TRACE THE HISTORICAL DEVELOPMENT OF STRATEGIC

MANAGEMENT

Until the 1940s, the strategy was seen as primarily a matter for the military. Military history is

filled with stories about strategy. Almost from the beginning of recorded time, leaders

contemplating battle have devised offensive and counter-offensive moves for the purpose of

defeating an enemy. The word strategy derives from the Greek for generalship, strategy, and

entered the English vocabulary in 1688 as strategie. According to James’ 1810 Military

Dictionary, it differs from tactics, which are immediate measures in face of an enemy. Strategy

concerns something “done out of sight of an enemy.” Its origins can be traced back to Sun Tzu’s

The Art of War from 500 BC

The strategic management discipline originated in the 1950s and 1960s. Among the numerous

early contributors, the most influential were Peter Drucker, Philip Selznick, Alfred Chandler,

Igor Ansoff, and Bruce Henderson discipline draws from earlier thinking and texts on 'strategy'

dating back thousands of years. Prior to 1960, the term "strategy" was primarily used regarding

war and politics, not business many companies built strategic planning functions to develop and

execute the formulation and implementation processes during the 1960s.

Peter Drucker was a prolific management theorist and author of dozens of management books,

with a career spanning five decades. He addressed fundamental strategic questions in a 1954

book The Practice of Management writing: "... the first responsibility of top management is to

ask the question 'what is our business?' and to make sure it is carefully studied and correctly

answered." He wrote that the answer was determined by the customer. He recommended eight
areas where objectives should be set, such as market standing, innovation, productivity, physical

and financial resources, worker performance and attitude, profitability, manager performance and

development, and public responsibility.

In 1957, Philip Selznick initially used the term "distinctive competence" in referring to how the

Navy was attempting to differentiate itself from the other services. He also formalized the idea of

matching the organization's internal factors with external environmental circumstances. This core

idea was developed further by Kenneth R. Andrews in 1963 into what we now call SWOT

analysis, in which the strengths and weaknesses of the firm are assessed in light of the

opportunities and threats in the business environment.

Alfred Chandler recognized the importance of coordinating management activity under an

all-encompassing strategy. Interactions between functions were typically handled by managers

who relayed information back and forth between departments. Chandler stressed the importance

of taking a long-term perspective when looking to the future. In his 1962 ground breaking work

Strategy and Structure, Chandler showed that a long-term coordinated strategy was necessary to

give a company structure, direction and focus. He says it concisely, "structure follows strategy."

Chandler wrote that:

"Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of

courses of action and the allocation of resources necessary for carrying out these goals.

Igor Ansoff built on Chandler's work by adding concepts and inventing a vocabulary. He

developed a grid that compared strategies for market penetration, product development, market

development and horizontal and vertical integration and diversification. He felt that management
could use the grid to systematically prepare for the future. In his 1965 classic Corporate Strategy,

he developed gap analysis to clarify the gap between the current reality and the goals and to

develop what he called "gap reducing actions Ansoff wrote that strategic management had three

parts: strategic planning; the skill of a firm in converting its plans into reality; and the skill of a

firm in managing its own internal resistance to change.

Bruce Henderson, founder of the Boston Consulting Group, wrote about the concept of the

experience curve in 1968, following initial work begun in 1965. The experience curve refers to a

hypothesis that unit production costs decline by 20–30% every time cumulative production

doubles. This supported the argument for achieving higher market share and economies of scale.

Porter wrote in 1980 that companies have to make choices about their scope and the type of

competitive advantage they seek to achieve, whether lower cost or differentiation. The idea of

strategy targeting particular industries and customers (i.e., competitive positions) with a

differentiated offering was a departure from the experience-curve-influenced strategy paradigm,

which was focused on a larger scale and lower cost. Porter revised the strategy paradigm again in

1985, writing that superior performance of the processes and activities performed by

organizations as part of their value chain is the foundation of competitive advantage, thereby

outlining a process view of strategy.

In 1985, Professor Ellen Earle-Chaffee summarized what she thought were the main elements of

strategic management theory where consensus generally existed as of the 1970s, writing that

strategic management:

1. Involves adapting the organization to its business environment;

2. Is fluid and complex. Change creates novel combinations of circumstances requiring

unstructured non-repetitive responses;

3. Affects the entire organization by providing direction;

4. Involves both strategy formulation processes and also implementation of the content of

the strategy;

5. May be planned (intended) and unplanned (emergent);

6. Is done at several levels: overall corporate strategy, and individual business strategies;

and

7. Involves both conceptual and analytical thought processes.

1. Linear strategy: A planned determination of goals, initiatives, and allocation of resources,

along the lines of the Chandler definition above. This is most consistent with strategic

planning approaches and may have a long planning horizon. The strategist "deals with"

the environment but it is not the central concern.

2. Adaptive strategy: In this model, the organization's goals and activities are primarily

concerned with adaptation to the environment, analogous to a biological organism. The

need for continuous adaption reduces or eliminates the planning window. There is more

focus on means (resource mobilization to address the environment) rather than ends

(goals). Strategy is less centralized than in the linear model.

3. Interpretive strategy: A more recent and less developed model than the linear and

adaptive models, interpretive strategy is concerned with "orienting metaphors constructed

for the purpose of conceptualizing and guiding individual attitudes or organizational

participants." The aim of the interpretive strategy is legitimacy or credibility in the mind

of stakeholders. It places emphasis on symbols and language to influence the minds of

customers, rather than the physical product of the organization.

Two pivotal events that firmly established strategic management as a field of study took place in

1980. One was the creation of the Strategic Management Journal. The introduction of the journal

offered a forum for researchers interested in building knowledge about strategic management.

The second pivotal event in 1980 was the publication of Competitive Strategy: Techniques for

Analyzing Industries and Competitors by Harvard professor Michael Porter.

EVALUATION

Implementation is the execution of the overall planning. This stage starts with breaking down the

high-level plan into more operational steps and actions. To bring intended strategies to reality,

the leadership team will also:

1. Set annual objectives

2. Revise policies to meet the objectives

3. Allocate resources

4. Redesign the organizational structure

5. Manage people and change

Strategy evaluation is that phase of the strategic management process in which the manager tries

to assure that the strategic choice is properly implemented and is meeting the objectives of the

enterprise. When one talks of evaluation one cannot forget the control aspect. The objectives of

the enterprise.” Therefore, when one says that he is talking of strategic evaluation, he is talking

of strategic evaluation and control. Then, strategic evaluation and control stand for the process of

determining the effectiveness of a given strategy in attaining the organizational objectives and

taking corrective action if need there be.

Thus strategy evaluation and control deal with ensuring whether a particular strategy contributes

to the organizational objectives or not. In other words, strategy evaluation and control is that
phase of the strategic management process which comprises of those activities that ensure that a

given strategic choice is implemented in letter and spirit by the managers who are entrusted with

the task of implementing a chosen strategy so as to meet the overall vision, mission, goals, and

objectives of the organization.