1. Explain the evolution, role and importance of business policy and strategic management. What would be the role of manager in this age?
Introduction: The term strategic management has been traditionally used. New title such as business policy, corporate strategy and policy, corporate policies is essentially and extensively used which means more less the same concept.
Evolution of Strategic Management:
1) In early 1920’s and 1930’s the managers used day-to-day planning methods to perform any task.
2) To anticipate the future, they tried using tools like preparation of budgets and control systems like capital budgeting and management by objectives.
3) The techniques were unable to emphasize the future adequately.
4) The next step was they tried using long range planning which was replaced by strategic planning and later by strategic management.
5) In mid 1930’s, according to the nature of business the planning was done during Adhoc policy making.
6) As many businesses had just started operations and were mostly in a single product line, there arose a need for policy making.
7) As companies grew they expanded their products and they catered to more customer and which in turn increased their geographical coverage.
8) The expansion brought in complexity and lot of changes in the external environment. Hence there was a need to integrate functional areas.
9) This integration was brought about by framing policies to guide managerial action.
10) Policies helped to have pre-defined set of actions, which helped people to make decision.
11) Policymaking was the owner’s prime responsibility.
12) Due to increase in the environment changes, in 1930’s and 40’s policy formulation replaced ad-hoc policy making, which led to emphasis shifted to the integration of functional areas in this rapidly changing environment.
13) Especially after II World War there was more complexity and significant changes in the environment.
14) Competition increased with many companies entering into the market.
15) Policy making and functional area integration was not sufficient for the complex needs of a business.
ROLE OF STRATEGIC MANAGEMENT: -