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Nature of ISM and Evolution

Coverage in session

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In this session , we will study about Evolution of strategy Phases of strategic Management Nature of Strategic Management

How strategic Management Evolved

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Evolved from Boston Consulting Group They started using concepts and techniques dealing with strategic Management. Earlier Managements were not using it, even now all are not using it with unstated objectives and intuitive strategies

Evolution of Strategic Management

1. 2. 3. Bruce Henderson of Boston Grp. Concluded that intuitive strategies can not be successful in long term as, Corporation becomes large. Layers of Management increases Environment changes substantially.
Risk of error, costly mistakes,

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Mangers using Strategic Management with changing world

Four sequential steps of planning

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Four phases of strategic Management

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Basic Financial planning-Annual BudgetsOperational control

Forecast based planning-Planning for growth

Extremely oriented planning-Orientation to markets, competitors

GM Led the transition of strategic planning to strategic Management. so by 1990 most comp. in world had started ISM

Strategic Management-competitive advantage while implementation And evaluation

Nature of strategic Management includes following aspects

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Dimensions of Strategic Management( Range of strategic decision-covers Level also) Formality in strategic Management (Degree to which participants involvement specified)

Dimensions of Strategic Management

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Dimensions means - What decisions facing a business have to strategic - Requires Management action to be strategic - Range of decision

The six dimensions are..

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Strategic issues require top-management decisions Strategic issues involve the allocation of large amounts of company resources( RR) Strategic issues are likely to have significant impact on the long-term prosperity of the firm (Reliance Telecom) Strategic issues are future oriented Strategic issues usually have major multifunctional or multibusiness consequences (e.g. Kingfisher ) Strategic issues lead to considering factors in the firm's external environment.

Formality of Strategic management

Formality Means degree to which participants , responsibilities , authority and discretion (caution) are involved in decision making,. Greater Formality means - Higher Cost - Comprehensiveness (in-depth) - Accuracy - Success of planning

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Determinants of Formality
Size of organization Management styles Complexity of environment Production process Problems Purpose of planning system

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Modes of Formality

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Entrepreneurial (single product/limited no. of products) Planning Mode (comprehensive/broad) Adaptive Mode (medium sized firms, where alternative strategies are close of existing)

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