1.

Explain the evolution of business policy and strategy;

2. Discuss the concept and relevance of strategic
management;
3. Distinguish business policy from strategy and tactics;
4. Discuss some aspects of policy identification and
development; and
5. Appreciate the role of the employees, top
management and board of directors of the business
organization in relation to str
1.1 background.
For any organization to operate and
effectively focus its efforts on certain task and
avoid going astray or deviate away from
targets, a sense of direction need to be set
and some sort of rules or guidelines have to be
stablished and observed.
These rules or guide are in the minds of
founders, leaders and managers though some
are put in writing.
In worst cases, rules and guides are never
put in writing thus creating a variety of
problems and sad experiences including
misadventures and financial losses.
 In the world of business, the set of rules
that guides the decisions and actions of the
members of the organization is generally
called business policy.
These policies maybe informal or in
writing coming in the form of operational
manual, personnel handbook, and memoranda
composed or issued from time to time and as
the need arises.
They may also come in the form of
minutes of the meetings and documentation
of other forms of formal disscussion including
workshops and year end activities.
 The written documents generally comprise the rules
and procedures in the conduct of the business and how
officers and employees of the organization should act
from day to day.
Overtime, it is realized that this is not enough to have
a set of business policies, written or unwritten, but it is
more important to address operational strategies knowing
that business is not a short-term but a long-term journey
to seeking profit.
Prior to the onset of strategic management concepts
management or higher level personnel in the organization
are simply concerned with internal business policies to
guide personnel in doing things right unmindful of or
caring less for external as well as long-term
considerations to be able to operate the business in a
more competitive manner given a variety of factors that
come along the way.
 With GLOBALIZATION trends along with the
challenges and opportunities posed by information
and communication technology particularly the
use of computers and the popularization of so
called e-Commerce/business, the notion of being
more concerned with internal operation policies
and procedures has alarmed business executives
that they are more concerned nowadays with
being external oriented and specifically
concerned with strategic management concept.
 The basic theory of the term management
which evolve around the idea of planning,
organising, staffing, coordinating, controlling
and evaluating still holds true.
Within the context of a plan or the process
of planning are the variety of plans taking the
form of budget, policy, strategy, rules, guides,
procedures, etc.
Common to these variants of plans is that all
of them are done ahead of time and that these
terms serve as guideposts or perimeters within
which decisions have to be based upon.
 Among the believers of the schools of thought
of management, in particular the concept of
business policy, the view is that rules or policies
must be observe or followed.
Business policies are really meant to be observed
or followed simply because as a matter of practice
and tradition, rules and policies of the business are
traditionally done by the top management and
doing otherwise would be risky or wll do more harm
than good for subbordinates.
Hence business policies are considered marching
orders for middle management to implement and
rank and file personnel have to do the actions.
 Policies are usually set forth by the top
management and hence must be adhered to.

Business policy generally refers to a set of

rules that guides the conduct of the business
in persuit of profit and other objectives of
the business organization.
Wright, Kroll, and parnell (1996) defined strategy as
essentially referring to top managements plan to
attain the outcomes consistent with the
organizations mission and goals .
a.) Strategy formulation or developing the strategy.
b.) Strategic implementation (putting strategy into
action), and
c.) Strategic control (modifying either the strategy or
its implementation to ensure that the desired
outcomes are attained.
 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 game

plan to achive the following;

a.) Attract the please customer.

b.) Stake out a market position
c.) Conduct operations; and
d.) Compete successfully.
 Other than defining the word strategy, these are
several characteristics on the nature of strategy as
shared by many authors and scholars.
The following are just a few of the
characterizations on the nature of the word
strategy.

a.) Strategy is traditionally meant to be a grand plan

made in the light of what it was believed an
adversary might or 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
anegative 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 change on this objectives, on the
resources used to attain this objectives, use and
disposition of these resources.
f.) It involves determination of the basic long-term
goals and objectives of the interprise, 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 direction to be taken.
i.) Strategy may, in some extreme or necessary cases,
exist without a policy.
 In the course of running the business in a real
setting, business policies and strategies often collide
thereby inviting dilemma and creating confusion.
When conflict exist between or amongst policies
and strategies, organizational problems or dilemmas
begin.
How well managers handle a scenario of conflicting
policies and strategies determines the direstion of the
business.
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 admist
absence of business strategy and strategies may
exist without stablished 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 maybe informal and not necessarily
written and often confidential.
 Policy is viewed as internal matters that guide
the operationalization of the business organization
whereas Strategy is viewed more as an external
orientation that the firms management should
practice to stay competitive in the industry or
sector it belongs.
 Jeffrey bracker cited that the term strategy was
mentioned in the old testament.
He further cited that the underlying principles of
strategy where discuss by Homer, Euripides, and
Socrates consoled Nichomactides.
Socrates compared the duties of a general from
businessman and showed Nichomactides that in
either case one plans the use of ones major
resources to meet objectives.
 Bracker cited that the word strategy originated
from the greek word stratego referring to a
general which in turn traces its root from the
words army and lead.

The word stratego means to plan the

distruction of ones enemies through effective
use of resources.
 Stable environment into a more rapidly
changing and competitive environment.
The change context of strategy was
attributed to two significant factors namely:
a.) The marked acceleration of the rate of
change with in the firms,and
b.) The accelerated application of science
annd technology to the process of
management.
 Von Neuman and morgenstern (1947) with
their theory of games.

Concept strategy sets out a sense of

direction to achieve an objective as well as
some sort of rules need to be laid down for
everyone to be guided upon, realizing that the
operationalization of the business organization
is not only a concern of how the organization
should operate, and hence the need for
internal policies, but also how the business
organization itself should conduct its business
in the light of prevailing external and
environmental realities.
 Inward-looking management styles, business
policy has metamorphosed from being inward-looking
into outward-looking evolving into what is now known
as strategic management.
 To make the company competitive integrating
the concept of strategy in the mainstream of the
management system is what matters takes into
consideration various external as well as internal
factors and the environment sustainability over the
long-term period in the industry or sector it belongs
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 determine the long-run performance
of a corporation.
It includes environmental scanning (both
external and internal), strategy formulation
(Strategic and long range planning), strategy
implementation, and evaluation of control.

The study of strategic management, therefore

emphasizes the monitoring and evaluation of
external opportunities and threats in the light of a
corporations strengths and weaknesses.
 Williamson, jenkins, et al.(2004) Approached
Strategic management as framework that evolves
around the idea of shaping the destiny of an
organization.
It is about:
a.) putting an organization into a competitive
position;
b.) Sustaining and improving that position by
developing an acquisition of appropriate resources
and by monitoring and responding the
environmental changes; and
c.) Monitoring and responding to the demands of
key stakeholders.
Strategies must be:
a.) Where is the organization going?
b.) What options are open to the organization?
c.) What is the best way forward for the
organization?
d.) How can this be done?
Wright, kroll and Parnell (1996) The mission and
goals of the organization with the context of
external and internal environment.
a.) Analyze the opportunities and threats or
constraints that exist in the external environment.
b.) Analyze the organizations strengths and
weaknesses in its internal environment;
c.) Stablish the organizations mission and develop
goals;
d.) Formulate strategies (at the corporate level,
business unit level, and functional level) that will
match the organizations strengths and weaknesses
with the environments opportunities and threats;
e.) implement the strategies; and
f.) Engage in strategic control activities to ensure
that the organizations goals are attained.
 To ensure achievement of desired outcomes both
on the producers and consumers side, embracing the
ideals of strategic management and doing it well
does not only stand to benefit business owners but
the industry and the society at large three most
highly rated benefits of strategic management to be:

a.) Cleare strategic vision for the firm

b.) Sharper focus on what is strategically important;
and
c.) Improved understanding of a repidly changing
environment.
 General strategic orientation into four
types as follows:

a.) Defenders. This type includes companies

with a limited product line that focus on
improving the efficiency of their existing
operation.
b.) Prospectors. This type of companies
includes firms with fairly broad product lines
that focus on product innovation and market
opportunities.
c.) Analyzers. This type include business
organizations that operate in at least two product
market areas, one stable and one variable.
d.) Reactors. This type includes companies that lack
a consistent strategy-structure-culture relationship.
 Other than business policy and strategy
as common terminologies often mentioned in
the world of strategic management, the term
tactics and its role in concretizing the
intents and purposes of business policy and
strategic management is equally important.
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 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 and erregular whereas tactics are
determined on a periodic cycle with fixed time
schedule (e.g., budget).
C.) As to subjective values, stretegic decision-
making is more heavily weighed with subjective
values of managers than is tactical decision-making.
d.) As to range of alternatives, the total possible
range of alternatives from which management must
choose is far greater in strategic than in tactical
decision-making.

e.) As to uncertainty, uncertainty is usually much

greater in both the formulation and implementation
of strategy than in deciding upon and knowing the
results of tactical decissions.

f.) In terms of nature of problems, strategic

problems are generally unstructured and tend to be
one of a kind tactical problems are more structured
and often repetitive in nature.
g.) As to information needs, formulating strategy
requires large amount of information. Tactical
information needs in contrast rely more heavily on
internally generated data(e.g., Accounting systems,
et.).

h.) In terms of time horizon, strategies are

intended to, and do last for long periods of time
whereas tactics cover a short duration and and are
more uniform for all parts of operating program
(e.g.,annual budget).

i.) By reference, strategy is original in the sense

that it is the source of origin for development of
tactics.
j.) As to details, strategies are usually broad and may
have fewer details that tactics.
k.) In terms of type of personnel involve, strategies
are for the most part formulated by top
management, and the staff, fewer in number as
contrasted with the formulation of tactics where
large number of management and employees usually
participate in the process.
l.) As to ease evaluation, it is usually considerably
easier to measure the effectiveness and efficiency
of tactics than strategies.
m.) From the context point of view, strategies are
formulated from corporate view point, whereas
tactics developed principally from a functional point
of view.
n.) As to importance, strategies are of the
highest importance to an organization , while
tactics are considerably less significan.
 May it be business policy or strategy, it has its
foundation or basis for formulation.

The following are the bases from which policies

and strategies are drawn upon:

a.) Legal mandate. Typically, business policies are

based on the provisions of the articles of
incorporation and by-laws of the organization.
b.) Vision and mission statement. Sense of
direction and mission for which the organization
was received or stablished.
c.) Specific objectives. Stated objectives of the
business organization maybe a product of a desire
to be competitive of the kind of image and culture
the company would like to project.
d.) Programs and policies. These are specific
programs and policies set forth by the
organizations policymakers (i.e,. Board of
directors and top of management) in persuit of
short and long term goals given certain
considerations at hand.
 In identifying opportunities for developing
business policies and strategies, there is wisdom in
considering various approaches.
A brainstorming session and doing serious
research about what is happening in the industry or
sector the company is operating would be extreme
useful.
Using the following approaches or modalities by
which policies and strategies are developed can be
of help.
a.) Policy/strategy profile. Systematic examination
of present company policy/strategy, self
examinations, audit, and intruspection.
b.) Gap analysis. What strategies and policies must
be adopted to reach the sought ends? it means
what is missing in the existing policy that may
have been missed resulting to non attainment of
objectives.
c.) Competitive strategy analysis. This also calls
for finding the niche were the firm is deemed
competitive.What is it that makes the firm less or
uncompetitive requires a much more detailed
analysis of the internal and external factors that
determine the long-term competitiveness of the
business.
 Richard Whittington (2001) theorized the strategy
comes in four generica approaches that differ
fundamentally along two dimensions: The
outcomes of the strategy and the process by
which it is made. Figuratively, the four approaches
are shown in figure 1 and the four approaches are
briefly described as follows:
a.) classical approach. The oldest of the four
approaches analyzing, planning, commanding or
directing. Profitability is the supreme goal and
rational planning the means to achieve it.
 Outcomes
Profit maximizing

Classical Evolutionary
Processes
Deliberate Emergent

Sytematic Processual

Plural
Figure 1 Generic Perspective of strategy
(Source: washington (2001),p.3)
b.) Evolutionary. This approach is concious on
keeping costs or expenses low with open option,s
do not necessarily prescribe rational planning
methods, managers adopt, it will only be the best
performers that survive.
c.) Processual. Imperfect nature of all human life,
It argues that it is to the very imperfections of
organizational and market processes that managers
owe their strategies and competitive advantages.
d.) Systemic. This approach is relativistic, regarding
the ends and means of strategy and inescapably
linked to the culture and powers of the local social
systems in which it takes place.
 While developing or formulating, policies and
strategies, should be a concern of everyone in the
business organization; it is essentially an initiative
and duty of management group in general.
a.) Top-bottom approach. Initiative in developing
policies and strategies come from the top
management with rank.
b.) Bottom-top approach. Strategies initiatives
emanate from the bottom or rank and-file which top
management.