Description
CHAPTER ONE INTRODUCTION 1.1 Back ground of the Study Until the 1940s, strategy was seen as primarily a matter for the military. Military history is filled with stories about strategy. Almost from the beginning of recorded time, leaders contemplating battle have devised offensive and counter-offensive moves for the purpose of defeating an enemy. The word strategy derives from the Greek for generalship, strategia, and entered the English vocabulary in 1688 as strategie. According to James? 1810 Military Dictionary, it differs from tactics, which are immediate measures in face of an enemy. Strategy concerns something ?done out of sight of an enemy.? Its origin can be traced back to Sun Tzu?s The Art of War from 500 BC. Over the years, the practice of Corporate strategy has evolved through five phases (each phase generally involved the perceived failure of the previous phase). These include: Basic Financial Planning (Budgeting), Long-range Planning (Extrapolation), Strategic (Externally Oriented) Planning, Strategic Management, Complex Systems Strategy: Complex Static Systems or Emergence and Complex Dynamic Systems (Vijaykumar, 2009: 1). McKinsey (1889-1937), founder of the global management consultancy that bears his name, was a professor of cost accounting at the School of Business at the University of Chicago. His most important publication, Budgetary Control (1922), is quoted as the start of the era of modern budgetary accounting. Early efforts in corporate strategy were generally limited to the development of a budget, with managers realizing that there was a need to plan the allocation of funds. Later, in the first half of the 1900s, business managers expanded the budgeting process into the future. Budgeting and strategic changes (such as entering a new market) were synthesized into the extended budgeting process, so that the budget supported the strategic objectives of the firm. With the exception of the Great Depression, the competitive environment at this time was fairly stable and predictable. Long-range Planning was simply an extensio