Strategic decisions are usually taken by senior managers or directors and involve medium- to long-term plans for how the business might achieve its objectives. They often require considerable investment of resources (especially financial ones), so strategic decisions come with a degree of risk. Because of the risk involved, managers will try to gather as much data as possible on which to base their decisions, using techniques such as market analysis, investment appraisal and decision trees. It would be unlikely for Richard Branson, for example, to launch Virgin Galactic without first establishing a market willing to pay $200,000 for a flight into space. At this level, hunch decisions would be very unlikely. But given the amount of time and money spent conducting research, why do some strategic decisions still fail? This article explores ten possible reasons.
In 2007, after 2 years of market research, Tesco opened up in America with its new Fresh & Easy convenience stores. The venture has yet to show a profit. Much of the market research was conducted in the kitchens of US consumers, observing how they shopped and asking them about their shopping habits. Yet, as one analyst commented, if Tesco had gone into consumers’ garages rather than their kitchens, it might have realised that Americans stockpile special-offer meat in huge chest freezers. Furthermore, market research needed to be conducted in the specific locality of each Fresh & Easy store as tastes and habits vary so much between different US neighbourhoods.
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