STRATEGIC MANAGEMENT AND BUSINESS POLICY THIRD EDITION AZHAR KAZMI Chapter 1 Introduction 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 (c) Dr. Azhar Kazmi 20082

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 (c) Dr. Azhar Kazmi 20083

4 Vision and Mission Goals and Objectives Strategy : Arenas Vehicles Differentiators Staging Economic 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

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 (c) Dr. Azhar Kazmi 20085

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”. (c) Dr. Azhar Kazmi 20086

The concept of strategy A 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. (c) Dr. Azhar Kazmi 20087

Levels at which strategy operates (c) Dr. Azhar Kazmi Corporate Office SBU A SBU B FinanceMarketingOperationsHRMInformation LEVELS OF MANAGEMENT LEVELS OF STRATEGY CORPORATE CORPORATE-LEVEL SBUBUSINESS-LEVEL FUNCTIONAL SBU C

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. (c) Dr. Azhar Kazmi 20089

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. (c) Dr. Azhar Kazmi

Schools of thought on strategy formation The prescriptive schools The descriptive schools The integrative school (c) Dr. Azhar Kazmi

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. (c) Dr. Azhar Kazmi

Four phases in strategic management (c) Dr. Azhar Kazmi Formulation of strategies Implementation of strategies Strategic evaluation Strategic control Establishment of strategic intent

Comprehensive model of strategic management (c) Dr. Azhar Kazmi Strategy Formulation Environmental Organisational Appraisal Appraisal SWOT Analysis Corporate-level Strategies Business-level Strategies Strategic analysis and choice Strategic plan Strategic Intent Vision Mission Business definition Business model Objectives Strategy Implementation Project Procedural Resource allocation Structural Behavioural Functional & Operational Strategic control Strategic Evaluation