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Strategic Management II
Aiperi Matyeva 1/3/2012
0 Recommendation / 12 4.1 Prescriptive schools / 4 2.Strategic Management II Aiperi Matyeva Table of Contents / Page 1.0 Introduction / 3 2.2 Descriptive schools / 6 2.0 References / Bibliography / 14 Page 2 .0 Analysis / 3 2.3 Whittington¶s four generic perspectives of strategy / 10 3.
(Johnson et al. depicting them as schools of thoughts. various concepts were introduced from scholars. which attains advantage in a highly turbulent environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations. µplanning¶ and µpositioning¶ schools Page 3 .. a strategy is a plan. In contrast to Ansoff¶s classical perspective and other previous classification attempts.0 Analysis Issues on business strategy started emerging in 1960¶s when Ansoff (1965) and Andrews (1965) were the first to formulate a perspective on strategic management. which includes the strategic thinking rooted from 1960¶s. defining the organization and providing consistency are the main contributions that strategic planning makes for an organization.Strategic Management II Aiperi Matyeva 1. Since that time. The scholars have also justified the significance of strategic planning for any organization. a pattern. Classification is based on 4 approaches that vary along the 2 dimensions: the outcome of strategy and the process of strategy formation. 2009) 2. The µdesign¶. Henry Mintzberg. management professor from Montreal McGrill University. 2001) Also. with Bruce Ahlstrand and Joseph Lampel explored the narrower concepts introduced in strategic management by publishing ³Strategy safari´. emphasizing on differences in the nature of managing an organization and other social science disciplines. Each schools of thought has its unique perspectives on one major aspect of strategy formation. Mintzberg and other authors of the book have approached the process of strategy formation from 10 broad and various angles. (Shekhar. a perspective and a ploy. which comprised all aspects of strategic formation.0 Introduction Strategy is defined as the direction and scope of an organization over the long term. (Shekhar. 2009) As various schools of thought exist the distinction between them can be identified by classifying them as prescriptive and descriptive approach. According to them. (Volberda & Elfring. setting up of direction. Rouleau and Séquin and Whittington devised the classification based on the underlying principles of various work in strategic management. Mintzberg introduced the 10 broad schools of thought. a position. 2005) According to Mintzberg. of effort.
suppliers. 2001) The dynamic of external business world. which consists of competitors. an organization is required to adapt to changes in order to sustain its competitive advantage. the design school of thought regards strategy formation process through an achievement of essential fit between strength and weakness of an organization and the opportunities to be seized in its external environment. 1990) Christensen et al. mainly by the CEO of an organization. As the today¶s world known to be hypercompetitive and fast-changing environment. Digital Equipment Corporation (DEC) was regarded as practical example of successful business but failed to sustain and had to sell the majority of its business due to the inconsistent structure. and simple. The other six schools are indicated as the descriptive approach. forecasting and scanning of the external and internal environment. fail to introduce new products in market Page 4 . explicit. (Mintzberg. following the premises of design school may not forecast the future changes in two distinct environments. urging the business to quit. In observations made by Ansoff (1991). By following the premises of design school. There are number of statements that underpin this model such as: that the process should be of consciously controlled thought. and that those strategies should be in the form of fully formulated before they are formulated. (1982) are among the main advocates of this school. that the strategies formulated must be unique. government forces. an organization found to fail due to inflexibility and non-adaptability. Model proposed by design school primarily emphasizes on the evaluations. The premises of the design school undermines several significant components of strategy formation.. that the model required to be kept in simple and informal. he saw the Mintzberg¶s statement on design school where he wanted to find out both methodology and the applicability of premises in current business practice.Strategic Management II Aiperi Matyeva are both prescriptive in nature. 2001) 2. (Volberda & Elfring. the influence of existing structure on strategy. 2009) Mintzberg argues that ³the strategy that locates an organization in a niche narrows it own perspective´. (Shekhar. customers. that are incremental development and emergent strategy. (Mintzberg et al.1 Prescriptive schools Design school According to Mintzberg. as well as the internal environment of an organization. and the participation of other organization¶s stakeholders than only chief executive.
2009) The case of General Electric (GE) under the reign of Reg Jones is a classical example as the famous company for strategic planning. However. Formalization of the strategy also can result in the failure to foresee the changes in environment where organization operates that leads to what scholars named as. (Bilton & Cummings. (Shekhar. 2010). It had rigid annual planning. but no considering the social and political and other non-quantifiable approaches. Jack has diminished this strategic planning in 1980s and facilitated the radical change of strategy of GE. e.Strategic Management II Aiperi Matyeva and fail to adapt to fast-changing information and communication technologies(ICT) as well as to changing customer needs. This also can cause the conflict of interests between chief executive and the stakeholders. 2009) The Planning School The Planning school reflects most of the design school premises with the exception that strategizing is decomposable into distinct steps delineated by checklists and supporting models such as the Value-Chain or the 5-forces of industry (Bilton & Cummings. (Shekhar. the formal structure of strategy formulation.. mainly the employees of an organization. 2010) The early contributor to this school was Michael Porter when he published ³Competitive Strategy´ in 1980¶s. Page 5 . (Shekhar. (Mintzberg et al. ³The Grand Fallacy of Strategic Planning´. Boston Consulting Group (BSG) matrix introduced strategies formulated on the relative market share and industry growth. predeterminated and detached strategy. According to Mintzberg. whereas the top management would formulate the strategy and goals in general meetings and the strategic planning would undergo review after a short while. giving the control to a single individual and separation of formulization and implementation of strategy may cause the inflexible. 2009) The Positioning School This school regards strategy as a process of selection from generic options or frameworks such as the Generic Strategy Matrix rooted from the formalized analysis of the specified industry and market conditions.g. the successor of GE. 2001) The positioning school has been criticized on several its heavy inclination towards economic and quantifiable perspective. It was clear on the stressing the importance on costs.
chairman and former CEO of Apple. Also. Also. Benetton and Toyota that achieved success without applying Porter¶s generic strategies. Limiting the number of options to the organizations that are 3 generic strategies opposes the concept of strategy being flexible and unique to an organization as introduced by the design school. questioning the narrow focus of Porter¶s concept of generic strategies. that it results in the dependence on single individual and narrow focus of strategic management. this premise was questioned as visions can be set by a single or multiple founders of an organization. Scholars stated cases of Caterpillar.Strategic Management II Aiperi Matyeva This school was accused of being biased to large organizations like Ford Motor Corporation. The lead role in strategy formation is on the thinker-philosopher as the process is mental and Page 6 . 2009) 2. as power is given to single individual who may be ineffective in operating the firm and may lose focus on realities of the business it¶s operating. 2009) The Cognitive School This school. more emphasis on quantitative approaches is regarded to be as an ignorance of qualitative aspects like power. employee motivation and organizational culture.2 The Descriptive schools The Entrepreneurial School The Entrepreneurial School emphasizes on the leader and his vision in the firm as the main premises in strategy formulation. was regarded as visionary leader who led a hardware revolution by introducing first in the market the small sized computers. Another criticism is that the vision can be regarded as good for the firm as it can be regarded as pathology by others. but applying both cost leadership and differentiation strategies. the cofounder. However. etc. (Shekhar. In addition.. Steve Jobs. which could ensure the stability in the environment and its emphasis on limited number of generic strategies that prevent the formation of new ones. developed in 1940s and 50s. This concept has been criticized by various scholars like Baden and Stopford (1992) and Miller (1992). this school doesn¶t provide the explanation for which kind of leadership style a leader must play in given conditions of the firm. GE. perceives strategy formation as a mental process. (Shekhar.
but to manage the process of strategic learning. 2002) This school introduced creative aspect to the process of strategy formation. a successful development of strategy in a constantly changing environment implies breaking traditional rules.Strategic Management II Aiperi Matyeva emergent. 2001) Strategy formation. Moreover. and March and Simon (1958). (TheManager. 2009) The Learning School This school of thought regards strategy formation as an emerging process in natural dynamic process that is dependent on the type of situation where groups learn about the trends and organization¶s capability in dealing with environment conditions. interpretation of the same piece of information by different minds may simply look the same from different angles that may facilitate different alternatives for the top management and integration of complex information. 2009) Due to the fast speed of change. (Shekhar. (Mintzberg et al. 2009) Page 7 . cognitive school of thought fails to address the collective way of strategy formulation and implementation. The major advocators of the cognitive school are Simon (1947). in this school. the strategy tend to overlook failures and some essential aspects as it happened in the case of Nokia vs. they missed out on the approach or systematic cognitive process to strategy formulation..org. Motorola. Some argued that learning process can purposeless and antistrategic that can lead to manipulation and misinterpretation of current situations. According to Kozami (2002). business models and ways of thinking. leading to quicker processes of decision-making. (Shekhar. (Shekhar. emphasizing on learning. develops in an emergent fashion based on the behavior that triggers thinking retrospectively. 2001) However. where the role of a leader is not to preconceive deliberate strategies. (Kozami. This made the school subjective in nature that leads to distortion of information during transmission through various hierarchical levels of an organization. However. ³while Mintzberg and his colleagues framed the cognitive basis for strategic management. It deals with how cognitive processes developed in the form of concepts that shape how people deal with inputs from the environment.´ Moreover. Motorola didn¶t foresee the rise of digital technology and Nokia took over this advantage becoming a leader. organizations need to formulate flexible and methodological strategies.
Emphasizing in power. Some researchers state that learning may result in no longer wanted formation and some were of the view that focus of an organization should not only be on learning. However.Strategic Management II Aiperi Matyeva According to some scholars. according to Sherhar (2009). this school fails to induce the concept of strategy as a learning process. based on beliefs and understandings shared by the members of an organization. this school has tried to address the issue of radical change in an organization that may guide an organization towards tackling the resistance´. reformulation and stabilization. Moreover. rather reflect the interest of the most powerful group in the organization´. it is argued that due to its prescriptive nature. the power school views strategy formation as ³a product of not a single architect but of a homogenous strategy team. The advocates of this school stated to be correct in indicating the culture as a resource of an organization that can establish a sustainable competitive advantage due to its imitability and causal ambiguous nature. This school also fails to regard the impact of collusion within an organization that persists within every organization due to the differences in beliefs. strategy formation is a process of social interaction. this school is still considered as applicable in an organization that works in a highly complex environment and where knowledge in strategy formation is blurred. This strains an organization¶s capability in coping with various kinds of situations. values and interests. 2009) The Cultural School According to this school. ³by discussing the constructs such as strategic drift. The example of success achieved by Japanese Page 8 . this school undermines the importance of culture. (Shekhar. leading to strategic failure. As the power is significant aspect in the strategy formation. but also on exploitation of learning in order to get on with day-to-day work. (Shekhar. experimentation. the greater extent of emphasis on learning may result in lack of coherent and smoothly viable strategy. leadership and social responsibility. implying that strategy emerges from such a process that will not necessarily be opined. 2009) The Power School According to Shekhar (2009). However. This school is heavily criticized that it resists the change in an organization¶s ideology. many actors inside the organizations employ the power as the tool to enhance their own interests that might result in conflict of interests.
2009) The Environmental School According to environmental school.µconfiguration¶ and µtransformation¶. Moreover. It consists two sides viz. This is known as a configuration school mainly due to two reasons: (i) it describes how different dimensions of an organization cluster together under particular conditions to define states.Strategic Management II Aiperi Matyeva companies over their counterparts in the US and Europe can be the practical example of this school¶s premises.. (Shekhar. whereas. can be countered with the argument that many organizations survive in the same environment using various strategies. (Shekhar. like technology or after periodic intervals. 2003) As this school emphasizes on continuous change in the environment to which every organization responds individually. 2009) However. strategy systems are described to be mainly about responding in a natural manner with the corporate external environment. changes normally take place either in a certain aspect of the environment. as suggested by this school. which is regulated by norms laid down by RBI. this school has been criticized for its simplicity in terms of understanding and applying into practice. 2009) The questions may be in terms of its application on highly complex organizations operating in turbulent environment. (KnowledgeBoard. The lack of µstrategic choice¶. which roots in biology. presents establishes itself to the enterprise as a set of general forces. and (ii) how these different states get sequenced over time to define states. Any of those strategy schools can be evaluated in terms of its impact on the achievement of essential and basic business goals and Page 9 . periods and organizational life cycle. transformation describes the strategy making process. 2009) The Configuration School This school integrates theall previous schools. The external context.com. The configuration side describes the states of perspectives in Strategic Management organization and its surrounding context. and is thereby the central factor in the strategy making processes. (Shekhar. it is argued that the environment of not all organization is on continuous change all the time like banking industry in India. It can be stated that proponents that is Mintzberg of this school have made many assumptions in order to explain complex phenomena that raises questions about its relevance in practical situations. models or ideal types. (Shekhar.
They are as following: Classical perspective Advantages Objective assessment and methodology straightforward to apply Long-term concern conforms to corporate mission and overcome short-term. 2001) In referring to Whittington¶s framework. strategy¶s ability to address the strategic issues such as globalization.Strategic Management II Aiperi Matyeva also. Table 1. myopic views Analytical tools and theories are abundant especially from allied disciplines such as finance and economics Disadvantages Ignorance of µsoft¶ issues and internal mechanisms within firms Page 10 . Summary of Whittington¶s classification of strategic perspectives Classical Rationale Focus Profit maximize Internal (plans) Processual Vague Internal (Politics/cognitions) Process Key influences Key period Key authors Analytical Economic/military µ60s Chandler Ansoff Porter Hax Bargaining/Learning Darwinian Psychology µ70s Cyert &March Mintzberg Pettigrew Hamel Evolutionary Survival External (Markets) Systematic Local External (societies) Social Economics/biology Sociology µ80s Hannan & Freeman Williamson µ90¶s Granovetter Marris (Whittington. the four perspectives have different strengths and weaknesses in their application to strategic management. 2.3 Whittington¶s four generic perspectives of strategy Below is the short summary from Richard Whittington¶s classification of strategic perspectives. e-commerce and corporate social responsibility of the firm.
transparency and objective measures to compare effectiveness of strategy adopted (Cheah & Wong. Disadvantages Overly passive. 2004) Processual perspective Advantages Add a µhuman¶ side to strategy Tackle µsoft¶ issues that are largely ignored by Classical theorists Enunciates the importance of internal mechanisms within firms Disadvantages Lack of control. 2004) Systemic perspective Advantages Add the all-important external environmental factors to corporate strategy Page 11 . 2004) Evolutionary perspective Advantages Enunciates the brutality of competitive and environmental forces which demands for constant strategy renewal. indirectly challenging the intellectual foundation of academic theories and managerial functions Succumb to short-term view Ignorance of market complexity and heterogeneity (Cheah & Wong.Strategic Management II Aiperi Matyeva Naïve separation of strategy formation and implementation Models generally do not apply to small organizations especially during the Internet era (Cheah & Wong.
The particular strategies are as following: Value Chain Positioning strategy ± strengthens firms core business competences by enabling the expansion of firm¶s business portfolio. particularly in Page 12 . relegating the importance of inter-company competition in certain industrial environment Needs to be complemented by studies of firms¶ behavior especially for cross-border competition (Cheah & Wong. collaboration and innovation across the enterprise to facilitate the unique selling points and standardizing the business processes to reduce 'time to market'.Strategic Management II Aiperi Matyeva Provide intellectual linkages to explore the impact of public policies Provide plausible explanations on the impact of firms¶ origins Disadvantages Primarily adopting a macro view point. Customer orientation & innovation ± that includes emphasizing on the highly changing needs of customers. And researches show that Chinese ³catch-up´ corporations struggle to obtain the benefits of an integrated global strategy and may face a greater danger from existing rivals. (Cavalcanti Sa de Abreu.0 Recommendation The globalization of the business environment in recent years has made it imperative for firms to seize foreign market opportunities in order to gain and sustain competitive advantages. products and services.enables the reduction of cost and development of ideas through direct cost efficiency activities. Chinese MNCs are facing the hypercompetition from global giants such as Samsung and Panasonic over a period of 10 years. It will enable the synergy. Enterprise Development & Cost Efficiency strategy . 2011) I would like to recommend positioning+enterpreneural+learning+innovation hybrid model. innovative efficient enterprise. in other words introducing Just-In-Time model. The balance of these 4 models will facilitate global industry position as modernized. 2004) 3. global sourcing and supplier management. The emerging Chinese multinational corporations (MNCs) can be evidence of the strategic content and end results of their internalization strategies.
However. ³latecomers´ undergo shorter learning processes compared to well-established rivals.. knowledge and the innovation aspects. 2006) Page 13 . The dominant topic of the new paradigm was the learning. facilitated by technology advancements and better knowledge of globalization process. (Zhu et al. the learning of new skills and innovation by Chinese companies and other ³latecomers´ will be important in ³catching-up´ game. The researchers suggest that the development of existing resources. The rationale is the dynamic models by which firms obtain valuable information and create accumulate intangible capabilities in a process of learning.Strategic Management II Aiperi Matyeva failing to learn to adjust to the company¶s new strategic directions. 2011) In order to recommend the hybrid model that would be suitable for the company with global aspirations. it would be appropriate to relate to the research based on the new paradigm for strategic management developed by the Nonaka (1991). (Mele & Parra. Hammel (2000) and Pfeffer and Sutton (2000). The main strategic technique employed is new integrated information technology systems.
2002..Strategic Management II Aiperi Matyeva 4. Cheah. Management studies of the chinese construction industry: which field of theories? In 20th Annual Conference of the Association of Researchers in contruction management. M.d.com/item/836/2010/5/2008 [Accessed 17 December 2011]. 2011. Cavalcanti Sa de Abreu. International Journal of Management.ssrn. 11(3). C. Creative Strategy: Reconnecting Business and Innovation. Strategic Management Journal. UK: John Wiley & Sons Ltd.. 2004. [Online] IESE Business School Available at: http://papers. THE DESIGN SCHOOL: RECONSIDERING THE BASIC PREMISES OF STRATEGIC MANAGEMENT. 7th ed. 2004. & Whittington... Scholes. W. M. Mintzberg. 28(3).knowledgeboard...cfm?abstract_id=960663 [Accessed 19 December 2011].. K. 2010. A. 2001. Mele. Johnson. pp. 1st ed. Effects of environmental pressures on company sustainability strategies: an interview study among Brazilian manufacturing firms. G. KnowledgeBoard.171-95. Kozami. & Parra. 2006. & Cummings. 1990. J.. H..909-25. 2nd ed. & Wong. pp. 1st ed. Page 14 . Exploring Corporate Strategy: Text and Cases..com/sol3/papers. 2003.. Startegy Safari: A Guided Tour Through The Wilds of Strategic Management.G. & Lampel. n. Edinburgh. Ahlstrand. [Online] Available at: http://www. H.0 References / Bibliography Works Cited Anon.com. Bilton. B.. S. Harlow: Pearson Education Ltd. Delhi: Tata McGraw-Hill Education. New York: Simon and Schuster. Mintzberg. R. 2005. C. Business policy and strategic management. D.
and does it matter? 2nd ed. 2011. 1st ed.. H. In Rethinking Strategy.org/strategy/strategy.Strategic Management II Aiperi Matyeva Shekhar.com/6783.. London: SAGE Publications Ltd. pp.511-33. Volberda. Zaplatinskaia. London: Cengage Learning EMEA. pp. Perspectives in Strategic Management A Critique of Strategy Safari: The Complete Guide Through the Wilds of Strategic Management.org. T.themanager. & Elfring. [Online] Available at: http://www.. TheManager. 2009. 6(2). L. 17(4). 2010. [Online] Available at: http://profi20. 2001.. & Jin. R.W.. V. Y..43-55. 2001. pp. Page 15 . ICFAI Journal of Business strategy. 2001.htm [Accessed 17 December 2011]. Playing the game of catching-up: global strategy building in a Chinese company. Whittington. What is strategy. Z. R. Zhu..1-25. Schools of Thought in Strategic.livejournal. Asia Pacific Business Review . Lynch.html [Accessed 17 December 2011].
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