Strategy and the Quest for

■ TABLE OF CONTENTS
1. Military Origins of Strategy Pg 3

2. Evolution of Strategy Pg 4

3. Concept & Characteristics of Strategic Management Pg 5

4. Defining Strategy – Mintzberg's 5Ps Pg 7

5. Levels of Strategy Pg 9

6. Strategic Management Process Pg 11

7. Quick Revision Summary Pg 13

 1. ■■ Military Origins of Strategy

What is the Word 'Strategy'?

The word STRATEGY comes from the Greek word 'Strategos' which means 'General of the
Army'. In ancient Greece, a Strategos was a military leader who planned battles and led soldiers
to victory. So, strategy originally meant the art of planning and leading in war.

How Military Strategy Came About:

• Ancient Battles: Long ago, kings and generals had to plan how to win wars. They needed to
decide where to fight, how many soldiers to use, and when to attack.
• Sun Tzu (500 BC): A Chinese general named Sun Tzu wrote a famous book called 'The Art of
War'. This is the oldest book on strategy in the world.
• Carl von Clausewitz (1800s): A German general who wrote 'On War'. He said war is about
achieving political goals using military power.
• Napoleon Bonaparte: Famous for his clever battle strategies — attacking the enemy's
weakness and protecting his strengths.

Key Military Strategy Concepts (That Moved to Business):

Military Concept Business Equivalent

Commander's Mission Company's Vision & Mission

Know your enemy Competitor Analysis

Use resources wisely Resource Allocation

Plan of attack Business Plan / Strategy

Win the war Achieve Competitive Advantage

■ Example: Just like a general plans to defeat the enemy army, a business plans to beat its
competitors in the market. Example: Apple plans strategies to beat Samsung in the smartphone
market.
 2. ■ Evolution of Strategy
Strategy in business did not appear suddenly. It slowly developed over time as businesses grew
bigger and markets became more complicated. Let us see this journey step by step.

Era / Period Focus Key Idea

1900s – 1930s Companies focused only on making budgets for next

Annual Budgeting
Basic Planning year. No long-term thinking.

1950s – 1960s
Companies started thinking about the future — 5 to 10
Long-Range 5-year plans
years ahead. Growth was the main goal.
Planning

1960s – 1970s SWOT, Companies started looking at both inside strengths and
Strategic Planning Environment outside threats. SWOT Analysis was born.

Michael Porter introduced ideas about beating

1980s Strategic Competitive
competitors. Strategy became about winning in the
Management Advantage
market.

1990s – 2000s
Change & Markets changed fast. Companies had to keep changing
Dynamic
Innovation their strategies. Focus shifted to innovation and flexibility.
Strategies

AI, Big Data, Digital Platforms — strategy now includes

2010s – Now Technology &
technology. Example: Amazon uses data to serve
Digital Strategy Data
customers better.

■ Key Point: Strategy evolved from simple yearly budgets → to long-term planning → to
competitive strategy → to digital and technology-driven strategy today.
 3. ■ Concept & Characteristics of Strategic
Management

What is Strategic Management?

Strategic Management is the process of setting goals, making plans, and taking actions to
help a company succeed in the long run. It includes looking at the company's strengths,
weaknesses, opportunities, and threats — and then deciding the best way forward.

Simple Definition:
■ Think of it like: A chess player does not just think about the next move — they plan many
moves ahead. Strategic management is like planning many moves ahead for a company.

Famous Definitions:
• Alfred Chandler: 'Strategy is the determination of long-term goals of an enterprise, and the
adoption of courses of action and allocation of resources necessary for achieving these goals.'
• Michael Porter: 'Strategy is about making choices, trade-offs; it's about deliberately choosing
to be different.'
• Fred David: 'Strategic Management is the art and science of formulating, implementing, and
evaluating cross-functional decisions that enable an organization to achieve its objectives.'

Characteristics of Strategic Management:

(These are the special features that make strategic management unique)

1. Long-Term Focus
• Strategic management thinks about the future — usually 3 to 5 years or more. It is not about
today's small problems.
■ ■ Example: A company plans to expand to 5 new countries in the next 5 years.

2. Goal Oriented
• Everything in strategic management is done to achieve specific goals. The whole company
works toward one direction.
■ ■ Example: Tata Motors' goal is to become the leading electric vehicle maker in India by 2030.

3. Top Management Involvement

• Strategic decisions are made by top-level managers — the CEO, Board of Directors, and
senior leaders. Not everyday workers.
■ ■ Example: Reliance Industries' Chairman Mukesh Ambani personally decides the major
strategies.

4. Looks at Both Inside & Outside

 • Strategic management studies what is happening inside the company (strengths, weaknesses)
AND outside (opportunities, threats in the market).
■ ■ Example: A company checks if it has the money and talent (inside) and if the market is
growing (outside).

5. Continuous Process
• Strategy is never 'done'. It keeps changing as the business world changes. Companies
regularly update their strategies.
■ ■ Example: During COVID-19, many restaurants changed strategy from dine-in to home
delivery.

6. Integrated & Comprehensive

• It covers ALL departments — marketing, finance, HR, operations — not just one area.
Everyone works together.
■ ■ Example: When Apple launches a new iPhone, the design, marketing, finance, and supply
chain all work together.

7. Dynamic in Nature
• The business world keeps changing. New technologies come, new competitors appear.
Strategy must adapt to these changes.
■ ■ Example: Netflix changed its strategy from DVD rentals to online streaming as technology
changed.

8. Competitive Advantage Focused

• The main aim of strategic management is to create a competitive advantage — doing
something better than competitors so customers choose you.
■ ■ Example: Amazon's fast delivery and low prices are its competitive advantages.
 4. ■ Defining Strategy – Mintzberg's 5Ps of Strategy
Henry Mintzberg was a famous Canadian management professor. He said that the word
'Strategy' has not just one meaning — it has FIVE different meanings. He called them the 5Ps of
Strategy. Each 'P' looks at strategy from a different angle.

Think of it like this:

■ The Blind Men & Elephant: Different people touch different parts of an elephant and describe it
differently. Similarly, strategy can be seen in 5 different ways — all are correct, just different
perspectives!

■ P1 — Strategy as a PLAN
Definition: A strategy as a PLAN means it is a deliberate, conscious, and intended course of
action that is decided in advance to achieve a goal.

• It is made BEFORE taking action.

• It is done on purpose — not by accident.
• Like a road map — you decide the path before you drive.
• Example: A cricket team plans its batting order before the match starts.

■ Real-Life Example: Before launching a new product, a company makes a detailed plan: budget,
timeline, target market, marketing approach.

■ P2 — Strategy as a PLOY
Definition: A strategy as a PLOY is a specific trick or move used to outsmart a competitor. It
is a tactical action designed to confuse or mislead the rival.

• It is a short-term clever trick.

• It is used to gain an advantage over rivals.
• Think of it like a fake move in football to confuse the opponent.
• Example: Uber offering massive discounts to push Ola out of a city.

■ Real-Life Example: A company announces it will build a huge new factory — not because it
really will, but to scare competitors from entering the market.

■ P3 — Strategy as a PATTERN
Definition: A strategy as a PATTERN means the consistent behavior a company follows over
time — even if it was not planned. Sometimes companies develop strategies without realizing it.

• It comes from looking at PAST actions.

• It shows what a company 'always does'.
 • Planned behavior + Unplanned behavior = Pattern.
• Example: McDonald's always maintains the same taste globally — that consistency is its pattern
strategy.

■ Real-Life Example: Toyota always focuses on quality and reliability in every car it makes. This
consistent behavior is its pattern — its strategy, even if not written down.

■ P4 — Strategy as a POSITION
Definition: A strategy as a POSITION means how a company places itself in the market —
how it is seen by customers compared to competitors. It is about finding a unique spot in the
market.

• It is about WHERE you compete.

• It is about finding the right 'spot' in the market.
• Think of it like choosing the best seat in a cricket stadium.
• Example: Dettol has positioned itself as India's #1 trusted antiseptic brand.

■ Real-Life Example: Rolls-Royce positions itself as the most luxurious car brand. Its strategy is
to be the 'king of luxury' — expensive, exclusive, and high-quality.

■ P5 — Strategy as a PERSPECTIVE
Definition: A strategy as a PERSPECTIVE means the company's unique way of thinking and
its culture. It is about the company's values, vision, and internal mindset that drives all decisions.

• It is about HOW you think, not just what you do.

• It is the company's culture and identity.
• Like a person's personality — it guides everything they do.
• Example: Google's perspective is 'organize the world's information and make it accessible to
everyone.'

■ Real-Life Example: Apple's perspective is 'Think Different' — they believe in innovation, design,
and simplicity. This mindset shapes every product, every ad, every decision.
 5. ■■ Levels of Strategy
Strategy in a company is not made at just one level. It is made at THREE DIFFERENT LEVELS.
Think of a company like a building with 3 floors — each floor has its own strategy, and all 3 must
work together for the company to succeed.

■■ LEVEL 1 — CORPORATE LEVEL STRATEGY

What is it? The HIGHEST level of strategy. This is decided by the CEO and Board of Directors. It
decides the overall direction of the entire company — which businesses to be in, where to grow.

What decisions are made here?

• In which industries should the company operate?
• Should the company expand to new countries?
• Should it merge with or acquire another company?
• Which businesses should be shut down?

Types of Corporate Strategies:

• Growth Strategy: Expand the business (new markets, new products). Example: Reliance
entering Retail and Telecom.
• Stability Strategy: Keep things as they are — no major change.
• Retrenchment Strategy: Cut down, sell divisions, or close unprofitable parts.
• Combination Strategy: Use more than one of the above at the same time.

■ Example: The Tata Group (Tata Sons) decides that it will be in sectors like automobiles (Tata
Motors), steel (Tata Steel), IT (TCS), and hotels (Taj). This overall portfolio decision is Corporate
Level Strategy.

■ LEVEL 2 — BUSINESS LEVEL STRATEGY (SBU Level)

What is it? The MIDDLE level of strategy. This is decided by Business Unit Heads / Division
Managers. It focuses on how each individual business unit (SBU) will compete in its specific market.

What decisions are made here?

• How will we beat our competitors in this market?
• Will we offer lower prices or better quality?
• What makes our product unique?
• How can we attract and keep customers?

Michael Porter's 3 Generic Strategies at this level:

• Cost Leadership: Be the cheapest! Example: Big Bazaar offers lowest prices.
• Differentiation: Be unique! Example: Apple offers unique design and ecosystem.
• Focus Strategy: Target a small, specific group. Example: Rolex focuses only on luxury watch
buyers.
 ■ Example: Tata Motors (one business unit of Tata Group) decides its strategy: compete in the
SUV market by offering better safety features and mileage than competitors like Hyundai and
Mahindra. This is Business Level Strategy.

■■ LEVEL 3 — FUNCTIONAL LEVEL STRATEGY

What is it? The LOWEST level of strategy. This is decided by Department Heads (Marketing
Manager, Finance Manager, HR Manager, etc.). It focuses on how each department will support the
business strategy.

Different Functional Strategies:

• Marketing Strategy: How to promote and sell the product. Example: Using social media ads.
• Finance Strategy: How to manage money and reduce costs. Example: Cutting unnecessary
expenses.
• HR Strategy: How to hire, train, and keep good employees.
• Operations Strategy: How to produce products efficiently with less waste.
• IT Strategy: How technology will be used to improve the business.

■ Example: Tata Motors' Marketing Department decides to run advertisements on IPL cricket
matches and social media to attract young buyers for the Nexon EV. This is Functional Level
Strategy.

Summary: 3 Levels at a Glance

Level Who Decides Focus Question Asked

What business should we be

Corporate CEO / Board Entire Company
in?

Business (SBU) Division Head One Business Unit How do we beat competitors?

How do we support the

Functional Department Head One Department
strategy?
 6. ■ Strategic Management Process
The Strategic Management Process is a step-by-step method that companies use to plan and
execute their strategies. It is a continuous cycle — after the last step, you go back to the first step
again. Think of it like running laps on a track — you keep going!

■ STEP 1: Establish Vision, Mission & Goals

Every journey needs a destination. Before making any strategy, a company must define:
• Vision: What does the company want to BECOME in the future? (Long-term dream). Example:
'To be the most loved brand in the world.'
• Mission: WHY does the company exist? What does it do today? Example: 'We provide quality
food at affordable prices.'
• Goals/Objectives: Specific targets to achieve. Example: 'Increase sales by 20% in 2 years.'

■ Example: Google's Vision: 'To organize the world's information and make it universally
accessible and useful.'

■ STEP 2: Environmental Analysis (SWOT Analysis)

Before making a plan, you must understand the situation. Companies do this through analysis:
• Internal Analysis: Look INSIDE the company.
• Strengths (S): What does the company do well? Example: Strong brand, loyal customers.
• Weaknesses (W): Where does the company struggle? Example: High costs, poor technology.
• External Analysis: Look OUTSIDE the company.
• Opportunities (O): What chances exist in the market? Example: Growing demand for electric
cars.
• Threats (T): What dangers exist outside? Example: New competitors, changing laws.
• Other tools: PESTLE Analysis (Political, Economic, Social, Tech, Legal, Environmental) and
Porter's Five Forces.

■ Example: Maruti Suzuki's Strength = Huge distribution network across India. Weakness = Less
presence in premium car segment. Opportunity = Growing middle class. Threat = Tata Motors and
Hyundai gaining market share.

■ STEP 3: Strategy Formulation

Now it's time to make the strategy — based on the analysis done in Step 2.
• This step decides WHAT strategy to follow.
• Choose which markets to enter or exit.
• Decide whether to grow fast, be stable, or downsize.
• Select competitive approach: low cost, differentiation, or focus.
 • Decide how to use limited resources (money, people, technology) wisely.
• Different strategies are developed at Corporate, Business, and Functional levels.

■ Example: After studying the market, Jio decided to formulate a strategy of FREE data and calls
when it launched — to quickly capture market share from Airtel and Vodafone.

■ STEP 4: Strategy Implementation

A strategy is useless unless it is actually carried out! This step is about DOING the plan.
• Convert the strategy into action plans and tasks.
• Allocate resources — money, people, technology.
• Assign responsibilities — who does what.
• Change the organizational structure if needed.
• Manage change — help employees adjust to new ways.
• This is often called the 'action stage' — the hardest part because it involves real people and
real challenges.
• Key tools: Balanced Scorecard, Action Plans, Budgets.

■ Example: After Jio decided its strategy (Step 3), it implemented it by: building thousands of
telecom towers across India, hiring thousands of employees, and launching massive marketing
campaigns.

■ STEP 5: Strategy Evaluation & Control

After implementation, the company must check if the strategy is working as planned.
• Measure Performance: Compare actual results with goals.
• Identify Gaps: Where are we falling behind?
• Take Corrective Action: If something is not working, fix it.
• Key Questions: Are we achieving our targets? Is the strategy still relevant? Do we need to
change?
• Tools used: KPIs (Key Performance Indicators), Balanced Scorecard, Audits, Financial
Reports.
• This step leads back to Step 1 — the process starts again as the world keeps changing.

■ Example: After Jio's launch, it regularly monitored: How many customers subscribed? What is
data usage? Are customers happy? Based on this data, they adjusted prices and services.

■ Key Point: The Strategic Management Process is CYCLIC — after evaluation, you go back to
step 1 and re-examine the vision, re-analyse the environment, and reformulate the strategy if
needed. It never truly ends!
 7. ■ Quick Revision Summary
Strategy comes from Greek 'Strategos' (Army General). Sun Tzu (Art of
Military Origins
War), Clausewitz (On War) influenced business strategy.

Evolved from simple budgeting (1900s) → Long-range planning (1950s)

Evolution → Strategic planning (1960s) → Strategic management (1980s) →
Digital strategy (today).

Process of setting goals, making plans, and executing them to gain

Strategic competitive advantage. It is long-term, top-level, dynamic, and
Management
comprehensive.

Long-term, Goal-oriented, Top management driven, Looks inside &

Characteristics outside, Continuous, Integrated, Dynamic, Competitive advantage
focused.

Plan (deliberate action) | Ploy (trick to beat rivals) | Pattern (consistent

Mintzberg's 5Ps behavior over time) | Position (place in market) | Perspective (company
mindset/culture).

Corporate Level (CEO – what business?) | Business Level (Division

Levels of Strategy Head – how to compete?) | Functional Level (Department Head – how
to support?).

Step 1: Vision/Mission → Step 2: Environmental Analysis (SWOT) →

Strategic
Management Step 3: Formulation → Step 4: Implementation → Step 5: Evaluation →
Process Back to Step 1.

■ Exam Tip: Always use EXAMPLES in your answers. Examiners love real-world examples like
Apple, Tata, Jio, Amazon, Google etc. It shows you understand the concept practically!

Unit 1 – Strategy and the Quest for Competitive Advantage | Detailed Notes