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Strategic Management

Strategic Management

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Published by tps5970
Answers to DMS Course from IIBMS
Answers to DMS Course from IIBMS

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Categories:Types, Business/Law
Published by: tps5970 on Feb 13, 2013
Copyright:Attribution Non-commercial


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Advanced Management Strategies
Q1 Write a descriptive note on the historical evolution of strategic management and business policy of India and the world.
Until the 1940s, strategy was seen as primarily a matter for the military. Military history is filled with stories about strategy. Almostfrom the beginning of recorded time, leaders contemplating battle have devised offensive and counter-offensive moves for the purposeof defeating an enemy. The word strategy derives from the Greek for generalship, strategia, and entered the English vocabulary in
1688 asstrategie. According to James‘ 1810 Military Dictionary, it differs from tactics, which are immediate measures in face
of an
enemy. Strategy concerns something ―done out of sight of an enemy.‖ Its origins can be traced back to Sun Tzu‘s
The Art of Warfrom500 BC.Over the years, the practice of strategy has evolved through five phases (each phase generally involved the perceived failure of theprevious phase):Basic Financial Planning (Budgeting)Long-range Planning (Extrapolation)Strategic (Externally Oriented) PlanningStrategic ManagementComplex Systems Strategy:Complex Static Systems or EmergenceComplex Dynamic Systems or Strategic Balance
Basic Financial Planning (Budgeting)
James McKinsey (1889-1937)
, founder of the global management consultancy that bears his name, was a professor of costaccounting at the school of business at the University of Chicago. His most important publication, Budgetary Control (1922), is quotedas the start of the era of modern budgetary accounting.
Long-range Planning (Extrapolation)
 Long-range Planning was simply an extension of one year financial planning into five-year budgets and detailed operating plans. Itinvolved little or no consideration of social or political factors, assuming that markets would be relatively stable. Gradually, itdeveloped to encompass issues of growth and diversification.
Strategic (Externally Oriented) Planning
Strategic (Externally Oriented) Planning aimed to ensure that managers engaged in debate about strategic options before the budgetwas drawn up. Here the focus of strategy was in the business units (business strategy) rather than in the organization centre. The
concept of business strategy started out as ‗business policy‘, a
term still in widespread use at business schools today. The word policy
implies a ‗hands
off‘, administrative, even intellectual approach rather than the implementation
-focused approach that characterizesmuch of modern thinking on strategy. In the mid-1900s, business managers realized that external events were playing an increasinglyimportant role in determining corporate performance. As a result, they began to look externally for significant drivers, such aseconomic forces, so that they could try to plan for discontinuities. This approach continued to find favor well into the 1970s.
Alfred Chandler (1918-)
Influential figure in both strategy and business structure-Strauss Professor of Business History at Harvardsince 1971.
Wickham Skinner (1924-)
Skinner argued for a clear manufacturing strategy to proceed in parallel with the marketing strategy.
Igor Ansoff (1918-)
through his unstintingly serious, analytical and complex,Corporate Strategy, published in 1965, had a highlysignificant impact on the business world. It propelled consideration of strategy into a new dimension. It was Ansoff who introducedthe term strategic management into the business vocabulary.
He also brought the concept of ‗synergy‘ to a wide audience for the first
time. In Ansof 
f‘s original creation it was simply summed up as the ―2+2=5‖ effect.
The Problem with Strategic Planning (Analysis)
: Managers have assumed that anything which could not be analyzed could not bemanaged. The belief in analysis is part of a search for a logical commercial regime, a system of management which will, under anycircumstances, produce a successful result. There are two basic problems with the reliance on analysis. First, it is all technique. Thesecond problem is more fundamental. This was all very well in the 1960s and for much of the 1970s. Security could be found. Thebusiness environment appeared to be reassuringly stable. Objectives could be set and strategies developed to meet them in theknowledge that the overriding objective would not change. Such an approach, identifying a target and developing strategies to achieveit, became known as
Management by Objectives (MBO).
Under MBO, strategy formulation was seen as a conscious, rational process. MBO ensured that the plan was carried out. The overallprocess was heavily logical and, indeed, any other approach (such as an emotional one) was regarded as distinctly inappropriate. Thethought process was backed with hard data. There was a belief that effective analysis produced a single, right answer; a clear plan waspossible and, once it was made explicit, would need to be followed through exactly and precisely.
Henry Mintzberg‘s
book The Rise and Fall of Strategic Planning was first published in 1994.
―The confusion of means and ends
s our age,‖ Henry Mintzberg observes and, today, the highways are likely to be gridlocked. When the highways are
blocked managers are left to negotiate minor country roads to reach their objectives
Strategic Planning to Strategic Management
 Strategic Planning to Strategic Management: Strategic planning was a plausible invention and received an enthusiastic reception fromthe business community. n a minority of firms, strategic planning restored their profitability and became an established part of themana
gement process. However, a substantial majority encountered a phenomenon, which was named ―paralysis by analysis‖: strategic
plans were made but remained unimplemented, and profits/growth continued to stagnate.In 1972
published the concept under the name of Strategic Management through a pioneering paper titled
The Concept of Strategic Management
, which was ultimately to earn him the title of the
Father of strategic management
. The paper asserted theimportance of strategic planning as a major pillar of strategic management but added a second pillar
the capability of a firm toconvert written plans into market reality. The third pillar- the skill in managing resistance to change
was to be added in the 1980s.Between 1974 and 1979 Ansoff developed a theory which embraces not only business firms but other environment-servingorganizations. The resulting book titled Strategic Management, was published in 1979.The Key patterns in strategic management as practiced by the Indian companies in the 3 periods are as below:Pre-
liberalization Stage: Strategic management on government‘s fringes
Subsuming enterprise objectives into the national planning framework 
Capabilities in generating and grabbing opportunities
High diversification, non- competitive scales and weak technology capabilities
Secretive and ‗one man‘ strategic management process
The decade of the 1990‘s : Transitional euphoria & reality check 
Carried‘ operation de
linked strategy‘ mindset to the early 1990‘s
‗Foreign complex‘ governed strategy in older groups in the early 1990‘s
Strategy of focus through rationalization and operations improvement by majority of companies in the late 1990‘s
Strategy of growth through acquisitions, internationalization and product market expansion by some companies in the late
Experimentation with international consulting firms in strategic management process.Post liberalization stage: Issues and agenda in 2000-2010
Acquire a ‗global maverick‘ mindset and actively shed pre
-liberalization thinking
Synergize entrepreneurial flair with professional skills in strategic management
Complete portfolio rationalization, but also expand boundaries through internationalization and entry into emerging sectors
Mobilize increased resources and ensure adequate growth through existing businesses
De-merge businesses as independent companies , for focus and improved market capitalization
Actively promote development of technology capabilities
Decentralize organizations and develop institutionalized control mechanisms
Q2 Describe some of the important characteristics of environment and demonstrate how a strategist can be understand it better by dividing into external and internal components and general and relevant environment.
In trying to understand the environment and its influence on business, managers face many problems, mainly because of the followingcharacteristics of the business environment:
a) Environment is complex:
 The environment is not made of any one simple constituent but consists of a number of factors, events, conditions and influences,arising from different sources.It is difficult to guess the factors that constitute a given environment. Hence, environment is at the same time complex and somewhateasy to understand in parts, but difficult in totality.
b) Environment is dynamic:
 The environment does not remain constant but keeps on changing, For instance, the environment changes with the competitor'sproducts and strategies, govt, policies, customers' preferences, etc.Hence, in order to survive and grow, it becomes very important for every organization to understand its impact and adapt itself withsuch changes.
c) Environment is multi-faceted:
 Same element or influence of environment affects different firms in different ways.This is frequently seen when the same development, say liberalization, is welcomed as an opportunity by one company while anothercompany perceives it as a threat.
d) Environment has a far reaching impact:
 The environment has a long term and lasting impact on organizations. The growth and profitability of an organization dependcritically on the environment in which it exists.

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