Academy of Management Review 1980, Vol. 5. No. 2,219-224

The Historical Deveiopment of theStrategic i\/lanagement Concept

JEFFREY BRACKERGeorgia State University

in this article, I examine how the concept of strategy has evolved into thefield of strategic management, A definition of strategic management isdeveloped from commonalities of past definitions and a selected overviewof approaches to operationalizing strategic management is presented.

Since its first mention In the Old Testament, theconcept of strategy has been largely a semanticissue. Numerous authors have focused their atten-tion on the concept of strategy but have failed tocomprehensively investigate its historical evolution.This omission, in favor of an exclusively contem-poraneous approach, has led to confusion amongprofessionals and students alike. My objective inthis paper is to develop a definition of strategicmanagement from commonalities of past defini-tions, and to provide a useful departure point for theclassroom study of strategic management.

The underlying principles of strategy were dis-cussed by Homer, Euripides, and many other earlywriters. Our word strategy comes from the Greekstrategos, "a general," which in turn comes fromroots meaning "army" and "lead." The Greek verbstratego means to "plan the destruction of one'senemies through effective use of resources." Theconcept of strategy in a military or political contexthas remained prominent throughout history, andhas been discussed by such major writers asShakespeare, Montesquieu, Kant, Mill, Hegel,Clausewitz, Liddell Hart, and Tolstoy. The strategicconcepts developed by these writers have beenused by numerous militarists and political theorists,such as Machiavelli, Napoleon, Bismarck, Yama-moto, and Hitler.

One of the first known applications of strategy tobusiness occurred when Socrates consoled Nicho-machides, a Greek militarist who lost an election tothe position of general to Antisthenes, a Greekbusinessman. Socrates compared the duties of a

© 1980 by the Academy of Management 0363-7425

general and a businessman and showed Nicho-machides that in either case one plans the use ofone's resources to meet objectives. This viewpointwas lost, for all practical purposes, with the fall ofthe Greek city-states and was not to rise again untilafter the Industrial Revolution.

The need for a concept of strategy related tobusiness became greater after World War II, asbusiness moved from a relatively stable environ-ment into a more rapidly changing and competitiveenvironment. Ansoff has attributed this change inenvironment to two significant factors: (1) themarked acceleration in the rate of change withinfirms, and (2) the accelerated application of scienceand technology to the process of management[1969, p. 7]. The accelerated rate of change put apremium on the ability to anticipate change, to takeadvantage of new opportunities, and to take timelyaction in avoiding threats to the firm. New technol-ogies spurred interest in and acceptance of analyticand explicit approaches to decision making thatIncreased management's ability to deal with theincreasingly uncertain future.

The first modern writers to relate the concept ofstrategy to business were Von Neumann andMorgenstern [1947], with their theory of games.Numerous other authors have developed conceptsof business strategy in the past 30 years. A com-parison of these modern authors' concepts hasbeen presented by Hofer and Schendel [1978].They found that among the authors, there wasmajor disagreement in three primary areas: (1) thebreadth of the concept of business strategy, (2) the

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Table 1A Chronology of Recent Definitions of Strategy

Date Contributor and Source

1947 Von Neumann & Morgenstern, Theory ofGames and Economic Behavior [pp. 79-84]

1954 Drucker, The Practice of /Management [p. 17]

1962 Chandler, Strategy and Structure: Chapters inthe History of American Industrial Enterprise[p. 13]

1965 Ansoff, Corporate Strategy: An Analytic Ap-proach to Growth and Expansion [pp.118-121]

1968 Cannon, Business Strategy and Policy [p. 9]

1969 Learned, Chrisfenson, Andrews, & Guth, Busi-ness Policy: Text and Cases [p. 15]

1971 Newman & Logan, Strategy, Policy, andCentral Management [p. 70]

1972 Schendel & Hatten, Business policy or strat-egic management. Academy of ManagementProceedings [p. 4]

1973 Uyterhoeven, Ackerman, & Rosenblum, Strat-egy and Organization: Text and cases inGeneral Management [pp. 9-10]

1974 Ackoff, Redesigning the Future [p. 29]

1975 Paine & Naumes, Strategy and Policy Forma-tion: An Integrative Approach [p. 7]

1975 McCarthy, Minichiello, & Curran, BusinessPolicy and Strategy: Concepts and Readings[p. 19]

1976 G lueck. Business Policy: Strategy Formationand Management Action, 2nd ed. [p. 3]

1977 McN ichols. Policy Making and ExecutiveAction, 5th ed. [p. 9]

Definition

Strategy is a series of actions by a firm that are decided onaccording to the particular s/fuaf/on.

Strategy is analyzing the present situation and changing it ifnecessary. Incorporated in this is finding out what one'sresources are or what they should be.

Strategy is the determinator of the basic long-term goals ofan enterprise, and the adoption of courses of action and theallocation of resources necessary for carrying out thesegoals.

Strategy is a rule for making decisions determined byproduct/market scope, growth vector, competitive advan-tage, and synergy.

Strategies are the directional action decisions which arerequired competitively to achieve the company's purpose.

Strategy is the pattern of objectives, purposes, or goals andmajor policies and plans for achieving these goals, stated insuch a way as to define what business the company is in or isto be in and the kind of company it is or is to be.

Strategies are for/vard-looking plans that anticipate changeand initiate action to take advantage o^opportunities that areintegrated into the concepts or mission of the company.

Strategy is defined as the basic goals and objectives of theorganization, the majorprograms of action chosen to reachthese goals and objectives, and the major pattern ofresource aiiocation used to relate the organization to itsenvironment.

Strategy provides both direction and cohesion to the enter-prise and is composed of several steps: strategic profile,strategic forecast, resource audit, strategic alternatives ex-plored, tests for consistency and, finally, strategic choice.

Strategy is concerned with long-range objectives and waysof pursuing them that affect the system as a whole.

Strategies are specific major actions or patterns of actionsfor the attainment of the firm's objectives.

Strategy is an analysis of the environment and selection ofeconomic alternatives that will match the corporateresources and objectives at a risk commensurate with theprofit and viability which the alternatives offer.

Strategy is a unified, comprehensive, and integratedp/andesigned to assure that the basic objectives of the enterpriseare achieved.

Strategy Is embedded in policy formulation: it comprises aseries of decisions reflecting the determination of basicbusiness objectives and the utilization oiskiiis andresources to attain these goals.

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Table 1 (Continued)

1977 Steiner & Miner, Management Poiicy andStrategy: Text, Readings, and Cases [p. 19]

1979 M i ntzbe rg, The Structuring of Organizations[p. 25]

1979 Schendel & Hofer, Strategic Management:A New View of Business Policy and Pianning[p. 516]

Strategy is the forging of company missions, setting objec-tives for the organization in light of externai and internalforces, formulating specific policies and strategies to achieveoi)/ecf/Ves, and ensuring their proper implementation so thatthe basicpurposes and objectives of the organization will beachieved.

Strategy is a mediating force between the organization andits environment: consistent patterns in streams oforganizational decisions to deal with the environment.

Strategy provides directional cues to the organization thatpermit it to achieve its objectives, while responding to theopportunities and threats in \ls environment.

components, if any, of strategy, and (3) the inclu-siveness of the strategy-formulation process. Hoferand Schendel's comparison failed to discuss thecommonalities in the concept of business strategy,however. I have therefore presented a summary ofmodern major writers" definitions of business strat-egy in Table 1, indicating in italics key terms thatidentify common threads in these definitions.

Table 1 shows that business strategy has thefollowing characteristics: an environmentai orsitua-tionai analysis is used to determine a firms posturein its field, and then the firm"s resources are utilizedin an appropriate manner to attain its ma\orgoals.

Strategic management is the direct organization-al application of the concepts of business strategythat have been developed in the academic realm.That is, strategic management entails the analysisof internal and external environments of a firn'. tomaximize the utilization of resources in relation toobjectives. This statement can be considered as amacro definition of the concept of business strat-egy, or strategic management

The major importance of strategic managementis that it gives organizations a framework for devel-oping abilities for anticipating and coping withchange. It also helps to develop the ability to dealwith uncertain futures by defining a procedure foraccomplishing goals.

Only recently has the literature addressed theoperationalization of strategic management. Table2 provides a brief overview of approaches to opera-tionalizing strategic management: a more exten-sive overview of the literature can be found in Hofer[1976] and Schendel and Hofer [1979].

Since the time of the early Greeks, the concept ofbusiness strategy has changed from a macro to amicro and back to a macro viewpoint (see Table 3).Now business researchers and practitioners needto move from a concern with definitions of the con-cept to a consolidation of terminology. Such aconsolidation would facilitate the empirical testingof hypotheses as part of an attempt to validate orreject traditional constructs and to develop usefulapplications to organizational environments.

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Date

1967

1968

1972

1973

1974

1975

1975

1976

1976

1978

1978

Table 2Approaches to Operationalizing Strategic Management

Author Explanation of Work

Mueller

Boston Consulting Group

Elliott

Macintosh, Tsurumi, and Tsurumi

Schoeffler, Buzzell, and Heany

Buzzell, Gale, and Sultan

Kirchhoff

Schendel, Patton, and Riggs

Schendel and Patton

Bass

Hatten, Schendel, and Cooper

A 2SLS regression model of strategic resource allocation to investigate thefunds-allocation process in a number of firms.

A process model dealing with cost/volume relationships of a vanety ofproducts. A number of strategic conclusions regarding cost, volume, marketshare, and profitability are developed.

A strategic analysis using a simultaneous equation model of themajor elements of corporate performance.

A 2SLS regression model linking the largest Canadian meat packer to amodel of the Canadian economy for the purpose of environmentalperception, analysis, and determining optimal strategic action.

A study of the strategic relationship between market share and other factorsand profitability (PIMS).

A study of the strategic relationship between market share and other factorsand profitability (PIMS).

An analysis of internal factors contributing to return on investment;uses an SPSS sfepwise regression model.

A strategic OLS regression model of corporate turnaround strategies.

A 3SLS regression model of corporate strategy to overcome the multiple-goal problem and to capture complex patterns of the strategic, operating,and environmental variables that influence goal attainment.

A strategic model formulated for consumer durables specifying the pricelevel for each period of a product's life that will maximize the firm'sdiscounted cash flow. Merges an earlier Bass demand model with theBoston Consulting Group's experience curve.

An OLS regression model of the U.S. brewing industry relating strategic(controllable) and environmental (noncontrollable) variables to a firm'sreturn on equity.

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Table 3History of the Scope of Strategic Management

Macro Micro Macro

Time

Rationale

3000 B.C. Fall of GreekCity- States

National markets

Large, complex interrelatedorganizations

Roman IndustrialEmpire Revolution

Oligopolistic environment

Unlimited resource availability

Lack of national markets

Lack of ability to anticipatechangeStable environment

Post World FutureWarn

Dynamic environment

New technology

Ability fo anticipate change

National marketsAbility to deal with uncertainfuture

StrategyDefinition

MajorContributors

Applicationof Strategy

Effective use of resources tomeet objectives

Early Greek writers such asHomer, Euripides, andSocrates

Business, Military, andGovernment

Effective use of resources tomeet objectives

Shakespeare. Montesquieu.Kant, Mill, Hegel, Clausewitz,Tolstoy

Military and Government

Analysis of internal and exter-nal environments of the firm inorder to maximize utilization ofresources in relation to objec-tives

Von Neumann & Morgenstern,Drucker, Chandler, Ansoff,Glueck, McNichols, Steiner,Miner, Mintzberg. Hofer,Schendel

Business, Military, andGovernment

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REFERENCES

Ackoff, R. Redesigning the future. New York Wiley, 1974.Ansoff, H.I. Corporate strategy: An analytic approach to busi-ness policy for growth and expansion New York: McGraw-Hill, 1965.

Ansoff, H. I. (Ed.). Business strategy: Seiected readings.Baltimore, Md.: Penguin Books, 1969

Bass, F. M. The relationship between diffusion rater, experi-ence cun/es, and demand elasticities for consumer durabletechnoiogicai innovations. Paper No. 660. Institute for Re-search in the Behavioral, Economic, and Management Sci-ences, Krannert Graduate School of Management. March 1978.Boston Consulting Group. Perspectives on experience.Boston: Boston Consulting Group. 1968.Buzzell, R D.; Gale, B T.; & Sultan. R. G M. Market share: Akey to profitability. Harvard Business Review, 1975, 53(1),97-106.

Cannon, J. T. Business strategy and policy. New York:Harcoun. Brace & World. 1968.

Chandler. A. Strategy and structure: Chapters in the history ofAmerican industrial enterprise. Cambridge, Mass.: MIT Press,1962.

Drucker, P. The practice of management. New York: Harper& Brothers, 1954.

Elliott, J. W. Forecasting and analysis of corporate financialperformance with an econometric model of the firm. Journal ofFinanciai and Ouantitative Anaiysis, 1972, 7(2), 1499-1526.Glueck, W Business poiicy, strategy formation, and manage-mentaction (2nded.). New York: McGraw-Hill. 1976.Hatten, K. J.; Schendel, D E.; & Cooper, A. C. A strategicmodel of the U.S. brewing industry: 1952-1971. Academy ofManagement Journai, 1978. 27(4). 597-610.Hofer, C. W. Research on strategic planning: A survey of paststudies and suggestions for future efforts. Journal of Econom-ics and Business, 1976,28(3). 261 -286Hofer. C W.; & Schendel, D. Strategy formuiation: Analyticalconcepts. St. Paul, Minn: West Publishing, 1978.Kirchhoff, B. A. Empirical analysis of the strategic factors con-tributing to return on investment. Unpublished paper. Univer-sity of Nebraska at Omaha. 1975.

Learned, E. P.; Christensen, R. C.; Andrews. K. R.; & Guth, W. D.Business policy: Text and cases. Homewood, III.: Inwin, 1969.

Macintosh, N. R.; Tsurumi, H.; & Tsurumi, Y. Economics forstrategic planning. Journal of Business Policy, 1973, 3(3), 49-60.

McCarthy, D. J.; Minichiello, R. J.: & Curran, J. R. Businesspoiicy and strategy: Concepts and readings. Homewood, III.:Irwin, 1975.

McNichols, T. J. Poiicy making and executive action (5th edi-tion). New York: McGraw-Hill, 1977.

Mintzberg, H. The structuring of organizations. EnglewoodCliffs, N.J.: Prentice-Hall, 1979.

Mueller, D. C. The firm decision process: An economic investi-gation. Quarteriy Journai of Economics, 1967,87(1), 58-81.

Newman, W. H.; & Logan, J. P. Strategy, poiicy, and centraimanagement. Cincinnati: South-Western Publishing, 1971.

Paine, F.; & Naumes, W. Strategy and policy formation: Anintegrative approach Philadelphia: Saunders, 1974.Schendel, D. E.; & Hatten. K. J. Business policy or strategicmanagement: A view for an emerging discipline. In V. F.Mitchell, R. T. Barth, & F. H. Mitchell (Eds.), Academy of Man-agement Proceedings, 1972

Schendel, D. E : & Hofer, C. Strategic management. Boston:Little, Brown, 1979.

Schendel, D.; & Patfon, G. R. A simultaneous equation modelof corporate strategy. Paper No. 582, Institute for Research inthe Behavioral, Economic, and Management Sciences, KrannertGraduate School of Management, December 1976.Schendel, D.; Patton, G. R.;& Riggs, J. Corporate turnaroundstrategies: A study of profit decline and recovery. JoumalofGeneral Management, 1976,3(3), 3-11.Schoeffler, S.; Buzzell, R. D.; & Heany, D. F. Impact of strat-egic planning on profit performance. Harvard Business Re-view, 1974,52(2), 137-145.

Steiner, G. A.:& Miner, J. B. Management poiicy and strategy:Text, readings, and cases. New York: Macmillan, 1977.Uyterhoeven. H ; Ackemnan, R; & Rosenblum, J. W. Strategyand organization: Text and cases in generai management.Homewood, III.: Irwin, 1973.

Von Neumann, J.; & Morgensfern, O. Theory of games andeconomic behavior (2nd ed). Princeton: Princeton UniversityPress, 1947.

Jeffrey Bracker is an Instructor of Management atGeorgia State University, Atlanta.

Received 3/30/79

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