Strama Chapter 8 and Strat Plan

BUSINESS
POLICIES AND
STRATEGIES
History of Strategic
Management
HISTORY OF STRATEGIC MANAGEMENT
 In 1950s and 1960s, Strategic Management originated.
 Alfred Chandler recognized the importance of coordinating the various aspects of
management under one umbrella strategy, which is Strategic Management today.
 In 1962, he made Strategy and Structure which showed that a long-term properly
coordinated strategy is important to give a company the needed structure, direction,
and focus.
 In 1957, Philip Selznick introduced the matching of the organization’s internal and the
external environmental circumstances. The prelude to what is now called SWOT
Analysis.
 Igor Ansoff came up with a new vocabulary pertaining Strategic Management. In his
book, Corporate Strategy published in 1965. He also conceptualized a strategy grid
which illustrated Market Penetration Strategy, Product Development Strategy, Market
Development Strategy and Diversification Strategy. 2
CURRENT PRODUCTS NEW PRODUCTS
CURRENT MARKET MARKET PENETRATION PRODUCT

DEVELOPMENT
NEW MARKET MARKET DEVELOPMENT DIVERSIFICATION
PRODUCT/MARKET MIX INTERNAL

GROWTH STRATEGY
3
HISTORY OF STRATEGIC MANAGEMENT
Peter Drucker’s contributions
to the field of Strategic
Management are classics
but there are two most
important concepts:
1. He emphasized the
importance of objectives.
He believed in clear-cut
objectives. It has evolved
in a well-known theory of
Management by
Objectives (MBO).
2. Intellectual Capital 4
GROWTH AND PORTFOLIO
THEORY
 The Profit Impact of Marketing Strategies (PIMS)

 Niche Marketing by Traverso
 Michael Porter’s paradoxical conclusion about
Market Share
 Portfolio Theory by Harry Markowitz
5
THE RISE OF MARKETING
MANAGEMENT
 The rise of marketing orientation in 1970s.

 Marketing orientation is understanding and
satisfying the needs and wants of the
customers.
6
THE RISE OF JAPANESE-ORENTED
MANAGEMENT STYLE
The success of Japanese was explained these

practices:
1. There was high employee morale
2. Costs were lower including labour costs
3. Government Policies favour businesses
4. After the WWII, it became a highly productive and
capital intensive organizations.
5. Exports prevailed
6. Total Quality Management
7
8
THE ART OF MANAGEMENT OF JAPANESE
 This theory is better known as the 7s.

1. Strategy
2. Structure
3. System
4. Skills
5. Staff
6. Style
7. Shared Values
9
SEARCH OF EXCELLENCE
It was released by Tom Peters and Robert Waterman in 1982.
It was their response to Ohmae’s book
They studied 62 companies and rated them in a six-performance criteria- must be above
50% in four out of six criteria performance metrics for 20 years. 43 companies passed.
 Customer Focus
 Action-oriented
 Entrepreneurship
 Simplicity
 Stick to what the company knows best
 Value-oriented management
 People-oriented
 Centralize and decentralize 10
 Strategic Architecture Concept -
Competency
 Management by Walking Around by
David Packard and Bill Hewlett
 Five Forces of Competition of Michael
Porter
 A set of theorists advocated Customer
service as the key to organization’s
success.
 Carl Sewell, Frederick Reicheld, C.
Gronros and Earl Sasser believed in
loyalty effect among consumers.
THE COMPETITIVE EDGE

11
FIVE FORCES OF COMPETITION
12
 The Art of War by Sun Tzu
 Philip Kotler proposed Marketing
Warfare Strategy.
 Moore developed an ecological
model of competition.
MILITARY THEORISTS
13
STRATEGIC MANAGEMENT is tackled in the context if an academic
environment
where it is approached and treated theoretically.
STRATEGIC PLAN is a buzzword in the business world. It is done in the

business world yearly.
It is defined as continuous, repetitive and competitive process of setting
the goals and objectives that
an organization aims to attain, defining the means to achieve them, and
assessing the best way to
realize them in the context of the prevailing environment while
measuring performance through set
standards but, continuously conducting assessments.
STRATEGIC PLAN AND STRATEGIC

MANAGEMENT
14
1. Medium or Long-range Plan – Prepared in the context of
the coming three to five, ten or more years.
2. Annual or Yearly Plan – Short term. It describes the current

situation of the organization, its goals and objectives,
strategies, monitoring mechanisms and the budget for the
year ahead.
TYPES OF STRATEGIC PLANS

15
 Hypercompetition
 Dynamism
 Complexity
Surviving the business world means carefully

planning their strategic approaches.
WHY IS THERE A NEED FOR STRATEGIC

PLAN?
16
VISION
GOALS MISSION
VISION/MISSION/CORE VALUES
17
I. COMPANY PROFILE
II. SITUATION ANALYSIS
II-A. External Audit
II-A-I. PESTLE ANALYSIS
II-B-II. FIVE FORCES OF COMPETITION
II-B. INTERNAL AUDIT
II-B-I. SWOT ANALYSIS
II-B-II. 7-S FRAMEWORK
II.B-III. BALANCED SCORECARD
III. AREAS OF CONSIDERATION
IV. STRATEGY IMPLEMENTATION
FORMAT OF STRATEGIC PLAN 18

 NAME OF THE COMPANY
 DEPARTMENT
 VMV OF THE COMPANY
 OBJECTIVES AND GOALS OF THE COMPANY
COMPANY PROFILE
19
SITUATION ANALYSIS (EXTERNAL
AUDIT)
20
FIVE FORCES
OF
COMPETITION
21

Strama Chapter 8 and Strat Plan

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BUSINESS

CURRENT MARKET MARKET PENETRATION PRODUCT

NEW MARKET MARKET DEVELOPMENT DIVERSIFICATION

PRODUCT/MARKET MIX INTERNAL

 The Profit Impact of Marketing Strategies (PIMS)

 The rise of marketing orientation in 1970s.

The success of Japanese was explained these

 This theory is better known as the 7s.

THE COMPETITIVE EDGE

STRATEGIC PLAN is a buzzword in the business world. It is done in the

STRATEGIC PLAN AND STRATEGIC

2. Annual or Yearly Plan – Short term. It describes the current

TYPES OF STRATEGIC PLANS

Surviving the business world means carefully

WHY IS THERE A NEED FOR STRATEGIC

FORMAT OF STRATEGIC PLAN 18

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