You are on page 1of 11

STRATEGIC MANAGEMENT AND BUSINESS POLICY

Introduction to strategic management and business policy


Prof.Pradeep Sadarpatil

Understanding Strategy
The concept of Strategy The term strategy is derived from a Greek word strategos, which means generalship-the actual direction of military force, as distinct from policy governing its deployment. Literally, the word strategy means the art of the general. In business parlance, strategy is often loosely used to mean A plan A pattern or common thread Pursing activities to take the organization to desired state Concerned with resources, making trade offs and creating a fit Planned & actual coordination of goals & actions

Business policy defined


Business policy, as defined by Christensen and others, is "the study of the function and responsibilities of senior management, the crucial problems that affect success in the total enterprise, and the decisions that determine the direction of the organisation and shape its future. The problems of policy in business, like those of policy in public affairs, have to do with the choice of purposes, the moulding of organisational identity and character, the continuous definition of what needs to be done, and the mobilisation of resources for the attainment of goals in the face of competition or adverse circumstance.

(c) Dr. Azhar Kazmi 2008

The concept of strategy


A strategy could be:

plan or course of action or a set of decision rules making a pattern or creating a common thread; the pattern or common thread related to the organisation's activities which are derived from the policies, objectives and goals; related to pursuing those activities which move an organisation from its current position to a desired future state; concerned with the resources necessary for implementing a plan or following a course of action; and connected to the strategic positioning of a firm, making tradeoffs 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.

(c) Dr. Azhar Kazmi 2008

Levels at which strategy operates


LEVELS OF MANAGEMENT LEVELS OF STRATEGY

CORPORATE

Corporate Office

CORPORATE-LEVEL

SBU

SBU A

SBU B

SBU C

BUSINESS-LEVEL

FUNCTIONAL

Finance

Marketing

Operations

HRM

Information

(c) Dr. Azhar Kazmi 2008

Strategic decision-making
Objectives to be achieved are determined; Alternative ways of achieving the objectives are identified; Each alternative is evaluated in terms of its objective-achieving ability; and The best alternative is chosen.

(c) Dr. Azhar Kazmi 2008

Issues in strategic decision-making


Criteria for decision-making Rationality in decision-making Creativity in decision-making Variability in decision-making Person-related factors in decisionmaking Individual versus group decisionmaking.
(c) Dr. Azhar Kazmi 2008 7

Strategic management defined


Strategic management is defined as the dynamic process of formulation, implementation, evaluation and control of strategies to realise the organizations strategic intent.

(c) Dr. Azhar Kazmi 2008

Four phases in strategic management

Establishment of strategic intent

Formulation of strategies

Implementation of strategies

Strategic evaluation

Strategic control

(c) Dr. Azhar Kazmi 2008

Introduction to Strategic Management


Elements in strategic Management Process A. Establishment of strategic intent
1. 2. 3. 4. 5. 6. 7. 8. Creating & communicating a vision Designing a mission statement Defining the business Adopting the business model Setting objective

B. Formation of strategies

Performing environmental appraisal Doing organizational appraisal Formulating corporate-level strategies 9. Formulating business-level strategies 10. Undertaking strategic analysis 11. Exercising strategic choice 12. Preparing strategic plan 13. Activating strategies 14. Designing the structure, systems & processes 15. Managing behavioral implementation 16. Managing functional implementation 17. Operationalzing strategies 18. Performing strategic evaluation 19. Exercising strategic control 20. Reformulating strategies

C. Implementation of strategies

D. Performing Strategic evaluation and control

Comprehensive model of strategic management


Strategic Intent
Vision Mission Business definition Business model Objectives

Strategy Formulation
Environmental Organisational Appraisal Appraisal SWOT Analysis Corporate-level Strategies Business-level Strategies Strategic analysis and choice Strategic plan

Strategy Implementation
Project Procedural Resource allocation Structural Behavioural Functional & Operational

Strategic Evaluation

Strategic control

(c) Dr. Azhar Kazmi 2008

11