BA 180 Strategic Management and

Business Policy
Description: Strategy analysis, formulation, implementation and evaluation with emphasis on
environmental trends and issues and organizational resources and capabilities

Module 1. Introduction and Overview of Strategic Management

Topic Outline:
1. Definition of key terms
2. Nature and importance of strategic management
3. The strategic management process (model)
4. Issues and concerns

Key terms
1. Business
is a type of work involved in providing people with goods and services for profit.
is a legal economic activity that utilizes inputs, process them into desired outputs
to attain the objectives of the organization.
According to Abells framework for defining business,
o Who is being satisfied? -Customer groups
o What is being satisfied? -Customer needs
o How are customer needs satisfied? -Distinctive Competencies

Fig. 1. Business Model

BUSINESS ENVIRONMENT

Micro Intermediate Macro

(Controllable) (Influenced)
Environment (Uncontrollable)
Environment
Environment
Entrepreneur Customers Economic
Capabilities Suppliers Political
Employees Competitors Socio-Cultural
Stockholders Natural

INPUTS PROCESS OUTPUT OUTCOME

Resources Management Products Goals/Objectives

Men
Money Planning Marketing Goods Profit
Materials Organizing Services
Production Services
Machines Financial Livelihood
Directing Power
Moments Organization Influence
Controlling People
Methods
Markets
Mother Earth
Entrepreneurshi
p
FEEDBACK
 2. Management
is the act of getting people together to accomplish desired goals and objectives
using available resources efficiently and effectively. Management comprises
planning, organizing, staffing, leading or directing, and controlling an organization
(a group of one or more people or entities) or effort for the purpose of
accomplishing a goal..
3. Policy
is directives designed to guide thinking, decisions and actions in the
implementation of strategies
defines the scope or spheres within which decisions can be taken by the
subordinates in an organization.
4. Business policy
is the study of the roles and responsibilities of top level management, the
significant issues affecting organizational success and the decisions affecting
organization in long-run.
5. Strategy
from a Greek word strategos which means the art to win (a battle, in business, in
a competition, game etc.)
are plans of actions through which a firm intends to achieve its short-term and
long-term objectives.
tactics, techniques, ways, methods,
determination of the basic long-term goals and objectives of an enterprise, and
the adoption of courses of action and the allocation of resources necessary
for carrying out these goals -Chandler
a commitment to undertake one set of actions rather than another. -Oster
...the game plan management has for positioning the company... entails choice
among alternatives and signals organizational commitment to specific markets,
competitive approaches, and ways of operating. -Thomson and Strickland

Purpose of Business Policies

Generally, policies are designed to control and reinforce the implementation of
functional and grand strategies.
Specifically,
it permits the lower level management to deal with the problems and issues without
consulting top level management every time for decisions.
it promotes uniform handling of similar activities.
It defines the limits within which decisions must be made.
Features of Business Policy
Specific
Clear
Reliable/Uniform
Simple
Inclusive/Comprehensive
Appropriate
Flexible
Stable

Why the need for strategy?

1. Complexity and sophistication of businesses
2. Multi-faceted and internal activities
3. Risky business environment, internal and external
4. Stiff global competition
5. Increasing costs and prices
6. Expanding, changing and powerful consumer preferences

Difference between Policy and Strategy

Policy
1. Policy is a blueprint of the organizational
activities which are repetitive/routine in
nature.
2. Policy formulation is responsibility of top
level management.
3. Policy deals with routine/daily activities
essential for effective and efficient running of
an organization.
4. Policy is concerned with both thought and
actions.
5. A policy is what is, or what is not done.
Strategy
Strategy is concerned with those
organizational decisions which have not
been dealt/faced before in same form.
Strategy formulation is basically done by
middle level management.
Strategy deals with strategic decisions.
Strategy is concerned mostly with action.
Strategy is the methodology used to achieve
a target as prescribed by a policy.

Strategic Management and its Key Attributes

Strategic management
 is a field that deals with the major intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of resources, to enhance the
performance of rms in their external environment.
It entails specifying the organization's mission, vision and objectives, developing policies
and plans, often in terms of projects and programs, which are designed to achieve
these objectives, and then allocating resources to implement the policies and plans,
projects and programs.
The art and science of formulating, implementing, evaluating cross-functional decisions
to enable an organization to achieve its objectives
It is the art and science of planning, directing, organizing and controlling of strategy-
related decisions and actions of business.
It emphasizes the monitoring and evaluation of opportunities and threats vis--vis a
companys strategies
Is the analyses, decisions and actions an organization undertakes in order to create and
sustain competitive advantages.

Strategic Management Model

Company
Vision

Company
mission

Internal Industry External

Analysis analysis Environment
Analysis

Strategic Analysis and Evaluation Feedback

Long-term Grand
Feedback Objectives Strategies

Annual Functional Policies

Objectives Strategies

Institutionalizing the strategies

Control and Evaluation

Strategic Management Process
1. Strategy Formulation
developing business vision
developing business mission
determining and analysing company strengths and weaknesses
establishing long-term and annual objectives
generating generic and functional strategies
choosing strategies to pursue
2. Strategy Implementation
operationalizing
organizing manpower, directing, motivating
resourcing - allocating resources
institutionalizing developing organizational culture, discipline through good
leadership
3. Strategy evaluation
monitoring, review
measuring performance
taking corrective actions

Levels of Business Strategy

1. Corporate Level Strategy overall direction of the company (BOD, CEO, AO- top
management)
2. Divisional or Business Unit Level business unit or product level (unit or product
managers)
3. Functional Level functional areas, mktg, finance, production, research, hr, etc)

Evolution of Strategic Management

Strategic Management as a discipline originated in the 1950s. The most influential
pioneers were:
1. Peter S. Drucker (1954) stressed on the importance of objectives. He developed the
theory of MBO, Management by Objectives.
2. Philip Selznick (1957) he developed the SWOT analysis together with Learned,
Andrews of the Harvard Business School and Gen. Mgt. Group.
3. Alfred Chadler (1962) recognized the importance of one-coordinating strategy, long-
term perspective
4. Igor Ansoff developed the strategy grid and compared the different types of strategies
Benefits of Strategic Management
1. Anticipates future problems and opportunities;
2. Provides employees with clear objectives and directions
3. More effective and better performance
4. Increases employee satisfaction
5. Financial benefits
6. Non-financial benefits
7. Competitive advantage
8. Leadership

Dimensions of Strategic Management

1. Requires top management support
2. Involves (large) capital investment
3. Have significant impact on the prosperity of the company
4. Future oriented
5. Have multifunctional or multi business consequences
6. Controversial in nature depending on managers viewpoints