Introduction to Business Policy

& Strategic Management

 A definition of business policy
“Business Policy, basically, deals with decisions
regarding the future of an ongoing enterprise. Such
policy decisions are taken at the top level after
carefully evaluating the organizational strengths
and weaknesses in relation to its environment”.
- RE Thomas
Origin of Business Policy Course
• BP as field of study was introduced at Harvard
Business School in 1911.
• Main objective was imparting general management
competence among students.
• In 1969 BP course was made mandatory for all
business schools by American Assembly of
Collegiate Schools of Business (AACSB)
• In every B- schools BP focused on the task of the top
management.
 Indian Context
• In India management education started in the late 1950s
• In early 60s IIM and Administrative Staff College of India (ASCI)
started and adopted the teaching methodology as HBS.
• Several universities all over the country started MBA and PGDM
programmes. Almost all the institutes have offered business policy
and strategic management course in their courses.
• AICTE was set up in 1990 to regulate technical and management
education in India. AICTE prescribed BP&SM as a compulsory
course in curriculum.
• A professional body called SMFI was also set up in 1996, which is
exclusively devoted to the development.
 Objectives of BP
• Integrates the knowledge and methods learnt in
functional courses such as production , finance ,
marketing , HR etc.
• Develops the analytical skills and decision-making
capabilities of students through case studies,
industry specific study and data.
• Promotes positive attitudes ,ethical values and
healthy ways of thinking taking a holistic view of
the internal as well as external stakeholders of an
organization.
 Features of BP
• Top Management Function
• Understanding the big picture
• Integration of functional areas
• Resource focus
• Externally Tuned
 Business Policy and Strategic
Management
• Business Policy and Strategic Management
both are concerned with policy and strategy
issues of an organization.
• Today Strategic Management is the
preferred name of the subject- Business
Policy.
Strategic Management
A definition & meaning of Strategic
Management
• Strategic Management can be described as the
identification of the purpose of the organization
and plans & actions to achieve that purpose.
• It is the set of managerial decisions and actions
that determine the long term performance of a
business enterprise.
• It involves formulating & implementing strategies
that will help in aligning the organization & its
environment to achieve organizational goal.
• SM involves those management processes in
organization through which future impact of
change is determined and current decisions
are taken to reach a desired future.

• In Short – SM is about the envisioning the

future and realizing it.
Why Strategic Management?
 Strategic Planning
• SP goes far beyond the planning involves a
long range planning and under conditions
& uncertainty & complexity.

• SP involves :-
1. Strategic thinking
2. Strategic decision making
3. Strategic approach
• Strategic thinking – Where are we now?
Where do we want to go?
How will we get there?
• Strategic decision making – choosing the best alternatives among many. It deals
with long term.
• Strategic approach - Change
Oriented towards the future
External emphasis
Assuring a good fit between envmt & organization
Focuses on competitive advantage
 Characteristics of SM
• Long term
• Recognize changes
• Oriented towards the future
• External emphasis
• Concerned with scope of organization
• Competitive advantage
 Strategic Management Process

Analyzing Deciding Putting Evaluating and

Current on Strategies Changing
Situation Strategies in Action Strategies
Situation Strategy Strategy Strategy
Analysis Formulation Implementation Evaluation
 Importance of SM
• It helps the firm to be more proactive than
reactive
• It provides the road map for the firm.
• It allows the firm to anticipate the change
and prepared to manage it.
• It minimizes the risk
• It provides clear objectives and direction for
employees.
Earlier = Business Policy

Now = Strategic Management

Questions
CONCEPT OF STRATEGY
 An Introduction to Strategy
• The term strategy is derived from the Greek
word “strategos” which means “the art of
the general” or “to command an army”.
• In other words it means the general who
commands the army and his or her art of
winning in the battlefield.
 A definition of strategy
• Goal-directed decisions and actions in
which capabilities and resources are
matched with the opportunities and threats
in the environment.
• “Strategy is a consistent stream of decisions
and actions to deal with the environment”.
-Henry Mintzberb
Mintzberb has identified 5Ps of strategy

A Plan
A Pattern
A Position
A Ploy
A Perspective
Levels of Strategy
Corporate level Strategy

Business level Strategy

Functional Strategy

Operational
Strategy
• Corporate level Strategy - It is concerned
with overall direction and scope. It is also
concerned with the expectations of
owners ,the shareholders and stock market.
It is the basis of other strategy.
• Business level Strategy - It is second level.
Concern about the new opportunities in
markets , which product/services should be
developed , how to meet with customer
needs.
• Functional Strategy – they are the detailed
action plans in functional areas to achieve
short tem objectives. Functional areas such
as marketing , HR etc to implement the
business strategy.
• Operational strategy – fourth level is an
operating end of an organization. OS
concern with how the component parts of
an organization deliver effectively the
corporate and business – level strategies.
 Who does strategy?
 The Role of Top Management
 Responsible for decisions and actions of every employee
 Providing effective leadership
 Other Organizational Employees
 Implement— put the strategies into action and monitor performance
 Evaluate—do the actual evaluations and take necessary actions
Questions
Vision
 Vision
• The first task in the process of strategic
management is to formulate the
organization’s vision and mission
statement.

What is Vision?
• A vividly descriptive image of what a
company wants to become in future.
 Nature of Vision
• A vision represents the animating dream
about the future of the firm.
• By nature it is hazy and vague. That’s why
Collins describes it as a BHAG
• For any organization it is a powerful
motivator.
 Characteristics
According to Thompson & Strickland – some important
characteristics of vision statement.
• Easily communicable
• It must be graphic
• It must be directional
• It must be feasible
• It must be focused
• It must be appealing
• It must be flexible
 Comparison between Vision and
Mission
• Vision describe the future world and
mission depicts what the organization is and
does the current picture of organization.
• Vision is the future picture and mission is
the more immediate and broader purpose of
an organization.
• Write Importance of Vision statement.
 Advantages of Vision
• Good vision fosters long term thinking.
• It creates common identity.
• It is inspiring and exhilarating.
• A good vision is competitive , original and
unique.
• A good vision represents integrity.
• It fosters risk taking and experimentation.
 Three approaches to formulate
vision statement
• Leader dominated approach
• Pump-priming approach
• Facilitation approach
Reason For Vision Failure?
Questions
Mission
 Definition
• Mission - “Purpose or reason for the
organization’s existence”.

Hunger and Wheelen

 Characteristics of Good Mission
Statement
• Not lengthy – it should be brief.
• Clearly articulated
• Inspiring
• Relevant
• Current
• Unique
 Components of Mission Statement
• Basic products & services
• Primary Markets
• Company Philosophy
• Company self concept
• Concern for public image
• Concern for employees
• Concern for quality
Questions
Strategic Intent
Vision Mission

Strategic Intent

Objectives
Goals
 Meaning
• Strategic intent of a company describes how
a company is going to realize its vision.
Strategic intent provides a particular point
of view about the long term vision or
aspiration of the company.
 Strategic Fit
• Strategic fit express the degree to which an
organization is matching its resources and
capabilities with the opportunities in the
external environment.