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UNIT 2:

HISTORICAL DEVELOPMENT OF

STRATEGIC MANAGEMENT

1. Origin and Development (1950-1973)

• Formal strategic planning began in the 1950s in the United States of America

– Drucker (1954): What is our business and what should it be?

– Chandler (1962): What is strategy?

– Structure follows strategy

– Andrews (1965) – corporate strategy

– Ansoff (1965) – corporate strategy

– Boston consulting group (1965) – Henderson B.2

• Strategic management recognized as an important element in corporate success

• Strategic planning was differentiated from budgeting

• The strategic planning process could be managed

• Importance of setting objectives as part of the strategic planning process

• Emergence of concept of core competences

• Emergency of concept of competitive advantage

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2. Disenchantment (1973-1980)• Widespread dissatisfaction with strategic

planning. Why?

– Increased environmental turbulence

– Reduced business opportunities

– Increased competition– Globalization (industries, competition,

corporations)

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• Strategic planning as developed in the stable environmental conditions could not cope with the challenges of the new turbulent environment.

• Increased adoption of strategy (strategic thinking) as a course unit in business school

• Shift to survey research (away from case studies)

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3. Rediscovery and recasting (1980-1990)

• Porter (1987): Although strategic planning had gone out of fashion in the late 1970s, it needed to be re-discovered. It would have to be “re-thought” and “recast”– Competitive strategy (1980)– Competitive advantage (1985)

• Formation of the Strategic Management Society (1981)

• Launch of the Strategic Management Journal (1982)

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• Increasing sophistication in research – Techniques borrowed from other fields e.g.

economics and mathematics– More theories advanced

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4. Institutionalization of Strategic Planning (1990- )• Strategic planning becomes an integral part

of business operations• Further developments in the theory and

technology of strategic management• Consistency between strategic plans, annual

plans and budgets• Greater attention to stakeholder interests• Greater attention to corporate social

responsibility• Greater involvement in the strategic planning

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Summary

• 1960s: Emergence of strategic management as an academic

and professional field

• 1970s: Disenchantment with strategic planning

• 1980s: Maturity of strategic planning

• 1990s: Strategic planning becomes an integral part of business operations

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