Strategic Management

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Introduction

Company’s strategy comprises the blend between business approaches and competitive moves performed by managers to direct the company towards achieving organizational goals. Organizations use strategies as basic plans that are established as means to achieving objectives. Strategic management is described as the steps followed by the company to achieve the desired position. Strategic management involves activities such as crafting a strategic vision, forming a strategy, setting objectives, executing the strategy and taking corrective measures deemed appropriate. Different authors such as Henry Mintzberg have written about strategy formulation. Mintzberg suggests ten schools of thoughts that are categorized into either prescriptive or descriptive schools. This paper compares and contrasts the prescriptive and descriptive schools of the strategy proposed by Mintzberg and to what extent Johnson, Scholes & Whittington, (2013) enhance the understanding of these schools of strategy.

Prescriptive schools

Prescriptive schools of thoughts focus on strategy formulation. The schools discuss the methods that businesses should employ in order to develop a strategy. Strategy makers formally acquire or learn the activity of devising strategy. This school focuses more on the act of strategy formulation rather than the content of the strategy. Strategies are made without using any non-conscious intuition. Strategy implementation comes after all strategies are fully formed.One of the requirements is that strategies should be clear to enable easy articulation to all members of the organization. Preparing detailed plans, checklists, programs and other formal planning techniques are employed during strategy formulation.  Strategy making is carried out by the chief executive. Strategy implementation is carried out by employees. Strategies are implemented in line with programs, goals and budgets outlined.  In the prescriptive school of thought, strategies may not be exceptional but chosen from a range of a number of broad market positions. The process of strategy making significantly depends on calculations and analysis.  A formal analysis of the market yields fully formed strategies which are then executed (Mintzberg et al., 1998).

The Design School

Mintzberg suggests that the design school should involve the formulation of strategy through the use of different tools and techniques. Such tools and techniques include Ashridge Mission Model and SWOT analysis. Organizations following this concept should conduct SWOT analysis to determine their strengths, weaknesses, opportunities and threats before formulating a strategy.  Strategy formulation should be done on the basis of the analysis of internal and external factors done through SWOT analysis (Mintzberg et al., 1998).

Thus, according to the concept, the foundations through which strategy should be devised are both SWOT analysis and Ashridge Mission Model. The concept is suitable in situations where the environment is stable, and this helps the business in the evaluation of its strengths, weaknesses, opportunities and threats.  There are some drawbacks that characterize this concept. One of the drawbacks is that it assumes that external changes remain constant. In reality, keeping track of external changes is imperative on contemporary business issues. A second drawback is that the concept focuses more on the enterprise than on its employees. Given that the strategy is based on the business’ SWOT analysis, it ignores the importance of innovation necessary to survive in business today(Mintzberg et al., 1998).

The Planning School

The planning school of thought emphasizes on the present business situation and centers more strategy implementation.  The concept suggests that an enterprise should analyze the prevailing business situation such as the position of the business, external factors, and contemporary issues and then craft a strategy.  The planning school encourages innovation, brainstorming, the establishment of goals and objectives and aids the enterprise in allocating resources according to their requirements. The concept is applicable in the contemporary business environment, and its ideology is similar to the five tasks of strategic management process.  The concept draws from urban planning, and the opportunity for innovation is vast in this particular concept (Mintzberg et al., 1998).

Compared to the design school, the concept is better as it has room for innovation and emphasizes on the external environment.  Some drawbacks associated with the concept include the creation of conflict between managers during brainstorming.  Predictions are made purely on the basis of instincts rather than facts. Strategy implementation is the most difficult part as managers have to monitor each action taken during the process. The emphasis on strategy execution is very critical as it determines the success or failure of the business strategy (Mintzberg et al., 1998).

The Positioning School

The concept emphasizes on the focus on the current position of the business in the industry and crafting of strategies that can change the position of the firm.  The concept recommends that the business focuses more on how to adjust its current position in the customer’s mind and the industry. Businesses should craft strategies that would change their position. This concept is completely different from the other two classified within prescriptive schools. Positioning concept is influenced by military strategy. It is suitable for large enterprises but not useful for small enterprises given that large companies can make huge investments and change position. Small businesses may not be capable of doing so. Hence, it is not a widely accepted technique of strategy formulation. The concept also ignores external factors such as cultural, political, social and technological factors and focuses more on profit (Mintzberg et al., 1998).

Descriptive schools

The descriptive school is made up of concepts that suggest how strategies are actually formulated. Strategy formulation and implementation take place simultaneously. The organization has many strategists no single individual or group is entrusted with the responsibility.  While crafting and executing strategy simultaneously, the enterprise learns.  Activities that accompany discharge strategy are kept flexible to accommodate necessary changes when required (Jonathan et al., 2013). Leaders assume the role of managing collective organizational learning as it occurs during strategy formulation and execution processes. Strategies are based on past patterns but become future plans as the organization learns jointly and collectively. Crafting of Strategy is shaped by external or internal politics and power. Therefore, strategies are emergent rather than fully formed.  The formulation of strategies is mainly through confrontation, persuasion, and internal political games.  The enterprise uses a range of networks and agreement in making shared strategies (Mintzberg et al., 1998).

Shared understanding and common beliefs of the organizational members form the basis of Strategies.  Businesses with strong cultures employ shared beliefs and values in developing strategies.  Members learn over time from the shared beliefs and members. Strategizing is entrenched in the shared intentions of organization employees. The enterprise can also rely on its environment for formulating strategy as its main strategic intent is to respond to changes in the environment. The role of leaders is essential to understand the environment and fine-tune the strategy when necessary (Grazzini, 2013). The enterprise may cluster with other comparable organizations to fight environmental forces. In this concept, strategy crafting is a process ingrained in the intuitive thinking of the maker and past experiences rather than formal forecast and analysis.  The leader promotes the member’s visions and ensures that it does not drift too far away from the vision. The strategy is clear in the mind of the maker which can be altered as the strategy is executed.  The enterprise is characterized by a simple structure which is quick response to the directives of the strategy maker.  The strategy takes advantage of market position instead of the complete set of forces of competition (Mintzberg et al., 1998).

The Entrepreneurial School

According to this concept, an enterprise following this concept has a visionary leader who creates a strategy for it, and the enterprise follows that strategy all through its existence making necessary changes according to the prevailing environment. The entrepreneurial school is influenced by biology. The concept is important given that strategy formulation is centralized and hence leaves the responsibility of crafting strategies with the visionary leader. The concept has various limitations since the some employees of the organization might oppose the strategy particularly due to the lack of involvement throughout the formulation process. Employees may fail to effectively respond due to perceived negligence during the crafting process (Mintzberg et al., 1998).

The Cognitive School

The cognitive school suggests that organizations craft their strategy based on the understanding of psychological needs of the customers. Organizations following this strategy focus on the needs and wants of the customers. Strategy makers analyze the reason behind customer’s behavior and their reactions to particular situations. These factors are used to craft strategies after conducting extensive research. The cognitive school concept is influenced by psychology (Eden & Ackermann, 2013). While it sounds very useful, it is futile in the present-day business environment as it is very expensive and time-consuming to conduct research on the psychology of the consumers. In addition, the concept is based on numerous assumptions, which are misleading.  The strategy formulation may be influenced by the psychology of the strategy makers and hence not succeed due to mismatch with customers(Mintzberg et al., 1998).Samsung Inc is an example of a company that employs this concept in determining its product offering. The company has also been involved in further strengthening the analysis of customer groups and lifestyles to facilitate the application of diversified marketing strategies.  It is also actively pursues “open innovation,” through which Research and Development partnerships are reinforced, outward assistance is welcomed, and various collaboration channels with other organizations are established (Kim, 2014).

The Learning School

The learning school is different from the other concept in that organizations craft their strategies by learning from past mistakes. Strategy formulation is extremely slow as managers learn and gradually create a strategy. The learning school concept is influenced by Education. The concept sounds extremely valuable but is characterized by problems such as time-consuming and may leave the organization with no strategy at all. It is also pricey particularly due to the requirement that research be conducted in order to devise a strategy (Mintzberg et al., 1998).

The Power School

The power school concept suggests that organizations formulate strategies based on their power. Power may be a competitive advantage such as the huge amount of capital and brand image. The strategy typically exerts some power over the customers. The concept draws from political science. The concept is slightly similar to the entrepreneurial school.  However, an organization has to invest heavily so as to make a statement and the perception of being powerful influence an organization to craft a wrong strategy (Mintzberg et al., 1998).

The Cultural School

The cultural school concept suggests that organizations employ corporate culture to formulate their strategy. The concept encourages the involvement of employees in strategy formulation and hence promotes cooperation in strategy formulation process. The cultural school concept is influenced by anthropology (Mintzberg et al., 1998). Similar to the entrepreneurial school, the organization is influenced by a visionary leader. Visionary leadership helps in guiding organizations on how to deal with acquisition, mergers and other forms of restructuring. However, it ignores the external environment which is critical to the success of any strategy. It may also cause a conflict between the organization and employees due to brainstorming (Ansoff, 1991). Apple Inc promotes a culture of innovativeness among its employees. The culture has enabled the firm to come up with groundbreaking inventions and compete effectively in the market. The culture affects quality in all aspects of the organization’s operations that touch on the processes, effectiveness and efficiency of processes (Apple Inc, 2015).

The environmental school

The environmental school emphasizes the importance of focusing on the external environmental factors and formulation of strategy based on the factors. An organization is expected to check all social, political, technological and economic factors and formulate a strategy that tackles the dilemma they are facing. It involves a reactive process that is significantly influenced by biology. It is similar to the design school as it fairly uses the external factors as the basis for strategy formulation. The concept is useful as it analyses the external environment before devising strategies. The problem with this concept is that it ignores that internal environment which is critical to the successful implementation of the strategy.  The external environment is also exceptionally unsteady in the modern business environment must devise a composite strategy based on the evaluation of both external and internal factors before devising a strategy. It is also necessary to leave room for innovation.  An example of a business that has adopted this strategy is Dell. The company made low-priced computers for the period of the global recession appealing to a wide range of customers (Mintzberg et al., 1998).

The Configuration School

The Configuration School emphasizes on frequent changes on decision-making patterns in order to devise a strategy. Organizations following Configuration School focus on decision-making patterns. The concept is significantly influenced by context. The concept is suitable for the contemporary business environment that demands innovativeness and keeping up with change.  Thus, the strategy should be compound.  The kind of strategic devising process demands a very flexible organizational structure and flexible employees to e able to adjust with rapid changes (Mintzberg et al., 1998).

Comparison

Directions

In the descriptive school, both management and employees make input towards strategy formulation process. Input begins from the bottom and progresses upward.  Contrary, the decision-making is left in the hands of visionary leaders and managers in the case of prescriptive school. Only the upper echelon makes the decisions. Subordinate do not play any role in management decision-making processes and simply implement the devised strategy.

Process vs. Content

Descriptive and prescriptive differ in the formulation of strategy. Organizations that use emphasize on the strategy formulation process. On the other hand, the descriptive school emphasizes on the content of a strategy. Managers in these organizations care more about the content rather that the process used in making the strategy.

Spontaneity vs. Premeditation

Prescriptive school and descriptive school of strategic management differ on when the strategy formulation should take place.  Managers employing Prescriptive school of thoughts believe that strategy must be planned well beforehand. They do not take into account changes in either external or internal environment. Descriptive managers acknowledge the unpredictability of decision-making environment. Spontaneity and flexibility of the strategy is preferred.

Outcomes

Descriptive and prescriptive schools do not share the same desired outcomes. Prescriptive schools seek to enhance performance while descriptive schools do not exclusively focus on enhancing performance.  Both schools desire the organization t survive.

Johnson, Scholes, and Whittington, (2013) perspective

Johnson et al., (2013) suggest that there are different levels of strategies implemented by organizations.

Corporate level strategy

Corporate level strategy is concerned with the general scope and overall purpose of an organization as well as how value is added to the various parts of the enterprise. One example of corporate level strategy is the practice of sharing same sales force and physical distribution for products. P&G has employed this strategy by making use of its sales workforce in the sale of paper towels and disposable diapers. The products are costly and bulky to transport (Johnson et al., 2013).

Business level strategy

The business level strategy provides a framework that helps an enterprise to compete successfully in the market. McDonald’s has previously used this strategy by remodeling its restaurant. The restaurant places hardwood floors, wood-beam ceilings, and comfortable armchairs to its restaurants to create a unique concept in the food industry. The firm also adds new items to the menu including brioche, espresso, and more upscale sandwiches (Johnson et al., 2013).

Operational level strategy

Johnson et al., (2013) define operational level strategy as one that focuses on the contribution people, processes and resources to the enterprise. McDonalds has adopted this strategy to evaluate customer arrival patterns by making use of previous sales trends. The result of the analysis is used to make products in right quantities and at the right time so as they are ready when the customers arrive (Johnson et al., 2013).

Conclusion

Prescriptive schools of thoughts focus on focuses more on the act of strategy formulation rather than the content of the strategy. Strategies are made without using any non-conscious intuition. Strategy implementation comes after all strategies are fully formed.The descriptive school is made up of concepts that suggest how strategies are actually formulated. The enterprise can also rely on its environment for formulating strategy as its main strategic intent is to respond to changes in the environment. The role of leaders is essential to understand the environment and fine-tune the strategy when necessary.  The cognitive school, planning school, positioning school are different with no similarities with other schools.  The design school, cultural school, and environmental schools share certain similarities. The entrepreneurial school, the cultural school and power school, share some similarities.  The cognitive and learning schools share some similarities. In the descriptive school, both management and employees are involved in strategy formulation process. Contrary, the decision-making is left in the hands of visionary leaders and managers in the case of prescriptive school.Prescriptive schools of thought believe that strategy must be planned well beforehand. However, they do not take into consideration changes in either external or internal environment. Descriptive managers acknowledge the unpredictability of decision-making environment. Johnson, Scholes, and Whittington suggest that there are different levels of strategies implemented by organizations: Corporate level strategy, Business level strategy and Operational level strategy.

 

References

Ansoff, H. I. (1991). Critique of Henry Mintzberg’s ‘The design school: Reconsidering the basic premises of strategic management’. Strategic management journal, 12(6), 449-461.

Apple Inc (2015) About Us: Mission and Vision statement

Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.

Grazzini, F. (2013). How do managers make sense of strategy?. European Business Review, 25(6), 484-517.

Johnson, G., Whittington, R., Scholes, K., Angwin, D., & Regnzr, P. (2013). Exploring strategy text & cases. Pearson Higher Ed.

Jonathan, K., Atandi, B., & Zachary, A. (2013). Strategic planning in a turbulent environment: A Conceptual View. DBA Africa Management Review, 3(1).

Kim, E. (2014). Samsung’s Innovative Phablet Is Still Noteworthy. PC Magazine, 64-69.

Mintzberg, H., Ahlstrand, B., & Lampel, J. (1998). Strategic Safari. A Guided Tour through the Wilds of Strategic Management.

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