Business policy & strategy

Book reference- Strategic management

(8th edition)

Charles W.L. Hill

Gareth R. Jones
 Chapter-1-Introduction
 Strategy
Strategy is a series of actions by a firm that are decided according
to the particular situation.
Strategy is the determination of the basic long-run goals and
objectives of an enterprise, and the adoption of courses of action
and the allocation of resources necessary for carrying out those
goals.
Strategy is an action that managers take to attain one or more of
the organization’s goals.
Strategy is the forging of company missions, setting objectives for
the organization in light of external and internal forces, formulating
specific policies and strategies to achieve objectives, and ensuring
their proper implementation so that the basic purposes and
objectives of the organization will be achieved.
 Strategy

Strength
Apply, sustain opportunity
Discover

Strategy
Weakness
Overcome Threat
Avert
 Management
Management is the process of designing and maintaining an
environment in which individuals, working together in groups,
efficiently accomplish selected aims.
 Strategic management
Strategic management is a process of analyzing, formulating,
implementing and evaluating some set of actions taken or to be
taken for the achievement of predetermined organizational goals
and objectives.
It focuses on integrating management, marketing, finance,
accounting, productions/operations, research and development and
CIS to achieve organizational success.
 Strategic planning
A strategic planning is a process which describes how a firm will
adapt to take advantages of opportunities in its constantly changing
environment, in order to maintain a strategic fit between the firm’s
goals and capabilities and these market opportunities.
Strategic manager

 Corporate level:
CEO, other senior Head office

executives and
corporate staff
Division-B Division-C
Division-A

 Business level:
Divisional manager
Business function Business function Business function

 Functional level:
functional manager
 Strategic Management Process

 Select the corporate mission and major corporate

goals.

 Analyze the organization’s external competitive

environment to identify organization’s opportunities
and threats.

 Analyze the organization’s internal operating

environment to identify organization’s strengths and
weaknesses.

 Select strategies that build on the organization’s

strengths and correct its weaknesses in order to take
advantage of external opportunities and counter
external threats.

 Implement the strategy.

 Strategic intent
Strategic intent refers to an obsession with achieving
an objective that stretches the company and requires it
to build new resources and capabilities.
 Vision, mission, goal and objective
Vision- The highest aspirations and ideals of a person
or organization; what a firm wants to be. Vision
statements often describe the firm or organization in
lofty, even romantic or mystical tones.
Mission- An organization’s mission is an overall goal of
the organization that provides a sense of direction and a
guide to decision making for all levels of management.
It should define the organization line of products,
identifying its products or services and specify the
markets it serves at present and within a time frame
work.
 Mission statement should include the following
components:
 Target customers and markets.
 Principal products and services.
 Geographic domain.
 Core technologies.
 Concern for survival , growth and maturity.
 Organizational self concept.
 Desired public image.
 Values and guiding standard.
 Major goals and objectives.

 Goals-
A goal is a desired future state or objective that a company
attempts to realize. The purpose of goals is to specify with
precision what must be done if the company is to attain its
mission or vision.
Characteristics of well constructed goals-
SMART-
o Specific.
o Measurable.
o Attainable.
o Realistic and
o Timeliness.
Qualities of a strategic leader
 Vision, eloquence, and consistency
 Articulation of the business model
 Commitment
 Being well informed
 Willingness to delegate and empower
 The astute use of power
 Emotional intelligence (self awareness, self-regulation,
motivation, empathy, social skills
 Self awareness: The ability to understand one’s own moods,
emotions, and drives as well as their effect on others.

 Self-regulation: the ability to control or redirect disruptive

impulses or moods, that is , to think before acting.

 Motivation: A passion for work that goes beyond money or

status and a propensity to pursue goals with energy and
persistence.

 Empathy: Understanding the feelings and viewpoints of

subordinates, and taking those into account when making
decision.

 Social skills: Friendliness with a purpose.

 Cognitive biases and strategic decision
making
 Prior hypotheses bias: Prior hypothesis biases refers to the
fact that decision makers who have strong prior belief about
the relationship between two variables tend to make decisions
on the basis of these beliefs, even when presented with
evidence that their beliefs are wrong.
Moreover, they tend to seek and use information that is
consistent with their prior beliefs while ignoring information that
contradicts these beliefs.

 Escalating commitment: It occurs when decision makers

having already committed significant resources to a
project, commit even more resources if they receive feedback
that the project is failing.
 Reasoning by analogy: It involves the use of simple
analogies to make sense out of complex problem.

 Representativeness: It is a bias rooted in the tendency to

generalize from a small sample, or even a single vivid
anecdotes.

 Illusion of control: It is the tendency to overestimate

ability to control events. Top level management seems to be
particularly prone to this bias, having risen to the top of an
organization, they tend to be overconfident about their ability
to succeed.

 Availability error: The availability error arises from our

predisposition to estimate the probability of an outcome
based on how easy the outcome is to imagine.
 Technique for improving decision making
Devils advocacy
Expert plan

Devil’s advocate
criticizes

Devil’s advocate
criticizes
 Dialectic inquiry

Expert plan-1 Expert plan-2

(Thesis) (Antithesis)

Debate (synthesis)

Final plan