This document discusses the concepts of business policy and strategy. It defines business policy as the set of rules that guide an organization's decisions and actions. Strategy is defined as management's plan to achieve organizational goals consistent with its mission. The document traces the evolution of strategic management from its origins in military science. It describes strategic management as an integrated process that considers both external environmental factors and long-term competitiveness and sustainability.

1. CHARTER 1
EVOLUTION OF BUSINESS POLICY AND STRATEGY

2. Background
 For any organization to operate and effectively focus its
efforts on certain tasks and avoid going astray or deviate
away from targets, a sense or direction needs to be set
and some sort of rules or guidelines have to established
and observed.
 More often, these rules are guides are in the minds of
founders, leaders and managers though some are put in
writing.
 The set of rules that guides the decisions and action of
the members of the organization is generally called
business policies. These policies may be informal or in
writing coming in the form of operational manual,
personnel handbook, and memoranda composed or issued
from time to time and as the need arises.

3. CONCEPT OF BUSINESS POLICY
 The basic theory of the term management which
evolves around the idea of planning, organizing,
staffing, coordinating, controlling and evaluating
holds true.
 Within the context of a plan or the process of
planning are a variety of plans taking the form of
budget, policy, strategy, rules, guides,
procedures, etc.

4.  BUSINESS POLICY - Generally refers to set of rules the guides the
conduct of the business in pursuit of profit and other objectives of
the business organization.
 These policies are developed in coherence with duties and
responsibility of various functional units. (e.g. human resource,
sale/marketing, production, and the like).
 Business policy is also looked upon as general management
orientation traditionally viewed as largely inward – looking as well
as more biased with guiding how personnel in the organization would
act or what or follow for as long as one is a part or employee of the
organization.

5. CONCEPT OF STRATEGY
Wright, Kroll and Parnell (1996)
defined strategy as essentially
referring to top management’s
plan to attain the outcomes
consistent with the organization’s
mission and goals.

6. STRATEGY IN THREE VANTAGE POINTS
A. Strategy formulation or developing the
strategy.
B. Strategy implementation ( putting the
strategy into action)
C. Strategic control ( modifying either the
strategy or its implementation to ensure
that the desired outcomes are attained)

7.  These same authors categorized strategy into
either intended or realized strategy. Intended
strategy refers to the original strategy that
management plans and intends to implement,
whereas realized strategy refers to the actual and
eventual strategy that management actually
implements. Realized strategy often differs from
the intended strategy because unforeseen
environmental or organizational events occur that
necessities modification in the intended strategy.

8. Thompson and Strickland (1999)
Characterized strategy at the
operational level referring to it as
a set of competitive moves and
business approaches that
management is employing to run
the company.

9. Strategy is management’s is “ game
Plan”
A.Attract and please the
customers
B.Stake out a market positions
C.Conduct operations
D.Compete seccessfully

10. CHARACTERISTICS OF STRATEGY
1. Strategy is traditionally meant to be a grand plan made
in the light of what it was believed an adversary might
or might not do.
2. Strategy derives its relevance given from the existence
completion in business.
3. It is done on the presumption of the existence of a
negative scenario.
4. It also connotes general program of action and
deployment of emphasis and resources attain
comprehensive objectives.

11. 5. A process of deciding on objectives of the organization, on
changes in these objectives, on the resources used to attain
these objectives use and disposition of these resources.
6. It involves of the basic long term goals and objectives of
an enterprise, and adoption of courses of action and
allocation of resources necessary to carry out those goals.
7. A decision about how to use available resources to secure
a major objective in the face of obstruction
8. Unlike policy, strategy implies actions and guides decision
– making, spelling out directions to be taken.
9. Strategy may, in some extreme or necessary cases, exits
without a policy.

12. STRATEGY vs. POLICY
 In the course of running the business in a
real setting, business policies and
strategies often collide thereby inviting
dilemma and creating confusion. When
conflict exists between or amongst policies
and strategies, organizational problems or
dilemmas begin.

13. The following are situation where the strategy and policy
oftentimes come in collision course making it difficult to
operationalize a strategy within the bonds of standing policy.
 Business policies exist amidst absence of business strategy
and strategies may exist without establishment business
policies.
 Business policies are generally directional in nature and
strategy is more operational in context.
 Business policies are often formal or written and strategies
may be informal and not necessarily written and often
confidential.

14. ORIGIN and NATURE OF STRATEGY
 The historical development of the concept of
strategic management was elaborated by Jeffrey
Bracker of Georgia state University who cited the
term of strategy was mention in the Old
Testament and largely treated as semantic issue.
Bracker cited the numerous authors have focused
their attention o the concept of strategy but have
failed to comprehensively investigate the
historical evolution.

15. Bracker cited
 Strategy originated from the Greek word
“stratego” referring to a “general” which in
turn traces its roots from the words “army”
and “lead”. As it is, the term strategy has its
roots and gained its popularity in the field of
military science. The word stratego means
“to plan the destruction of one’s enemies
through effective use of resources”.

16. EVOLUTION OF STRATEGIC MANAGEMENT
 The concept of strategy as related to business become
greater after World War II, as business moved from
relatively stable environment into more rapidly changing
and competitive environment.
 The changes in context of strategy was attributed to two
significant factors.
 The mark acceleration of the rate of change within the
firms
 The accelerated application of science and technology
to the process of management.

17.  It was reported that the first modern writers to relate
the concept of strategy to the business were Von
Neuman and Morgenstern (1947) with their theory of
games.
 By historical account of some authors in management
science. Strategic management is essentially
perceived as business policy going out of the shell
realizing that operationalization of business
organizational is not only a concern of how the
organizational should operate, and hence the need of
internal policies , but also how the business
organization itself should conduct its business in light
of prevailing external and environmental realities.

18.  In recent years, and given the above
premise, business policy has
metamorphosed from being inward-looking
into outward – looking evolving into what is
now known as strategic management. As a
tool for managing the business
organizations, business policy has expanded
its role to include external factors as
influencing factors in developing business
policies eventually transforming into
strategic management.

19. THE NATURE OF STRATEGIC
MANAGEMENT
 More importantly, integrating the concept of strategy
into the mainstream of the management system is
what matters most in terms of giving direction that
promises delivering profit expectations.
 Much more than simply applying planning principles.
Strategic management takes into consideration
various external as well as competitiveness and
sustainability over the long term period in industry or
sector it belongs.

20. Nature of strategic management
 Stahl and Grigsby (1992) defined strategic management as referring to
the entire process of strategic decision – making that relates to its
environment, guides internal activities, and determines the long-term
performance of the organization.
 Wheelen and Hunger (2004) described the strategic management as a
set of managerial decisions and actions that determine the long-run
performance of a corporation. It includes environmental scanning (both
external and internal), strategy formulation ( strategic and long run
planning) strategy implementation , evaluation and control.
 Williamson, Jenkins, et al. (2004) as a framework that evolves around
the idea of shaping and destiny of an organization.

21. It is about:
 Putting an organization into a competitive
position.
 Sustaining and improving that position by
developing an acquisition of appropriate
resources and by monitoring and responding to
environmental changes
 Monitoring and responding to the demands of key
stakeholders.

22. Organizational strategies must be able
to answer the ff. questions
Where is the organization going?
What options are open to the
organization?
What is the best way forward for the
organization?
How can this be done?

23.  Wright, Kroll and Parnell ( 1996) strategic
management in a broader term that
encompasses managing not only the stages
or vantage points they have identified but
also the earlier stages determining the
mission and goals of an organization within
the context of external and internal
environment.

24.  Wright, Koll and Parnell emphasized the strategic
management is a continuous process. Indeed it is
considered a continuous and dynamic process in
the sense that being externally –oriented and
driven by macro and micro environmental
conditions, managers have to be always conscious
that business being an ongoing wealth creation
endeavor, appropriate efforts have to be made to
ensure profitable operations and survive in times
of trouble.

25. Strategic Management involves a series of steps
which top management should accomplish the
following task:
A. Analyze the opportunities and threats or constraints that exits in the
external environment.
B. Analyze the organization’s strengths and weaknesses in its internal
environment
C. Establish the organization’s mission and develop goals;
D. Formulate strategies(at the corporation level, business unit level, and
functional level) that will match the organization's strengths and
weaknesses with the environment’s opportunities and threats;
E. Implement the strategies
F. Engage in strategic control activities to ensure that the organization’s goals
are attained.

26.  Wright, Kroll and Parnell emphasized that
strategic management is a continuous process.
Indeed it is considered a continuous and dynamic
process in the sense that being externally-
oriented and driven by macro and micro
environmental conditions, managers have to be
always conscious that business being an ongoing
wealth creation endeavor, appropriate efforts
have to be made to ensure profitable operations
and survive in times of trouble.

27. BENEFITS OF STRATEGIC MANAGEMENT
 There no doubt that substantial benefits can be
expected from the practice of strategic
management. As it promises and articulates a
series of activities or tasks meant to ensure
achievement or desired outcomes both on the
producers and consumers’ side, embracing the
ideals of strategic management and doing it well
does not only stand to benefits business owners
but the industry and the society.

28. The three most highly rated benefits of
strategic management:
 Clearer sense of strategic vision for the
firm
 Shaper focus on what is strategically
important
 Improved understanding of a rapidly
changing environment

29. STRATEGIC TYPES
Is the category of firms based on
common strategic orientation and
combination of structure, culture, and
process consistent with strategy.

30. General Strategic Orientation into four
types as follows:
Defenders
Prospectors
Analyzers
Reactors

31. DEFENDERS
This type includes companies with a
limited product line that focus on
improving the efficiency of their
existing operations. This cost
orientation makes them unlikely to
innovate in a new area.

32. PROSPECTORS
This type of companies includes firms
with fairly broad product lines that
focus on product innovation and
market opportunities. The sales
orientation makes them somewhat
inefficient. They tend to emphasize
creativity over efficiency.

33. ANALYZERS
This types includes business
organizations that operate in at least
two different product-market areas,
one stable and one variable. In the
stable areas, efficiency is emphasized.
In the variable areas innovation is
emphasized.

34. REACTORS
This type includes companies that lack
a consistent strategy-structure-culture
relationship. Their (often ineffective)
responses to environmental pressures
tend to be piecemeal strategic
changes.

35. STRATEGIC vs. TACTICS
 STRATEGY – as common terminologies often
mentioned in the world of strategic management
 TACTICS – its role in concretizing the intents and
purposes of business policy and strategic
management is equally important. Tactics are
more operational and done in context with or as
support activity or operation to achieve a
strategy.

36. Strategy and tactics are differentiated
in many ways as follows:
 As to level of conduct, strategy is developed at the
highest levels of management whereas tactics are
employed at related to lower levels of management.
 As to regularity, formulation of strategy is both continuous
and irregular whereas tactics are determined on a
periodic cycle with fixed time schedule( e.g. budget)
 As to subjective values, strategic decision- making is more
heavily weighed with subjective values of managers than
is tactical decision-making

37. Strategic vs. tactics ( Cont’s)
 As to range of alternative, the total possible range of
alternatives form which management must choose is far
greater in strategic than in tactical decision-making.
 As to uncertainty, uncertainty is usually much greater in both
the formulation and implementation of strategy than in
deciding upon and knowing the results of tactical decisions.
 In terms of nature of problems, strategic problems are
generally unstructured and tent to be one of a kind. Tactical
problems are more structured and often repetitive in nature.

38. Strategic vs. tactics ( Cont.'s )
 As to information needs, formulating strategy requires large
amount of information. Tactical information needs a contrast
rely more heavily on internally generated data ( e.g. Accounting
system,)
 In terms of horizon, strategies are intended to, and do last for
long periods of time whereas tactics cover a short duration and
are more uniform for all parts of operating program( e.g. annual
budget).
 By reference is primal in the sense that it is the source of origin
for development of tactics. Tactics are formulated within and in
pursuit of strategies.

39. Strategic vs. tactics ( Cont.'s )
 As to details, strategies are usually broad and may have
fewer details than tactics.
 In terms of the type of personnel involved, strategies are
for the most part formulated by top management, and the
staff, fewer in he number as contrasted with the
formulation of the tactics where large number of
managers and employees usually participate in process.
 As to ease of evaluation, it is usually considerably easier
to measure the effectiveness and efficiency of tactics
than strategies.

40. Strategic vs. tactics ( Cont.'s )
 From the contest point of view, strategies are
formulated from corporate viewpoint, whereas
tactics are developed principally from a
functional point of view.
 As to importance, strategies are of the highest
importance to an organization, while tactics are
considerably less significant.

41. Bases of Policies and Strategies
 Having a business policy in place is not a
product simply copied from other business
organizations but a set of document that
needs to be developed in the a well planed
manner on the basis of certain
presumptions or sets of biases.

42. The following are the bases from which
policies and strategies are drawn upon:
a.Legal mandate
b.Vision and mission statement
c.Specific objectives
d.Programs and policies

43. Legal mandate
 This refers to formulating policies on the
basis of the provisions of the charter or
legal basis for certain or existence of the
business organization including the
applicable provisions of laws and policies or
pronouncement of the government and its
statutory or regulation bodies.

44. Vision and Mission Statement
This refers to the leadership bias
as well as sense of direction and
mission for which the organization
was conceived or established.

45. Specific objectives
These are the corporate objectives
purposely developed for the
organization and for its members or
employees at large to pursue.

46. Programs and policies
 These are specific programs and policies
set forth by the organization’s
policymakers( i.e. Board of directors and
Top management) in pursuit of short and
long term goals given certain considerations
at hand.

47. Approaches to identifying Policies and
Strategies
A. Policy/ Strategy Profile – This approach involves a
systematic examination of present company
policy/strategy – implicit and explicit.
B. Gap analysis – The stimulus is an examination of
whether an end that has been established is likely to
achieved.
C. Competitive strategy analysis – This involves a
thorough analysis of the competitive forces operating
in a firm’s environment and searching for an
alternative option.

48. Richard Whittington ( 2001)
theorized that strategy comes in
four generic approaches that differ
fundamentally along two
dimensions: the outcomes of the
strategy and the process by
which it is made.

49. Figure 1. Generic Perspective of Strategy

50. Four approaches are briefly described as
follows:
A.Classical approach
B.Evolutionary
C.Processual
D.Systematic

51. Classical Approach
 The oldest of the four approaches and still
the most influential, it relies on the
rational planning methods dominant in the
textbooks. As such, this approach follows a
pattern of analyzing, planning and
commanding or directing.

52. EVOLUTIONARY
It draws on the fatalistic metaphor of
biological evolution but substitutes the
discipline of the market for the law of
the jungle. This approach is conscious
on keeping cost or expenses low with
open options.

53. PROCESSUAL
 It emphasizes the sticky imperfect nature of all
human life, pragmatically accommodating
strategy to the fallible processes of both
organizations and markets.

54. SYSTEMATIC
This approach is relativistic, regarding
the ends and means of strategy and
inescapably linked to the cultures and
powers of the local social system in
which it takes place.

55. STRATEGIC DECESION
 The strategic management, it is not just simply making
decision but it is important to exercise strategic decision
or something like hard and unusual decision that need to
be done for certain strategic considerations.
 Unlike the usual or many other decisions business
managers do on a daily or routine basis, strategic
decisions usually take into account a lot of external
factors and deal with the long-run future of the entire
organization.

56. What it takes for a decision to be considered
strategic is described by Wheelen and Hunger
A. Rare- Strategic decisions are unusual and
typically have no precedent to follow.
B. Consequential – strategic decisions should
commit substantial resources and demand a great
deal or commitment from people at all levels
C. Directive – strategic decisions set precedents for
lesser decisions and future actions throughout the
organization.

57. MODALITIES IN STRATEGIC DECISION
 Decision-making function is a daily or
routine aspect of a managerial function.
Doing strategic decision, however is not a
simple and considered ordinary or routine
task compared to strategic decision.

58. Four most typical approaches or modes of
strategic decision-making and they are as
follow:
A. Entrepreneurial mode – In this mode, strategy is made by one
powerful individual and the focus is on opportunities; problems
are secondary.
B. Adaptive mode – sometimes referred to as “muddling trough”
this mode is characterize by relative search for new
opportunities.
C. Planning mode – This decision making mode involves the
systematic gathering of appropriate information for situations
analysis, the generation of feasible alternative strategies and
the rational selection of the most appropriate strategy.
D. Logical mode – It can be viewed as a synthesis of planning,
adaptive and to lesser extent, the entrepreneurial modes.