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Evolution of Strategic Management: From Business Policy to Modern Paradigm

Explore the transition in strategic thinking from the classical Business Policy model to the contemporary Strategic Management paradigm. Gain insights into the multi-disciplinary integrative nature of strategic management. Understand the importance of focusing on both efficiency and effectiveness in business decision-making.

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Evolution of Strategic Management: From Business Policy to Modern Paradigm

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  1. Session 1 History and Overview of Strategic Management

  2. Session Objectives • To Develop an Understanding of the (brief) History of Strategic Management. • To Develop a Conceptual Understanding of the Paradigm Shift from Business Policy to Strategic Management

  3. Colleges of Business Administration • Very young compared to philosophy, science, religion, literature… • So we’re still trying to figure out the optimal way to teach students how to be effective business managers • For example – right now we have major disagreements and issues regarding ethics and leadership among universities worldwide

  4. What is the best model? • Ford Foundation study of “best practices” of b-schools during the late 1940s found • Need to develop a multi-disciplinary understanding of Business: instead of studying pieces of a business such as operations, finance, marketing, info systems,… • A capstone course that introduces accountants to marketing, marketers to operations, production managers to human resources…big picture

  5. This capstone course was most often called Business Policy at that time… So that name has stuck even though the way we attempt to achieve this integrative perspective through the capstone course has evolved The business policy model has been replaced by the strategic management model

  6. Word for the Day • Paradigm • We have experienced a paradigm shift over the past 70 years from the business policy paradigm to the strategic management paradigm

  7. What is the First “Strategy” for any Business? • It’s that Key Idea in the Entrepreneur’s mind for • Satisfying a societal/marketplace need by • Providing/producing a product/service that will • Yield an excess of price over cost of its provision that • Incents the provider to continue/expand its delivery (Capitalism 101)

  8. The Business Policy Model would then • Focus on becoming as efficient as possible in the development and delivery of the product or service. What’s Missing in this Paradigm? • The effectiveness issue • Focuses on doing things right but not whether the business is doing the right thing • The entrepreneurial aspect of the business • Must start with the health of the key idea

  9. So under the BP model • IBM would be the most efficient manufacturer of time clocks • Disney would be the most efficient producer of animated (mouse oriented) cartoons • Seven Eleven would be a well run dairy product provider • Radio Shack would produce leather goods • Winthrop would provide excellent training for women in teaching and home economics (Normal and Industrial)

  10. So we must start with the health of the key idea(s) Are we doing the right things? Where should we compete?

  11. THE LIFE EXPECTANCY OF THESE KEY IDEAS? LONGER OR SHORTER TODAY THAN DURING THE MID 20TH CENTURY?

  12. A MORE RATIONAL PARADIGM BEGIN BY CONSIDERING THE HEALTH OF THE BUSINESS’S KEY IDEA OR KEY IDEAS: WHERE SHOULD WE COMPETE? (ARE WE DOING THE RIGHT THINGS? THAT’S S.M.

  13. Strategic MGMT is Multi-Disciplinary Integrative with input from an understanding of the interworkings of finance, accounting, marketing, research and development, human resources, operations, management information systems,… Functional specialties that contribute to the general management of the firm : Your Degree Concentration You have studied these fundamentals separately.

  14. TIME TO LOOK AT THEM ALL TOGETHER • What do we do better than our rivals? • What don’t we do better than our rivals? • Future oriented plan for interacting with the competitive environment to achieve objectives(SCA). • Game Plan/Scheme/Framework for Decisions

  15. Strategy • Where do we compete? (corporate) • How do we compete? (business) • How do we execute? (functional)

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