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Evolution of Strategic Management and Business Policy

Historical Evolution of Strategic Management and Business Policy started in 1911 at Harvard Business School. In 1911 HBS introduced an Integrative course in management to create general management capability.

The base for the introduction of this course was case studies used at the school for the instructional purpose since 1908.

Origin and Etymology of the word Strategy

Origin of the word strategy can be observed in the Greek word Strategos (from word Strategia) in 1680. Meaning of Strategos is General Army or Military commander.

Historical Evolution of Strategic Management & Business Policy

Below is the detailed information about the Evolution of Strategic Management. This can be explained with the help of the following key points.

1911: Harvard Business School Introduced Course in Management

1959: Introduction of Business Policy in Academics

1969: The American Assembly of Collegiate Schools of Business, a regulatory body for business schools, made the course of Business Policy  a mandatory for the purpose of recognition

1980-2000: Business policy has become an integral part of Management Curriculum

The term Business Policy has been used traditionally until the end of the 20th century.

After that, the new titles Strategic Management, Corporate Strategy and Policy have been used.

Evolution based on Managerial Practices

  • Use of plannings techniques by Managers can be observed as an important part of the development of the term Business Policy.
  • Along with day to day planning and practices, managers began planning for the future, including budgets and other resources.

You can also use the following simple chart to understand the evolution of the term Strategic Management.

  • First Short term planning (day to day) Replaced by Long-range Planning
  • Then Long-range planning replace by Strategic Planning
  • Then Strategic Planning replaced by Strategic Management

The term Strategic Management is nowadays used to describe the process of Strategic Decision Making.

Four Paradigm Shifts

These four paradigm Shifts are given by Hofer and others.

Phase I /Paradigm I: 1930 to 1960

Key Points: – Paradigm of Ad hoc policymaking

Phase II / Paradigm II

  • Environmental changes from 1930 to 1940 in the US — planned policy formulation replaced ad hoc policymaking
  • Based on this second paradigm, the emphasis shifted to the integration of functional areas in a rapidly changing environment.

Phase III / Paradigm III – 1960

  • Planned policy paradigm become irrelevant due to increased complexity and accelerating changes in the environment.
  • Demand for a critical look at the basic concept of business and its relationship with the environment.

Phase IV / Paradigm IV – 1980 onward

Focus on two fields of enquiry:

1. The strategic processes of business firms
2. The responsibilities of general management

This is all about history and Evolution of Strategic Management and Business Policy.