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so on. Fourth, strategic management is iterative. It isnot something that can be done at the front end of anoperation and then dropped; it entails feedback andlearning.These teachings may seem like commonsense, but that does not make them easy to follow.Because managing strategy (the organization gameplan) is a process, not an event, it demands action andfollow-up. Determined strategic managers always aretrying to build on the organization’s strengths andcapitalize on favorable circumstances, whileminimizing weaknesses and overcoming threats to theorganization. Quantum changes in strategy are rare,but fine-tuning takes place continuously, whenevernew information is received.As a self-identified area of inquiry, strategicmanagement is still young. The first major conferencedevoted to the subject was only held in 1977 at theUniversity of Pittsburgh. The Strategic ManagementJournal and the Journal of Business Strategy eachpublished their first issue three years later. MichaelPorter’s landmark study, Competitive Strategy,appeared in 1980. The Academy of Management, theprofessional association of business school teachers,organized its Business Policy and Strategy division ataround the same time.Despite its youth, strategic management has bred alarge (though repetitive) and coherent (though thin)practical literature. The strategic managementparadigm remains a simple one, however (Daft andBuenger, 1990). Distinct schools of thought,equivalent to the human relations and scientificmanagement view points in organization theory, or toKeynesians and monetarists in macroeconomics, haveyet to emerge. Most of strategic management’s advicestill involves simple check lists, typologies, and rulesof thumb. These have been gleaned from anecdotesand casual observation as often as from rigorous study.
History of Strategic Management
To understand what strategic management is about, it ishelpful to look at its history and review its core ideas.Strategic management grew out of both teaching andresearch in business administration. On the teachingside, the roots were the business policy or generalmanagement classes that by the 1960s most businessschools required as the “capstone” course at the end of the business curriculum. These courses directedstudents’ attention to the “big picture,” and tried tobreak down the conventional boundaries amongadministrative functions (marketing, finance,personnel, and so on). The focus was decision makingby top executives in Fortune 500 companies.As officers charged with broad responsibility for thewell-being of whole companies, top executivesnaturally spend much of their time strategizing—that isthey concern themselves with the general direction andlong-term policy of their enterprises. Business policyprofessors thus were forced to try to think systematically about companies’ strategies, whicheventually led to them into the self-styled study of strategic management (Schendel and Cool, 1988).
On the research side, the area had its genesis in thefinding of business case studies in the 1950s and 1960sthat companies in the same industry could succeedfollowing different approaches, while other companiesthat followed approaches similar to each other werenot equally successful (Hammermesh, 1990: 292).Orthodox economic theory could not explain theseanomalies; corporate strategy could. For example,several companies might do well in one line of trade bystrategies of pursuing different market niches. Othercompanies might fail with similar strategies becausethe strategies did not match the unique assets andtalents these other firms brought to bear.What is this powerful force called corporate strategy?One of strategic management’s pioneers, KennethAndrews of Harvard Business School, offers thefollowing widely used definition:. . .corporate strategy is the pattern of majorobjectives, purposes, or goals and essentialpolicies and plans for achieving these goals,stated in such a way as to define whatbusiness the company is in or is to be in andthe kind of company it is or is to be(Andrews, 1971: 28).Subsequent writers have argued that you can substitutethe word “organization” for “corporate” in thisdefinition, and apply the notion of strategy to anyformal human collectivity.The analogy to military campaigns is obvious. Just asgenerals prevail on the battlefield by superior planningand logistics, so do business leaders prevail in themarketplace. Like armed combat, the contest forcustomers and profits brings organizations into conflictwith one another. Also like armed combat, there arewinners and losers in the economic arena, asdetermined by market share and return on investment.Victory goes to the side that is the best prepared.Whatever the context, most views of strategy sharefour underlying themes. First, strategy is forward-looking and instrumental. It combines the ends forwhich the organization is striving and the means(tactics) of getting there. Second, strategy is cross-