Evolution of strategic management and business policy

The genesis of strategic management and business policy Evolution based on management practices Historical perspective Pointers to the future

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Business policy defined

Business policy, as defined by Christensen and others, is "the study of the function and responsibilities of senior management, the crucial problems that affect success in the total enterprise, and the decisions that determine the direction of the organisation and shape its future. The problems of policy in business, like those of policy in public affairs, have to do with the choice of purposes, the moulding of organisational identity and character, the continuous definition of what needs to be done, and the mobilisation of resources for the attainment of goals in the face of competition or adverse circumstance.
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Policy
A policy is a broad guideline for decision making that links the formulation of a strategy with its implementation. Companies use policies to make sure that employees throughout the firm make decisions and take actions that support the corporations mission, objectives, and strategies
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Policies
1. Policies include guidelines, rules, and
procedures established to support efforts to achieve stated objectives. 2. Policies are most often stated in terms of management, marketing, finance/accounting, production/operations, research and development, and computer information systems activities. Examples: smoking policy, recruitment policy

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How does Strategy fit in?

Strategy is the process by which individuals and organisations make choices about scarce resources so as to satisfy wants over time in an environment of uncertainty. They are aided in this process by market and non-market forces.

The concept of strategy

A strategy could be:

plan or course of action or a set of decision rules making a pattern or creating a common thread; the pattern or common thread related to the organisation's activities which are derived from the policies, objectives and goals; related to pursuing those activities which move an organisation from its current position to a desired future state;
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Contd.
concerned with the resources necessary for implementing a plan or following a course of action; and connected to the strategic positioning of a firm, making trade-offs between its different activities, and creating a fit among these activities. the planned or actual coordination of the firm's major goals and actions, in time and space that continuously co-align the firm with its environment.
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Strategic Management Defined

Strategic management is the process by which managers set an organizations (or several organizations) long-term course, develop plans in the light of internal and external circumstances, and undertake

appropriate action to reach those goals.

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Strategic management defined

Strategic management is defined as
the dynamic process of formulation, implementation, evaluation and control of strategies to realise the organizations strategic intent.

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P K Agarwal

Planning & Strategic Management.

"[Strategic management] is a means of understanding the strategic position of the organisation: formulating courses of action,

evaluating
strategy

them
can be

and
put

choosing
into

between
and

them; as well as planning how the choice of effect

managing

the

resultant

changes."

Johnson and Scholes (1994)

Planning and Strategic Management.

Planning is a sequence of analytical and evaluative procedures to formulate an intended strategy and the means of implementing it.
(Johnson and Scholes, 1999)

is Planning unconcerned with emergent strategy?

Basic Concepts of Strategic Management

1. Basic financial planning: initiate some planning when they requested to set up their budgets; considers activities for one year. 2. Forecast-based planning: consider projects for more than a year. The time horizon is usually 3-5 years. 3. Externally-oriented planning: conduct strategic planning by top management and they leave implementation to low level. 4. Strategic management: planning by forming a team from all levels in the company.
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Strategic decision-making
Objectives to be achieved are determined; Alternative ways of achieving the objectives are identified; Each alternative is evaluated in terms of its objective-achieving ability; and The best alternative is chosen.

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Issues in strategic decision-making

Criteria for decision-making Rationality in decision-making Creativity in decision-making Variability in decision-making Person-related factors in decisionmaking Individual versus group decisionmaking.
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Not Always a Formal Process

Where is the organization now? (not where

do we hope it is)
If no changes are made, where will the

organization be in 1,2,5 or 10 years?

What specific actions should management

undertake?
What are the risks and payoffs?
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4 Phases of Strategic Management

Firms evolve through the following

phases of strategic management. 1. Basic financial planning 2. Forecast-based planning 3. Externally-oriented planning 4. Strategic management
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Four phases in strategic management

Establishment
of

strategic intent

Formulation of strategies

Implementation
of

Strategic evaluation

strategies

Strategic control

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Strategic Management
Environmental Scanning

Evaluation & Control

Mission

Strategy Formulation

Vision
Strategy
Implementation Disciplined, iterative process of driving towards vision, by finding or making and maintaining a defensible space or trajectory in a given business environment.

Comprehensive model of strategic management

Strategic Intent Vision Mission Business definition Business model Objectives

Strategy Formulation
Environmental Appraisal Organisational Appraisal

Strategy Implementation
Project Procedural Resource allocation Structural Behavioural Functional & Operational

Strategic Evaluation

SWOT Analysis Corporate-level Strategies Business-level Strategies Strategic analysis and choice Strategic plan

Strategic control

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Levels at which strategy operates

LEVELS OF MANAGEMENT

LEVELS OF STRATEGY
Corporate Office

CORPORATE

CORPORATE LEVEL

SBU

SBU A

SBU B

SBU C

BUSINESS-LEVEL

FUNCTIONAL Finance
Marketing Operations HRM Information

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Strategic Intent
Vision Mission
Business definition

Business model Objectives

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Strategy Formulation
Environmental Appraisal Appraisal SWOT Analysis Corporate-level Strategies Business-level Strategies Strategic analysis and choice Strategic plan
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Organisational

Strategy Implementation
Project Procedural Resource allocation Structural

Behavioural
Functional & Operational
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Strategic Evaluation

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Functional Strategy
Technological leadership Technological followership

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