As a manager, decision-making is a critical aspect of your role. Making the right decisions can be the difference between success and failure. However, to make informed decisions, you need access to relevant information. Thus, a functional classification of information based on the types of decisions can be useful.
Operational, tactical, and strategic are the three types of information that managers require. Let’s take a closer look at each of these.
1. Operational Information
Operational information is the information that relates to the day-to-day operations of the organisation. It is useful in exercising control over the operations that are repetitive in nature. Since such activities are controlled at lower levels of management, operational information is needed by the lower management.
Operational information mainly relates to current and historical performance, and is based primarily on internal sources of data. It is easily measurable by specific standards and has a short-term horizon. The following are some examples of operational information:
- Cash position on a day-to-day basis
- Daily and weekly sales information
- Production output and quality data
- Inventory levels
- Customer service metrics
2. Tactical Information
Tactical information helps middle-level managers in allocating resources and establishing controls to implement the top-level plans of the organisation. It focuses on short-term trends and may be partly current and partly historical. It may come from internal as well as external sources.
Some examples of tactical information are:
- Alternative sources of funds and their uses in the short run
- Opportunities for deployment of surplus funds in short-term securities
- Competitive intelligence
- Industry trends and forecasts
- Market research data
3. Strategic Information
Strategic information is needed for making choices among the business options. It helps in identifying and evaluating these options so that a manager makes informed choices that are different from the competitors and the limitations of what the rivals are doing or planning to do. Such choices are made by leaders only.
Strategic information is predictive in nature, relies heavily on external sources of data, has a long-term perspective, and is mostly in summary form. It may sometimes include ‘what if’ scenarios. However, the strategic information is not only external information.
For long, it was believed that strategic information are basically information regarding the external environment. However, it is now well recognized that the internal factors are equally responsible for success or failures of strategies and thus, internal information is also required for strategic decision making.
Some examples of strategic information are:
- Long-term needs of funds for ongoing and future projects
- Analysis of industry and market trends
- Evaluation of strengths and weaknesses of the organization
- Assessment of opportunities and threats in the external environment
- Identification of new business areas and product lines
Types of Information Required at Different Levels of Managerial Hierarchy
Each type of information has its role to play in managerial effectiveness. Each type of information is needed with varying degrees by the managers at all levels. Thus, a part of operational information may be used even by the chief executive officer of a company. The difference lies in the proportion of each type of information in the total information needs of managers at different levels of managerial hierarchy.
|Levels of Management||Operational Information||Tactical Information||Strategic Information|
|Lower Management||Required||May be required||Not required|
|Middle Management||Required||Required||May be required|
|Top Management||May be required||Required||Required|
In conclusion, understanding the types of information required at different levels of managerial hierarchy is critical to effective decision-making.