product line, prompting the buying team to renegotiate prices or order volumes with suppliers

External influences on functional objectives and decisions

• Additionally, a range of factors outside of the business's control can affect the functional objectives set and decisions made

Examples of external influences on functional objectives and decisions