STRATEGIC MANAGEMENT

Concept of Business Policy

In context, business policy generally refers to a set of rules that

guides the conduct of the business on pursuit of profit and other
objectives of the business organization. Business policies come in
many types of forms designed to achieve end-results. These policies
are developed in coherence with the duties and responsibilities of
various functional units (e.g., human resource, sales/marketing,
production, and the like).business policies are usually expressed in
broad direction and sometimes made specific to serve as guidelines
or rules for decision-making and execution of organizational
activities.
Concepts of Strategy

Wright, Kroll, and Parnell (1996) defined strategy as

essentially referring to top management’s mission and
goals. These authors regard strategy in three vantage
points namely: a) strategy formulation, b) strategy
implementation, and c) strategic control. These same
authors categorized strategy into either intended or
realized strategy.
Thompson and Strickland (1999) characterized strategy at the
operational level referring to it as a set of competitive moves
and business approaches that management is employing to run
the company. Among others, strategy is management’s “game
plan” to achieve the following:
a)Attract and please customers;
b)Stake out a market position;
c) Conduct operations; and
d)Compete successfully.
Characteristics of Strategy

a) Strategy is traditionally meant to be a grand plan made in the light of what it

was believed an adversary might of might not do.
b) Strategy derives its relevance given from the existence competition in
business.
c) It is done on the presumption of the existence of a negative scenario.
d) It also connotes general program of action and deployment of emphasis and
resources to attain comprehensive objectives.
e) A process of deciding on objectives of the organization, on changes in these
objectives, on the resources used to attain these objectives, use and
disposition of these resources.
f) It involves determination of the basic long-term goals and objectives of an
enterprise, and the adoption of courses of action and the allocation of
resources necessary to carry out those goals.
g) A decision about how to use available resources to secure
a major objective in the face of obstruction.
h) Unlike policy, strategy implies actions and guides decision-
making , spelling out directions to be taken.
i) Strategy may, in some extreme or necessary cases, exist
without a policy.
Strategy vs. Policy

The following are situations where strategy and policy oftentimes come
in collision course making it difficult to operationalize a strategy within
the bounds of standing policy:
a) In many instances, business policies exist amidst absence od
business strategy and strategies may exist without established
business policies.
b) If ever they exist, business policies are generally directional in
nature and strategy is more operational in context.
c) Business policies are often formal or written and strategies may be
informal and not necessarily written and often confidential.
Origin and Nature of Strategy

Jeffrey Bracker cited that the word strategy originated from the
Greek word “sratego” referring to a “general” which in turn traces
its roots from the word “army” and “lead”. As it is, the term
strategy has its root and gained its popularity in the field of military
science. The word statego means “to plan destruction of one’s
enemies through effective use of resources.
The nature of Strategic Management

Stahl and Grigsby (1992) defined strategic management as referring

to the entire process of strategic decision-making that relates to its
environment, guides internal activities, and determines the long-
term performance of the organization.

Wheelen and Hunger (2004) described strategic management as a set

of managerial decisions and actions that determines the long-run
performance of a corporation. It includes environmental scanning,
stategy formulation, strategy implementation, evaluation and
control.
Willianson, Jenkins approached strategic management as a
framework that evolves around the idea of shaping the destiny
of an organization. It is about:
a)Putting an organization into competitive position
b)Sustaining and improving that position by developing an
acquisition of appropriate resources and by monitoring angd
responding to environmental changes; and
c) Monitoring and responding to the demands of key
stakeholders.
Wright , Kroll and Parnell viewed that the strategic management
involves a series of steps in which top management shoul accomplish
the following tasks:
a) Analyze the opportunities and threats or constraints that exist in
the environment;
b) Analyze the organization’s strengths and weaknesses in in its
internal environment;
c) Establish the organization’s mission and develop goals;
d) Formulate strategies (at corporate level, business unit level, and
functional level) that will match the organization’s strenghths and
weakness with the environment’s opportunities and threats;
e) Implement the strategies; and
f) Engage in strategic control activities to ensure that the
organization’s goals are attained.
Benefits of Strategic Management

a) Clearer sense of strategic vision for the firm;

b) Sharper focus on what is strategically important; and
c) Improved understanding of a rapidly changing environment.
Strategic Types

Wheelen and Hunger (2004) theorized that strategic type is a

category of firms based on common strategic orientation and
combination of structure, culture, and process consistent with
strategy. Competing firms within a single industry can be
categorized on the basis on their general strategic orientation into
four types as follows:
a) Defenders. This type includes companies with limited product
line that focus on improving the efficiency of their existing
operations. This cost orientation makes them unlikely to innovate in
anew area.
b) Prospectors. This type of companies includes firms with fairly broad
product lines that focus on product innovation and market opportunities.
They tend to emphasize creativity over efficiency.

c) Analyzers. This type includes business organization that operate in at

least two different product-market areas, one stable and one variable. In
the stable areas, efficiency is emphasized. In the variable areas,
innovation is emphasized.

d) Reactors. This type includes companies that lack a consistent strategy-

structure-culture relationship. Their (often ineffective) responses to
environmental pressures tend to be piecemeal strategic changes.
Strategy Vs. Tactics

Tactics are more operational and done in context with or as a support activity
or operation to achieve a strategy.
Strategy and tactics are differentiated in many ways as follows:
a) As to level of conduct, strategy is developed at the highest levels of
management whereas tactics are employed at and related to lower levels
of management.
b) As to regularity, formulation of strategy is both continuous irregular
whereas tactics are determined on a periodic cycle with fixed time
schedule (ex. Budget)
c) As to subjective values, strategic decision-making is more heavily weighed
with subjective values of managers than is tactical desicion-making