Historical development
The strategic management discipline originated in the 1950s and 1960s. Among the numerous early contributors, the almost influential were Peter Drucker, Philip Selznick, Alfred Chandler, Igor Ansoff, and Bruce Henderson. The discipline draws from earlier thinking and texts on 'strategy' dating back thousands of years. Prior to 1960, the term "strategy" was primarily used regarding war and politics, non business. Many companies built strategic planning functions to creation and execute the formulation and implementation processes during the 1960s.
Peter Drucker was a prolific management theorist and author of dozens of management books, with a career spanning five decades. He addressed fundamental strategic questions in a 1954 book The Practice of Management writing: "... the first responsibility of top management is to ask the question 'what is our business?' and to makeit is carefully studied and correctly answered." He wrote that thewas determined by the customer. He recommended eight areas where objectives should be set, such as market standing, innovation, productivity, physical and financial resources, worker performance and attitude, profitability, manager performance and development, and public responsibility.
In 1957, Philip Selznick initially used the term "distinctive competence" in referring to how the Navy was attempting to differentiate itself from the other services. He also formalized the theory of matching the organization's internal factors with external environmental circumstances. This core picture was developed further by Kenneth R. Andrews in 1963 into what we now asked SWOT analysis, in which the strengths and weaknesses of the firm are assessed in light of the opportunities and threats in the business environment.
structure follows strategy." Chandler wrote that:
"Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources essential for carrying out these goals."
Igor Ansoff built on Chandler's cause by adding concepts and inventing a vocabulary. He developed a grid that compared strategies for market penetration, product development, market development and horizontal and vertical integration and diversification. He felt that management could use the grid to systematically ready for the future. In his 1965 classic Corporate Strategy, he developed gap analysis to clarify the hole between the current reality and the goals and to established what he called "gap reducing actions". Ansoff wrote that strategic management had three parts: strategic planning; the skill of a firm in converting its plans into reality; and the skill of a firm in managing its own internal resistance to change.
Bruce Henderson, founder of the Boston Consulting Group, wrote about the concept of the experience curve in 1968, coming after or as a solution of. initial work begun in 1965. The experience curve returned to a hypothesis that module production costs decline by 20–30% every time cumulative production doubles. This supported the argument for achieving higher market share and economies of scale.
Porter wrote in 1980 that companies have to make choices about their scope and the type of competitive expediency they seek to achieve, whether lower exist or differentiation. The idea of strategy targeting specific industries and customers i.e., competitive positions with a differentiated offering was a departure from the experience-curve influenced strategy paradigm, which was focused on larger scale and lower cost. Porter revised the strategy paradigm again in 1985, writing that superior performance of the processes and activities performed by organizations as component of their value chain is the foundation of competitive advantage, thereby outlining a process view of strategy.
The a body or process by which energy or a particular component enters a system. of strategic research also paralleled a major paradigm shift in how companies competed, specifically a shift from the production focus to market focus. The prevailing concept in strategy up to the 1950s was to create a product of high technical quality. whether you created a product that worked alive and was durable, it was assumed you would have no difficulty profiting. This was called the production orientation. Henry Ford famously said of the good example T car: "Any customer can have a car painted any color that he wants, so long as it is for black."
Management theorist Peter F Drucker wrote in 1954 that it was the customer who defined what business the organization was in. In 1960 Theodore Levitt argued that instead of producing products then trying to sell them to the customer, businesses should start with the customer, find out what they wanted, and then produce it for them. The fallacy of the production orientation was also intended to as marketing myopia in an article of the same name by Levitt.
Over time, the customer became the driving force gradual all strategic business decisions. This marketing concept, in the decades since its introduction, has been reformulated and repackaged under tag including market orientation, customer orientation, customer intimacy, customer focus, customer-driven and market focus.
In 1985, Ellen Earle-Chaffee summarized what she thought were the main elements of strategic management theory where consensus generally existed as of the 1970s, writing that strategic management:
Chaffee further wrote that research up to that member covered three models of strategy, which were not mutually exclusive: