54  Strategic Management — Concept, Process and Types

54.1 What is Strategy?

The word “Strategy” comes from the Greek strategos — “the art of the general”. Modern business usage began with Alfred D. Chandler’s Strategy and Structure (1962). Michael E. Porter (Harvard) and Henry Mintzberg (McGill) are the leading scholars; Sumantra Ghoshal (London Business School) shaped strategy thinking in the Indian context.

TipWorking definitions
Author Definition
Alfred Chandler (1962) “Determination of basic long-term goals and objectives, adoption of courses of action and allocation of resources necessary for carrying out these goals.”
Kenneth Andrews (1971) “The pattern of objectives, purposes or goals and major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in.”
Igor Ansoff (1965) “A common thread among the firm’s activities and product-markets… (defined by) four components — product-market scope, growth vector, competitive advantage and synergy.”
Michael Porter (1980, 1996) “The creation of a unique and valuable position involving a different set of activities. Strategy is about being different.”
Henry Mintzberg “A pattern in a stream of decisions.”
William Glueck “A unified, comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved.”

54.2 Mintzberg’s 5 Ps of Strategy

Henry Mintzberg (California Management Review, 1987) — strategy has five meanings:

TipMintzberg’s 5 Ps
P Meaning
Plan A consciously intended course of action
Ploy A specific manoeuvre to outwit a competitor
Pattern Consistency in behaviour over time
Position Locating the firm in its environment / market
Perspective Shared mindset within the organisation; “the way we do things”

54.3 Vision, Mission, Objectives and Goals

TipThe strategic intent hierarchy
Level Description Example
Vision Aspirational future state — where we want to go “To organise the world’s information” — Google
Mission Reason for existence — why we exist “To accelerate sustainable transport” — Tesla
Values Beliefs that guide behaviour Integrity, customer-first, innovation
Goals Broad, long-term targets Become market leader
Objectives Specific, measurable, time-bound Achieve 15 % ROCE by 2027
Strategies Means of achieving objectives Differentiation through R&D
Tactics Short-term operational moves Quarterly product launches
NoteStrategic Intent — Hamel & Prahalad (1989)

Gary Hamel and C.K. Prahalad (HBR, 1989) — strategic intent is an “ambitious aspiration that creates a deliberate gap between resources and aspirations… stretching the organisation”. Examples: Canon vs Xerox; Komatsu vs Caterpillar.

54.4 Levels of Strategy

flowchart TB
  CO[Corporate Strategy<br/>What businesses to be in?]
  BU[Business / SBU Strategy<br/>How to compete in each business?]
  F[Functional Strategy<br/>How does each function support?]
  CO --> BU
  BU --> F
    classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;

TipThree levels of strategy
Level Key question Decisions
Corporate What businesses should we be in? Portfolio, diversification, M&A, divestiture
Business / SBU How to compete in each business? Cost leadership vs differentiation; positioning
Functional How do functions support strategy? Marketing, HR, Finance, Ops sub-strategies
Operational How are tasks executed? Day-to-day tactical decisions

54.5 Strategic Management — Definition

Strategic Management is the comprehensive process of formulating, implementing, evaluating and controlling cross-functional decisions that enable an organisation to achieve its long-term objectives.

TipWorking definitions
Author Definition
Wheelen & Hunger “Strategic management is a set of managerial decisions and actions that determines the long-run performance of a corporation.”
Fred R. David “The art and science of formulating, implementing and evaluating cross-functional decisions that enable an organisation to achieve its objectives.”
Thompson & Strickland “The set of managerial actions used to develop and execute a deliberate strategy.”
Sharplin “Formulating and implementing plans and carrying out activities that relate to matters which are of vital, pervasive and continuing importance to the organisation as a whole.”

54.6 Strategic Management Process

flowchart LR
  E[1. Environmental<br/>Scanning] --> F[2. Strategy<br/>Formulation]
  F --> I[3. Strategy<br/>Implementation]
  I --> EV[4. Strategy<br/>Evaluation & Control]
  EV -.feedback.-> E
    classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;

TipFour-stage strategic management process
  1. Environmental Scanning — external + internal analysis (Topic 54).
  2. Strategy Formulation — choose corporate, business, functional strategies (Topic 55).
  3. Strategy Implementation — structure, culture, leadership, resource allocation (Topic 56).
  4. Strategy Evaluation and Control — measure performance, take corrective action.

54.7 Approaches / Schools of Strategy — Mintzberg

Mintzberg, Ahlstrand and Lampel (Strategy Safari, 1998) — ten schools of strategic thought:

TipMintzberg’s Ten Schools
# School Nature Key author
1 Design Strategy formation as conception Andrews, SWOT
2 Planning Strategy as a formal process Ansoff
3 Positioning Strategy as an analytical process Porter
4 Entrepreneurial Strategy as a visionary process Schumpeter, Drucker
5 Cognitive Strategy as a mental process Simon, March
6 Learning Strategy as an emergent process Quinn, Mintzberg
7 Power Strategy as a process of negotiation Pfeffer, Salancik
8 Cultural Strategy as a collective process Rhenman, Pettigrew
9 Environmental Strategy as a reactive process Hannan, Freeman
10 Configuration Strategy as a transformation process Miller, Mintzberg
NotePrescriptive vs Descriptive

The first three schools (Design, Planning, Positioning) are prescriptive — concerned with how strategy should be formulated. Schools 4-9 are descriptive — describing how strategy is actually made. School 10 is integrative.

54.8 Deliberate vs Emergent Strategy — Mintzberg

TipDeliberate vs Emergent Strategy (Mintzberg)
Type Source
Deliberate / Intended Planned in advance
Realised What actually happened
Unrealised Intended but not executed
Emergent Arose from action, without prior intent

Realised Strategy = Deliberate (intended that worked) + Emergent (unplanned successes).

54.9 Types of Strategy

54.9.1 Corporate-Level Strategies

flowchart TB
  CO[Corporate-Level<br/>Strategies]
  CO --> G[Growth /<br/>Expansion]
  CO --> ST[Stability]
  CO --> RT[Retrenchment]
  CO --> CM[Combination]
  G --> IN[Intensive<br/>Ansoff]
  G --> INT[Integration<br/>Vertical/Horizontal]
  G --> D[Diversification<br/>Related/Unrelated]
  RT --> TU[Turnaround]
  RT --> DI[Divestment]
  RT --> LI[Liquidation]
    classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;

TipFour corporate-level strategy categories
  1. Growth / Expansion — Intensive (Ansoff), Integration, Diversification, M&A, JV, Strategic alliances.
  2. Stability — No change, Profit, Pause/Proceed-with-caution, Sustainable growth.
  3. Retrenchment — Turnaround, Divestment, Liquidation.
  4. Combination — mix of the above for different SBUs.

54.9.2 Ansoff’s Product-Market Matrix (1957)

TipAnsoff Matrix
Existing Markets New Markets
Existing Products Market Penetration Market Development
New Products Product Development Diversification

54.9.4 Business-Level (Competitive) Strategies — Porter (1980)

Michael Porter (Competitive Strategy, 1980) — three Generic Strategies:

TipPorter’s Three Generic Strategies
Strategy Source of Advantage Scope
Cost Leadership Lowest cost Broad
Differentiation Uniqueness Broad
Focus (Cost Focus / Differentiation Focus) Cost / Uniqueness in niche Narrow
NoteStuck in the Middle

Porter warned that firms attempting both cost leadership and differentiation simultaneously risk being “stuck in the middle” — beaten by both ends. Modern scholars (Hill, Murray) have challenged this view, citing hybrid strategies (Toyota: cost + quality).

54.9.5 Other Business-Level Strategy Frameworks

TipOther competitive-strategy frameworks
  • Bowman’s Strategy Clock (Cliff Bowman, 1996) — 8 positions on price-perceived value matrix.
  • Blue Ocean Strategy (Kim & Mauborgne, 2005) — create uncontested market space.
  • Hypercompetition (D’Aveni, 1994) — series of temporary advantages.
  • Co-opetition (Brandenburger & Nalebuff, 1996) — simultaneous cooperation + competition.
  • Resource-Based View (RBV) (Wernerfelt 1984; Barney 1991) — strategy from unique resources.
  • Dynamic Capabilities (Teece, Pisano, Shuen, 1997) — ability to reconfigure resources.

54.9.6 Miles-Snow Strategic Typology (1978)

TipMiles & Snow’s four strategic archetypes
Archetype Behaviour
Defender Narrow domain; focus on efficiency
Prospector Wide domain; innovate; first-mover
Analyser Combination; cautious follower
Reactor No coherent strategy; respond to crises

54.9.7 Functional-Level Strategies

TipFunctional strategies
  • Marketing strategy — STP + 4 Ps.
  • HR strategy — talent, culture, capability.
  • Operations / Manufacturing strategy — cost, quality, flexibility, delivery.
  • Financial strategy — capital structure, investment, dividend.
  • R&D strategy — innovation, IP.
  • IT / Digital strategy.
  • Sustainability / ESG strategy.

54.10 Strategic Decision Making

Strategic decisions are characterised by:

TipSix features of strategic decisions
  • Long-term horizon.
  • Resource commitment — substantial.
  • Cross-functional impact.
  • Irreversibility / high cost of reversal.
  • High uncertainty.
  • Top-management responsibility.

54.11 Strategic Management vs Operational Management

TipStrategic vs Operational Management
Dimension Strategic Operational
Time horizon Long-term Short-term
Focus Effectiveness (“doing right things”) Efficiency (“doing things right”)
Decision-makers Top management Middle / Lower management
Reversibility High cost / irreversible Relatively reversible
Frequency Infrequent Routine
Risk High Low
Information needs External + futuristic Internal + historical

54.12 Strategic Decisions — Drucker’s Five Questions

Peter Drucker’s timeless questions (Managing for the Future, 1992):

TipDrucker’s five strategic questions
  1. What is our mission?
  2. Who is our customer?
  3. What does the customer value?
  4. What are our results?
  5. What is our plan?

54.13 Strategic Management in India — Brief

TipIndian context
  • Pre-1991 — controlled economy, licensing raj limited strategy.
  • Post-1991 reforms — liberalisation transformed strategy practice; competition, FDI.
  • Modern Indian strategy scholars — Sumantra Ghoshal, Pankaj Ghemawat (GLOBE), Vijay Govindarajan (Reverse Innovation), Anil K. Gupta.
  • Indian strategic challenges — caste-driven informal networks, family-firm governance, jugaad innovation.
  • Modern Indian strategy themes — frugal innovation, digital public infrastructure (UPI, ONDC, DPI exports), reverse innovation, ESG.

54.15 Practice Questions

Q 01 Strategy Easy

The word "strategy" comes from the Greek word for:

  • ASoldier
  • BGeneral
  • CBattle
  • DVictory
View solution
Correct Option: B
Strategos — Greek for general.
Q 02 Chandler Medium

The seminal book *Strategy and Structure* (1962) was by:

  • AAlfred Chandler
  • BMichael Porter
  • CHenry Mintzberg
  • DIgor Ansoff
View solution
Correct Option: A
Alfred D. Chandler — *Strategy and Structure* (1962); "structure follows strategy".
Q 03 5 Ps Medium

Mintzberg's "5 Ps of Strategy" do NOT include:

  • APlan
  • BPattern
  • CPosition
  • DProfit
View solution
Correct Option: D
5 Ps: Plan · Ploy · Pattern · Position · Perspective. Profit is not one.
Q 04 Ansoff Medium

In Ansoff's matrix, "selling new products to existing markets" is:

  • AMarket Penetration
  • BProduct Development
  • CMarket Development
  • DDiversification
View solution
Correct Option: B
Product Development; existing markets + new products.
Q 05 Porter Generic Easy

Porter's three generic strategies are Cost Leadership, Differentiation and:

  • ADiversification
  • BStability
  • CFocus
  • DRetrenchment
View solution
Correct Option: C
Focus (cost-focus / differentiation-focus) — narrow scope.
Q 06 Schools Hard

Mintzberg's *Strategy Safari* identifies how many schools of strategy?

  • A5
  • B7
  • C10
  • D12
View solution
Correct Option: C
Ten schools — Design, Planning, Positioning, Entrepreneurial, Cognitive, Learning, Power, Cultural, Environmental, Configuration.
Q 07 Emergent Medium

The concept of "emergent strategy" is associated with:

  • AMichael Porter
  • BHenry Mintzberg
  • CAlfred Chandler
  • DPeter Drucker
View solution
Correct Option: B
Henry Mintzberg — Realised = Deliberate + Emergent.
Q 08 Strategic intent Hard

"Strategic Intent" was articulated in 1989 by:

  • AHamel & Prahalad
  • BPorter
  • CMintzberg
  • DChandler
View solution
Correct Option: A
Gary Hamel and C.K. Prahalad, HBR (1989).
Q 09 Miles-Snow Hard

Miles & Snow's typology does NOT include:

  • ADefender
  • BProspector
  • CAnalyser
  • DAggressor
View solution
Correct Option: D
Defender · Prospector · Analyser · Reactor — Aggressor is not one.
Q 10 Vision-Mission Medium

A vision statement primarily answers:

  • AWhy do we exist?
  • BWhere do we want to go?
  • CHow do we make money?
  • DWho is our competitor?
View solution
Correct Option: B
Vision = future aspiration; Mission = why we exist.
Q 11 Blue Ocean Medium

"Blue Ocean Strategy" (2005) was proposed by:

  • AKim & Mauborgne
  • BHamel & Prahalad
  • CBrandenburger & Nalebuff
  • DPorter
View solution
Correct Option: A
W. Chan Kim and Renée Mauborgne — *Blue Ocean Strategy* (2005); INSEAD.
Q 12 Stuck Medium

Porter's warning of being "stuck in the middle" cautions against:

  • ADiversification
  • BMixing cost leadership and differentiation
  • CVertical integration
  • DStrategic alliances
View solution
Correct Option: B
Attempting both ends → beaten by either; modern view permits hybrids.
Q 13 Levels Easy

"What businesses should we be in?" is a question of:

  • ACorporate-level strategy
  • BBusiness-level strategy
  • CFunctional strategy
  • DOperational strategy
View solution
Correct Option: A
Portfolio choice = corporate-level.
Q 14 Co-opetition Hard

"Co-opetition" (1996) — simultaneous cooperation + competition — was proposed by:

  • ABrandenburger & Nalebuff
  • BPorter & Lawler
  • CKim & Mauborgne
  • DD'Aveni
View solution
Correct Option: A
Adam Brandenburger and Barry Nalebuff (Yale, 1996).
Q 15 RBV Hard

The Resource-Based View (RBV) of strategy was developed by:

  • AWernerfelt (1984) and Barney (1991)
  • BPorter (1980)
  • CChandler (1962)
  • DDrucker (1954)
View solution
Correct Option: A
Birger Wernerfelt (1984) and Jay Barney (1991, VRIN).
Q 16 Dynamic capabilities Hard

"Dynamic Capabilities" theory (1997) was developed by:

  • ATeece, Pisano & Shuen
  • BHamel & Prahalad
  • CPorter
  • DMintzberg
View solution
Correct Option: A
David Teece, Gary Pisano and Amy Shuen, *SMJ* (1997).
Q 17 Drucker questions Medium

Drucker's first strategic question is:

  • AWhat is our mission?
  • BWho is the competition?
  • CWhat is our budget?
  • DWhere do we manufacture?
View solution
Correct Option: A
Five questions begin with **"What is our mission?"**.
Q 18 Strategic vs Operational Easy

Strategic decisions differ from operational decisions in being:

  • AShort-term and reversible
  • BLong-term and difficult to reverse
  • CAlways automated
  • DRoutine
View solution
Correct Option: B
Long-term, large commitment, cross-functional, irreversible.
Q 19 Retrenchment Easy

"Turnaround" is a form of:

  • AGrowth
  • BStability
  • CRetrenchment
  • DDiversification
View solution
Correct Option: C
Retrenchment options: Turnaround · Divestment · Liquidation.
Q 20 Match authors Hard

Match the strategy concept with its author:

(i) Strategy & Structure (a) Porter
(ii) 5 Ps of Strategy (b) Ansoff
(iii) Product-Market Matrix (c) Chandler
(iv) Generic Strategies (d) Mintzberg
  • A(i)-(c), (ii)-(d), (iii)-(b), (iv)-(a)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(b), (ii)-(c), (iii)-(d), (iv)-(a)
  • D(i)-(d), (ii)-(a), (iii)-(c), (iv)-(b)
View solution
Correct Option: A
Strategy & Structure — Chandler; 5 Ps — Mintzberg; Product-Market Matrix — Ansoff; Generic — Porter.

54.15.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Strategy is about creating sustainable competitive advantage.
R: Porter's generic strategies are cost leadership, differentiation, focus.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: B
S 1Statement-basedMedium

Levels of strategy: (i) Corporate. (ii) Business. (iii) Functional. (iv) Operational.

  • AAll four
  • B(i), (ii), (iii) only
  • C(i) and (ii) only
  • D(iv) only
View solution
Correct Option: A
S 2Statement-basedHard

Mintzberg's 5 Ps: (i) Plan. (ii) Pattern. (iii) Position. (iv) Perspective. (v) Ploy.

  • AAll five
  • B(i), (ii), (iii) only
  • C(iv) and (v) only
  • D(i) only
View solution
Correct Option: A

54.16 Quick Recall

ImportantQuick recall
  • Strategy etymology: Greek strategos (general); modern usage from Chandler (1962) Strategy and Structure.
  • Definitions: Chandler · Andrews · Ansoff · Porter (“being different”) · Mintzberg (pattern) · Glueck.
  • Mintzberg’s 5 Ps: Plan · Ploy · Pattern · Position · Perspective.
  • Strategic intent hierarchy: Vision · Mission · Values · Goals · Objectives · Strategies · Tactics.
  • Strategic Intent — Hamel & Prahalad (1989): ambitious aspiration; stretch.
  • Three levels of strategy: Corporate (what businesses?) · Business / SBU (how to compete?) · Functional (how do functions support?).
  • Strategic management process: Environmental Scanning → Formulation → Implementation → Evaluation & Control.
  • Mintzberg’s Ten Schools (Strategy Safari 1998): Design · Planning · Positioning (prescriptive) · Entrepreneurial · Cognitive · Learning · Power · Cultural · Environmental · Configuration.
  • Deliberate vs Emergent: Realised = Deliberate + Emergent.
  • Corporate strategies (4): Growth · Stability · Retrenchment · Combination.
  • Growth: Intensive (Ansoff) · Integration · Diversification · M&A · JV · Alliances.
  • Retrenchment: Turnaround · Divestment · Liquidation.
  • Ansoff’s matrix (1957): Penetration · Market Development · Product Development · Diversification.
  • Diversification: Concentric (related) · Conglomerate (unrelated) · Horizontal · Vertical.
  • Porter’s Generic Strategies (1980): Cost Leadership · Differentiation · Focus; warning of “stuck in the middle”.
  • Other frameworks: Bowman’s Strategy Clock (1996) · Blue Ocean — Kim-Mauborgne (2005) · Hypercompetition — D’Aveni (1994) · Co-opetition — Brandenburger-Nalebuff (1996) · RBV — Wernerfelt 1984, Barney 1991 · Dynamic Capabilities — Teece-Pisano-Shuen 1997.
  • Miles-Snow (1978): Defender · Prospector · Analyser · Reactor.
  • Functional strategies: Marketing · HR · Operations · Finance · R&D · IT · Sustainability.
  • Strategic decisions: long-term · resource-heavy · cross-functional · irreversible · uncertain · top-mgmt.
  • Strategic vs Operational: effectiveness vs efficiency; long vs short.
  • Drucker’s 5 strategic questions: Mission · Customer · Value · Results · Plan.
  • Indian scholars: Sumantra Ghoshal · Ghemawat · Vijay Govindarajan (Reverse Innovation) · Anil K. Gupta.
  • Modern trends: digital transformation · AI strategy · platform · ecosystem orchestration · ESG · stakeholder capitalism · geopolitical · dynamic capabilities · real options · open strategy · resilience > optimisation.