Department of Business Administration

LOGO Faculty of Management Studies & Research (FMS&R)

Aligarh Muslim University, Aligarh

BUSINESS POLICY
&
STRATEGIC MANAGEMENT

Dr. Saboohi Nasim

(saboohinasim@gmail.com)
FMS&R, AMU
 UNIT-I (Syllabus)
Introduction to Strategic Management

1 Evolution , Nature & Objectives of BPSM

2 Concept of strategy; Levels of strategy

Strategic Decision Making;

3 Schools of Thought in Strategic Management

4 Strategic Management Process

5 Corporate Governance; Corporate Social Responsibility

2
The Strategy Landscape

Robin Hood Case!!

3
 Strategic Issues highlighted in
Robin Hood’s Case

The role of organizational leader as a strategist

and articulator of global goals

The pitfalls of success: how to channel and control

organizational growth

The relationship of structure to environment

Strategy making and group values and culture

Strategy making as a creative response to

contradictory constraints
4
 “If you don’t know
where you are going,
any road will take you there”

5
 “Management’s job is not
to see the company as it is . . .
but as it can become.”

John W. Teets

6
“Winning companies
know how to do their
work better”
Michael Hammer and James Champy

7
 KEY Questions!!

What is strategy?

What are the levels at which

strategy operate?

What are the issues in strategic

decision making?
The Concept
of
Strategy

9
 The Origins of Strategy

Know the other and know yourself: Triumph without peril.

Know Nature and know the Situation: Triumph completely.
- Sun Tzu (~360 B.C.)

 Roots of strategy traced back to early military

strategy.

 Carl von Clausewitz wrote in the early 1800’s that

“tactics…[involve] the use of armed forces in the
engagement, strategy [is] the use of engagements
for the objects of war.”
 What Is Strategy?
The Etymological Definition
 Etymologically, the word strategy can be traced
back to the Greek word ‘strategos’, defined as the
commander in chief of the ancient Greek city-
states.

By expression, the concept of strategy came to

imply “the art of the general in the conduct of war”.

The etymological meaning of ‘strategy’ relates

this concept to that of leadership. One of their roles
is to formulate and implement strategy.
 Use of Strategic Thinking in Business

 Strategic thinking in the business world begin to be articulated.

 Alfred Sloan, CEO of GM, 1923 – 1946 - One of the first to analyze
competition (Ford), and devise a strategic plan based on its
strengths and weaknesses.
 Chester Barnard, Senior Executive of New Jersey Bell, 1930s -
Argued managers should pay attention to “strategic factors” which
depend on “personal or organizational action.”

 Wartime (WWI and WWII) efforts also impacted strategic

thinking and use of formal strategic tools and concepts:
 Allocation of scarce resources
 Use of quantitative analysis in planning
 The concept of “learning curves”
 The concept of “distinctive competence” - first mentioned by Philip
Selznick, a sociologist, in a debate about whether or not to combine
the military forces into a single unit (i.e., no Army, Navy, Air Force,
Marines, just the US Military).
 Concepts that Serve as the Foundation of
Strategic Management

 Kenneth Andrews’ SWOT Analysis was developed – still in use today.

 Theodore Levitt’s “Marketing Myopia” argued that when companies fail
it typically is because firms focus on the product rather than the
changing patterns of consumer needs and tastes.
 Igor Ansoff argued, in response to Levitt, that a firm’s mission should
exploit an existing need in the market, rather than using the consumer
as the common thread in business. “In reality a given type of customer
will frequently have a range of product missions or needs.” Corporate
Strategy, 1965.
 BCG developed the “experience curve” and portfolio analysis
concepts.
 McKinsey & Company’s development of SBUs and the nine-block
matrix.
 Mintzberg’s “Deliberate, Emergent & Realized Strategies”
 Porter’s Five Forces Model; Generic Strategies, Competitive
Advantage, Strategy as Fit…
 Hamel & Prahlad’s Core Competence;Strategy as Stretch & Leverage
 Some Early Definitions of Strategy

Strategy as the determinant of the long-

term goals of the enterprise. – Chandler

Strategy as the pattern of objectives,

purposes, or goals and plans for
achieving these goals. – Andrews

Strategy as the common thread among a

firm’s activities. - Ansoff
 Contemporary Definitions of Strategy

Strategy as moving from where you are to

where you want to be in future-thru
sustainable competitive advantage– (Porter
1980,85)

Strategy as the pattern in a series of

decisions or actions; strategy is not
something within a plan, but is more likely
to be discovered intuitively –
(Mintzberg,1994)
Key Contemporary Definitions of Strategy….

Strategy as a process of creating stretch-a

misfit between resources and aspirations
and leveraging resources– (Hamel &
Prahlad, 1993, HBR)

Strategy is not Operational effectiveness ;

Strategy Rests On Unique Activities; A
company can outperform others and win only if
it can establish a difference that it can sustain –
a differential competitive advantage – ((Porter
1996, HBR)
 Other Contemporary Definitions of
Strategy….

Strategy as an integrated overarching

concept of how the business will achieve its
objectives (five elements: arenas, vehicles,
differentiators, staging, economic logic) –
(Hambrick & Fredrickson, 2001, AME
journal)

Strategy as ‘paradox’; strategy as a complex

process of synthesis of two opposing
perspectives– (Bob De Wit & Ron Meyer,
2005)
 Alternative Definitions of Strategy….light
antidote to complex views on Strategy

Strategy as ‘cunning plan’; a creative

response to major constraint; novel/non
obvious solution, difficult to imitate –
(Blackadder; Famous TV Series in USA)

Best Strategies often have the ingredient of

SIMPLICITY………KISS approach!!???
Strategy/Strategic Management in
simple terms
is a LOT like Sailing------
 Sailing Race…

What do we need?

Place to go--------GOAL
 Sailing Race-- Strategy Elements
place to go GOAL

sailing plan, navigation, charts, timetable PLAN

boat, supplies, money, food, information RESOURCES

captain, decision-maker LEADERSHIP

procedures, measurement SYSTEMS

people, skills, experience STAFF/SKILLS

decisions, tasks STRUCTURE

norms, culture CORE VALUES

 Elements of Strategic Framework:
McKinsey’s 7S Framework

7 S’s-- must FIT together

strategy
systems structure
superordinate
goals
skills style
staff
 Sailing Race

Having designed our Strategy--

We set sail….. What happens???

 Sailing Race….

Start

Finish
 Sailing Race…

Start

Finish

Strategy is a pattern in a stream of actions over time

 Thus, SM, as a field of study…
• Provides a framework for thinking about the
“business”
• Creates a fit between the organization and its
external environment.
• Provides a process of coping with change and
organizational renewal
• Fosters anticipation, innovation, and excellence
• Facilitates consistent decision-making
• Creates organizational focus
• Acts as a process of organizational leadership.
• Finally and most importantly: To help the
organization to succeed (outperform) against its
competition!!
 Levels
of
Strategy Making

27
 Crafting a Strategy
Strategy-making involves entrepreneurship –
searching for opportunities
 To do new things or
 To do existing things in new or better ways

Strategizing involves
 Picking up on happenings in the external
environment and
 Steering company activities in new directions
dictated by shifting market conditions
28
Who Participates in Crafting a Company’s
Strategy?

Chief executive officer - CEO

Senior corporate executives
Chief financial officer - CFO
Managers of business divisions and
major product lines
Key VPs for production, marketing, human
resources, and other functional departments
Every company manager has a strategy-making,
strategy-executing role – ranging from minor to major – for the
area he or she heads! 30
 Strategizing: An Individual or Team
Responsibility?
Teams are increasingly used because
 Finding market- and customer-driven solutions is
necessary
 Complex strategic issues cut across
functional areas and departmental units
 Ideas of people with different
backgrounds and experiences
strengthen strategizing effort
 Groups charged with crafting the
strategy often include the people
charged with implementing it 31
The Levels of Strategy Making

Levels of Analysis
Corporate
• Where to Compete? Strategy

Business
• How to Compete? Strategy

Functional
• How to Contribute? Strategy

Choice of Products
Choice of Markets
Choice of Competitors
 Levels of Strategy-Making in a
Single-Business Company

Business-Level
Business
Managers Strategy

Two-Way Influence

Functional
Functional Strategies
Managers

Two-Way Influence

Operating
Managers Operating Strategies

33
Levels of Strategy-Making in a Diversified
Company

Corporate-Level Corporate
Managers Strategy
Two-Way Influence

Business-Level
Managers Business Strategies

Two-Way Influence

Functional
Functional Strategies
Managers
Two-Way Influence

Operating
Managers Operating Strategies

34
A Company’s Strategy-Making Hierarchy

35
 Tasks of Corporate Strategy

Is an overarching plan of action covering the various

functions that are performed by the SBUs

Actions to boost performance of individual

businesses

Capturing valuable cross-business synergies to

provide 1 + 1 = 3 effects!

Establishing investment
priorities and steering
corporate resources into the
most attractive businesses 36
 Tasks of Business Strategy

 Initiating approaches to produce successful performance in a

specific business

 Crafting competitive moves to build

sustainable competitive advantage by developing
competitively valuable
competencies and capabilities
 Uniting strategic activities of functional areas
 Gaining approval of business strategies by corporate-level
officers and directors

37
Tasks of Functional Strategies

Game plan for a strategically-relevant

function, activity, or business process

Detail how key activities

will be managed

Provide support for

business strategy

Specify how functional objectives

are to be achieved 38
 Tasks of Operating Strategies

Concern narrower strategies for

managing grassroots activities and
strategically-relevant operating units

Add detail to business

and functional strategies

Delegation of responsibility
to frontline managers
39
 Uniting the Company’s Strategy-Making
Effort

A firm’s strategy is really a collection of

initiatives undertaken by managers at all levels
in the organizational hierarchy

All the various strategic initiatives must be

unified into a cohesive, company-wide action
plan

Pieces of strategy should fit

together like the pieces of a puzzle 40
 Strategic
Decision Making

41
LOGO