Chap1_SMBP_Kazmi

STRATEGIC MANAGEMENT AND BUSINESS POLICY

THIRD EDITION

AZHAR KAZMI

Chapter 1Introduction to strategic management and business policy

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

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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

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Vision andMission

Goals andObjectives

Strategy:Arenas

VehiclesDifferentiators

StagingEconomic logic

Implementation Levers and Strategic Leadership

Internal and External Strategic Analysis

Hambrick and Fredrickson model of strategic management

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

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

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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”.

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The concept of strategyA 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.

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Levels at which strategy operates

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Corporate Office

SBUA

SBUB

Finance Marketing Operations HRM Information

LEVELS OF MANAGEMENT LEVELS OF STRATEGY

CORPORATE CORPORATE-LEVEL

SBU BUSINESS-LEVEL

FUNCTIONAL

SBUC

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.

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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 decision-making• Individual versus group decision-making.

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Schools of thought on strategy formation

• The prescriptive schools• The descriptive schools• The integrative school

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Strategic management defined

• Strategic management is defined as the dynamic process of formulation, implementation, evaluation and control of strategies to realise the organization’s strategic intent.

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Four phases in strategic management

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Formulation of strategies

Implementation of strategies

Strategic evaluation

Strategic control

Establishment of strategic intent

Comprehensive model of strategic management

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Strategy Formulation

Environmental Organisational Appraisal Appraisal

SWOT AnalysisCorporate-level StrategiesBusiness-level Strategies

Strategic analysis and choiceStrategic plan

Strategic Intent

VisionMission

Business definitionBusiness model

Objectives

Strategy Implementation

ProjectProcedural

Resource allocationStructural

BehaviouralFunctional & Operational

Strategic control

Strategic Evaluation