CHAPTER 1: STRATEGIC MANAGEMENT: AN INTRODUCTION

STRATEGY

A plan of action or policy designed to achieve a major or overall aim. A strategy is the means to ends,
and these ends concern the purpose and objectives of the organization. A strategy is a tool for utilizing
resources and skills sets dynamically in a changing environment and thereby, meeting market needs and
fulfill stakeholder’s expectations. A strategy could be a plan or course of action making a pattern or
common thread. The pattern related to the organization’s activities drawn from it’s the policies,
objectives and goals. Associated to practicing activities to take the organization from its current state t
aspired position. Related to various resources needed for implementation of organizational plans.
Connect to 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.

DIFFERENCES POLICY, STRATEGY & TACTICS

POLICIES

Derived from a Greek word Politeia meaning ‘polity’ i.e. the state and the citizens. Define how the
company will deal with stakeholders, employees, customers, suppliers, distributors, and other important
groups. While comparing Strategy and Policy, it is derived that Policy is a broader or more general
concept in the form of guidelines or principles; however, Strategy is more specific as it relates to a
particular situation, objective or target. Policy generally comes first; and Strategies are considered as
element of policy.

TACTICS

Refers to the number of sub-strategies. It is the specifications which deliver and implement the
strategies in order to fulfill objectives and pursue the mission.

DIFFERENCE BETWEEN STRATEGY – TACTICS – POLICY

STRATEGY TACTICS POLICY

Planning Doing Guiding
Why to do? How to do? Rules – how to do it?
Long term – Documented Short term – non Documented Very long term – documented
and signed by people
Competition and business Competition and Business Mostly only limited to internal
Environment Environment resources
Can be changed with lot of Very frequently changes Conservative and difficult to
though change
Related to goals Related to goals Related to vision

EVOLUTION OF STRATEGY AS A CONCEPT

Over the years, many authors have discussed the concept of strategy and have given varied approaches
relating to strategy.
ALFRED D. CHANDLER

Chandler defined strategy as: “the determination of the basic long term – goals and objectives of an
enterprise and the adoption of the courses of action and the allocation of resources necessary for
carrying out these goals.”

KENNETH ANDREWS

Andrews defined strategy as: “The pattern of objectives, purpose, goals, and the major policies and
plans for achieving these goals stated in such a way so as to define what business the company is in or is
to be and the kind of company it is or is to be.”

IGOR ANSOFF (1965)

Ansoff, explained corporate strategy as: “the common thread among the organizations activities and
product – markets that defines the essential nature of business that the organization was or planned to
be in future.”

WILLIAM F. GLUECK

Glueck discussed strategy as “a unified, comprehensive and integrated plan design to assure that the
basic objectives of the enterprise are achieved.”

IGOR ANSOFF (1984)

Ansoff, explained corporate strategy as: “a set of decision – making rules for the guidance of
organizational behaviour.”

HENRY MINTZBERG

Mintzberg defines strategy as: “a pattern in a stream of decisions and actions.”

MICHAEL E. PORTER

Porter discussed strategy as the locus of general management and describes it as “Developing and
communicating the company’s unique position, making trade-offs, and forging fit among activities.”

SCHOOLS OF THOUGH ON STRATEGY FORMULATION

The subject of strategic management is still evolving.

Mintzberg and his associates have given 10 schools of though on strategy formulation. These schools of
thought are classified in 3 groups

THE PRESCRIPTIVE SCHOOL

The design school

The planning school

The positioning school

THE DESCRIPTIVE SCHOOL

The entrepreneurial school

The cognitive school

The learning school

The power school

The cultural school

The environmental school

THE INTEGRATIVE SHOOL

The configuration school

STRATEGIC MANAGEMENT

Strategic decision – making is done through the process of strategic management.

DEFINITION OF STRATEGIC MANAGEMENT

Strategic Management - is the set of decision and actions which leads to the development of an
effective strategy or strategies to help achieve corporate objectives.

Strategic Management – is primarily concerned with relating the organization to tis environment,
formulating strategies to adapt strategies takes place.

Strategic Management – is an art as well as science of formulating, implementing and evaluating

decision across functional areas to help an organization in achieving its objectives.

BENEFITS OF STRATEGIC MANAGEMENT

Strategic management allows organizations to shape their own destinies by becoming more proactive
than reactive.

FINANCIAL BENEFITS

The strategic management practices may help a company by yielding the following benefits:

1. Increased sales
2. Improved profitability
3. Enhanced productivity

NON - FINANCIAL BENEFITS

Strategic management offers other intangible and non-financial benefits. Some of these benefits are:

1. Enhanced awareness of external threats.

2. Improved understanding of competitors’ strategies.
3. Increased employee productivity.
4. Reduce resistance to change.
5. Clearer understanding of performance reward relationships
6. Encourages order and discipline in the organization