Strategic management is a broader term than corporate strategy. Strategic Management consistsof Corporate Strategy (Portfolio Strategy)and Business Strategy (Competitive Strategy). Corporate Strategy is a master plan for the entire organisation

Strategic management is a broader term than corporate strategy. Strategic Management consists

of Corporate Strategy (Portfolio Strategy)and Business Strategy (Competitive Strategy). Corporate Strategy is a master plan for the entire organisation.

Chandler describes strategic management as the “determination of the basic long-term goals and objectives of an enterprise and adoption of course of action and allocation of resources necessary to carry out these goals”11 According to Paine and Naumes, “strategic management involves the decision-making and the activities in an organisation which: (1) have wider ramifications,

 (2) have a long time perspective, and

 (3) use critical resources towards perceived opportunities or threats in a changing environment

Corporate Strategy – A Master Plan

The author would define corporate strategic management as the formulation and execution of a master plan for accomplishing the corporate vision: – by consolidating/strengthening its competitive position, – based on its : (1) vision/mission, philosophy and ethics, (2) strengths and weaknesses, and, (3) environmental opportunities and threats.

The above definition connotes the following: 1. Strategic management is a means to the end. The end, i.e. the purpose, is to realise the corporate vision/mission.

2. Corporate strategy is a master plan – a plan that encompasses the entire organisation for its overall development. It is a long-term plan that lays down the roadmap for the overall development of the organisation. All sub-plans, like divisional or sectional plans (SBU plans) shall be aligned with the scope and vision/objectives of the master plan, i.e., corporate strategy.

3. It aims at gaining/enhancing competitive advantage vis-à- vis other firms in the industry. 4. It is based on a SWOT analysis, i.e., corporate strategy defines the business portfolio (scope of the business). That is, on the basis of the SWOT analysis, existing business(es) may be dropped or further strengthened or new ones may be added.

5. Corporate plan, being a master plan, is likely to be complex in nature. The complexity tends to increase with the increase in the size and diversity of the business.

6. A corporate plan normally is characterised by the need for large resource commitments – investing today for tomorrow. Further, strategies pertaining to the different businesses may call for resource reallocation. Thus, strategic management is often characterised by resource mobilisation and reallocation.

7. The vision/mission, philosophy and values of the organisation have important bearing on the strategy. They may influence how the business shall be conducted or fostered or the scope of the business (i.e., the type of business the organisation can be or shall not be in.)

In short, Strategic Management/Business Policy/Corporate Strategy refers to those set of perspective management measures taken with a view to ensuring the survival and long-term success of an enterprise in a dynamic environment. Going by the origin of the word strategy, corporate strategy is a well-thoughtout systematic plan of action for survival and success, formulated by due consideration of the possible positions and defensive and offensive moves, and the relative strengths and weaknesses of the rivals vis-à-vis those of the company. Besides these, strategy in business management has an additional dimension: future perspective.

According to a survey conducted among corporate planners (USA), strategy “includes the

determination and evaluation of alternative paths to an already established mission or objectives and, eventually, choice of the alternatives to be adopted”.13 Waterman defines strategy as “a coherent set of actions aimed at gaining a sustainable advantage over competition, improving position vis-à-vis customers or allocating resources.

Competitive orientation is an essential feature of strategic management. Kenichi Ohmae, a world

renowned management expert and author, observes in his well known The Mind of the Strategies “What business strategy is all about – what distinguishes it from all other kinds of business planning – is, in a word, competitive advantage. Without competitors, there would be no need for strategy, for the sole purpose of strategic planning is to enable the company to gain, as efficiently as possible, a sustainable edge over its competitors. Corporate strategy, thus, implies an attempt to alter a company’s strength relative to that of its competitors in the most efficient way.”15 That competition is at the heart of strategy formulation will be clear if one considers the origin of

the word strategy. The word strategy is derived from the ancient Greek word strategia, which connoted the art and science of directing military forces. Strategy is, thus, a well-thoughtout systematic plan of action to defend oneself or to defeat rivals. Strategy is formulated in anticipation of the possible positions, moves, actions and reactions of the rivals. It is very relevant to point out in this context that in business the term rivalry is commonly used

to refer to competition. According to Thompson Jr. and Strickland, “a company’s strategy is the game plan management

is using to stake out a market position, conduct its operations, attract and please customers, compete successfully, and achieve organisational objectives. In crafting a strategy, management is saying, in effect, ‘among all the paths and actions we could have chosen, we have decided to move in this direction, focus on these markets and customer needs, compete in this fashion, allocate our resources and energies in these ways, and rely on these particular approaches to doing business’. A strategy thus entails managerial choices among alternatives and signals organisational commitment to specific markets, competitive approaches, and ways of operating.”16 The definitions of strategy/strategic management by their reference to mission, sustainable

competitive advantage etc. implicitly indicate the futuristic nature of strategic management. Strategic management is indeed managing for the future or competing for the future. Aa Thompson Jr. And Strickland point out, “closely related to the concept of strategy is the

concept of a company’s business model, a term now widely applied to management’s plan for making money in a particular business. More formally, a company’s business model deals with the revenuecost-profit economics of its strategy – the actual and projected revenue streams generated by the company’s product offerings and competitive approaches, the associated cost structure and profit margins, and the resulting earnings stream and return on investment. The fundamental issue surrounding a company’s business model is whether a given strategy makes sense from a moneymaking perspective. A company’s business model is, consequently, more narrowly focused than the company’s business strategy. Strategy relates to a company’s competitive initiatives and business approaches (irrespective of the financial and competitive outcomes it produces), while the term business model deals with whether the revenues and costs flowing from the strategy demonstrate business viability.”