INTRODUCTION OF STRATEGY MANAGEMENT

Managerial decisions of long-term significance that organizations such as Bharti Enterprises take are
studied in the subject of strategic management and business policy. Strategic management and business
policy are overlapping terms that are not clearly distinguishable from each other. While strategic
management is generally considered as the process of formulating, implementing and evaluating
strategies for an organization, business policy is usually considered as an academic field of study, an area
of specialization or a specifically named course related to strategic management.

INTRODUCTION TO BUSINESS POLICY

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 organization 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 organizational
identity and character, the continuous of definition of what needs to be done and the mobilization of
resources for the attainment of goals in the face of competition or adverse circumstance.

The senior management consists of those managers who are primarily responsible for long-term decision
and carry designations such as the Chief Executive Officer, President, General Manager or Executive
Director. These are the persons who are not concerned with the day-to-day problems but are expected to
devote their time and energy to thinking and deciding about the future course of action.

Business policy, with its concern for determination of the future course of action, lays down a long-term
plan which the organization then follows. The senior management, while determining the future course of
action, has a mental picture of the type of organization they want their company to become.

In deciding about the future course of action, the senior management is confronted with a wide array of
decisions and actions that could possibly be taken. The senior management exercise a choice, depending
on the given circumstances and which, in their opinion, would lead the organization towards a specific
direction. Moving in a predetermined direction, the organization attains the planned identity and
character.

Organizational decisions are not made in isolation and managerial actions can not be taken without
providing the resources necessary for them. The senior management, while deciding about the future
course of action, concern themselves with the resources---- financial, material and human--- that would be
required for the implementation of the long-term plans.

Business policy is assigned to a compulsory course included in a typical management studies curriculum.
Almost all the management education program offered by universities, management institutes or business
schools in India include the business policy course, by whatever nomenclature it might be addressed,
normally in the later part of the degree or diploma programme. The content of the business policy course
is drawn from the field strategic management.
INTRODUCTION TO STRATEGIC MANAGEMENT

Strategic decision –making is done through the process of strategic management. In this section, we deal
with four aspects: - a definition of strategic management, the different phases in the process of strategic
management, the elements this process contains, and lastly, the model of strategic management that we
have adopted in this book.

Definition of strategic management

In this text, strategic management is defined as the dynamic process of formulation, implementation,
evaluation and control of strategies to realize the organisation’s strategic intent.

First, strategic management is a dynamic process. It is not a one-time, static or mechanistic process. By
being dynamic, strategic management is a continual, evolving, iterative process by this; it means that
strategic management can not be a rigid, step-wise collection of a few activities arranged in a sequential
order. Rather, it is a continually involving mosaic of relevant activities. Managers perform these activities
in any order contingent upon the situation they face at a particular time. By being iterative, an activity
may not be required to be performed only once but repeated over time as the situation demands.

Four Phase in strategic Management Process

Establishme Formulatio Implementatio Strategic

nt of n of n of strategies evaluation
strategic strategies
intent

Strategic control

The first phase consists of establishing the strategic intent for the organization. In this text, strategic
intent is the hierarchy of objectives that an organization sets for itself. Within this, there are the vision,
mission, business definition and objectives. The aim of strategic management is to help the organization
realize its strategic intent.

The second phase of the formulation of strategies is concerned with the devising of a strategy or a few
strategies. This phase is also called strategic planning. Essentially, this is an analytical phase in which
strategies (managers who are responsible for strategic management in an organization) think, analyze and
plan strategies.

The third phase of implementation is the ‘putting into action’ phase. The strategies that are formulated
are implemented through a series of administrative and managerial actions.

The fourth and last phase of evaluation and control involves assessing how appropriately the strategies
were formulated and how effectively they are being implemented. Depending on the outcome of
assessment, actions could be taken ranging from fine-turning implementation to a drastic reformulation of
strategies.

Third Edition of Strategic Management and Business Policy, only by the publishers Tata McGraw-
Hill Publishing Company Limited 7 west Patel Nagar New Delhi , Reffered by Azhar Kazmi ;
(Page no. 3, 4, 9, 10, 19, 20).

Nature of Business Policy and Strategic Management

The concepts of business policy, strategy and strategic management evolve over time. The strategic
management is currently used, we also familiarize with the term business policy. Business policy is a
term traditionally associated with the integrated management course in business schools devoted to
integrating the educational programme of these schools.

Definitions of strategy:

“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”

According to Alfred D. Chandler

“A plan or course of action which is of vital pervasive or continuing Importance to the organization
as a whole.”

According to Arthur Sharplin

“The pattern of plan that integrates an organisation’s major goals, policies and action sequences
into a cohesive whole.”

According to James Brain Quinn

Analysis of definition of strategy:

The analysis of various definitions of strategy presents the following points:

1. Strategy is a central understanding of the strategic management process.

2. Strategy is the determination of basic long-term goals and objectives of an organization.
3. Detreminning the course of action to attain the predetermined goals and objectives
4. Allocation the necessary resources for implementing the course of action.
5. Developing the company from its present position to the desired future position.
6. Set of decision-making rules making a common thread.
7. The common thread pulls the policies, plans, goals, objectives of the different functional areas fo
business such as finance, marketing, production/operations and human resourse together and
interweaves them as a unified comprehensive and integrated plan, action and evaluation.
8. Set a clear direction.
9. Enterprise knows its strengths and weaknesses compared with those of its competitiors.
10. Enterprise devotes its hard-won resources to projects that employ its set of core competencies, the
primary skills within the organization.
11. Identify factors in the political and social environment that requires careful monitoring.
12. Recognize which competitor’s actions need critical attention.

Basic elements of the concepts of policy

1. Objectives
2. The environment
3. The Firm
4. Strategy
5. Time

Criteria for Effective strategy:

Although each strategic situation is unique, there are some common criteria that tend to explain
an effective strategy. Criteria for effective strategy include:

1. Clear objective:-
All efforts should be directed towards clearly understood, decisive and attainable overall goals.
All goals need not be written down or numerically precise but they must be understood and be
decisive.
2. Maintaining the initiative:-
The strategy preserves freedom of action and enhances commitment. It sets the pace and
determines the course of events rather than reacting to them.
3. Concentration:-
The strategy concentrates superior power at the place and time likely to be decisive. The strategy
must define precisely what will make the enterprise superior in power, best in critical dimensions
in relation to its competitors. A distinctive competency yields greater success with fewer
resources.
4. Flexibility:-
The strategy must purposely be built in resources, buffers and dimensions for flexibility and
maneuver. Reserved capabilities, planned maneuverability and repositioning allow one to use
minimum resource while keeping competitors at a relative disadvantage.
5. Coordinationated and committed leadership:-
The strategy should provide responsible, committed leadership for each of its major goals. Care
should be taken in selecting the leaders in such a way that own interest and values match with the
requirements of their roles. Commitment but not acceptance is the basic requirements.
6. Surprise:-
The strategy should make use of speed, secrecy and intelligence to attack exposed or unprepared
competitors at an unexpected time. Thus surprise and correct time are important.
7. Security:-
The organization should secure or develop resources required, securely maintain all vital
operating points for the enterprise, an effective intelligence system to prevent the effects of
surprises by the competitors.
Strategic Management

Introduction:-
One can spontaneously say that the strategic management is the process of management of
strategic decision-making, implementation and control. It is not a complete meaning of strategic
management as it fails to cover many important aspects of strategic management.
One should know that the nature of strategic management is different from that of management.
Managers in most cases deal with day to day issues and problems of operational control. These
issues and problems include procuring raw material, scheduling production process, inventory
control, production goods, procuring finances, investing, capital budgeting, working capital
management, procuring human resources, settling their problems, selling the products. Creating
demand, advertising, sales promotion, marketing research and the like. All these tasks are
important, but the managers perform these tasks based on general guidences provided to them.
Therefore, these tasks are vital for efficient implementation of strategy but it is not entire strategic
management

What is strategy management?

Definitions of strategic management:

“Strategic management is concerned with deciding on strategy and planning how that strategy is
to be put into effect.” It can be thought of as having these elements with in it strategi analysis,
strategic choice and strategic implementation as shown in strategic analysis seeks to understand
the strategic position of the firm. Strategic choice is to do with the formulation of possible course
of action. Strategic implementation is concerned with planning how the choice of strategy can be
implemented.

Strategic Analysis Strategic Choice Strategic implementation

Evaluation Process
According to Samuel C. Certo and J. Paul Peter, “ strategic management is a continuous
iterative, cross-functional process aimed at keeping an organization as a whole appropriately
matched to its environment.” A series of steps that a manager must take are identified by this
definition. These steps include performing an environmental analysis. Establishing organizational
direction, formulating organizational strategy, implementing organizational strategy and
exercising strategic control.

“Strategic management is primarily concerned with relating the organization to its environment,
formulating strategies to adapt to the environment and assuring that implementation of strategies
taken place.”
 Analysis of the definition of strategic Management:
The study of the above mentioned definitions of strategic management presents the following
analysis:

1. Strategic management is a continuous process and it does mean that the organization never
finishes its strategic work. Managers always will be focusing or reflecting on some aspect of
strategic management, through different aspects of strategic management requires different
emphasis and effort of varying intensity at different times.
2. Though the process of strategic management starts with the step of performing as
environmental analysis, carries on to the step strategic control and it again begins with the
environmental analysis. Thus, strategic management consists of a series of step repeated
cyclically.
3. Various activities of strategic management draw the inputs from various functional areas of
management. Thus, strategic management process integrates human resources with
marketing, production/operation and finance. All these functional areas of management, in a
comprehensive effort, contribute simultaneously to create an effective plan or output. Thus,
the cross- functional team members work together and the organization will enjoy the
benefits of synergy.
4. Strategic management identifies its purpose as ensuring that an organization as a whole
appropriately matches its ever changing environment. Organizations must modify their
strategies in accordance with the changes in its environment. For example announcement of
new economic policy by the government of India in 1991 shook the environment and
consequently most of the business firms modified their strategies.

Historical Development of strategic Management:

Almost all the disciplines passed through different stages in their evolutionary process and reached their
present stage. Strategic management is not an environment to this . though the formulation of a strategy
seems to be simple, it would be very difficult to accomplish it. Many organization develop their strategic
management process over periods of several years, adjusting and tailoring them to meet specific need of
the organization.
Different phase of development of strategic management are presented

Increasing Phase 1 Phase 2 Phase 3 Phase 4

Effectiveness of basic Forecast Externally Strategic
Formal business Financial Based Oriented
Management
Planning Planning Planning Planning

 All resources
to create
competitive
advantage.
 Increasing
 Strategically
response to
chosen
markets and
planning
 More competition.
framework.
effective  Through
 Creatives,
 Operati planning for situation and
flexible.
onal growth competitive
control.  Environmen assessment.
 Annual t analysis  Dynamic
budget  Multi-year allocation of
plans resources

Phase 1- Basic Financial Planning-

The first phase of the strategic development is fairly simple routine of basic financial planning. The main
concern during this phase was simply meeting annual budget requirement, operational functions like
production, marketing, finance and human resources and emphasizing on the operational control.

Phase 2- Forecast-based Planning-

During this phase the primary concern was mainly on effective plans, environmental scanning, plan for
the future and allocation of resources.

Phase 3- Externally-oriented Planning-

There is remarkable shift during the phase the not able developments include: increasing response to
markets and competition, complete situational analysis and assessment of competitive strength, evaluation
of strategic alternatives and allocation of resources based in changing needs from time to time.
Phase 4- Strategic Management-

The focus shifts over time from meeting the budget to planning for the future to thinking abstractly, to
working to create desired future. To create future, decision-makers and integrate all their organization’s
resources to gain a competitive advantage. They build flexibility into the organizational planning process,
and foster a supportive, participative climate within the organization.

Published by Himalaya Publishing House, “Ramdoot” Dr. Bhalero Marg, Girgaon Mumbai,
Reffered by P Subba Rao (Page no- 7 to 14)

Evolution of Business Policy as a Discipline

Business policy is a mandatory course which is usually included in a typical management Studies
curriculum. Almost all management education programmes offered by the universities and
management institutes in India include a business policy course (by whatever nomenclature it
may be addressed) normally in the latter part of a degree or diploma programme.

The Genesis of Business Policy

The origins of business policy can be traced back to 1911, when the Harvard Business School
introduced an integrative course in management aimed at providing general management
capability. This course was based on case studies which had been use in at the School for
instructional purposes since 1908.

However, the real impetus for introducing business policy in the curriculum of business
schools (as management institutes or departments are known is the US) came with the
publication of two reports in 1959. The Gordon and Howell report, sponsored by the Ford
Foundation, had recommended a capstone course of business policy which would “… give
students and opportunity to pull together what they have learned in the separate business fields
and utilize this knowledge in the analysis of complex business problems”.

In 1969 the American Assembly of Collegiate Schools of Business (AACSB), a regulatory

body for business schools, made the course of business policy a mandatory requirement for the
purpose of recognition. In the last two decades, business policy has become an integral part of
management education curriculum.
Evolution Based on Managerial practices
Glueck has viewed the development in business policy as arising from the use of planning
techniques by managers. Starting from day to day planning in earlier times, managers, till
recently tried to anticipate the future through the preparation of budgets and by using control
systems like capital budgeting and management by objectives. However, as these techniques
were unable to emphasize the role of the future adequately, long – range planning came into use.
But, soon, long-range planning was replaced by strategic planning, and later by strategic
management – a term that is currently being used to describe the process of strategic decision-
making. Strategic management forms the theoretical framework for business policy courses
today.

Historical Perspective of the Evolution of Business Policy

Hofer and others have viewed the evolution of business policy in terms of four paradigm shifts.
For the sake of convenience, these shifts may be considered as four overlapping phases in the
development of the subject of business policy. It is interesting to note that the development of
business policy as afield of study has closely followed the demands of real – life business.
According to Hofer and others (referred to above), the first phase, which can be traced to the mid
– 1930s, rested on the paradigm of ad hoc policy- making. The need for policy – making arose
due to the nature of the American business firms of that period. The firms, which had originally
commenced operational in a single product line catering to a unique set of customers in a limited
geographical area, expanded in one or all of these three dimensions. Informal control and
coordination became partially irrelevant as expansion took place and the need to integrate
functional areas arose. This integration was brought about by framing policies to guide
managerial action. Policy – making became the prime responsibility of erstwhile entrepreneurs
who later assumed the role of senior management.

Due to the increasing environment changes in the 1930s and 40s in the US, planned policy
formulation replaced ad hoc policy- making. Based on this second paradigm, the emphasis
shifted to the integration of functional areas in a rapidly changing environment.

Points to the Future

The resolution of strategic issues that affects the future of a business firm has been a continual
Endeavour in the subject ob business policy. The Endeavour is based on the development of
strategic thinking. As Whitefield says “really useful training (in strategic management should
yield) … a comprehension of a few general principles with a thorough grounding in the way they
apply to a variety of concrete details”. Most likely, the students will forget the details and
principles but “remember (usually unconsciously) new, non-obvious ways of thinking
strategically”. The general principle undergirding strategic thinking has been focus of the efforts
of researchers and academicians in the field of business policy. What, then, are these general
principles? As a first step, the model of strategic management that has development so far and is
under constant review incorporates these general principles.

The direction in which strategic in which management is moving can be anticipated from
what Ansoff calls an emerging comprehensive approach of “management of discontinuous
change, which takes account of psychological, sociological, political, and systemic
characteristics of complex organizations”.

The Indian Scenario

Formal management education started in India in the late fifties and gained impetus with the
setting up of the Indian Institutes of Management (IIMs) and the Administrative Staff College of
India in the early sixties. In the formative years of the IIMs, the curriculum and philosophy of
management education “… were borrowed substantially from the American business schools”.
IIM Ahmadabad based its teaching methodology on the Harvard model of developing and using
case studies as a major pedagogical tool. Wit the spreading of the network of the IIMs and the
creation of several university departments and private management institutes, management
education has experienced an unparalleled growth.

As stated earlier, almost all management education institutions offer the business policy
course, usually in the latter part of the degree or diploma programme. The All India Council of
Technical Education (AICTE), the regulatory agency for management education in India,
prescribed business policy – first in 1990 and again in 1995 – as an integrative component in the
management studies curriculum, in the form of a course in corporate planning and strategic
management. The Association of Indian Management Schools (AIMS), a representative body of
management institutes and university management departments, while recommending a standard
curriculum, included business policy and strategic management as a compulsory course.

BUSINESS POLICY AND STRATEGIC MANAGEMENT –

Evolution of business policy as a discipline – AZHAR KAZMI
CHARACTERISTICS OF STRATEGY MANAGEMENT
Characteristics of strategy management are as follows;

1) Strategy as a major course of action through which an organization tries to relate itself
with environment to develop certain advantages which help in achieving its objects.
2) Strategy is a relative combination of action aimed at to meet a particular condition, to
solve certain problem, or to achieve a desirable end. This combination of action differs
from situation to situation.
3) Strategy may even involve contradictory action. Since a strategic action depends on
environmental variables, an organization mat takes contradictory action either
simultaneously or with a gap of time. For example, to purpose a growth strategy, an
organization may shall some of its businesses while expanding other business. This is
happening throughout the word and in India too.
4) Strategy is forward looking; it has orientation toward future. Strategic action is required
in a new situation. No new situation requiring solution can exist in the past and, therefore,
strategy is relevant to future.

L. M. PRASAD: BUSINESS POLICY STRATEGY MANAGEMENT: PAGE

NUMBER; 34-35

Characteristic of strategy management as follows :

1) The condition of most business change so fast that strategic management is the only way
to anticipate future problems and opportunities.
It allows an enterprise to make its decisions based on long range forecast not spur-of
moment reactions.
2) Strategic management provides all the employees with clear object and direction about
the future of the enterprise.
People perform better if they know what is expected of them $ where the enterprise is
going. This also helps reduce conflict. It provides a strong incentive to employees and
management to achieve company’s objective. It also ensures that the top executives have
unifies opinion on strategic issues and action.
3) Strategic management improves quality of strategic decision through group interaction.
The process of group interaction for decision-making facilitates generation alternative
strategies and better screening of opinion due to specialized perspective of group
members. The best alternative is thus likely to be chosen and acted upon.
4) Strategic management provides financial benefits.
On the basis of empirical studies and logical analysis it may be claimed that the impact of
strategic management is primarily that improved finical performance in terms of profit
and growth of firms with a developed strategic management system having major impact
on planning and implementation of strategies.
 5) Stretragic management provides greater employee motivation.
Participation of employees of their representatives in strategy formulation leads to better
understanding of the priorities and operation of the reward system. Also there is better
appreciation their part of the productivity-reward linkage inherent in the strategic plan.
Hence, goal-directed behavior is likely to follow incentives.
6) strategic management minimizes resistance to change.
The benefits of acceptability of change with minimum resistance is also likely to follow
participative process of strategy making ,as there is greater awareness on the basis of
choosing a particular option and the limits to available alternatives. The uncertainly,
which is associated with change, is also eliminated in the process and resistance to
change is rendered innocuous.

B. S. HOTI : STRATEGIC MANAGEMENT : PAGE NUMBER : 4- 5

Concept of strategic management (AZHAR KAZMI)

The concept of strategy is central to understanding the process of
strategic management. The term ‘strategy’ is derived from the Greek
word ‘strategos’ which means generalship the actual direction of
military force as distinct from the policy governing its development.
Therefore the ‘strategy’ literally means the art of the general.
Example of strategy in action-
Kotak Mahindra finance Ltd is a major non-banking finance company
(NBFC) that has experienced low profitability owing to the various
problem faced by the (NBFC) in India. it is planning to adopt a
divestment strategy in wholesale corporate lending focusing on new
growth areas ,such as wealth management ,retail, insurance, and
information services.
WHAT IS STRATEGIC MANAGEMENT?

The set of managerial decision sand actions that determines the long-run
performance of an organization.
 A continuous, iterative process aimed at keeping an organization as a
whole appropriately matched to its environment (Certo and Peter)
 Keeping the business in tune with Management and marketing forces
both outside and inside the firm

The first definition is one proposed by Samuel Certo and J. Paul Peter in
their book Strategic Management: Concepts and Applications.  This
definition is highlighted by the following statement from Cornell
Maiser, the chairman of the board of Kaiser:

We have begun implementation of our strategic plan for the decade. 

Two years in formulation, the plan calls for Kaiser to identify its most
promising business and focus its resources on long-term development
and profitability.  Increased resources will be allocated to business lines
where the company believes it has existing strengths, such as superior
technology, low costs, or strong market positions. 

The second definition is a little more down to earth.  It shows that the
firm’s management recognizes that there are forces which affect the firm
and the firm’s profitability both inside and outside of the business’s
operations.  These forces affect two primary components of the firm. 
The management component includes the firm’s operations, financial
position, labor situation, and overall management structure.  The
marketing component includes not only the firm’s marketing strategy
(including packaging, advertising, customer service, quality control
procedures, etc.), but also recognizes the fact that there is competition
that the firm must face.  This competition exists both inside and outside
of the firm.  While the firm’s outside competition is fairly obvious, the
inside competition most often arises from conflicts between the
production and management functions of the business and the marketing
functions.  In many small businesses, these conflicts often reside within
one person.
 Benefits of Strategic Management: 8. 8.Establish procedures
1. Establish the mission 9. Provide facilities
2. Formulate philosophy 10. Provide capital
3. Establish policies 11. Set standards
4. Setting objectives 12. Establish programs and
5. Developing strategy plans
6. Plan the organizational 13. Control information
structure 14. Activate people
7. Provide personnel

The application of the concept of strategy commits an organization to a

predetermined course of action while this is essential to chart out the
path ahead it can often blind an organization to emergent an situation as
it goes along the path rigidity can lead to an attitude of finality with
regard to those situation that are actually not known at the time of
starting the journey. It mite be better thus to move slowly one step at a
time and keep in mind to maximum look before you leap. One might say
that this may already be know to perceptive managers. Yet there is no
harm in being careful. Discretion is certainly the batter part of
management.