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Strategy schools academic literature essay -

  1. 1. GET YOUR WORK DONE BY Introduction The ideas of various scholars who have addressed the issues of strategic management by developing models or “Schools” of thought have been extensively researched and justified in (Steven French 2009a), but all these schools have been developed in a Modernist/Functionalist rs epistemology. The theory underlies the ideas of these Classical Schools of strategic thinking in the business environment can be traced back to classical and neo-classical economic thinking, pe which depends on the body of theory that is described by concepts of linearity, stability, and predictability. These macroeconomic concepts fit within a microeconomic view of a firm as a cybernetic system (Masuch, 1985; Morgan, 1986; Dixon et al., 2004) Classical and contemporary schools are two out of the four of schools of strategic management. They are the Pa opposing schools based on the criteria of historical and future trends in strategic management. The classical school of strategic management gathers premises of the founders of strategic management as a scientific field. Although the premises are shaped about eighty years ago, they represent the cornerstone of the field still valid today. The premises have been developed though de out the years and almost each of contemporary premises can be traced back to those years or is formed as the opposing premise of the one dating in the past (Steven French 2009d). Let’s discuss these schools of thoughts with relevance to critical analysis. ra The Design SchoolpG “Look before you leap” Strategy Systems as Processes of Conception Among the schools of strategic thinking, this one explains all prescriptions in the field. The design school suggests a very simple model that shows an essential fit between external threatTo and opportunity and internal distinctive competence. Strategy formation is a premeditated course of action of conception designed by the CEO, who decides the scale or guidelines of the company, perhaps in terms of a mission vision statement company cultures and its core values, The CEO look at the external environment with respect to company’s position and try to bring maximum value to shareholders by using company strengths and available opportunities to take corrective action against the company weakness and external threats. He sets objectives for others to achieve and implement. The firm is a cybernetic system. However this is a theoretical 1 GET YOUR WORK DONE BY
  2. 2. GET YOUR WORK DONE BY concept, it is not essentially formalized, and the responsibility of management is to effectively and efficiently plan. The model of strategy is not formalized so it is important that it remains relatively simple. No theory of strategy creation is impending from the Design School. The repercussion is that a “think-tank” approach to the directions given by the chief executive, will rs articulate strategy. The base line for this school is architecture as a metaphor. It is more useful in relatively stable environment. This model is to be kept simple and informal and hence the strategies produced should be unique, simple and explicit (Richard A. Swanson et al. 2001). pe Further, these strategies should be fully formulated before they are implemented. The chief executive is the main strategist. The school suggests that strategy systems are processes of conception. The strategies formulated are clear and unique. Thus the strategy of the organization Pa is designed to represent the best possible fit. It falls in Prescriptive school category. The Planning School “A stitch in time saves nine” de Strategy Systems as Formal Processes The philosophy of the Planning School emerged directly as an extension of the thoughts of the Design School. The basic difference is the move away from simple, conceptual, informal plans ra to more sophisticated, state of art, deliberate, highly formalized plans, developed by a team of specialized planners whose job is to bring the scattered ideas in to refined course of action . The “era” of the specialist strategic planner happened together with the market favoring the planningpG model of strategy formulation (Steven French 2009b). Its main roots underlay in systems thinking and cybernetics. The strategy is broken into set of steps, which comprises from the analysis of the situation to the execution of strategy. These processes give clear direction and enable firm resource allocation. Chief executive has the core responsibility for the completeTo process and the execution responsibility rests with staff planners. Strategies are made explicit so that they can be implemented through detailed attention to objectives, budgets, programs and operating plans of various kinds. The base disciplines are some links to urban planning, cybernetics and system theory. The strategy may become too static as the predicting is difficult. 2 GET YOUR WORK DONE BY
  3. 3. GET YOUR WORK DONE BY The Positioning School “Nothing but the facts, ma’am” rs Strategy Systems as Analytical Processes Advocator to the ideas of the Positioning School, also accept most of the building blocks of the pe Design School and the Planning School but add two cautions of their own. First, more stress is given to the importance of the strategic ideas, not just to the process & procedures by which they are formulated, and, second, by focal pointing and focusing on the content of strategies, the Pa prescriptive side of the field is opened up to substantial investigation. Its roots lie in economics and military history. The strategy systems focus on strategies that are generic, especially common and identifiable. So the market is to be economic and competitive. (Steven French 2009c). It places the business within the context of industry and looks for the ways enterprise de can improve its strategic positioning within that industry. This school made Strategic Management into a science, enabling future progress. In the early 1980s, with Modernist ideas of the Planning School firmly deep-rooted, and “management” theorists generally influencing ideas, ra business strategy was suddenly re-directed by the influence of Industrial Organization (IO) economists fettered to the equilibrium assumption. IO is a branch of economics that study the behavior ofpG firms within industry groups, upholding that a firm’s performance depends on the interactive relationship between the number and distribution of firms in a market and the behavior they exhibit (Shivasharan and Shashidhar, 2005). It focuses on hard economic facts and it is more useful in early stage of strategy development. The strategy formation process places the businessTo within the context of the industry and finds out ways how organization can improve its competitiveness in the industry. This school neglects power, politics, culture and social elements. It is also a Prescriptive school. The Entrepreneurial School “Take us to your leader” Strategy Systems as Visionary Processes 3 GET YOUR WORK DONE BY
  4. 4. GET YOUR WORK DONE BY According to this school, the strategy systems are semiconscious and are rooted in the experience and intuition of the leader. Leader has being through such situation and he uses his intuition and come up with new ideas. The strategy systems are processes existing mainly in the mind of leader. Strategies are relating to a sense of long term direction mission, vision, culture and core rs values of the organization (Steven French 2009b). The school focuses on the intrinsic and inherent mental states and processes such as intuition, judgment, wisdom and experience (Ahlstrand, B 1998). The leader is responsible to promote the vision on his own and also pe responsible for maintaining control of implementation processes. So, entrepreneurial systems tend to be both Deliberate and Emergent. A sound vision and a visionary leader can cohesively sail organization through muddy waters when organization is going through its difficult years Pa (Mintzberg, Lampel, 1998). These strategies best work out where the companies are owned and managed by a single individual. Entrepreneurial strategy systems are argued to tend to take the form of niche strategy, one or more patches of a market position protected from the forces of outright competition. But the question still exits how can you find the right leader with all the de needy qualities? The Cognitive School ra “I will see it when I believe it” Strategy Systems as Mental ProcessespG Its main roots lye in psychology (cognitive) and strategy systems are prescribed to be cognitive processes that come in strategist’s mind. Strategies emerge in the form of concepts, maps, schemes and frames. These inputs flow through all sorts of distorting filters before they are decoded by the cognitive maps (Chaffee, 1985). Its main focus is on how people perceive patternTo and process information. It purely focuses on what is happening in the mind of strategist and how that happening is being processed. It stresses the creative side of the strategy process. This is very useful to explain why our minds are imperfect (Mintzberg, H. 1990). As concepts, strategies are difficult to attain in the first place, considerably less than optimal when actually attained and subsequently difficult to change when no longer viable (Richard A. Swanson 2001). In this regard various forms of cognition have an influence on how strategy systems are said to function, such cognition as confusion, cognition as information processing, cognition as 4 GET YOUR WORK DONE BY
  5. 5. GET YOUR WORK DONE BY mapping, and cognition as concept attainment. This approach, based upon the science of brain functioning, regards strategy formation as a mental process, and analyzes how people perceive patterns and process information. It is not very practical beyond the conceptual stage and currently not very useful to guide collective strategy process. School category is Descriptive. rs The Learning School “If at first you don’t succeed, try, try again” pe Strategy Systems as Emergent Processes Its main roots are also in psychology, strategy systems are processes of learning over time in Pa which formulation and implementation activities are intertwined and indistinguishable in nature. Many firms have learnt and are now discovering that strategy is about redefining and re-shaping the industry in which they will compete according to the environment. They suggest that a strategy is as much a state of mind within an organization – a Post-modern concept – as it is a set de of actions in the market place – a Modernist concept. Product advantages are surprisingly fleeting. Intellectual capital such as patent, copy writes are the eventual leverage point and it is extremely difficult to imitate strategy analysis, irrespective of the tools, techniques and method employed. Strategy must be focused upon understanding and challenging how managers think. ra The intellectual ability of the managerial resources of a firm is the key to competitive advantage. The environment of the enterprises is complex and of unpredictable nature (Steven FrenchpG 2009b). As world does not allow strategies to be developed all at once hence, strategies emerge in small steps throughout the journey of enterprise (Jelenc 2009). It offers solution to complexity and unpredictability in strategy formation. It produces strong strategies in complex situations with continuous change. The learner may be the collective system of the enterprise or leader may be the main leader. This implies that there are many potential strategies in most enterprisesTo (Lampel, 1998). The learning is a process proceeding in emergent fashion, through behaviour that stimulates thinking retrospectively, so that sense can be made of action. Thereby, the role of leadership becomes not to preconceive deliberate strategies, but to manage the process of strategic learning, from which novel strategies can emerge. The base discipline perhaps links to learning theory in psychology and education; chaos theory. The champions to this school are people inclined to experimentation, ambiguity and adaptability. This strategy is not useful at all 5 GET YOUR WORK DONE BY
  6. 6. GET YOUR WORK DONE BY in crises. Also there are costs associated with learning. You should not cross a chasm by taking small steps. The school category is Descriptive. The Power School rs “Look out for number one” Strategy Systems as Processes of Negotiation pe Its roots are in politico-logy (the study of politics), and strategy systems are described to be shaped by politics and power. Strategies formulated under this are tend to be emergent in nature and takes the forms of positions and ploys. It can be divided into Micro Power and Macro Power Pa (Mintzberg, Lampel, 1998). In micro power, strategies are made through interplay, persuasion, bargaining, direct confrontation and shifting coalitions. On other hand, Macro power sees the enterprise as promoting its own welfare by making corporations with other enterprises. Strategies are developed as a process of negotiation between power holders within the company and its de external stakeholders (Whittington, 1993). It can help the strongest people to survive in the corporate jungle. It also ensures that all aspects of an issue are fully debated. It also can help to reduce resistance after a decision is made. Its base line is political science. But it uses a lot of energy, causes wastage and is costly. Further, more badly, it can lead to having no strategy or ra just doing some tactical maneuvering (Steven French 2009e). It overstates the role of power in strategy formation. The school category is Descriptive.pG The Cultural School “An apple never falls far from the tree” Strategy Systems as Collective ProcessesTo Its roots in anthropology describes the strategy systems as processes of social interaction, that base on beliefs and understandings shared by members of enterprise (Henry Mintzberg 1990). These beliefs are acquired by acculturation and socialization which are largely nonverbal. Hence the members describe only those beliefs that underpin their culture; while the origin and explanations may remain obscure (H. Igor Ansoff 1991). It views the strategy formation process as a collective and cooperative process. The strategy formulated is a reflection of corporate 6 GET YOUR WORK DONE BY
  7. 7. GET YOUR WORK DONE BY culture of organization. Its emphasis is on crucial role that social processes beliefs and values are playing in decision making and in strategy formation. The champions include the people who like the social, the spiritual and the collective environment (Steven French 2009g). It has the limitation of resistance to change and gives few clues on how things should unfold. The school rs category is Descriptive. The Environmental School pe “It all depends” Strategy Systems as Reactive Processes Pa This school has its roots in biology, strategy systems are described to react in natural manner with the corporate external environment. The external context is the central factor in strategy making processes. The strategy formulated is a response to the challenges that were imposed by external environment. If the enterprise does not respond to external forces, that enterprise will de not be selected out (Steiner, George Albert1979). In the long run, enterprises end up clustering together in distinct ecological-type niches, positions where they remain until resources become scarce or conditions too hostile (Mintzberg et al. 1998). The champions include population ra ecologists, some organization theorists and positivists in general. In the long run, it gives the central role in strategy formation to the environment. As the dimensions of the environment are vague and aggregated, it becomes less useful for strategy formation. It is unrealistic that it deniespG real strategic choice that an organization may have. The school category is Descriptive. The Configuration School “To everything there is a season”To The base line of this school is History. This school underlay that strategy formation is a process of changing organization from one type of decision making structure to another. It says that with the time organization need to adopt the change and it has to move its direction towards the competitive position (Steven French 2009b). It matches the organizational shape with strategy as they are closely integrated. Organizations have some stable configurations in its characteristics, which cause to create particular strategies (Kippenberger, T. 1998). But these stability periods 7 GET YOUR WORK DONE BY
  8. 8. GET YOUR WORK DONE BY are interrupted by some processes of transformation. So these strategies do not work for organizations in long run (Lampel, 1998). Key to success in strategic management is to sustain stability or adapting to strategic changes. Therefore, strategy formation itself has configurations. The champions include lumbers and integrators in general and as well as change agents. In rs reality organizations do not have a limited number of valid configurations; also patterns in the eye of beholder are not limited. If reality is prescribes by using configuration, it will distort the reality in order to explain it. pe CONCLUSION: Pa In each of these schools, the strategy formation process is something like “black box” because no one of these schools is able to outline that how an individual or organization will leap from the collection of information to the conceptualization of alternative courses of action. de In the final analysis, just as none of the blind mens descriptions of the elephant was completely adequate, yet each contained elements of truth, none of these 10 approaches is complete in and of itself, either. Each offers some useful concepts, and some strong points to aid understanding, but ra has its disadvantages or limitations as well, likely: as there is still room for more classifications of strategy formation and the complexity of these schools, at a glance, may scare the strategist. But at the same point it can’t be denied that these approaches have also helped the strategists inpG like Illumination of origins and characteristics of the different schools of thoughts in strategy formation and understanding and appreciating differences between strategy formations.To 8 GET YOUR WORK DONE BY
  9. 9. GET YOUR WORK DONE BY REFERENCES rs 1. Steven French. (2009a). Critiquing the language of strategic management. The Journal of Management Development, 28(1), 6-17. Retrieved September 13, 2009, from ABI/INFORM Global. (Document ID: 1611833551). pe 2. Steven French. (2009b). Re-thinking the foundations of the strategic business process. The Journal of Management Development, 28(1), 51-76. Retrieved September 13, 2009, from ABI/INFORM Global. (Document ID: 1611833581). Pa 3. Shivasharan, N.S. and Shashidhar, P. (2005), “Research in strategic management: a theoretical exposition”, available at: de 4. Steven French. (2009c). Exploring the house built on sand. The Journal of Management Development, 28(1), 38-50. Retrieved September 13, 2009, from ABI/INFORM Global. (Document ID: 1611833571). ra 5. Morgan, G. (1986), Images of Organization, Sage, Beverly Hills, CA. 6. Masuch, M. (1985), “Vicious circles in organizations”, Administrative Science Quarterly, Vol. 30, March, pp. 14-33.pG 7. Dixon, J., Dogan, R. and Kouzmin, A. (2004), “The dilemma of privatized public services: philosophical frames in understanding failure and managing partnership terminations”, Public Organization Review: A Global Journal, Vol. 4 No. 1, pp. 25-46.To 8. Steven French. (2009d). Cogito ergo sum: exploring epistemological options for strategic management. The Journal of Management Development, 28(1), 18-37. Retrieved September 13, 2009, from ABI/INFORM Global. (Document ID: 1611833561). 9. Steven French. (2009e, April). The inductive frame. Journal of Management Development, 28(3), 225-241. Retrieved September 13, 2009, from Business Source Premier database. 9 GET YOUR WORK DONE BY
  10. 10. GET YOUR WORK DONE BY 10. Steven French. (2009f, April). Action research for practising managers. Journal of Management Development, 28(3), 187-204. Retrieved September 13, 2009, from Business Source Premier database. 11. Steven French. (2009g, April). The deductive frame. Journal of Management rs Development, 28(3), 242-266. Retrieved September 13, 2009, from Business Source Premier database. 12. Jelenc, Lara(2009), categorizing the field of strategic management pe , accessed at 31/08/2009 13. Ansoff, H.I., (1991 ) Strategic Management Journal “Critique of Henry Mintzberg’s The Pa Design School: Reconsidering The Basic Premises of Strategic Management” , Vol. 21, pp. 98-112 de 14. Kippenberger, T. (1998), “How strategy is formed? Ten schools of thought”, The Antidote, Vol. 3 No. 6, pp. 11-14. 15. Mintzberg, H. (1990), “Strategy formation: ten schools of thought”, in Fredrickson, J. ra (Ed.), Published By: KnightRidder 16. Henry Mintzberg (1990) The Strategic Management Journal “Design School:pG Reconsidering the Basic Premises of Strategic Management”, John Wiley & Sons 17. Henry Mintzberg (1994), The fall and rise of strategic planning Harvard Business Review, vol 72 no 1, pp. 8To 18. Richard A. Swanson, Elwood F. Holton (2001), Foundations of human resource development, berrett-koehler publishers, Inc. 19. H. Igor Ansoff (1991) Critique of Henry Mintzbergs The design school: Reconsidering the basic premises of strategic management’ available at 10 GET YOUR WORK DONE BY
  11. 11. GET YOUR WORK DONE BY (accessed: 30 August 2009) 20. Mintzberg, H., Ahlstrand, B., Lampel, J. (1998), Strategy Safari A Guided Tour Through rs the Wilds of Strategic Management,, accessed at 29/08/2009. pe 21. James L. Haye ,"Effective managers live in the present – but concentrate on the future." available at, Pa accessed at 31/08/2009 22. Henry Mintzberg, Bruce Ahlastrand (1997), Categorizing the field of strategic management de , accessed at 27/08/2009 ra 23. Bill Richardson (1994), Comprehensive Approach to Strategic Management, tType=Article&Filename=_published_emeraldfulltextarticle_pdf_0010320805.pdf, accessed at 28/08/2009 24. Steiner, George Albert 1979: Strategic Planning, What Every Manager Must Know, TheTo Free Press, New York 25. Chaffee Ellen Earle (1985), Three Models of Strategy, Academy of Management Review, Vol.10, No.1, pp. 175-182 26. McKiernan Peter (1997), Strategy past: Strategy futures. Oxford: Long Range Planning, Vol.30, no. 5, pp.22-23 11 GET YOUR WORK DONE BY
  12. 12. GET YOUR WORK DONE BY 27. Ansoff, Igor (1987), The evolution of corporate planning, working paper, Graduate School of Industrial Administration, Carnegie-Mellon University rs 28. Mintzberg Henry (1994), The rise and fall of strategic planning: Reconceiving roles for planning, plans, planners, Free Press (New York and Toranto) pe 29. Hamel, G.(1996), The core competences of the corporation, Harvard Business Review, Vol. 23, pp. 232 Pa 30. Whittington, R (1993), What is Strategy and Does It Matter? London: Routledge de rapGTo 12 GET YOUR WORK DONE BY