Strategic Management Organisation
Strategic management is a concept which is now employed in all organizations, and many authors have tried to define strategic management. Quinn (2003) defines strategy management as â€œA strategy is the pattern or plan that integrates an organisation’s major goals, policies and action sequences into a cohesive wholeâ€. A well formulated strategy helps to position and allocate an organisation’s resources into an inimitable and viable posture based on its relative internal competencies and shortcomings, probable changes in the context and contingent moves by intelligent rivalries. This report critically analyzes the mainstream perspective of different authors of strategic management, evaluating their key issues in the field of corporate strategic management. First part focuses on the different perspectives of authors like Mintzberg, Whittington, Chaffee the second part throws light on different types of context, and finally it summarizes the whole reports and comes to a definitive conclusion.
In the complex and dynamic business environments, strategy is response from management to turbulence. It is uniquely affected by contexts like uncertainty of market situation, technological changes etc. As strategy is wide term, plethora of opinion and views generated. Some of the mainstream definitions are stated. According to Johnson, Scholes and Whittington (2006) â€œstrategyâ€ concerns with the scope of an organisation’s activities, leads in achieving competitive advantage and fulfil the expectations of the stakeholder. Strategy is formulated in accordance to effective use of resources, creating a brand position of an organisation and effective communication within and outside organisation. Even strange times require unusual strategy, suggests Gary Hamel (1990), saying that â€œstrategy is revolution; everything else is tactics.â€ Strategy as â€œa pattern in stream of decisionsâ€ given by Mintzberg and Waters (1986). The diverse approaches to strategy which have been classified and categorised major differences in the way that strategy is conceptualized are discussed below.
Ten different schools of thoughts have been given by Mintzberg and Lampel (1999), in which they analysed strategy depending on different situation and considered different requirements like analytical, prescriptive, psychological, social and descriptive for the formation of strategy in the organisation. They categorize schools of thoughts into two: descriptive and prescriptive approaches. (Mintzberg et al, 1998) in his three prescriptive schools namely Design, Planning and Positioning relates to market needs and competitor’s characteristics ,helps the management in terms of what the firm can do well and where it may have deficiencies. These are on rational and deliberate strategies i.e. realized as intended.
Design school is based on analyzes through SWOT analyses of the surroundings in which the company is operating. The strategy of design
school is very simple and informal. By (Ansoff, H. McDonnell. 1990) the length
of the design school has been quite clear by consideration, assessment, judgement, supported by the analysis or by conscious thoughts express verbally and on paper. It is one best way to make strengths but sometime design school model is rejected where strategy formation has to be emphasizing learning especially on a collective basis, under conditions of uncertainty and complexity. The Planning school helps in developing a proper plan to implement in any organisation but according to (Steiner and Kunin, 1983:15) plans are sometimes ineffective but the planning process is always essential. So, it depends upon the management how that are implementing the planning strategy in the organisation. (Pearson, 1999: 498) argues, none of above approach guides to know the most desirable range of virtues of rational planning to strategy formulation. The unspoken theory was that environment was feasible for planner to formulate strategy.
Positioning School is based on analytical calculation. According to (Steiner and Kunin, 1983:15) the positioning school manages the strategy formation as an analytical process. It places the business within the context its industry and looks at how the organization can improve its strategic positioning within that industry. According, to, (Porter. M, 1980) a firm can gain competitive advantage if it is able to generate value for its buyers. Companies can endow with the superior value by putting forward the products that are lower in prices than that of their competitors, this generic strategy is called the strategy of cost leadership or by offering benefits that are of unique quality for which consumers are willing to pay a higher price this is the strategy of “differentiation”. The third strategy is focus that is when a firm chooses a narrow segment within its industry and modifies its offerings to that segment.
Strategy Planning school, Design school and Positioning school, the three approaches developed by Chandler (1962) seeking changes in the environment requirement for new strategies concerned with rational and deliberate approach. These concepts were modified and still in use by Mintzberg in his prescriptive models were similar to Chandler’s schools of thought. Deliberate approach is related to the feature of acting intentionally and based on the concept of forecasting the environment. It doesn’t infer that realized or rational strategies are totally avoid unexpected developments or events. This characterizes by the work of Ansoff (1965), and Poter (1980).The main part of debate lies with the description of modernism i.e. descriptive approach with the prescriptive schools. Modernist approach deals with certain assumptions impacting on prescriptive approach. In view of (Clegg, Carter & Corn Berger, 2004) it is mainly stress on context in which firm operates and ultimately capture a strategy within a scientific methodological straight jacket.
The descriptive schools of thought which refer to simply give a company’s current overview at particular point of time given by Mintzberg are entrepreneurial, cognitive, learning, power, cultural, environmental and configuration school.
Emergent strategy helps is making strategic decision which is concerned with learning by experience. Planning at certain level is important but due to turbulent environment â€˜action with planning’ is implemented. It evolves through a process of learning experimenting with different data and extreme risk-taking strategy. Mintzberg and Waters (1985) states this approach that strategy is not necessarily planned or intended, it often emerges from a series of decisions and actions taken if it is successful, later then it might be deliberate. This strategy has certainty to change i.e. possibility to flexibility, thinking intuitively which Mintzberg stated this in his learning and cognitive school of thought. Chaffee mentioned in Adaptive model one of the three mental model about adapting the environment in which organisation operates and also in Interpretive which mainly stresses on processual aspects of strategy and to a limit it affords to legitimacy are closely related to concept given by Mintzberg and Lampel (1998) in their cognitive and environmental schools of thoughts. Processual approach is an outline that develops over time within a company in absence of a specific goal. But in contrast to Mintzberg the Linear model of Chaffee his concepts limits only to sequential planning where the model does not describe about the positioning of company in to industry.
According to (Liz Tulop and Stephen Linstead,1999) relates his three approaches to strategy with Mintzberg 10 schools of thought .The rationalist model use to describe that are essentially prescriptive schools of thought, that is, approaches which are primarily normative(what ought to be) or focused in how the enterprise should approach strategy formation. These prescriptive approaches are based on applying rationalist models and theories to strategy. The reconfigurationist models or modernist approach refers to descriptive schools of thought, less concerned with prescribing how strategy should be formulated than with the description and explanation of how enterprise strategies are actually formed in practice. Consideration of the postmodernist approach, attempts to account for the existence and appeal of the preceding two models.
On the Contrary to deliberate process Weick and Westly (1996: 453) argue in spite imposing a hierarchical relation and differing between planning and action, management rely on the â€œ activity of people who thrown into the middle of things and play their way out by thinking while doingâ€. Heinrich von Kleist (1997) supports emergent process by his narrating strategy as act before you plan.
Other approaches of strategy given by the Whittington (1993) as Classical approach which is concerned with influencing outcomes through certain commitments to the formed structured of science by which valid and actual knowledge can be obtained. This is very much similar to prescriptive approach of Mintzberg in which he emphasizes on SWOT analyses. But in contract to this, Processual approaches, instead of complete research it stresses more on learning as a means of generating ideas, more specific, learning from experience. Levinthal and March (1993), argues to the
processual approach as there might be confusing experience and dilemma whether to apply innovative ideas or to continue with same set of ideas. In respect to Evolutionary approach of Whittingon is complexity and uncertainty of environment, to generate risk bearing capacity of firm, on the contrary no such view was mentioned by Mintzberg. But, other authors argue on Whittington approach to more concern on classical approach which is very much waste of time and money of organisation like small firms who have little or no effect on the environment in which they operate. Whereas, systemic approach stresses on social ethics and system within and outside firm, is similar to Culture and Environmental School of Mintzberg.
Context is distinctive and continuously changing. It consists of facts and perspectives. The aim of strategic management is to enable the enterprise to respond to its context in a way that improves its chances of remaining viable.
In the words of Beer (1984) context is â€œsomething that provides questions, issues, and dilemmas which strategic management need to resolveâ€. Context should be properly feasible and scan to start the strategic management. To greater or lesser extent, all the aspects are relevant for most organisations. However, it is likely that different aspects will be more important in some contexts and in some organisation than on others.
Small business, the multinational corporation, manufacturing and service organisations, public sector and the voluntary and not-for-profit sectors are different business types which uniquely affected by context accordingly. . The context includes everything that is important to the future of the enterprise both in the external environment in which the enterprise operates and in the internal characteristics of the enterprise itself.
Context follow certain key elements are stakeholders, which signifies in finding the interested investors to hold the share of an organisation. International environment differ from country to country, in which organisation has to deal totally different cultural value, new markets and political norms of two countries. This makes big concern for forming strategy to cope up in different environment. Another element of context regarding the, customers and employees for whom business has to provide lucrative offer in compare to their competitors.
As contexts are unique in nature, they uniquely benefits or presents set of issue to a single enterprise. So, enterprise builds up strategy in response. Thus, its important to study context surrounding the organisation. There are few reasons which reflects that how and why context is essential:-most organisations compete against rivalries, so a study of the environment will provide information on the nature of competition as a step of developing sustainable competitive advantage; second, most organisations will perceive opportunities that might be explored and threats that need to be contained. Such opportunities and threats may come not just from competitors but also from government decisions, changes in technology, social developments; there are opportunities for networks and other linkages which lead to sustainable co-operative linkages. Such linkages may strengthen an organisation in its environment by providing mutual support with others.
It is important to understand how changes in the macro environment are likely to impact on individual organisation. PESTEL analysis is essential to make changes in strategy accordingly. In private and public organisation the impact
of political changes such as government stability, taxation policy, foreign trade
Regulations and social welfare policies are of highly influence because the organisation has to set up their strategy according to norms and rules and regulation impose by the government. Wherein, non-profit organisation is concerned on the service tax policies. From economical aspect any kind of business is more focus on as business cycles, GNP trends, interest rates, money supply, and disposable income. Socio-cultural factors such as population demographics, income distribution, life style changes; technological as government spending on research, focusing on technological effort, new discoveries/developments, speed of technology transfers and rates of obsolescence; environmental i.e. environmental protection laws, waste disposal and energy consumption and the last; legal related to competition laws, employment law, health and product safety.
This report has reviewed meaning and perspectives mentioned by mainstream thinkers to the field of strategy. It has examined debates that evolve from differences in the assumption of some of the more established approaches. The debate shows that many schools of thoughts and models who conceptualize the perspectives of strategy are being contrast from different assumption but some extent similar to Mintzberg and Lampel (1998) ten schools of strategy. Then report emphasizes upon the context, describing its importance that how each context is uniquely affects in the formation of strategy to both those who employ deliberate or adapt processual strategy. It can be stated that context is a background to strategy formation. In every type of organisation strategy is implemented through thorough analysis of contextual environment due complex and turbulent environment. Practically strategy not merely reflect an organisational reality but actually creates it and strategy has become so well ingrained in business language that it is commonly accepted as a determinant of success or failure: whether by having good strategy, a bad strategy, or no strategy. Thus, strategy formation can be done through integrating diversified perspectives like rationalist and modernist to achieve ultimate goal.
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