This document provides an introduction to strategic management and business policy. It discusses the historical development of strategic management, key concepts like strategy and strategic decision-making. It also outlines several schools of thought on strategy formation and summarizes the strategic management process as involving establishing strategic intent, formulating strategies, implementing strategies, and evaluating strategies.

1. STRATEGIC MANAGEMENT
AND BUSINESS POLICY
STRAT 401
Introduction to strategic
management and business
policy

2. Learning objectives
 Historical development of strategic management and
business policy in the world and in India
 Concept of strategy and its limitations
 Process of strategic decision making
 Various schools of thought on strategy formation
 Strategic management process
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3. Evolution of strategic management
and business policy
 The genesis of strategic management and business
policy- 1911 Harvard Business School
 Evolution based on management practices- MBO Capital
Budgeting etc
 Historical perspective- Acc. to hofer
 Adhoc policy making, 1930’s
 Planned policy formulation 1940-50
 Strategy paradigm 1960’s
 Current- Strategic Management
 Pointers to the future
 Development of strategic thinking
 Alternative models like of Hambrick & fredrickson
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4. Hambrick and Fredrickson model of
strategic management
Internal and External
Strategic Analysis
Strategy:
Arenas
Vision and Goals and Vehicles Implementation Levers
Mission Objectives Differentiators and Strategic
Staging Leadership
Economic logic
D. C. Hambrick & J. W. Fredrickson: “Are you sure you have a strategy?” (2001). Academy of
Management Executive Vol. 15, No. 4, pp. 48-59
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5. The Indian scenario
 Role of IIMs and ASCI
 Role of AICTE
 Role of AIMS
 Role of AIMA
 India-focused international studies
 Strategic Management Forum of India
 Publications
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6. 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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7. Strategy
 Term derived from Greek word
strategos meaning generalship- the
actual direction of military force as
distinct from the policy governing its
deployment.

8. 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;
 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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9. Change
Time

10. Time
Where we Where we want to be?
are?

11.  A global economy is one which goods, services, people,
skills and ideas move freely across geographic borders.
 Europe is now world’s largest market.
 GDP 35% more than US.
 China extremely competitive market. Source of low cost
goods
 GE headquartered in US, will have 60% revenue from
developing countries 2015.

12.  Globalization is the increasing economic interdependence
among countries and their organization as reflected in the
flow of goods and services, financial capital knowledge
across country border.
 Wal-Mart- Boundary-less retailing, global pricing,
sourcing and logistics
 Globalization- Design, production, distribution and
servicing of goods and services.

13.  N=1
 Serving one customer at a time.
 R=G
 Resource = Global
 Radius of operation= Global
 Characteristics
 Node within a global web
 Personalized experience
 Co-creation
 Celebration of individual
 Thematic experience
 Delivery Network

14.  A strategy is an integrated and coordinated set
commitments and actions designed to exploit core
competencies and gain a competitive advantage.
 Integrated
 Two or more component merged together into a single system
 Core Competencies
 Specific factor that a business sees as being central to the way
it works.
 Competitive advantage
 A strategy competitors are unable to duplicate or find to costly
to try to imitate

15.  “A unified, comprehensive, and integrated plan designed
to ensure that the basic objectives of the enterprise are
achieved.” (Glueck, 1980)
 “The pattern or plan that integrates an organization’s
major goals, policies, and action sequences into a
cohesive whole.” (Quinn, 1980)
 “A pattern of resource allocation that enables firms to
maintain or improve their performance.

16.  Increasing rate of change and diffusion
 Perpetual Innovation
 Continuous and carry high priority
 Shorter life cycle
 Rapid diffusion of innovation
 Replicated within short period
 Speed to market may become a source of competitive advantage
 The information age
 Companies are wired
 Customers
 Employees
 Vendors

17.  Increasing Knowledge Intensity
 Converting accumulated knowledge of employees into corporate asset
 Shareholder value is increasingly influenced by the firm’s intangible
assets such as knowledge
 From assessing information to exploiting information
 Capturing intelligence
 Transforming intelligence into usable knowledge
 Embedding it as organizational learning
 Diffusing it rapidly throughout the organization

18.  1996 takeover of tandem computers
 1998 took over digital
 1999 CEO, Pfeiffer Sacked, Why?
 By 1995 Compaq become leading seller of PC
 Purchase of DEC also made it leading computer service firm
competing with IBM.
 Compaq lost focus of selling PC, went behind Dell in Internet selling.
 Announced a bigger move in web sales
 Reseller become anxious
 Announced number of reseller to de downsized to 4 from 20.
 1998, in charge of service business resigned.
 Creating further uncertainty about their future
 2002 taken over by HP

19.  Valuable
Valuable Rare
 Allow the firm to exploit opportunities or neutralize
threats in its external environment. Organized
 Rare
 Possessed by few, if any, current and potential
competitors Costly
 Costly to imitate
 When other firms cannot obtain them or must
obtain them at much higher cost
 Organized to be exploited
Core Competence
 The firm is organized appropriately to obtain the
full benefits of the resources in order to realize a
competitive advantage.

20. Levels at which strategy
operates
LEVELS OF MANAGEMENT LEVELS OF STRATEGY
Corporate
CORPORATE Office CORPORATE-LEVEL
SBU SBU SBU
SBU A B C BUSINESS-LEVEL
FUNCTIONAL
Finance Marketing Operations HRM Information

21. 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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22. 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 decision-
making
 Individual versus group decision-
making.
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23. Schools of thought on strategy
formation
 The prescriptive schools
 The descriptive schools
 The integrative school
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24. Strategic management defined
 Strategic management is defined as
the dynamic process of formulation,
implementation, evaluation and
control of strategies to realise the
organization’s strategic intent.
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25. Four phases in strategic
management
Establishment of
strategic Formulation of Implementation of Strategic
intent strategies strategies evaluation
Strategic control
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26. Comprehensive model of strategic
management
Strategic Intent Strategy Formulation Strategy Strategic
Implementation Evaluation
Vision Environmental Organisational
Mission Appraisal Appraisal Project
Business definition SWOT Analysis Procedural
Business model Corporate-level Strategies Resource allocation
Objectives Business-level Strategies Structural
Strategic analysis and choice Behavioural
Strategic plan Functional &
Operational
Strategic control
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