Assignment 1: History of

Business Strategy
Nazmul Rafi
29 March 2024
Content
• Central points of lecture 1  slide 3 – 5
• Central points of lecture 2  slide 6 – 8
• Central points of lecture 3  slide 9 – 10
• Central points of “Evolution of business strategy”  slide 11 – 16
Lecture 1 (1/3)
• The professional business management came into play when making
money for the businesses became harder with higher cost for labor
which was a result of rising welfare, especially economic, over a
century ago.
• Taylorism (like modern LEAN) was the first business management
strategy (from early 20th century) which improved the productivity by
efficient production process by creating a stronger position for the
managers and lesser autonomy for the workers.
• Downsides of Taylorism also started emerging from its beginning, like
dehumanization, lesser room for innovativeness and motivation,
increasing hierarchical confrontations.
Lecture 1 (2/3)
• To mitigate the downsides of Taylorism, the next big strategy style
was Human Relation Management which started from 1920.
• The key idea behind this fashion was to motivate workers which in
modern business exists as the leadership activities. Key ideas of this
strategy is to boost team spirit, soft skills of the members, improved
communication, self-confidence, assertiveness, inquisitiveness &
creativity, etc.
• Where Taylorism essentially is controlling the work process, Human
Relation Management controls the minds of the workers who
execute/implement the processes.
Lecture 1 (3/3)
• The third item of business management is Strategic Management
which means analyzing the business environment and making
necessary adaptations.
Lecture 2 (1/3)
• The word strategy has the same meaning in today’s business which used to
be in wars 3000 years ago, it’s about managing and leading.
• Tactics also has the same meaning just in the scale of a battle.
• This terms were brought to civil organizations by WW-II veterans, who
learned it during wars, in the fast growning American corporations where
business environment analysis and future planning was critically important.
• The idea of systematic customer centric business strategy is still extremely
important in today’s business which was invented by the first business
strategy guru Peter Drucker.
• Drucker also introduced the systematic management by objectives and
practices for the customers.
Lecture 2 (2/3)
• Due to the level of uncertainty produced by the chaos of wars, famous
war generals emphasized the need of being prepared for different
scenarios while in a battlefield with extended autonomy for the
troops to act (making tactics and fight) according to the instant need.
For sure, the troops must be well trained before hand to so.
• In business strategy the above idea was long forgotten and hence
resulted overplanning and reduced overall productivity/outcome.
• In the early phase, during 1960-1980, of integration of accounting and
IT processes into the businesses naturally made the management
strategy task heavier. Also, the implementation of the strategy was done
with too much care. This challenges still exist in businesses.
Lecture 2 (3/3)
• In 1980s, international oil crisis reintroduced the old knowledge of war chaos into
business environment, i.e., showed how unpredictable the business can be.
• This made companies aware of the importance of strategic agility, resulting
SCENARIOANALYSIS a fashionable tool for businesses.
• Academically the systematic strategy planning started facing criticism.
• In 19080s, strategy literature divided into two thought schools:
• Planning: focuses to develop better strategic planning
• Thinking: strategy is actions taken daily by well informed professionals without much
planning effort
• In most recent strategy literatures, both emerged as equally important, and the
best strategy is a combination of planning and daily actions by well trained
workers.
Lecture 3 (1/2)
• Strategic Business Management at present time is much harder
than it was in the past due to the unpredictability added by the fast-
paced technological advancement, disruptive innovations,
difficulties brought by the globalization of markets, production,
know-how and ownership, aware and demanding customers.
• Current market is in hyper competition state according to some
scholars and businesspeople.
• High demanding business environment strengthened Resource
Based Approach since 1990s.
• Due to extremely complicated business environment at present the search for
the right place for the business in the market has become less important than
the past.
• Most important for the business at present is to be prepared for any
unexpected situation of the market. This is Well summarized in the picture
shown in the lecture
Lecture 3 (2/2)
• Current trend in Business Strategy
• Strategic agility: the key item. Closed loop cycle of experiment ->
fail -> learn -> repeat.
• Strategic experiment: big corporations’ new trend
• Open strategy: newly developing item. Outsiders (e.g., customers)
are getting involved in the company strategizing.
Evolution of business strategy
• Strategy, rooted in military origin, is an essential tool in modern business. Seven phases of
evaluation of business strategy and two of its approaches:
Phase I: Budgetary planning
• Literature study by business strategy guru Peter Drucker opened the fact that most successful companies
were centralized with good goal setting ability.
• 1950’s was the period of budgetary planning and control. Operating budgets created financial control,
taking into account the investment planning and project appraisal.
Phase II: Corporate planning
• 1960’s is marked for strategy making place in business community and popularization of corporate planning.
• The idea of decentralization in large corporation was introduced.
• The corporate planning departments got the charge of forecasting for the business in 1960’s.
• Three basic business strategies:
1. Horizontal: implies growth in market
2. Vertical
3. Diversification: Either entering or not into related or unrelated market
Continued…
Phase III: Corporate strategy
• Growth/Share Matrix: assesses the market growth rate in relation to a farm’s
relative market share.
• 1970’s also witnessed the start of the mammoth PIMS (profit impact of market
strategy): correlation between performance and strategy, PIMS study
produced six linkages between this two:
1. Relative (competitor) quality of product is most important item of business
2. Market share and profitability are strongly related
3. High-investment intensity -> profitability
4. Unfamous business can be profitable while the famous ones becomes dry
5. Particular business integration technique is suitable for some while not for others.
6. Boosting ROI factors also contributes to long-term value.
Continued…
Phase IV: Industry and competitive analysis
• Farm’s position in the industry and structure of the industry are important points for
evaluating performance.
• This led 1970-80 the analysis of industry and competition
• “Five Forces” model to analyze the industry and competition, the terms are quite self
explanatory:
1. Potential entrants into the market
2. Threat of substitute products or services that could be used in place of the company’ s
offering
3. Bargaining power of buyers (customers)
4. Bargaining power of suppliers
5. Current industry competition as seen in the rivalry among existing firms
Continued…
Phase V: Internal Sourcing of Competitive Advantage
• Core competencies represent the sources of competitive advantage inherent in the firm
• Resource-Based Theory: firm’ s assets and capabilities and how these internal strengths provide
advantage over rivals

Phase VI: Strategic Innovation and Implementation

• The goal now was to exploit dynamic sources of competitive advantage that can be leveraged to finance
the next wave of innovation
• most wonderfully conceived strategy is irrelevant if not properly implemented
• five broad categories proposed in 1999 for successful implementation of strategy:
1. Setting accountability
2. Enabling and aligning action
3. Fixing the organization
4. Providing an environment in which people can excel
5. Judging and rewarding
Continued…
Phase VII: Strategic Thinking & Simplification (2003 and beyond)
• Strategic thinking and planning are two separate tasks and companies failed to allocate
sufficient resource for those activities
• Strategic thinking regularly became relevant. How to use them:
1. Deeper sense of the purpose of the work
2. It grows business
3. Decision making ability enhancement
4. Becomes daily routine
5. Improved problem solving ability
6. Increase in value to the company
7. Career advancement
Continued…
Two approaches of Business Strategy:
1. Structure – conduct – performance (S-C-P): identifies the casual relationship
in that an industry structure determines firm strategy -> performance of the firm
2. Resource based approach: two key sources of the heterogenous nature
of a firm are resources and mental models, both of which contribute to
the heterogeneity in their performance versus one another.

The S-C-P (strategic groups) and Resource-Based approaches make up two

branches of the Strategic Management perspective, which places equal
weight on the industry and the firm.