STRATEGIC MANAGEMENT REVIEWER

EVOLUTION OF BUSINESS POLICY

 For any organization to operate and effectively focus its efforts on certain tasks and
avoid going astray or deviate away from targets, a sense of direction needs to be set and
some sorts of rules or guidelines have to be established and observed.
 These rules or guides are in the minds of FOUNDERS, LEADERS AND MANAGERS.

In worst case: Rules and guides are never put in writing thus creating a variety of problems
and sad experiences including misadventures and losses.

BUSINESS POLICY
 The set of rules that guides the decisions and actions of members of the organization.
 These policies may informal or in writing coming in form of operational manual,
personnel handbook, and memoranda.

CONCEPT OF BUSINESS POLICY

 The basic theory of the term management which evolves around the idea of planning,
organizing, staffing, coordinating, controlling and evaluating still hold true.
 The context of England or the process of our April variety of plans taking the form of
budget, ppolicy, strategy, rules, guides common procedure, etc.

Concepts of Strategy
 Wright, Kroll, Parnell define strategy as essentially referring to top managements
plan to attain the outcomes consistent with the organization's mission and goals.
 These authors regard strategy in three vantage points namely:
 Strategy formulation or developing the strategy
 strategy implementation (putting the strategy into action)
 Strategic control (modifying either the strategy or its implementation to ensure that the
desired outcomes are attained)

Other Definition of Strategy

 According to Harvard Business Review Strategy is the creation of a unique and

valuable position,involving a different set of activities.
 Kotler, strategist for over 30 years, “developing an overarching strategic framework
within which all other decisions are made”.

CHARACTERISTICS OF STRATEGY
 Strategy is traditionally meant to be a grand plan made in the light of what it was
believed, and adversary might or might not to do.
 Strategy derives its relevance given from the existence competition in the business.
 It is done on the presumption of the existence of a negative scenario.
 It also connotes general program of action and deployment of emphasis and resources
to attain comprehensive objectives.
 A process of deciding on objectives of the organization, on changes in these objectives,
on the resources used to attain these objectives, use and disposition of these resources.
 It involves determination of this basic long-term goals and adjectives of an enterprise,
and the adoption of courses of action and the allocation of resources necessary to carry
out these goals
 A decision about how to use available resources to secure a major objective in the face
of obstruction
 Unlike policy, strategy implies actions and guides decision mating spelling and
directions to be taken
 Strategy may some extreme or necessary cases exist without a policy
Origin and Nature Of Strategy

Jeffrey Bracker of Georgia State University

 Excited that the word strategy originated from the Greek word “STRATEGO” referring to
a “GENERAL” which in turns traces its roots from the word “ARMY” and “LEAD”.

 The word “STRATEGO” means “to plan the destruction of one’s enemies through
effective use of resources”.

Leader of the Army

 Planning
 Execution

The concept of strategy in the military or political context has remained prominent throughout
history, and has been discussed by such major writer:

 Shakespeare
 Montesqueu
 Kant
 Mill
 Hegel
 Clauzewits
 Liddell
 Hart
 Tolstoy

EVOLUTION OF STRAEGIC MANAGEMENT

The concept of strategy is related to business became the creator After World War 2, as
business move from relatively stable environment into a rapidly changing and competitive
environment.
The change in context off strategy was attributed to two significant factor namely:
 The marked acceleration of the rate of change within the firms;
 The accelerated application of science and technology to the process of management

 1491 BC: Moses uses hierarchical delegation of authority during the exodus from
Egypt. Dividing a large set of people into smaller groups creates a command structure
that enables strategies to be implemented.
 500 BC: Sun Tzu's The Art of War provides a classic handbook on military strategy
with numerous business applications, such as the idea "to win without fighting is best."
This type of approach was used by businesses, such as Gap Inc. when they decided to
 create their own stores rather than competing for shelf space for their clothing within
traditional department stores.
 70 BC: Roman poet Virgil tells the story of the Trojan horse, a classic strategic ploy
where the Greek forces hid a select number of soldiers in a large wooden horse that the
Trojan army took into their heavily guarded city gates. Once inside the city, Greek
soldiers were able to open the gates and allow in reinforcements which eventually led to
the end of the war.
 c. 530: King Arthur rules Britain. Legend says he made his famed round table so that
no one, including him, would be seen as above the others. His mission to find the Holy
Grail serves as an exemplar for the importance of the central mission to guide
organizational actions.

The Nature Of Strategic Management

 Strategic management takes into consideration various external as well as internal
factors in the investment in general as well as competitiveness And sustainability over
the long-term period in the industry or sector it belongs.
 Strategic management as referring to the entire process of strategic decision making that
relates to its environment, the guides internal activities and determines the long-term
performance of the organization.

Williamson, Jenkins Et al (2004)

Strategic management as framework that evolves around the idea of shaping the destiny of
an organization. It is about:

 Putting an organization into a competitive position;

 Sustaining and improving the position independent and acquisition of appropriate
resources and by monitoring and responding environmental changes; and
 Monitoring and responding to the demands of stakeholders.

Benefits of Strategic Management

Three most highly rated benefits of strategic management to be:

 Clearer sense of strategic vision of the firm;
 Shaper focus on what is strategically important;
 Improve understanding of a rapidly changing environment.

Strategic Types

 Defender. This type includes companies with a limited product line that focus on
improving the efficiency of their existing operation.
 Analyzers. This type includes business organization that operate in a at least two
different product market areas, one stable and one variable.
 Prospectors. This type of companies include firms with fairly the broad product lines that
focused on innovation and the market opportunities.
 Reactors. This type includes companies that lack a consistent strategy-structure- culture
relationship.

STRATEGY VS POLICY

STRATEGY
STRATEGIC DECISIONS
GUIDELINES
DEALS WITH CRUCIAL DECISIONS, REQUIRES TOP MANAGEMENT INVOLVEMENT
ACTIONS

POLICY
GUIDELINES
GENERAL COURSE OF ACTION
ONCE FORMULATED CAN BE DELEGATE LOWER LEVEL
THOUGHTS AND ACTION
Bases of Policies And Strategies

 Legal mandate. This refers to formulating policies on the basis of the provisions of the
charter or legal basis for creation or existence of business organization including the
applicable provision of laws and policies or pronouncement of the government and its
statutory or regulatory bodies.

 Vision and mission statement. This essentially refers to the leadership but yes as well
as sense of direction and mission for which the organization was conceived or
established.

 Specific objectives. These are the corporate objectives purposely develop for the
organization and for each members or employees at large to pursue.

 Programs and policies. These are specific programs and policies set forth by the
organization policymakers (ie, board of directors and top management) in pursuit of short
and long term goals given certain considerations at hand

Approaches To Identify Policies And Strategies

 Policy/strategy profile. This approach involves a systematic examination of present

company policy/strategy-implicit and explicit.

 Gap analysis. In this approach the stimulus is an examination of whether an end that
has been established is likely to be achieved.

 Competitive strategy analysis. This involves a thorough analysis of competitive forces

operating in a firm's environment and searching for an alternative option.

Strategic decision

Four generic approaches

 Classical approach. The older of the four approaches and still the most influential. This
approach follows a pattern of analyzing, planning and commanding or directing.
Profitability is the supreme goal and rational planning that means to achieve it.
 Evolutionary. This approach is conscious of keeping costs or expenses low with open
option.
 Processual. This approach is more adaptive to situation by playing by the local rules.
 Systemic. This approach is more cautious staying close to the ground and going with
the flow where the direction is going. This approach or theory does retain faith in the
capacity of the organization to plan forward and to act effectively within their
environments.

Developing Policy And Strategy

 Top-bottom approach. Initiatives and developing policies and strategies come from the
top management with rank and file task to implementing or following the policies and
strategies.
 Bottom-top approach. Policy and strategy initiatives emanate from the bottom or rank
and file from which top management develops concrete policies and strategies for what
the lower rank employees to observe or follow.
 Top-bottom approach. Policy and strategy initiatives are taken by the top management
then filtered down to lower ranked personnel for the consultations then returned back to
the top management for refinement.
Modalities in strategic decision

Mitzberg Four Typical approaches of Modes of strategic decision making.

 Entrepreneurial mode- strategy is made by one powerful individual and the focus is on
opportunities; the problems are secondary.
 Adaptive mode- this mode is characterized by reactive solution to existing problems,
rather than proactive solutions to existing problems.
 Planning mode- this mode involves systematic gathering of appropriate information for
situation analysis.
 Logical mode-in this mode top management has a reasonably clear idea of the
corporation's mission and objectives

STRATEGIC DECISION MAKING PROCESS

1A. Evaluate Current Performance Results
1B. Examine and Evaluate the Current:
 Mission
 Objectives
 Strategies
 Policies
2. Review Corporate Governance:Board of Directors Top management
3A. Scan and Assess External Environment: Societal, Task
3B. Analyze External Factors: Opportunities and threats
4A. Scan and Assess External Environment: Structure, Culture, Resources
4B. Analyze Internal factors : strength and weaknesses
5(a) Select Strategic Factors (SWOT) in Light of Current Situation
5(b) Review and Revise as Necessary: • Mission • Objectives
6A. Generate and Evaluate Strategic Alternatives
6B. Select and Recommend Best Alternative
7. Select and Recommend Best Alternative
8. Evaluate and Control

Role of Board of Directors

 Monitor-by acting through its committees or being a part of management team, the
board can keep abreast of development inside and outside the corporation, bringing the
management's attention development it might have overlooked.
 Evaluate and influence- a board can examine management proposals, decisions,
actions; agree or disagree with them; give advice and offer suggestions; outline
alternatives.
 Initiate and determine- a board can delineate a corporation's mission and specify
strategic options to its management.