Introduction To Strategic Management

Introduction to Strategic
Management and
Business Policy
Module 1 (A)
Source : 1. Strategic Management & Business Policy
by Azhar Kazmi
2. Strategic Management by Ireland , Hoskisson , Hitt
And
3. Crafting and Executing Strategy by Thompson Jr , Strickland ,
Gamble and Arun Jain
Genesis of Strategic Management
and Business Policy
Business Policy can be traced to 1911 when Harvard
Business School introduced an Integrated Course in
management aimed at the creation of General
management capability based on case studies used
since 1908 .
In 1969 , the American Assembly of Collegiate
Schools of made the course of business policy a
mandatory requirement for recognition .
PREPARED BY DR.PG.K.MURTHY ,
DEAN(DOCTORAL STUDIES)
FACULTY OF MANAGEMENT , PARUL
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Historical Perspective of Evolution of SM and BP
Hofer and others viewed the evolution of BP in terms
of four paradigm shifts :
1. First phase Ad hoc Policy Making in mid1930s.
2. Second Phase - Planned policy formulation in the
1930s and 1940s .
3. Third Phase Concept of Strategy Paradigm in
1960s evolved .
4. Fourth Phase Strategic Management intersection
of inquiry a) strtategic processes of business firms and
responsibilities of general management .
PREPARED BY DR.PG.K.MURTHY , DEAN(DOCTORAL STUDIES)

FACULTY OF MANAGEMENT , PARUL UNIVERSITY 3
Elements based on DC
Hambrick and J W Fredrickson
Strategic choices are five related elements of
strategy that managers make :
1. Arenas : Comprise of the products , services,
distribution channels , geographic markets and
technology .
2. Vehicles : How will get there ? Acquisitions ,
alliances or internal development .
3. Differentiators : Features and attributes of
firms products or services .
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Elements based on DC
Hambrick and J W Fredrickson
4. Staging : What will be our speed and sequence
of moves? Timing and pace of moves .
5. Economic Logic : How will we obtain our
returns ?Every firm has to earn a profit over and
above its cost of capita. Explaining how profit
is created is economic logic .
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Business Policy
As per Christensen and Others , Business
Policy is the study of the function and
responsibilities of senior management , the
crucial problems that affect success in the
total enterprise and the decisions
determine the direction of the organization
and shape its future .
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Aspects of Business Policy
1.Functions and Responsibilities of Senior
Management .
2 Determines future course of action by the
organization .
3. Involves choice of purpose and defines what
needs to be done .
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How do we define Strategic
Management?
According to Peter Drucker

Strategic Management is not a box of
tricks or a bundle of techniques . It is
analytical thinking and commitment of
resources to action
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How do we define Strategic
Management?
According to Lawrence R Jaunch and
William F Glueck
Strategic Management is a stream of
decisions and actions which leads to the
development of an effective strategy of
strategies to help achieve corporate
objectives . The strategic management
process is the way in which strategists
determine objectives and make strategic
decisions FACULTY OF MANAGEMENT , PARUL
UNIVERSITY 9
According Thompson and
Strickland
The tasks of crafting ,
implementing and executing
company strategies are the heart
and soul of managing a business
enterprise
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As per Ireland , Hoskisson , Hitt
A strategy is an integrated and coordinated set
of commitments and actions designed to exploit
core competencies and gain a competitive
advantage .
A firm has a competitive advantage when it
implements a strategy competitors are unable to
duplicate or find too costly to try to imitate .
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According Thompson and Strickland
In crafting a strategy , management is
saying , in effect , Among all the paths and
actions we could have chosen , we have
decided to move in this direction , focus on
these markets and customer needs ,
compete in this fashion , allocate our
resources and energies in these ways . And
rely on these particular approaches to doing
business . PREPARED BY DR.PG.K.MURTHY ,
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How Stakeholders relationship could
be source of competitive advantage ?
Stakeholders are the individuals and groups who can
affect the vision and mission of the firm are affected
by the strategic outcomes achieved , and have
enforceable claims on a firms performance . Claims
on a firms performance are enforced through the a
stakeholders ability to withhold participation
essential to the organisations survival ,
competitiveness , and profitability .
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Representation Hambrick and
Fredrickson Model of SM
Internal and External
Strategic Analysis
Strategy Arenas Vehicles Implementation Levers

Vision and Mission Goals and Objectives Diffferentiators Staging and Strategic Leadership
Economic Logic
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SM in Indian Scenario
A. Pre-
Pre-liberaliation Stage (till 1990s) : SM on
Government Fringes .
Subsuming enterprise objectives into the national
planning framework .
Capabilities in generating and grabbing
opportunities .
High diversification , non-
non-competitive scales and
weak technology capabilities .
Secretive and one man sratategic management
process .
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B. The decade of the 1990s : Transitional euphoria
and reality check :
Carried Operation delinked strategy mindset to the
early 1990s .
Foreign complex governed strategy in order groups
in the early 1990s .
Strategy of focus through rationalisation and
operations improvement by majority of companies in
the late 1990s .
Experimentation with international consulting firms in
strategic management process .
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C. Post-
Post-Liberalization Stage : Issues and Agenda in
2000--2010 .
2000
Acquire a global maverick mindset and activly shed
pre--liberalization thinking .
pre
Synergize entrepreneurial flair with professional skills
in strategic management .
Complete portfolio rationalization , but also expand
boundaries through internationalization and entry into
emerging sectors .
.
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C. Post-
Post-Liberalization Stage : Issues and Agenda in
2000--2010 .
2000
Mobilize increased resources and ensure adequate
growth through existing businesses .
De--Merge businesses as independent companies for
De
focus and improved market capitalization .
Actively promote development of technology
capabilities .
Decentralize organisations and develop institutional
control mechanisms .
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Concept of Strategy
A strategy could be :
a plan or course of action or set of decision rules
making a pattern or creating a common thread .
the pattern or common thread related to the
organizations activities which are derived from the
policies , objectives and goals .
Related to pursuing those activities which move an
organization from its current position to a desired
future state
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Concept of Strategy
A strategy could be :
Concerned with the resources necessary for implementing
a plan or following a course of action .
Connected to the strategic positioning of a firm , making
trade offs between its different activities and creating a fit
among these activities : and
the planned or actual coordination of the firms major
goals and actions , in time and space that continually co-
co-
align the firm with its environment .
In simple terms strategy is the means to achieve objectives
. PREPARED BY DR.PG.K.MURTHY ,
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Different Levels of Strategy
Corporate Office
SBU SBU B
A SBU C
Information
Finance Marketing Operations HRM
or MIS
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Issues in Strategic Decision Making
1. Criteria for Decision Making
2. Rationality in Decision Making
3. Creativity in Decision making .
4. Variability in Decision Making
5. Person related factors in Decision Making .
6. Individual versus Group Decision Making
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Schools of Thought on Strategy Formation
A. The Prescriptive Schools :
1. Design school where strategy formation is a
process of conception .
2. Planning school where strategy formation is an
analytical process .
3. Positioning school where strategy formation is an
analytical process .
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B. The Descriptive Schools :
4. Entrepreneurial school where strategy formation is
a visionary process
5. Cognitive school where the strategy formation is a
mental process .
6. Learning school where the strategy formation is an
emergent process .
7. Power school where the strategy formation is a
negotiation process .
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B. The Descriptive Schools :
8. Cultural school where the strategy formation is a
collective process .
9. Environmental process where the strategy
formation is a reactive process .
C. The Integrative Schools:
10 . Configuration school where the strategy
formation is a process of transformation .
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Introduction To Strategic Management

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Introduction to Strategic

PREPARED BY DR.PG.K.MURTHY , DEAN(DOCTORAL STUDIES)

According to Peter Drucker

Strategy Arenas Vehicles Implementation Levers

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