The document discusses strategic management and business policy, highlighting their differences and the importance of effective decision-making in organizations. It outlines the process of forming business policies, the nature of strategic decision-making, and various modes and levels of strategic management. Additionally, it emphasizes the role of top management in formulating strategies that align with organizational goals and the need for continuous monitoring and adaptation to changing environments.

1. RASHTRASANTTUKDOJI MAHARAJ NAGPUR UNIVERSITY
MBA
SEMESTER: 3
SUBJECT
STRATEGIC MANAGEMENT
MODULE NO : 1
INTRODUCTION TO STRATEGIC MANAGEMENT & BUSINESS
POLICY
- Jayanti R Pande
DGICM College, Nagpur

2. Q1. How business policy is different from Strategic Management?
Business Policy Strategic Management
A detailed plan to achieve specific goals within a set
timeframe.
A general plan of action without a specific timeframe.
Guides decision-making for repetitive tasks.
Deals with important decisions that haven't been
encountered before.
Delegates power to others for implementation.
Requires constant attention from top management for
implementation.
Focuses on guidelines and thinking. Takes action to address competition and uncertainties.
Operates within a specific timeframe. Involves making long-term decisions.
Delegates power to subordinates for implementation. Empowers everyone in the organization to take action.
Provides guidelines and helps achieve goals. Suggests specific actions to achieve objectives.
Implementation is driven by policies.
Implementation requires continuous attention from top
management.
Controls the overall management direction.
Mobilizes available resources in the best interest of the
company.
Aims to achieve set objectives.
Addresses competition, risks, and uncertainties for future
success.

3. Q2. Mention the definition & Nature of Business Policy. Give their importance & Limitations.
BUSINESS POLICY
Business policy is a detailed plan that helps organizations make decisions. It's like a roadmap to achieve specific goals
within a certain time. It provides guidelines for repetitive tasks and helps everyone in the company know what to do.
Business policy gives power to managers to delegate tasks and make choices. It focuses on thinking and controlling
the overall direction of the company to reach its goals.
DEFINITION OF BUSINESS POLICY
 A business policy is a comprehensive plan that guides decision-making and actions within an organization.
 Koontz & O Donnell – “Policies delimit an area within which a decision is to be made & assure that the decision will
be consistent with & contribution to objectives.”

4. NATURE OF BUSINESS POLICY:
1.Future-oriented decision making: Business policy involves making decisions that consider long-term goals and
objectives. It focuses on anticipating and adapting to future trends and changes in the business environment.
2.Defines business objectives: Business policy helps in setting clear objectives for the organization. It provides a
framework for aligning the actions and activities of the company with its overall goals.
3.Represents the best thinking: Business policy reflects the collective knowledge, expertise, and experience of top
management. It incorporates the best practices and strategic thinking to guide the organization in achieving its
objectives.
4.Implicit guide: Business policy serves as an implicit guide for managers and employees in making decisions and
taking actions. It provides a broad direction and framework within which operational decisions can be made.
5.Top management activity: Business policy is primarily formulated and implemented by top management. It
involves strategic decision-making and the allocation of resources to achieve organizational goals.

5. IMPORTANCE OF BUSINESS POLICY:
1.Coordination: Business policy facilitates coordination among different departments and functions within an
organization. It ensures that all activities are aligned towards common objectives, promoting synergy and efficiency.
2.Quick decision-making: Business policy provides a framework for making decisions quickly and effectively. It helps
in streamlining decision-making processes, reducing ambiguity, and enabling timely actions.
3.Effective control: Business policy helps in establishing control mechanisms to monitor and evaluate the
performance of the organization. It sets guidelines and standards that enable effective control over operations and
resources.
4.Reduces costs: Business policy can contribute to cost reduction by promoting efficiency, eliminating redundant
processes, and optimizing resource allocation. It encourages a systematic approach to resource management.
5.Decentralization: Business policy supports decentralization by providing a framework for delegation of authority
and decision-making. It empowers lower-level managers and employees to make decisions within the boundaries of
established policies.

6. LIMITATIONS OF BUSINESS POLICY:
1.Rigidness: Business policies can become rigid and inflexible, limiting the organization's ability to adapt to changing
circumstances.They may hinder innovation and responsiveness to emerging opportunities or threats.
2.Limited zone: Business policies are typically focused on a specific scope or area of the organization.They may not
address all aspects of business operations, leading to gaps or inconsistencies in decision-making.
3.Policies provide set rules: Business policies often provide set rules and guidelines, which may not always be
applicable or suitable in every situation.They may overlook the need for flexibility and adaptability in decision-
making.
4.Consistency in policies: While consistency is generally desirable, rigid adherence to policies can hinder creativity
and individual judgment. It may discourage experimentation and limit the exploration of alternative approaches.
5.Policies are not an end: Business policies should be seen as means to achieve organizational goals rather than an
end in themselves. Over-reliance on policies without considering the evolving needs and dynamics of the business can
restrict growth and innovation.

7. Q3. Explain different modes and levels of strategic decision management.
MODES OF STRATEGIC DECISION MANAGEMENT:
 Entrepreneurial mode: In this mode, strategic decisions are driven by the entrepreneurial vision and instincts of
key individuals within the organization. It involves taking bold and innovative actions to seize new opportunities and
create a competitive advantage. The decision-making process is often dynamic, quick, and driven by intuition and risk-
taking.
 Adaptive mode:The adaptive mode of strategic decision management emphasizes the organization's ability to
adapt and respond to changes in the external environment. It involves continuously monitoring the market,
identifying emerging trends and threats, and making strategic adjustments accordingly. Decision-making in this mode
focuses on flexibility, agility, and the ability to learn and adapt.
 Planning mode:The planning mode involves a structured and systematic approach to strategic decision-making. It
emphasizes the formulation of long-term plans and goals based on a thorough analysis of internal and external
factors.The decision-making process in this mode is deliberate, analytical, and oriented towards achieving predefined
objectives. It often involves extensive data gathering, forecasting, and scenario analysis.
 Logical incrementalism:The logical incrementalism mode recognizes that strategic decisions are often made
incrementally, gradually building on past actions and learning from experience. It involves a step-by-step approach to
decision-making, where small, logical adjustments are made over time based on feedback and evaluation.This mode
allows for flexibility and adaptation while avoiding radical or disruptive changes.

8. LEVELS OF STRATEGIC DECISION MANAGEMENT:
1.Critical decisions by top management:Top management is responsible for making strategic decisions that have a
significant impact on the overall direction and success of the organization.These decisions include setting the vision
and mission, formulating long-term objectives, allocating resources, and making major strategic choices such as
entering new markets or acquiring other companies.Top-level strategic decisions often involve a high degree of
uncertainty and require a broad perspective on the business environment.
2.Tactical decisions by middle-level management: Middle-level management is involved in implementing the
strategic decisions made by top management.They translate the strategic objectives into actionable plans and
strategies for specific business units or departments.Tactical decisions focus on resource allocation, coordination of
activities, and the execution of specific initiatives to achieve strategic goals.These decisions bridge the gap between
the strategic vision and the day-to-day operations of the organization.
3.Operational decisions by lower-level management: Lower-level management is responsible for making
operational decisions that directly impact the routine activities and processes of the organization.These decisions
involve managing the day-to-day operations, allocating resources at the operational level, and ensuring the efficient
execution of tasks. Operational decisions are focused on achieving short-term goals and maintaining the smooth
functioning of the organization.They are typically more detailed and specific compared to strategic or tactical
decisions.

9. Q4. What are nature & scope of Strategic Decision Making? Give issues in Strategic management.
DEFINITION OF Strategic Decision Making
Eisenhardt & Zbaracki- “Strategic decisions are those infrequent decisions made by the top leaders of an organization
that critically affect organizational health & survival. ”
NATURE OF STRATEGIC DECISION MAKING
• Impacts long term direction of the firm
• It is concerned with the scope of organizational activities.
• It is concerned with matching the organizational activities with environment where it functions.
• It influences the operational decisions.
• It is complex in nature, complexity differentiates strategic management from other aspects of organizational
management.
• Exact prediction of future is not possible for managers, thus it is highly uncertain
• It is challenging to implement

10. SCOPE OF STRATEGIC DECISION MAKING
 Economics: Economics plays a crucial role in strategic decision making. It involves analyzing market dynamics,
demand and supply trends, pricing strategies, cost structures, and other economic factors that can impact the
organization's strategic choices. Economic analysis helps in identifying opportunities, assessing risks, and
formulating strategies to optimize resource allocation and maximize profitability.
 Sociology: Sociology provides insights into the social dynamics and behaviors that influence strategic decisions.
It involves understanding the cultural, social, and demographic factors that shape consumer preferences, market
trends, and stakeholder relationships. Strategic decisions need to consider societal norms, values, and
expectations to ensure the organization's actions align with the broader social context.
 Marketing: Marketing is closely intertwined with strategic decision making. It involves understanding customer
needs, market segmentation, positioning, branding, and promotion strategies. Strategic decisions in marketing
encompass product development, pricing, distribution channels, and marketing communications.The goal is to
create a competitive advantage and capture value in the marketplace.
 Management: Strategic decision making is a fundamental aspect of management. It encompasses the overall
management of the organization, including strategic planning, goal setting, resource allocation, organizational
structure, and performance management. Management decisions guide the direction and operations of the
organization and involve considering factors such as leadership, organizational culture, human resources, and
innovation.

11. ISSUES IN STRATEGIC DECISION MAKING
1.Contextual Issues: Strategic decision making occurs within a specific context, and organizations must consider the
external environment, industry trends, competitive landscape, regulatory factors, and technological advancements.
Failure to adequately understand and adapt to the context can lead to ineffective or misguided strategic decisions.
2.Personality/Style:The personal characteristics and leadership style of decision-makers can impact strategic decision
making. Different individuals may have different preferences, biases, risk appetites, and decision-making styles.
Conflicting personalities or ineffective leadership can hinder the decision-making process and lead to suboptimal
outcomes.
3.Effects of Biases: Decision-makers are susceptible to cognitive biases, which can distort their judgment and reasoning.
Biases such as confirmation bias, anchoring bias, or overconfidence can influence the evaluation of alternatives, the
interpretation of information, and the selection of strategic options. Recognizing and mitigating biases is crucial for
effective decision making.
4.Role of Values: Strategic decisions are not solely driven by rational analysis; they are also influenced by personal and
organizational values.Values shape the priorities, ethical considerations, and long-term objectives of decision-makers.
Misalignment of values or lack of ethical awareness can lead to decisions that are not aligned with the organization's
mission and may have negative consequences.
5.Nature of Strategic Decisions: Strategic decisions are typically complex, interconnected, and have long-term
implications.They involve trade-offs, uncertainty, and resource allocation.The complexity of strategic decisions can pose
challenges in terms of information management, analysis, and ensuring alignment with the overall organizational
strategy.

12. DEFINING POLICYAREA
RECOGNISINGTHE POLICYALTERNATIVES
ASSESINGTHE ALTERNATIVES
CHOOSINGTHE ALTERNATIVE BUSINESS POLICY
EXECUTINGTHE BUSINESS POLICY
MONITOR
FORMING BUSINESS POLICY
Q5 Describe process of forming Business Policy

13. 1.Define policy area:The first step is to clearly define the specific area or aspect of the business that the policy will
address.This could be related to areas such as finance, human resources, marketing, operations, or any other functional
area.
2.Recognize policy alternatives: Once the policy area is defined, the next step is to identify and recognize different
policy alternatives or options that can be considered to address the identified area.This may involve brainstorming,
research, and gathering input from relevant stakeholders.
3.Assess the alternatives: After identifying the policy alternatives, a thorough assessment is conducted for each option.
This assessment involves evaluating the feasibility, potential benefits, risks, and impact of each alternative on the
organization and its stakeholders. It may also involve conducting cost-benefit analyses or conducting scenario planning.
4.Choose the alternative business policy: Based on the assessment, one or more alternatives are selected as the
preferred business policy.The selection is made based on alignment with organizational goals, feasibility, anticipated
outcomes, and the overall strategic direction of the organization.
5.Execute the business policy: Once the alternative is chosen, the next step is to develop an implementation plan for
the selected policy.This includes defining clear objectives, outlining the necessary actions, allocating resources,
assigning responsibilities, and setting timelines. Effective communication and coordination are crucial during this stage
to ensure successful execution.
6.Monitor and evaluate: After implementing the business policy, it is essential to monitor its progress and evaluate its
effectiveness.This involves collecting and analyzing relevant data, tracking key performance indicators, and comparing
the actual outcomes with the desired results. Monitoring allows for making adjustments, identifying areas for
improvement, and ensuring that the policy remains relevant and aligned with changing circumstances.

14. Q6What do you understand by Strategy? Explain different levels of strategy.
Greek word- strategia = means general-ship
MEANING OF STRATEGY
Strategy- blueprint of an organization that defines its vision, mission.
- helps in determining future course of action
- helps to minimise the strength of competitors by maximising own strength
- tries to achieve balance between objectives, resources & concepts to maximise success possibility
- refers to determining fundamental long term organizational goals
DEFINITION OF STRATEGY
Alfred D Chandler- Strategy is the determination of the basic long term purpose and objective of an enterprise & the
adoption of the courses of action & allocation of resources necessary for carrying out these goals.
William F Glueck – Strategy is a unified, comprehensive and integrated plan designed to assure that the basic objective
of enterprise are achieved.
Strategy is not as simple as it seems to be, but logical understanding of its theory helps to grasp it & work with ease.

15. NATURE OF STRATEGY
• Provides Structure- develops a roadmap for providing guidance to the enterprise for making rational decisions &
achieving org goals.
• Integrated Approach- Allocating internal resources & using them for benefit of entire org. Directs & supports
enterprise in taking necessary decisions for maximising strengths & facing environmental threats with confidence.
• Relates an org with the environment- Interaction with external environment , so management can take necessary
steps to achieve the org goals.Thus enterprise can relate to its environment.
• Set of Actions- Strategy is an arrangement of diff actions that are taken in diff situations to achieve certain
objectives, or to solve some problems.
• Future Oriented- Solve problems that are new & have not been previously handled by the firm.Thus it is future
oriented.
• Combination of Internal & External Factors- Strategy matches internal strengths to meet external opportunities &
threats.
• System Oriented- Strategy operates under rules & standards, followed in the org.

16. LEVELS OF STRATEGY
1 CORPORATE
STRATEGY
2 BUSINESS
STRATEGY
3 FUNCTIONAL
STRATEGY
 Plans ofTop Management for
supervising overall functioning
of firm & achieving expected
performance.
 Outlines org activities &
objectives in diff areas like
product lines, technologies,
consumers & their needs.
 Guides an org to become what
it wants, maximises
performance level
 Eg Nokia [alliance with
Microsoft]
 Strategic Business Unit SBU is based on
recognising separate market segment
created by the company.
 Formulated separately for each segment
due to differences in their environmental
condition
 Formulated to satisfy needs of customers
of each segment thus increasing &
sustaining competitive advantage
 Dominos Pizza –Turnaround Strategy
 Denotes operating division levels
& departments in an org like
marketing, finance, HR, R&D
 Business and Corporate strategy
depend on this strategy for info
regarding resources &
capabilities.
 Eg Marketing strategy can be
broken into functional levels like-
Pricing strategies
Distribution strategies
Promotion strategies
Sales strategies

17. Q7 What is Strategic Management? Explain the process of Strategic Management.
MEANING OF STRATEGIC MANAGEMENT
• Strategy + Management = STRATEGIC MANAGEMENT
• Formulation of vision, objectives, strategy formulation, strategy implementation & making changes according to
changing requirements of org.
• Formulation of mission statement & setting of objectives
• Portfolio of business model is prepared, at last there is conducting functional activities to achieve pre established goals.
DEFINITION OF STRATEGIC MANAGEMENT
• Glueck- “Strategic Management is a stream of decisions & actions, which leads to development of an effective strategy
to help achieve corporate objectives.”
• Lloyd L Byars- “Strategic Management is concerned with making decisions about organization’s future direction &
implementing those decisions.”
 Strategic management is not one time process
 It is re evaluated and implemented periodically
 It is a holistic approach
 It is concerned with analysing environment, providing direction, developing & implementing strategies, & applying
strategic control measures.

18. 1
ENVIRONMENTAL
SCANNING
2 STRATEGY
FORMULATION
3 STRATEGY
IMPLEMENTATION
4 EVALUATION &
CONTROL
PROCESS OF STRATEGIC MANAGEMENT

19. 1] ENVIRONMENTAL SCANNING
It is identifying external & internal elements that will determine the future of the corporation.
Environmental Scanning is done through SWOT analysis.
SWOT = Strength,Weakness, Opportunity,Threat
External Environment: Opportunities &Threats
Internal Environment: Strengths &Weakness
2] STRATEGY FORMULATION
Formulation of long term organizational plans that assist in carrying out organizational activities in best possible way.
Strategies are framed by looking the future of org in long run.
Strategies define the course of action an org would choose to reach its goals.
This involves -
DevelopingVision
Identifying corporate Mission
Setting realistic objectives
Formulating strategies
Establishing policy guidelines

20. VISIONOF ORG
• Position that the org aspires to achieve in future.
• It is developed by top management [CEO, President, Director,Chairman, etc]
• The basic idea behind formulating vision is to provide a concentrated view of the org.
• It provides employees with a common goal & stimulate them for conducting their routine operations efficiently.
MISSIONOF ORG
• It is the reason for existence of the org.
• Specifies organizational Culture &Values
• Sets guiding points for carrying out activities of the business org
• Unique statement that defines the products, markets & geographical scope of the business, market price, etc.
OBJECTIVES
• They are the results one expects out of the business activities.
• Symbolise that management is committed towards achieving desired result under specific time period.
• Helps in setting performance standards on the basis of which performance is evaluated.
• Harmony between decision & decision makers.

21. STRATEGIES
Detailed plan which help the org in realising its mission & objectives.
Formulated for achieving the competitive advantage & minimising factors which result in lowering of org position.
EgTata Group of Companies- not able to meet its objectives- so soldTomco, Lakme etc companies to Hindustan
Lever Ltd
POLICIES
Set of comprehensive instructions that are used for making decisions & for relating strategy formulation with
strategic implementation.
Focuses on achieving corporate goals by ensuring optimum allocation of resources.
Related to duties and responsibilities of corporate level managers, long term strategic decisions & factors
influencing success of org.

22. 3] STRATEGY IMPLEMENTATION
Without successful implementation, a well devised strategy is of no use.
It is the process that facilitates in successful execution of the selected strategy.
Strategies are implemented with the help of Programmes, Budgets & Procedures.
Implementation is generally conducted by the middle or lower management after being assessed by the top management.
PROGRAMMES
Actions/Steps needed to implement single use plan.
Help in putting the strategies into action.
Eg –
Corporate restructuring,Changing org culture, Initiating a new research project
BUDGETS
Declaration of org programme in monetary terms.
Represents cost entailed in each programme.
Used in purpose of planning & control
PROCEDURES
Standard Operating Procedures [SOP] – step by step explanation of the order in which a task is to be carried out
Provide explanation regarding no. of operations that are necessary for completion of programmes.

23. 4] EVALUATION & CONTROL
After successful strategy implementation, it is necessary to evaluate it on regular basis.
Helps in monitoring the whole procedure.
Strategic objectives & performance measures are base for evaluating effectiveness of strategy.
For assessment between expected and actual results.
Managers role to monitor the expected response from diff sectors.
Analysing market response.
Factors that determine extent to which strategic control is necessary-
Size of org
Business activities
No. of business segments
Org structure
Performance is final outcome of all activities involved in the process of strategic management.
Successful evaluation of strategy is based on suitable and prompt feedback.
Effectiveness of strategy evaluation depends on info provided by the subordinates.

24. Q8 Explain Mintzberg’s 10 Schools OfThought of Strategic Formulation.
1 DESIGN
SCHOOL
2 PLANNING
SCHOOL
3 POSITIONING
SCHOOL
4 ENTERPRENEURIAL
SCHOOL
5 COGNITIVE
SCHOOL
6 LEARNING
SCHOOL
7 POWER
SCHOOL
8 CULTURAL
SCHOOL
9
ENVIRONMENTAL
SCHOOL
10
CONFIGURATION
SCHOOL
Conception
Process
Formal
Process
Analytical
Process
Visionary
Process Mental
Process
Emergent
Process
Negotiation
Process
Collective
Process
Reactive
Process
Transformation
Process

25. 1THE DESIGN SCHOOL
 It formulates unique & clear strategies in order to match internal conditions of org with its external environment.
 It helps in reducing confusion
 It provides assistance to powerful & visionary leadership.
2THE PLANNING SCHOOL
 Detailed and careful sets are taken from the state of situation analysis till strategy execution.
 Provides clear direction
 Helps in allocating resources, provides control.
3 THE POSITIONING SCHOOL
 Business is placed within the context of its industry & it is observed that how the org can enhance its strategic
position in industry.
 Focuses on actual facts
 Useful at the time when data is analysed during initial phase of strategy formulation.
4THE ENTERPRENEURIAL SCHOOL
 It largely depends on intuition, wisdom, experience, insight & judgement.
 Problems that org faces in initial phase can be tackled with vision
 It is flexible & emergent in detail
 It is deliberate in broad line.

26. 5THE COGNITIVE SCHOOL
 Examines how people identify patterns & do information processing.
 Observes what is going on in the mind of strategist & how they perform information processing.
6THE LEARNING SCHOOL
 Management focuses on what will work & what will not work
 They implement all the lessons they have learnt into their overall action plan.
7THE POWER SCHOOL
 Strategy is formulated as a process of negotiation between company & its outside stakeholders or between
organization’s internal power holders.
 It is based on political science
 Helps strongest people survive in corporate environment
8THE CULTURAL SCHOOL
 Strategy formation is said to be co-operative and collective process.
 Developed strategy is the reflection of corporate culture

27. 9THE ENVIRONMENTAL SCHOOL
 Strategies are developed to face the challenges of the external environment.
 Sees environment as an actor while other schools sees it as a factor.
 Environment has been given an imp. role in strategy formulation.
10THE CONFIGURATION SCHOOL
 The process of changing the organization from one type of decision making structure to
another is called strategy formulation.
 This school tries to find combination of all other 9 strategy schools.