In the previous days, talking about the 1920’s till 1930’s, the managers used to work out the day-to-day planning method. Till this time they do not concentrate about the future work. However after this period, managers have tried to anticipate and predict about the future happenings. They started using tools like preparation of Budgets and control system like capital budgeting. However these techniques and tools also failed to emphasize the role of future adequately.
Then long-range planning came into picture, giving the idea of planning for the long-term future. But it was soon replaced by Strategic planning and later by Strategic management term that is currently being used to describe the process of Strategic decision-making. The first phase of the planning can be tracked in the mid of 1930’s. The planning at that period was done on the premises of Ad Hoc policy making. The reason why the need for planning arose at that period was that, many businesses had just about started operations and were mostly in a single product line and the ranges of operation were in a limited area. As these companies grew they expanded their products and also increased their geographical coverage. The method of using informal control and coordination was not enough and became irrelevant as these companies expanded. Thus arose a need to integrate functional areas. Framing policies to guide managerial actions covered this task of integration. Policies helped to have predefined set of actions, which helped the manager to make decisions. Policy-making became the way owners managed their business and it was considered their prime responsibility.
Thus, the increasing environment changes in the 1930’s and 1940’s planned policy formation replaced Ad Hoc policy making, which led to the shifting of emphasis to the integration of the functional areas in a policy changing environment, showing an indication of the evolution of Strategic management.
The Importance of Strategic management:
1. Strategic management is a wide concept and encompasses all functions and thus it seeks to integrate the knowledge and experience gained in various functional areas of management.
2. It enables one to understand and make sense of the complex interaction that takes place between different functional areas.
3. There are many constraints and complexities, which the Strategic management deals with. In order to develop a theoretical structure of its own, Strategic management cuts across the narrow functional boundaries. This in turn helps to create an understanding of how policies are formulated and also creating a Strategic Management solution of the complexities of the environment that the senior management faces in policy formulation.
