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STRATEGIC MANAGEMENT AND

BUSINESS POLICY
THIRD EDITION

Chapter 1
Introduction to strategic
management and business
policy
AZHAR
KAZMI

Learning objectives
Describe the historical development of strategic
management and business policy in the world and in
India
Discuss the likely future developments in the field of
strategic management and business policy
Explain the concept of strategy and its limitations
Describe the process of strategic decision making
Discuss the various schools of thought on strategy
formation
Describe the strategic management process

(c) Dr. Azhar Kazmi 2008

Evolution of strategic management


and business policy
The genesis of strategic
management and business policy
Evolution based on management
practices
Historical perspective
Pointers to the future

(c) Dr. Azhar Kazmi 2008

Hambrick and Fredrickson model of


strategic management
Internal and External
Strategic Analysis

Strategy:
Vision and
Mission

Goals and
Objectives

Arenas
Vehicles
Differentiators
Staging
Economic logic

Implementation Levers
and Strategic
Leadership

D. C. Hambrick & J. W. Fredrickson: Are you sure you have a strategy? (2001). Academy of
Management Executive Vol. 15, No. 4, pp. 48-59

(c) Dr. Azhar Kazmi 2008

The Indian scenario

Role of IIMs and ASCI


Role of AICTE
Role of AIMS
Role of AIMA
India-focused international studies
Strategic Management Forum of India
Publications
(c) Dr. Azhar Kazmi 2008

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 trade-offs
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
Office

CORPORATE

SBU
A

SBU

CORPORATE-LEVEL

SBU
B

SBU
C

BUSINESS-LEVEL

FUNCTIONAL
Finance

Marketing

Operations

(c) Dr. Azhar Kazmi 2008

HRM

Information

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

10

Schools of thought on strategy


formation
The prescriptive schools
The descriptive schools
The integrative school

(c) Dr. Azhar Kazmi 2008

11

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

12

Four phases in strategic


management

Establishment of
strategic
intent

Formulation of
strategies

Implementation of
strategies

Strategic
evaluation

Strategic control

(c) Dr. Azhar Kazmi 2008

13

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

Strategic
Evaluation

Project
Procedural
Resource allocation
Structural
Behavioural
Functional &
Operational

Strategic control

(c) Dr. Azhar Kazmi 2008

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