WHAT IS STRATEGY?

STRATEGY IS
A plan or course of action or a set of decision/rules making a pattern or creating
a common thread.
A pattern or common thread related to the organizations activities which are derived
from the policies, objectives and goals.
Concerned with pursuing those activities which move an organization from its
current position to a planned future position
Concerned with the resources necessary for implementing a plan or a predetermined
course of action.
Five Ps Of Strategy
1. Strategy is a Plan
2. Strategy is a Ploy
3. Strategy is a Pattern
4. Strategy is a Position
5. Strategy is a Perspective .
DEFINITIONS, NATURE, SCOPE, SIGNIFICANCE, ELEMENTS AND PROCESSES
OF STRATEGIC MANAGEMENT
The word strategy is derived from the Greek word "strategtia" which was used first around 400
B.C. This implies the art and science of directing military forces. In business parlance, there is
no definite meaning assigned to strategy. A few definitions stated below may clarify the concept
of Business strategy:
Kenneth Andrews (1955) "The pattern of objectives, purpose, goals and the major policies and
plans for achieving these goals stated in such a way so as to define what business the
company is in or is to be and the kind of company it is or is to be"
Ansoff (1984) "Basically a strategy is a set of decision making rules for the guidance of
organizational behavior.
Arthur Sharplin (1985) Strategic Management.
"A plan or course of action which is of vital, pervasive or continuing importance to the
organization as a whole".
STRATEGIC MANAGEMENT:
The systematic analysis of the factors associated with customers and competitors (the
external environment) and the organization itself (the internal environment) to provide the basis
for maintaining optimum management practices. The objective of strategic management is to
achieve better alignment of corporate policies and strategic priorities.

ELEMENTS:
From the definitions discussed above, we may identify the following elements:
It is a plan or course of action or a set of decision rules.
It is derived from its policies, objectives and goals.
It is related to peruse those activities which move an organization from its current
position to a desired future state.
It is concerned with the requisite resources to implement a plan.
Various Aspects Regarding Nature of Strategic Management
The term "Strategic Management" is gaining importance in the era of privatization,
globalization and liberalization. A few aspects regarding the nature of strategy are as follows:
Strategic Management is related mostly to external environment.
Strategic Management is being formulated at the higher level of management. At
operational level, operational strategies are also formulated.
Strategic Management integrates three distinct and closely related activities in
strategy making. The activities are strategic planning, strategic implementation and
strategic evaluation and control.
Strategic Management is related to long term.
It requires systems and norms for its efficient adoption in any organization.
It provides overall frame work for guiding enterprise thinking and action.
It is concerned with a unified direction and efficient allocation of organization resources.
Strategic Management provides an integrated approach for the organization and
aids in meeting the challenges posed by environment.
The major components of Business strategy are purpose and objectives, vector, competitive
advantage, synergy, personal values and aspirations and social obligations. Payoff has used the
term "common thread" for the purpose. According to him, the common thread is a statement
of relationship between present and future product market postures. In this section, the different
components of Business strategy are discussed.


Objectives
Business objectives should be stated in such a way so that they may provide a clear idea about
the scope of the enterprise's business. Objectives give the direction for which action plan is
formulated. Objectives are open-ended attributes denoting a future state. Objectives translate the
purpose into goals. A few specific aspects about objectives are as follows:
NATURE, SIGNIFICANCE OF BUSINESS POLICY
Business policy is the guide post to decision making. It helps in the managerial thinking process
and thus leads to the efficient and effective attainment of the objectives of any
organization. Business policy has been defined as "Management's expressed or implied
intent to govern action in the pursuit of the company's objectives." Business policy clarifies
the intention of management in dealing with the various problems faced. It gives the managers a
transparent guideline to take their decisions by being on the safe side. Business policy helps the
manager in identification of the solutions to the problem. It provides the framework in which he
has to take the decisions. Following are the different view points of leading authorities as to what
is business policy?
1. The first category holds the opinion that policy and strategy are synonymous. Business
policy has been defined by William Glueck as "Management policy is long range
planning. For all practical purposes, management policy, long range planning and strategic
management mean the same thing." However, this view is quite controversial as strategy and
Business policy do not mean the same thing. Strategy includes awareness of the
mission, purpose and objectives. It has been defined as, "the determination of basic long
term goals and objectives of all enterprise, and the allocation of resources necessary to
carry out these goals", while policies are statements or a commonly accepted understandings of
decision making and are thought oriented guidelines. Therefore, strategy and Business policy
cannot be used interchangeably as there is a clear line of differentiation between the two terms.
This view stress upon the assumption that business strategy and policy are more or less the
same. However, this view did not receive much support from various authorities in the
area of business management.

2. The second group of experts view Business policy as the process of implementing
strategy in the words of Frank 1. Paine and William Naumes, "Policies guide and channel
the implementation of strategy and prescribe the processes within the organisation will
function and be administered. Thus the term policy refers to organization procedures,
practices and structures, concerned with implementing and executing strategy."
Supporting this view, Robert Mudric has defined Business policy as "A policy establishes
guidelines and limits for discretionary action by individuals responsible for implementing the
overall plan."

The view represents Business policy to be:
Restrictive
Laying stress only on the practical side and ignoring the strategic dimension.
3. The third group considers business policy to be decisions regarding the future of an
organization.
Robert J. Slockler defines Business policy as, "Strategic guidelines for action and spells out
what can and what cannot be done in all areas of a companys operation."
According to the policy manual of General Electric Company, "Policy is definition of
common purpose for organization components of the company for benefit of those
responsible for implementation, exercise discretion and good judgment in appraising and
deciding among alternative courses of action."
The views of different management authorities differ because of following reasons:
There is no clear differentiation of policy from other elements of planning.
There are different policies made at different levels of management for directing
executives.
Business policy encompasses and relates to the entire process of planning. .
ELEMENTS OF BUSINESS POLICY /STRATEGIC MANAGEMENT ELEMENTS
General Statement of Principles: Policies are general statement of principles followed
by Business for the attainment of organizational objectives. These principles provide a
guide to action for the executives at different levels.
Long Term Perspective: Business policies have a long life and are formulated with a
long term perspective. They provide stability to the organization.
Achievement of Objectives: Business policy is aimed at the fulfillment of organizational
objectives. They provide a framework for action and thus help the executives to
work towards the set goals.
Qualitative Conditional and General Statements: Business policy statements are
qualitative in nature. They are conditional and defined in general manner. These
statements use words as to maintain, to follow, to provide etc. They call be specific
at times but most of the times, a Business policy tends to be general.
Guide for Repetitive Operations: Business policies are formulated to act as a guide for
repetitive day to day operations. They are best as a guide for the activities that
occur frequently or repeatedly.
Hierarchy: Business policies have an hierarchy i.e. for each set of objectives at
each level of management there is a set of policies. The top management determines the
basic overall policy, then the divisional and / or departmental policies are
determined by the middle level management and lower level policies are more
specific and have a shorter time horizon than policies at higher levels.
Decision Making Process: Business policy is a decision making process. In formulating
Business policy one has to make choices and the choice is influenced by the interests and
attitudes of managers engaged ill making the policies.
Mutual Application: Business policies are meant for Mutual application by
subordinates. They are made for some specific situation and have to be applied by the
members of the organization.
Unified Structure: Business policies tend to provide predetermined issues and
thus avoid repeated analysis. They provide a unified structure to other types of plans and
help mangers in delegating authority and having control over the activities.
Positive Declaration: Business policy is a positive declaration and a command to
its followers. It acts as a motivator for the people following it and thus they work towards
the attainment of the objectives efficiently and effectively. The Business policy lays
down the values which dominate organisation's actions.