Business Policy and

Strategic Management
Session 1
BITS Pilani
Pilani Campus
 Course Objectives
The objectives of this course are to:

• develop the capacity to think strategically about the long

term direction of the organization and it’s positioning &
capabilities to achieve sustainable competitive advantage.
• make learn to apply various strategic management
frameworks & tools to analyze, formulate & implement
Strategies; evaluate Strategic Goals Vs Results by defining
processes & metrics to monitor and improve performance.
• make to learn to integrate knowledge & experience to
Innovate and Strategize in changing times.
 Text Book
 Wheelen, Thomas L. and J. David Hunger,
Concepts in Strategic Management and Business
Policy, Pearson Education, 12th ed., 2010.

• Other Reference Resources are mentioned in

the handout.

• Additional studies and case studies will be

given during the course.
Evaluation Scheme

Evaluation Duration Weightage Nature of Date, Time and

Component (%) Component Venue
Mid Term Test 90 Min. 25 Closed book 30/09
4:00 to 5:30 P.M
Case studies*/ NA 10 Open book Continuous
Assignments

Surprise NA 10 Closed book Continuous

Quizes
Project work NA 15 Open Book
Compre. exam 3 hours 40 Partly Open 05/12 AN
book
Learning Outcomes – Session 1
• What is Strategy
– DEFINITION OF STRATEGY
– WHAT IS NOT STRATEGY

• Pits falls of Strategic Planning

– FALLACY OF PREDICTION
– FALLACY OF DETACHMENT
– FALLACY OF FORMALISATION

• Strategic Thinking
– STEPS OF STRATEGIC THINKING
Strategy

Strategy is about understanding what you do,

looking out over the long-term future to
determine what you want to become, and - most
importantly - focusing on how you plan to get
there.

Dictionary: Strategy is a plan, method, or a series

of maneuvers for obtaining a specific goal or
result.
Strategy

• Military: Strategy is concerned with “drafting the

plan of war, shaping the individual campaigns
and within these, deciding on the individual
engagements.

• Management: Strategy is a plan or pattern that

integrates an organization’s major goals, policies
and action sequences into a cohesive whole.

• Drucker “Strategy is a purposeful action”.

 Strategy is NOT…OE
• Strategy is Not
Operational Excellence

• Operational effectiveness
means performing similar
activities better than rivals, the
quest for productivity, quality
& speed

• The productivity frontier is

constantly shifting outward as
new technologies, tools and
techniques are developed
Strategy is about Creating Value
• Strategy is the creation of a unique and valuable position,
involving a different set of activities.

• Differentiation arises from both the choice of activities and

how they are performed.

• Strategic positioning means performing similar activities in

different ways Or performing different activities from rival’s.

• SWA for example offers short-haul, point to point service

midsize cities and secondary airports in large cities.
Strategy is NOT…Planning
• Strategy is Not about Planning & Budgeting. Planning
represent calculating style of management, not a
committing style which engages people.

• Thinking and Acting are most obviously separated in

the dichotomy between formulation and implementation-

1. The fallacy of prediction: Planning stresses the importance of

accurate forecasting, ex: by extrapolating past performance.
2. The fallacy of detachment: Detachment of strategy from
operations.
3. The fallacy of formalization: Formalization is achieved
through decomposition, that is essentially analytical.
 1. Fallacy of Forecasting
• Extrapolation i.e. projecting
past performance patterns
into future works in
conditions of stability.

• Hockey stick forecasts:

Downward trends were
extrapolated for a short time,
followed by sharp upward
predictions.
• Changes rarely occur
abruptly or without
supporting context.
XYZ company
• XYZ is an Indian electronics
manufacturing company making a FY Revenue of XYZ
component for multinational (Amount In Crores)
mobile phones manufacturing 2008-09 58
companies. 2009-10 88
• XYZ focuses on using high quality
2010-11 102
material in it’s component to
differentiate and charging 2011-12 129
premium price from their client 2012-13 152
companies.
2013-14 172
• 90% of the revenue is through
exports.
XYZ company
FY Revenue of XYZ
• XYZ is an Indian electronics
(Amount In Crores)
manufacturing company making a
2008-09 58
component for multinational
mobile phones manufacturing 2009-10 88
companies. 2010-11 102
• XYZ focuses on using high quality
2011-12 129
material in it’s component to
differentiate and charging 2012-13 152
premium price from their client 2013-14 172
companies.
2014-15 76
• 90% of the revenue is through
exports. 2015-16 74

2016-17 75
2. Fallacy of Detachment
• The belief that strategic managers and their planning
systems can be detached from operations is predicated on
one fundamental assumption: that they can be informed in a
formal way.
• The messy world of random noise, gossip, inference,
impression and fact must thus be reduced to firm data,
hardened and aggregated so that they can be supplied
regularly in a formal way.
• Hard data is limited in scope, aggregated and some times
unreliable.
• Effective strategists are not people who abstract themselves
from the daily detail but quite the opposite: they are the
ones who immerse themselves in it, and abstract the
strategic messages.
3. Fallacy of Formalization
• Formalization is achieved through decomposition, -
process is reduced to a procedure, a series of steps i.e.
essentially analytical.

• Planning by it’s very nature defines & preserves

categories. Creativity, by it’s very nature, creates
categories and rearranges established ones.

• Strategy formation, needs both 1) Creativity to function

beyond boxes, i.e. to create new perspectives & new
combinations, AND 2) Analysis for planning & decision
making.
Strategic Thinking
• Strategic thinking is about analyzing opportunities and
problems from a broad perspective and understanding the
potential impact of your actions.
• Strategic thinkers visualize what might or could be, and
take a holistic approach to day-to-day issues and
challenges.
• Seven Strategic Thinking skills
– Seeing the big picture;
– Clarifying strategic objectives;
– Identifying relationships, patterns, and trends;
– Thinking creatively;
– Analyzing information;
– Prioritizing your actions; and
– Making trade-offs.
Strategic Thinking - setting the stage

• Seeing the big picture

– Understanding the Broader business environment in
which you operate.

• Clarifying strategic objectives

• Determining Smart Goals & Metrics
• Questioning the assumptions
 Strategic Thinking: Next phase
• Once you've set the stage, you put your Strategic thinking skills to use
in order to generate results. This phase includes:
– Identifying patterns & relationships - Spotting patterns across
seemingly unrelated events, and categorizing related information.
– Thinking creatively - Generating alternatives, visualizing new
possibilities, challenging your assumptions, and opening yourself
to new information
– Analyzing information - Listing critical information while making a
decision, use of tools like pareto chart, fish bone diagram…
– Prioritizing your actions - Staying focused on your objectives
while handling multiple demands and competing priorities
– Making trade-offs - Recognizing the potential advantages and
disadvantages, making choices, balancing short- and long-term
concerns
Thank you