MBA/4/CC/16

BUSINESS POLICY AND

STRATEGIC MANAGEMENT
(BPSM)
The word “strategy” is derived from the Greek word
“stratçgos”; stratus (meaning army) and “ago” (meaning
leading/moving).

Strategy is an action that managers take to attain one or

more of the organization’s goals. Strategy can also be
defined as “A general direction set for the company and
its various components to achieve a desired state in the
future. Strategy results from the detailed strategic
planning process”.
Strategy is a well-defined roadmap of an
organization. It defines the overall mission, vision and
direction of an organization. The objective of a strategy
is to maximize an organization’s strengths and to
minimize the strengths of the competitors.

Strategy, in short, bridges the gap between “where we

are” and “where we want to be”.
A strategy is all about integrating organizational activities and
utilizing and allocating the scarce resources within the
organizational environment so as to meet the present objectives.
While planning a strategy it is essential to consider that decisions are
not taken in a vaccum and that any act taken by a firm is likely to be
met by a reaction from those affected, competitors, customers,
employees or suppliers.

Strategy can also be defined as knowledge of the goals, the

uncertainty of events and the need to take into consideration the
likely or actual behavior of others. Strategy is the blueprint of
decisions in an organization that shows its objectives and goals,
reduces the key policies, and plans for achieving these goals, and
defines the business the company is to carry on, the type of economic
and human organization it wants to be, and the contribution it plans
to make to its shareholders, customers and society at large.
Features of Strategy
1. Strategy is Significant because it is not possible to
foresee the future. Without a perfect foresight, the firms
must be ready to deal with the uncertain events which
constitute the business environment.
2. Strategy deals with long term developments rather
than routine operations, i.e. it deals with probability of
innovations or new products, new methods of
productions, or new markets to be developed in future.
3. Strategy is created to take into account the probable
behavior of customers and competitors. Strategies
dealing with employees will predict the employee
behavior.
 MINTZBERG’S 5P’S OF STRATEGY

1. Plan.
2. Ploy.
3. Pattern.
4. Position.
5. Perspective.

By understanding each P, we can develop a robust

business strategy to take full advantage of our
organization's strengths and capabilities.
1. Strategy as a Plan

Planning is something that many managers are happy

with, and it's something that comes naturally to us. As
such, this is the default, automatic approach that we
adopt – brainstorming options and planning how to
deliver them.

In this case, the entire strategy and its planning are

done in much in advance with the long-term and a
futuristic approach in mind. Aftermath, the process is
followed by the actual implementation and
development of the strategy
2. Strategy as Ploy
Here, the strategy is planned and executed with a
specific intention to beat and outperform the
competition in the market gaining the competitive edge
and advantage.

Mintzberg says that getting the better of competitors, by

plotting to disrupt, dissuade, discourage, or otherwise
influence them, can be part of a strategy. This is where
strategy can be a ploy, as well as a plan
3. Strategy as Pattern
Strategic plans and ploys are both deliberate exercises.
Sometimes, however, strategy emerges from past
organizational behavior. Rather than being an
intentional choice, a consistent and successful way of
doing business can develop into a strategy.

In this case, the overall strategy is emerged as a pattern

considering the various internal and external situations
rather than being pre-planned in nature.
4. Strategy as Position

"Position" is another way to define strategy – that is,

how you decide to position yourself in the marketplace.
In this way, strategy helps you explore the fit between
your organization and your environment, and it helps
you develop a sustainable competitive advantage.

Here, the organizations formulated the strategy to carve

a distinctive niche or an identity in the market through
exclusive products or services gaining a competitive
edge in the market and in the minds of the consumers.
5. Strategy as Perspective
The choices an organization makes about its strategy
rely heavily on its culture – just as patterns of behavior
can emerge as strategy, patterns of thinking will shape
an organization's perspective, and the things that it is
able to do well.

In this case, the strategy is formulated as per the

organizational culture and the way organization views
itself.
In-depth analysis of the 5 P’s of Strategy by Mintzberg:
1. Plan
It is always better for the organizations to have a plan of
action much in advance to be prepared for any
unforeseen internal and external situations. And a well-
planned strategy is a plan to deal with such situations. A
plan needs to be made with a long-term and a futuristic
approach in mind with its execution and development
followed up in a detailed and intricate manner.
The business goals and objectives can be attained with a
good plan plus it enables the management and the key
employees of the company with a clear vision and
mission in hand.
2. Ploy

The facet of ploy is also one of the strategic options to

beat the competition in the market and gain the
advantage. In this scenario, the organizations can come
up with something very outlandish and unexpected and
surprise the market environment that also creates the
waves of the ruckus within the minds of the
competitors.

It can be a well placed promotional tool or a feature in

the product or service that is sure to outsmart and beat
the competitors as a ploy.
3. Pattern

As mentioned earlier, the aspect is the plan in the 5 P’s of

Strategy model by Mintzberg focuses on the intended strategy
but the aspect of pattern comes into the picture where the
strategies have already been implemented before.

The earlier patterns that have worked wonders for the

organization before are an integral part of developing the new
strategy. The regular pattern that has been quite successful in
nature is used in the decision making flow and process. The
strengths of such patterns are included in the future strategies
as intentionally or unintentionally, there is a consistent positive
behavior of employees and internal teams is displayed towards
these patterns and are well accepted without any prejudice and
issues.
4. Position

The aspect of position in formulating the organizational

strategy needs to be carefully understood, designed, planned,
and executed as it will define the overall position of the
organization in the market considering all the internal and
external factors.

It focuses on how the organization wants to portray itself in the

market and in the minds of the consumers that will gain it a
competitive advantage. What will be the core values, unique
selling propositions, nature and attributes of the offerings of
products and services, and the overall brand strength and value
proposition? Working on all these factors in a detailed manner
will help the organization carve a distinctive position in the
market with an edge over others.
5. Perspective

The facet of perspective in the model of 5 P’s of Strategy is quite

indifferent to all of the above-mentioned paths this one draws a
larger perspective keeping the organization at the focal point.

The organization formulates the strategy by dwelling on the

crucial and important details such as how does the target
audience think about the organization? How do employees of
the company perceive the management and the brand as a
whole? What is the perspective of the investors and other
stakeholders of the organization? The culmination and thought
patterns of all these individual perspectives work as the valuable
source of information for the company and help it to make a
strategic choice.
 EXAMPLE: APPLE 5P OF STRATEGY

Plan: The technology giant continues to plan and come up with the consumer
electronics that offer operational excellence and are easy to use. They also plan
and come up with the various software updates expanding their ecosystem.
Ploy: The Company is highly renowned for offering the products that are
innovative, unique, and outlandish in nature that gives them a competitive edge
in the market. They threaten to sue their competitors that copy their technology
or features of the company’s products.
Pattern: Apple uses the previous innovations that have been quite successful in
the past and follows the same pattern to challenge the competition in the
market.
Position: Apple has successfully carved a niche for itself in the market and in the
consumers’ minds as a niche and premium brand that offers only high-end
products that are difficult to compete against in terms of both hardware and
software capabilities.
Perspective: The core values of Apple are innovation and to think differently
and they work as an integral part of their company culture. And their product
offerings to stand as a testimony to the same.
 STRATEGIC DECISION

Strategic decisions are the decisions that are concerned

with whole environment in which the firm operates, the
entire resources and the people who form the company
and the interface between the two.
Characteristics/Features of Strategic Decisions
a. Strategic decisions have major resource propositions for an organization. These decisions
may be concerned with possessing new resources, organizing others or reallocating
others.
b. Strategic decisions deal with harmonizing organizational resource capabilities with the
threats and opportunities.
c. Strategic decisions deal with the range of organizational activities. It is all about what
they want the organization to be like and to be about.
d. Strategic decisions involve a change of major kind since an organization operates in ever-
changing environment.
e. Strategic decisions are complex in nature.
f. Strategic decisions are at the top most level, are uncertain as they deal with the future,
and involve a lot of risk.
g. Strategic decisions are different from administrative and operational decisions.
Administrative decisions are routine decisions which help or rather facilitate strategic
decisions or operational decisions. Operational decisions are technical decisions which
help execution of strategic decisions. To reduce cost is a strategic decision which is
achieved through operational decision of reducing the number of employees and how we
carry out these reductions will be administrative decision.
Strategic decision-making
Strategic decision-making is the process of charting a
course based on long-term goals and a longer term vision.
By clarifying your company's big picture aims, you'll have
the opportunity to align your shorter term plans with this
deeper, broader mission – giving your operations clarity
and consistency.
Strategic decision making aligns short-term objectives with
long-term goals, and a mission that defines your company's
big picture purpose. Shorter term goals are expressed in
quantifiable milestones that give you the capacity to
measure your success and your adherence to your vision
Mission and Vision
Strategic decision-making should start with a clear idea of your
company's mission and vision – the reasons you exist as a business.
Your business may be dedicated to providing environmental
solutions, or you may simply want to make as much money as
possible. Either way, if you know what you want over the long term,
you'll be better positioned to infuse these aims and principles into
your daily decisions. Start by writing your mission and your vision.

This statement can be as simple or complex as you wish, depending

on the degree of formality you use in your everyday business
decisions as you run your company. Even if your mission is only one
sentence – the act of thinking about and articulating this sentence
will help you develop a better idea of what you want. Having this
written statement will also enable you to communicate your long-
term vision to your employees and to other stakeholders, to get
them on board with the strategic decisions you make.
Long-Term Goals
Long-term goals are the concrete embodiment of your
mission and vision. A vision is an idea, and long-term goals
are expressions of how these ideas play out – with
milestones and real-world objectives. These goals are
critical to the strategic decision-making process, because
they guide your choices, and provide measurable and
quantifiable ways to assess whether you are successfully
aligning your company's direction with the values you've
articulated to guide your business.
If your business designs environmentally friendly
technologies, you might create a long-term goal of wanting
to be carbon-neutral within five years. With this goal in
mind, you'll then make strategic decisions aimed at
reducing your carbon footprint during that time.
Short-Term Goals
It's easy to lose sight of the strategic decision-making
process when you're focusing on short-term goals and
decisions that concern day-to-day activities and issues.
Short-term goals and decisions usually relate to
immediate needs, such as improving cash flow so that you
can cover outstanding bills. Despite the immediacy and
urgency of these goals, your strategic decision-making
process should still enable you to proceed with an eye
toward both your vision and your longer term objectives.
If your values are centered around sustainability, and your
company's official company car dies, it would be more
consistent with your mission to finance a fuel-efficient
replacement than to buy a cheap gas guzzler.
 STRATEGIC DECISION MAKING PROCESS
Strategic decision making is a critical skill for effective
leadership. The outcome of a leader’s choices
significantly impacts employees, customers, the market,
and ultimately the success of the company. Developing
such a skill requires a combination of knowledge,
experience and intuition. It also requires a process to
help define the problem and select the right course of
action. Here is a method to help you successfully
navigate the decision making process.
1. Define the Problem - 
Consider these questions:
• What is the problem? Can it be solved? Is this the
real problem or a symptom of a larger one?
• Does it need immediate attention or can it wait? Is it
likely to go away by itself? Can I risk ignoring it?
• What is my objective? What’s to be accomplished by
the decision?
2. Gather Information - Seek information on how and
why the problem occurred:
• Stakeholders: Talk to individuals or groups affected
by the problem
• Facts and data: research, benchmarking studies,
interviews with credible sources, observed events
• Constraints: Lack of funding, resources, cultural
barriers
• Ask: What am I not seeing? What have I missed?
3. Develop and Evaluate Options - Generate a wide
range of options:
• Choose options that show promise, need more
information, can be combined or eliminated, or will
be challenged.
• Weigh advantages/disadvantages of each. Consider
cost to the business, potential loss of
morale/teamwork, time to implement the change,
whether it meets standards, and how practical the
solution is.
• Predict the consequences of each option. (“If/Then”
or “What if?”)
• Ask: What is the worst solution?
4. Choose the Best Action - Select the option that best
meets the decision objective:

• Consider factual data, your intuition, and your

emotional intelligence when deciding a course of
action.
• Accept that the solution may be less than perfect.
• Consider the middle ground. Compromising on
competing solutions may yield the best decision.
5. Implement and Monitor the Decision - Develop a
plan to implement and monitor progress on the decision:
• Step-by-step process or actions for solving the
problem
• Communications strategy for notifying stakeholders
• Resource identification/allocation
• Timeline for implementation
• Measurements/benchmarks to gauge progress
In business (and in life), decisions can fail because the
issue has not been clearly defined and alternatives have
not been carefully considered. Rather than delay the
decision or make one based on faulty information, this
model ensures that the right problem gets solved at the
right time and in the right way.
 STRATEGIC MANAGEMENT PROCESS

1. Clarify Your Vision:

The purpose of goal-setting is to clarify the vision for
your business. This stage consists of identifying three
key facets: First, define both short- and long-term
objectives. Second, identify the process of how to
accomplish your objective. Finally, customize the
process for your staff, give each person a task with which
he can succeed. Keep in mind during this process your
goals to be detailed, realistic and match the values of
your vision. Typically, the final step in this stage is to
write a mission statement that succinctly communicates
your goals to both your shareholders and your staff.
2. Gather and Analyze Information

Analysis is a key stage because the information gained

in this stage will shape the next two stages. In this stage,
gather as much information and data relevant to
accomplishing your vision. The focus of the analysis
should be on understanding the needs of the business
as a sustainable entity, its strategic direction and
identifying initiatives that will help your business grow.
Examine any external or internal issues that can affect
your goals and objectives. Make sure to identify both the
strengths and weaknesses of your organization as well as
any threats and opportunities that may arise along the
path.
3. Formulate a Strategy

The first step in forming a strategy is to review the

information gleaned from completing the analysis.
Determine what resources the business currently has
that can help reach the defined goals and objectives.
Identify any areas of which the business must seek
external resources. The issues facing the company
should be prioritized by their importance to your
success. Once prioritized, begin formulating the
strategy. Because business and economic situations are
fluid, it is critical in this stage to develop alternative
approaches that target each step of the plan.
4. Implement Your Strategy

Successful strategy implementation is critical to the

success of the business venture. This is the action stage
of the strategic management process. If the overall
strategy does not work with the business' current
structure, a new structure should be installed at the
beginning of this stage. Everyone within the
organization must be made clear of their
responsibilities and duties, and how that fits in with the
overall goal. Additionally, any resources or funding for
the venture must be secured at this point. Once the
funding is in place and the employees are ready, execute
the plan.
5. Evaluate and Control
Strategy evaluation and control actions include performance
measurements, consistent review of internal and external issues
and making corrective actions when necessary. Any successful
evaluation of the strategy begins with defining the parameters to
be measured. These parameters should mirror the goals set in
Stage 1. Determine your progress by measuring the actual results
versus the plan.

Monitoring internal and external issues will also enable you to

react to any substantial change in your business environment. If
you determine that the strategy is not moving the company toward
its goal, take corrective actions. If those actions are not successful,
then repeat the strategic management process. Because internal
and external issues are constantly evolving, any data gained in this
stage should be retained to help with any future strategies.