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Schools of Thought
Course: Bus6150 A
Course Instructor: Dr. Njambi Esther, DBA
Semester: Spring 2019
Group 3
Positioning
Entrepreneurial
Group Members
Group 3 2
Arnold
Grace
Lilian
Sheila
Evaline
Sharon
Leah
Group 3 3
Lorem
Ipsum
Schools
of
Thought
Positioning & Entrepreneurial
School Summary
04 01
0203
Presentation Outline
Schools of Thought
Overview
Entrepreneurial School
Premises
Foundation
Context and Contribution
Criticism
Positioning School
Premises
Foundation
Context and Contribution
Criticism
Design School
Planning School
Positioning School
Prescriptive Descriptive Configuration
Schools of Thought Overview
Group 3 4
01
01 02 03
Entrepreneurial School
Cognitive School
Learning School
Power School
Cultural School
Environmental School
Configurational School
Group 3 5
Focus: Positioning & Entrepreneurial Schools
Positioning School
Prescriptive in Nature
Entrepreneurial School
Descriptive in Nature
Positioning School
Group 3 6
Premises
Foundation
Context and Contribution
Criticism
Basic Model
Group 3 7
02
BCG, Experience Curve
& PIMS
Positioning School
Research
Sun Tzu &
Von Clausewitz
Porter’s Competitive
Analysis, Generic
Strategies & Value Chain
01
02
03
04
1
3
2
4
Positioning School Premise
According to Mintzberg, Ahlstrand and Lampel (1998), positioning school can be
summarized as follows:
1. Strategies are generic, specifically common identifiable positions in the
marketplace.
2. The market place is economic and competitive.
3. The strategy formation process is therefore one of these generic positions based
on analytical calculation.
4. Analysts play a major role in this process feeding the results of their calculations
to managers who officially control the choices.
5. Strategies therefore come out of this process full blown and are articulated and
implemented; market structure drives deliberate positional strategies that drive
organizational structure.
Group 3 8
02
Positioning School
Leading Proponents
Positioning school is described in 3 waves:
1. Early Military Maxims
2. The Search for Consulting Imperatives
3. The Recent Work on Empirical Propositions
Group 3 9
02
First Wave: Military Maxims
Sun Tzu strategies came close to the spirit of today’s
positioning school.
Sun Tzu emphasizes the importance of being informed
about the enemy and the place of the battle.
Devoted a good deal of attention to specific position
strategies such as locating armies in respect to the
mountains and rivers, fighting downhill and occupying
level and high ground.
Generally he who occupies the field of battle first and
awaits the enemy is at ease; he who comes later to
the scene and rushes into the fight is weary.
Group 3 10
02
Sun Tzu recognized the limitations of the
generic thinking such as “the musical notes
are only five in number but their melodies
are so numerous that we cannot hear
them all”.
Sun Tzu also advocates the need to know
the business environment to be able to take
a position-“the natural formation of a
county is the soldier’s best ally”.
Group 3 11
02 First Wave: Military Maxims
Clausewitz focused his theory on the classical issues
of field combat, army formation, the relationship
between battles and wars, the character of
military leaders and troops and so on.
Strategy seeks to shape the future yet intentions
are likely to be frustrated by chance and ignorance.
It’s imperative to put together an organization with
formal chain of command in which orders are
executed without question.
Clausewitz argued that strategy depends on basic
building blocks which are used to attack, defend
and maneuver.
Group 3 12
02 First Wave: Military Maxims
Emphasis on two concepts in war namely physical and
moral aspects of war
Physical- elements of matter
Moral aspects- are the attitudes, character traits
and spirit of all human beings involved in a conflict,
leaders, soldiers and the state
His concepts consist of 'boldness' which is more
appropriate for soldiers than generals, and the idea of
military 'genius' which is required only of commanders.
Group 3 13
02 First Wave: Clausewitz
Second Wave: Search for Consulting
Imperatives
According to Mintzberg et al., there arose
strategy boutiques such as McKinsey &
Company which focused on top management
(1998). BCG on the contrary focused on BCG
Matrix and the Experience Curve, then came
along the PIMS Model.
Experience Curve
BCG Matrix/Growth Share Matrix
PIMS
Group 3 14
02
i. Experience Curve
Henderson (1984) stated that with lower costs, other things being equal, a firm can displace its
rivals.
Mintzberg et al. (1998) observe that this technique as well as the BCG matrix became popular
in American business for a time as being a market leader became an obsession.
Group 3 15
02
ii. BCG Matrix/Growth Share Matrix
16
02
L
o
w
Market Share LowHigh
QUESTION MARKSTAR
CASH COW DOG
Select a few Remainder divested
Invest
MarketGrowth
H
i
g
h
Liquidate
This model addresses the
allocation of funds to a
company with diversified
products.
Henderson argues that
for a company to be
successful, cash cows
and stars are needed
simultaneously in any
organization.
Group 3
iii. PIMS
(Profit Impact of Market Strategy)
17
02
PIMS Model was developed in 1972 for General
Electric.
It later on became a standalone database for
sales.
According to Mintzberg et al. (1998), both PIMS
and BCG seemed to have simple imperatives
that couldn’t give companies the best strategic
tactics. This led to a number of companies
going down.
Group 3
Third Wave: The Development of
Empirical Propositions
Began in the mid-1970s and became more
prominent and profound after 1980 and became
the basis for the literature and practice of
strategic management.
Mintzberg et al. (1998) writes that Porter took the
basic approach of the design school and applied
it to the industry/external environment.
Porter's books Competitive Strategy (1980) and
Competitive Advantage in (1985), presented a
foundation of concepts onto which other scholars
have built on.
Porter’s Competitive Analysis
Porter’s Generic Strategies
Porter’s Value Chain
Group 3 18
02
i. Porter’s Competitive Analysis
Group 3 19
02
Group 3
Porter argued that there are but two basic types of
competitive advantage a firm can possess: low cost
or differentiation.
Firms should combine either of the strategies
namely; cost leadership, differentiation and focus
with its scope to achieve superior performance in
the industry.
According to Porter, a firm that focuses on being all
things to all people is a recipe for strategic
mediocrity and below average performance.
In Porter’s own words, “a firm that engages in each
generic strategy but fails to achieve any of them is
stuck in the middle”. Group 3 20
02 ii. Porter’s Generic Strategies
Broad
Target
Narrow
Target
Lower Cost Differentiation
Cost
Leadership
Focus
Differentiation
Focus
Cost Leadership Differentiation
iii. Porter’s Value Chain
Group 3 21
02
Kinds of Position School Research
22
02
Single Static Research
Static
Conditions
Dynamic
Conditions
Single Factors Cluster of Factors
Cluster Static Research
Single Dynamic Research Cluster Dynamics Research
Focussing on particular
generic strategies such as
product bundling.
i.e. “Does diversification pay?”
Selecting individual strategic
positions but weaving them
into integrated strategies.
i.e. Fast food chains
Considering the effect of a
single change such as a
technological breakthrough.
Focuses on both substantive
responses and signaling ones.
i.e. False signal to ward off
competitor
Considering issues such as
the dynamics of strategic
groups and evolution of
industries.
It requires comprehensive
research.
It’s the least used method
Group 3
Game Theory
Group 3 23
02
According to Osak (2010), game theory is a tool that
predicts outcomes of a group of interacting firms
where an action of a single firm has an impact on
other firms within their given industry.
Decisions made by one firm have an effect on
multiple organizations that interact with or within
that firm, and vice versa. Game theory is suitable for
strategic situations such as:
Auctions
Bargaining (Unions)
Product Decisions (Market Entry or Market Exit)
Game Theory Assumptions
Group 3 24
02
According to Osak (2010), game theory assumes the
following:
The players are rational and will act rationally.
Players moves are strategic and consider the
repercussions of their actions; not all manager are
however able to think within a strategic context.
Game Theory is most effective when managers
understand the effects (negative or positive) their moves
or actions have. In today's business world it can be seen
that most companies are not knowledgeable of their
own payoffs and those of their competitors.
Game Theory Aim
Group 3 25
02
Osak (2010) stated that the main aim of the games
is to provide:
A set of strategic decisions that help in
analyzing competitive behaviour to provide a
desirable result.
An analysis of how a series of possible
strategic moves can predict a number of
competitive outcomes.
With regards to making business decisions,
different types of games can be used depending on
the situation, timing, the number of players and
the information available.
Game Theory Advantages
Group 3 26
02
Advantages of Game Theory
Osak (2010) states that a properly constructed game
can be useful to businesses in the following ways:
Lowers business risk
Provide important competitive insights
Improves the internal decision-making process
Maximize strategic utility
Positioning School Criticism
The following are the some of the criticisms of the positioning
school as stated by Mintzberg et al. (1998):
1. The focus of the positioning school is narrow. The positioning
school considers the external factors affecting the firm, but
does not take into account the importance of a firm’s
internal capabilities to ensure that strategy is achieved.
2. It has a bias towards traditional large, established corporations
and mature industries. It has a bias toward conditions of
stability which is found in mature industries.
3. It also does not take into consideration that the structure of
industries are continuously changing and increased speed is
required in response.
Group 3 27
02
Positioning School Criticism
4. It is focused on the strategy formulation process.
5. There is a disconnect between strategy thinking
and implementation, this then affects the
strategy learning process. This means that top
management may make assumptions about the
practicability of the strategies and yet the
strategies may not be practical from an
implementation point of view.
6. The calculations by analysts can curtail the
learning and creativity process within the
organization.
Group 3 28
02
Positioning School Criticism
7. If strategy implementers are not part of the
strategy formulation process, there will be a
lack of commitment and even rejection of the
strategies by the implementers.
8. The positioning school does not take into
account certain factors that influence strategy
such as the political factors. It is focused more
on cost management and increasing of market
share and profits.
Group 3 29
02
Entrepreneurial School
Group 3 30
Premises
Foundation
Context and Contribution
Criticism
Basic Model
Group 3 31
03
Kenneth
Knight
Cole A. H
Joseph
Schumpeter
Peter
Drucker
01
02
03
04
1
3
2
4
1. Strategy exists in the mind of the leader as perspective, which
is specifically a sense of long-term direction; a vision of the
future of the organization.
2. The process of strategy formation is semiconscious at best; it
is rooted in the experience and the intuition of the leader.
3. The leader promotes the vision single-mindedly; passionately
maintaining a close personal control of the implementation in
order to be able to reformulate specific aspects of it as
necessary.
Group 3 32
03
The following are the premises of the entrepreneurial school as explained by Mintzberg et al.
(1998):
Entrepreneurial School Premises
Entrepreneurial School Premises
4. The strategic vision is thus malleable, and so
entrepreneurial strategy tends to be deliberate and
emergent – deliberate in the overall vision and emergent in
how the details of the vision unfold.
5. The organization, like the strategic vision is malleable, a
simple structure responsive to the leader’s directives;
whether it is an actual startup, a single owner company, or a
turnaround in a large established organization.
6. Entrepreneurial strategy tends to take the form of niche;
one or more pockets of market position protected from the
forces of outright competition.
Group 3 33
03
The foundation for the entrepreneurial school consists of
intuition, judgment, experience, and insight. These skills
work to promote a view of strategy as perspective,
which is associated with the formation of a vision.
Vision is the central concept in entrepreneurial school.
Vision can be defined as a mental representation of
strategy which encourages thinking ahead and the
analyzing of the surrounding factors in order to
successfully strategize (Mintzberg et al., 1998).
Group 3 34
03 Entrepreneurial School Foundation
According to Schumpeter (1942), an entrepreneur is a person
who has the business idea.
He saw visions and creativity as the greatest contribution
entrepreneurs made.
He stated, “when an entrepreneur ceases to innovate, he/she
ceases to perform their function”.
Group 3 35
03 Entrepreneurial School Leading
Proponents
Knight (1967) saw the entrepreneur as synonymous with
heavy risk taking and the handling of uncertainty.
Drucker identified entrepreneurship with management
itself (1970).
Cole (1959) posed four types of entrepreneurs:
• The calculating inventor who comes up with new
inventions
• The inspirational innovator
• The over optimistic promoter
• The builder of a strong enterprise
Entrepreneurial School Leading
Proponents
Group 3 36
03
Visionary leadership is style and strategy coupled together.
The firm is mainly a startup or turnaround while maintaining
the small size.
The central actor is the leader in the organization, who is
dominant and intuitive.
Strategy is a personal, unique perspective.
The basic process is visionary, intuitive, and largely
deliberate.
Change is occasional, opportunistic, timely and revolutionary.
The environment is maneuverable, full of niches and the best
environmental fit is a dynamic one.
Group 3 37
03 Entrepreneurial School Contribution
Strategic visionary leadership
Henry Mintzberg suggested four personality attributes in relation to strategy making in the
entrepreneurial organization.
In the entrepreneurial mode, strategy making is dominated by the search for new opportunities,
problem solving is secondary.
Power is centralized in the hands of the chief executive who leads the organization into bold
decisions through charisma and influence.
Strategy making is characterized by dramatic moves in the face of uncertainty and thriving in the
unknown.
Ultimately, growth is the dominant goal of the organization.
Entrepreneurial School Contribution
Group 3 38
03
Other aspects brought forward:
1. Repetition; having deep concentrated knowledge of the subject. -
intimate, detailed, knowledge of the business. It gives the entrepreneur
advantage and inspiration as the architect of the whole firm.
2. Representation; strategic entrepreneurs are able to see and share this
vision not only in language but also in pictures by being able to paint a
clear picture of the vision; having others share into their perspective by
having powerful imagery of their strategic goal.
3. Assistance; leaders become visionary because they appeal to a specific
audiences at specific periods of time; visionary leadership can lead to
good or evil; such as Hitler, Steve Jobs, Pablo.
4. Controlled boldness; bold ideas with careful execution.
Group 3 39
03 Entrepreneurial School Contribution
Entrepreneurs:
Begins with a major disruption in their lives hence set out on
their own; seeking to project their dilemmas into business.
Eventually become the CEOs of their own ventures, they do not
need to worry about pleasing other people around them,
whereas managers must at least please their own bosses.
Require and develop exceptional self-confidence to take on the
risks of starting a venture.
Seek stronger control of their existence, independence,
achievement, authority, and have a tendency to accept relative
risk and do not seek security.
Exhibit overconfidence, are strong decision makers, and do not
need a lot of information and observations to make a move.
Group 3 40
03 Entrepreneurial School Contribution
Entrepreneurial School Contribution
View their circumstances way more positively, always see
solutions; strengths other than weaknesses, opportunities
other than threats.
Believe in luck, being at the right place at the right time,
timing of ideas, places and people, hence always seem to
strike deals, reach agreements, have resilience, and always
have the resources needed for a strategic move.
Are brilliant and smart, with great people skills, crafty, can
be unsentimental, lacking empathy, cunning, smooth, free
spirits, and autonomous highly independent individuals,
with lower needs for affiliation, non-conformists and with
great interpersonal effect on people around them. They
are enigmatic and have admirers and supporters.
Group 3 41
03
Entrepreneurs (Cont’d):
Google’s Vision Statement: “To provide access to the
world’s information in one click”
Mission: “To organize the world's information and
make it universally accessible and useful”
Google’s vision is being kept alive by it’s a good
environment that nurtures creativity hence their
innovation, in the form of advanced search algorithms
to revolutionizing online marketing with adwords.
Group 3 42
03
Entrepreneurial School Context
(Google Case)
Larry Page - Google co-founder
Envisioned a search engine that would be capable of
downloading the entire web and keeping the links.
Directly involved in every single hire at Google. This fostered a
good relationship with his team.
While some left to start their own companies, many stuck around
because of his approach. 3 of the 6 people presently leading
Google’s product divisions are among the first ten employees that
were hired when Google was first incorporated.
Group 3 43
03
Entrepreneurial School Context
(Google Case)
When one treats people with benevolence, justice, and
righteousness, and reposes confidence in them, THE ARMY
WILL BE UNITED IN MIND AND ALL WILL BE HAPPY TO SERVE
THEIR LEADERS.”
Sun Tzu
Group 3 44
Entrepreneurial School Criticism
Although this school of thought has made significant
contributions in the field of strategy, it is not without
criticism;
1. Portrays the strategy formation process as being wrapped
in the behavior of a single person.
2. Is lauded and thought to be glamorizing by some scholars
whereas others find it to be irrational and deterring.
3. High risk and uncertainty.
4. Vision may not necessarily be useful due to the
unpredictability of the future.
Group 3 45
03
Entrepreneurial School Criticism
5. Centralization of strategic decision making can
foster flexibility and adaptability since there is
full knowledge of operations.
6. C.E.O can drown in the operations at the ground
to the extent of them losing their strategic
vision.
7. C.E.O can be too focused on his vision while in
his position at the top, and end up losing touch
with the goings on on the ground; whereas his
vision may no longer be relevant.
Group 3 46
03
Entrepreneurial School Criticism
8. Stacey (1992) is quoted by Mintzberg et al. (1998)
as finding it absurd that the leader and the leader
alone is expected to provide a general direction as
the vision dictates. Places an “unrealistic burden”
on the leader.
9. Should something unfortunate such as death
happen then the company’s visionary leader and
key strategist will no longer exist.
Group 3 47
03
Positioning School Summary
Group 3 48
04
Model An Analytical Process
Approach •The positioning school places the business within the setting of its industry and
•Looks into how organisations can enhance their strategic positions within their given industry
Basis •Industrial Organizations and Military Strategy
Contributions •Looks at strategic management as a science. It provides content in a systematic way to the existing
way of looking at strategy
•It focuses on facts and numbers
•Useful in the early stages of strategy formulation
Limitations •Neglects factors such as power, politics and culture
•Biased to large corporations
Concepts •The Art of War PIMS Porter’s Value Chain
•Experience Curve Porter’s Competitive Analysis Game Theory
•BCG Matrix Porter’s Generic Strategies
Entrepreneurial School Summary
Group 3 49
04
Model A Visionary Process
Approach •The Leader and the strategy formulation process
•Growth seeking
•Focuses on opportunities rather than the problem solving
Formulation •Intuition, judgment, experience and insight
Contributions •Vision concept Personalized leadership Creativity and innovation
Limitations •Wrapped in the behavior of a single person
•Irrational and deterring/high risk and uncertainty…. Vision may not necessarily be useful due to
unpredictability of the future
•Leadership loosing touch with the goings on the ground
•The leader and the leader alone is expected to provide a general direction
•If the leader is no longer there, then a key strategist will no longer exist
•Biased to large corporation
Concepts •Style and strategy coupled together
•Strategic visionary leadership
Group 3 50
Thank You !
Any questions?

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Schools of Thought-Positioning and Entrepreneurial

  • 1. Schools of Thought Course: Bus6150 A Course Instructor: Dr. Njambi Esther, DBA Semester: Spring 2019 Group 3 Positioning Entrepreneurial
  • 2. Group Members Group 3 2 Arnold Grace Lilian Sheila Evaline Sharon Leah
  • 3. Group 3 3 Lorem Ipsum Schools of Thought Positioning & Entrepreneurial School Summary 04 01 0203 Presentation Outline Schools of Thought Overview Entrepreneurial School Premises Foundation Context and Contribution Criticism Positioning School Premises Foundation Context and Contribution Criticism
  • 4. Design School Planning School Positioning School Prescriptive Descriptive Configuration Schools of Thought Overview Group 3 4 01 01 02 03 Entrepreneurial School Cognitive School Learning School Power School Cultural School Environmental School Configurational School
  • 5. Group 3 5 Focus: Positioning & Entrepreneurial Schools Positioning School Prescriptive in Nature Entrepreneurial School Descriptive in Nature
  • 6. Positioning School Group 3 6 Premises Foundation Context and Contribution Criticism
  • 7. Basic Model Group 3 7 02 BCG, Experience Curve & PIMS Positioning School Research Sun Tzu & Von Clausewitz Porter’s Competitive Analysis, Generic Strategies & Value Chain 01 02 03 04 1 3 2 4
  • 8. Positioning School Premise According to Mintzberg, Ahlstrand and Lampel (1998), positioning school can be summarized as follows: 1. Strategies are generic, specifically common identifiable positions in the marketplace. 2. The market place is economic and competitive. 3. The strategy formation process is therefore one of these generic positions based on analytical calculation. 4. Analysts play a major role in this process feeding the results of their calculations to managers who officially control the choices. 5. Strategies therefore come out of this process full blown and are articulated and implemented; market structure drives deliberate positional strategies that drive organizational structure. Group 3 8 02
  • 9. Positioning School Leading Proponents Positioning school is described in 3 waves: 1. Early Military Maxims 2. The Search for Consulting Imperatives 3. The Recent Work on Empirical Propositions Group 3 9 02
  • 10. First Wave: Military Maxims Sun Tzu strategies came close to the spirit of today’s positioning school. Sun Tzu emphasizes the importance of being informed about the enemy and the place of the battle. Devoted a good deal of attention to specific position strategies such as locating armies in respect to the mountains and rivers, fighting downhill and occupying level and high ground. Generally he who occupies the field of battle first and awaits the enemy is at ease; he who comes later to the scene and rushes into the fight is weary. Group 3 10 02
  • 11. Sun Tzu recognized the limitations of the generic thinking such as “the musical notes are only five in number but their melodies are so numerous that we cannot hear them all”. Sun Tzu also advocates the need to know the business environment to be able to take a position-“the natural formation of a county is the soldier’s best ally”. Group 3 11 02 First Wave: Military Maxims
  • 12. Clausewitz focused his theory on the classical issues of field combat, army formation, the relationship between battles and wars, the character of military leaders and troops and so on. Strategy seeks to shape the future yet intentions are likely to be frustrated by chance and ignorance. It’s imperative to put together an organization with formal chain of command in which orders are executed without question. Clausewitz argued that strategy depends on basic building blocks which are used to attack, defend and maneuver. Group 3 12 02 First Wave: Military Maxims
  • 13. Emphasis on two concepts in war namely physical and moral aspects of war Physical- elements of matter Moral aspects- are the attitudes, character traits and spirit of all human beings involved in a conflict, leaders, soldiers and the state His concepts consist of 'boldness' which is more appropriate for soldiers than generals, and the idea of military 'genius' which is required only of commanders. Group 3 13 02 First Wave: Clausewitz
  • 14. Second Wave: Search for Consulting Imperatives According to Mintzberg et al., there arose strategy boutiques such as McKinsey & Company which focused on top management (1998). BCG on the contrary focused on BCG Matrix and the Experience Curve, then came along the PIMS Model. Experience Curve BCG Matrix/Growth Share Matrix PIMS Group 3 14 02
  • 15. i. Experience Curve Henderson (1984) stated that with lower costs, other things being equal, a firm can displace its rivals. Mintzberg et al. (1998) observe that this technique as well as the BCG matrix became popular in American business for a time as being a market leader became an obsession. Group 3 15 02
  • 16. ii. BCG Matrix/Growth Share Matrix 16 02 L o w Market Share LowHigh QUESTION MARKSTAR CASH COW DOG Select a few Remainder divested Invest MarketGrowth H i g h Liquidate This model addresses the allocation of funds to a company with diversified products. Henderson argues that for a company to be successful, cash cows and stars are needed simultaneously in any organization. Group 3
  • 17. iii. PIMS (Profit Impact of Market Strategy) 17 02 PIMS Model was developed in 1972 for General Electric. It later on became a standalone database for sales. According to Mintzberg et al. (1998), both PIMS and BCG seemed to have simple imperatives that couldn’t give companies the best strategic tactics. This led to a number of companies going down. Group 3
  • 18. Third Wave: The Development of Empirical Propositions Began in the mid-1970s and became more prominent and profound after 1980 and became the basis for the literature and practice of strategic management. Mintzberg et al. (1998) writes that Porter took the basic approach of the design school and applied it to the industry/external environment. Porter's books Competitive Strategy (1980) and Competitive Advantage in (1985), presented a foundation of concepts onto which other scholars have built on. Porter’s Competitive Analysis Porter’s Generic Strategies Porter’s Value Chain Group 3 18 02
  • 19. i. Porter’s Competitive Analysis Group 3 19 02 Group 3
  • 20. Porter argued that there are but two basic types of competitive advantage a firm can possess: low cost or differentiation. Firms should combine either of the strategies namely; cost leadership, differentiation and focus with its scope to achieve superior performance in the industry. According to Porter, a firm that focuses on being all things to all people is a recipe for strategic mediocrity and below average performance. In Porter’s own words, “a firm that engages in each generic strategy but fails to achieve any of them is stuck in the middle”. Group 3 20 02 ii. Porter’s Generic Strategies Broad Target Narrow Target Lower Cost Differentiation Cost Leadership Focus Differentiation Focus Cost Leadership Differentiation
  • 21. iii. Porter’s Value Chain Group 3 21 02
  • 22. Kinds of Position School Research 22 02 Single Static Research Static Conditions Dynamic Conditions Single Factors Cluster of Factors Cluster Static Research Single Dynamic Research Cluster Dynamics Research Focussing on particular generic strategies such as product bundling. i.e. “Does diversification pay?” Selecting individual strategic positions but weaving them into integrated strategies. i.e. Fast food chains Considering the effect of a single change such as a technological breakthrough. Focuses on both substantive responses and signaling ones. i.e. False signal to ward off competitor Considering issues such as the dynamics of strategic groups and evolution of industries. It requires comprehensive research. It’s the least used method Group 3
  • 23. Game Theory Group 3 23 02 According to Osak (2010), game theory is a tool that predicts outcomes of a group of interacting firms where an action of a single firm has an impact on other firms within their given industry. Decisions made by one firm have an effect on multiple organizations that interact with or within that firm, and vice versa. Game theory is suitable for strategic situations such as: Auctions Bargaining (Unions) Product Decisions (Market Entry or Market Exit)
  • 24. Game Theory Assumptions Group 3 24 02 According to Osak (2010), game theory assumes the following: The players are rational and will act rationally. Players moves are strategic and consider the repercussions of their actions; not all manager are however able to think within a strategic context. Game Theory is most effective when managers understand the effects (negative or positive) their moves or actions have. In today's business world it can be seen that most companies are not knowledgeable of their own payoffs and those of their competitors.
  • 25. Game Theory Aim Group 3 25 02 Osak (2010) stated that the main aim of the games is to provide: A set of strategic decisions that help in analyzing competitive behaviour to provide a desirable result. An analysis of how a series of possible strategic moves can predict a number of competitive outcomes. With regards to making business decisions, different types of games can be used depending on the situation, timing, the number of players and the information available.
  • 26. Game Theory Advantages Group 3 26 02 Advantages of Game Theory Osak (2010) states that a properly constructed game can be useful to businesses in the following ways: Lowers business risk Provide important competitive insights Improves the internal decision-making process Maximize strategic utility
  • 27. Positioning School Criticism The following are the some of the criticisms of the positioning school as stated by Mintzberg et al. (1998): 1. The focus of the positioning school is narrow. The positioning school considers the external factors affecting the firm, but does not take into account the importance of a firm’s internal capabilities to ensure that strategy is achieved. 2. It has a bias towards traditional large, established corporations and mature industries. It has a bias toward conditions of stability which is found in mature industries. 3. It also does not take into consideration that the structure of industries are continuously changing and increased speed is required in response. Group 3 27 02
  • 28. Positioning School Criticism 4. It is focused on the strategy formulation process. 5. There is a disconnect between strategy thinking and implementation, this then affects the strategy learning process. This means that top management may make assumptions about the practicability of the strategies and yet the strategies may not be practical from an implementation point of view. 6. The calculations by analysts can curtail the learning and creativity process within the organization. Group 3 28 02
  • 29. Positioning School Criticism 7. If strategy implementers are not part of the strategy formulation process, there will be a lack of commitment and even rejection of the strategies by the implementers. 8. The positioning school does not take into account certain factors that influence strategy such as the political factors. It is focused more on cost management and increasing of market share and profits. Group 3 29 02
  • 30. Entrepreneurial School Group 3 30 Premises Foundation Context and Contribution Criticism
  • 31. Basic Model Group 3 31 03 Kenneth Knight Cole A. H Joseph Schumpeter Peter Drucker 01 02 03 04 1 3 2 4
  • 32. 1. Strategy exists in the mind of the leader as perspective, which is specifically a sense of long-term direction; a vision of the future of the organization. 2. The process of strategy formation is semiconscious at best; it is rooted in the experience and the intuition of the leader. 3. The leader promotes the vision single-mindedly; passionately maintaining a close personal control of the implementation in order to be able to reformulate specific aspects of it as necessary. Group 3 32 03 The following are the premises of the entrepreneurial school as explained by Mintzberg et al. (1998): Entrepreneurial School Premises
  • 33. Entrepreneurial School Premises 4. The strategic vision is thus malleable, and so entrepreneurial strategy tends to be deliberate and emergent – deliberate in the overall vision and emergent in how the details of the vision unfold. 5. The organization, like the strategic vision is malleable, a simple structure responsive to the leader’s directives; whether it is an actual startup, a single owner company, or a turnaround in a large established organization. 6. Entrepreneurial strategy tends to take the form of niche; one or more pockets of market position protected from the forces of outright competition. Group 3 33 03
  • 34. The foundation for the entrepreneurial school consists of intuition, judgment, experience, and insight. These skills work to promote a view of strategy as perspective, which is associated with the formation of a vision. Vision is the central concept in entrepreneurial school. Vision can be defined as a mental representation of strategy which encourages thinking ahead and the analyzing of the surrounding factors in order to successfully strategize (Mintzberg et al., 1998). Group 3 34 03 Entrepreneurial School Foundation
  • 35. According to Schumpeter (1942), an entrepreneur is a person who has the business idea. He saw visions and creativity as the greatest contribution entrepreneurs made. He stated, “when an entrepreneur ceases to innovate, he/she ceases to perform their function”. Group 3 35 03 Entrepreneurial School Leading Proponents
  • 36. Knight (1967) saw the entrepreneur as synonymous with heavy risk taking and the handling of uncertainty. Drucker identified entrepreneurship with management itself (1970). Cole (1959) posed four types of entrepreneurs: • The calculating inventor who comes up with new inventions • The inspirational innovator • The over optimistic promoter • The builder of a strong enterprise Entrepreneurial School Leading Proponents Group 3 36 03
  • 37. Visionary leadership is style and strategy coupled together. The firm is mainly a startup or turnaround while maintaining the small size. The central actor is the leader in the organization, who is dominant and intuitive. Strategy is a personal, unique perspective. The basic process is visionary, intuitive, and largely deliberate. Change is occasional, opportunistic, timely and revolutionary. The environment is maneuverable, full of niches and the best environmental fit is a dynamic one. Group 3 37 03 Entrepreneurial School Contribution
  • 38. Strategic visionary leadership Henry Mintzberg suggested four personality attributes in relation to strategy making in the entrepreneurial organization. In the entrepreneurial mode, strategy making is dominated by the search for new opportunities, problem solving is secondary. Power is centralized in the hands of the chief executive who leads the organization into bold decisions through charisma and influence. Strategy making is characterized by dramatic moves in the face of uncertainty and thriving in the unknown. Ultimately, growth is the dominant goal of the organization. Entrepreneurial School Contribution Group 3 38 03
  • 39. Other aspects brought forward: 1. Repetition; having deep concentrated knowledge of the subject. - intimate, detailed, knowledge of the business. It gives the entrepreneur advantage and inspiration as the architect of the whole firm. 2. Representation; strategic entrepreneurs are able to see and share this vision not only in language but also in pictures by being able to paint a clear picture of the vision; having others share into their perspective by having powerful imagery of their strategic goal. 3. Assistance; leaders become visionary because they appeal to a specific audiences at specific periods of time; visionary leadership can lead to good or evil; such as Hitler, Steve Jobs, Pablo. 4. Controlled boldness; bold ideas with careful execution. Group 3 39 03 Entrepreneurial School Contribution
  • 40. Entrepreneurs: Begins with a major disruption in their lives hence set out on their own; seeking to project their dilemmas into business. Eventually become the CEOs of their own ventures, they do not need to worry about pleasing other people around them, whereas managers must at least please their own bosses. Require and develop exceptional self-confidence to take on the risks of starting a venture. Seek stronger control of their existence, independence, achievement, authority, and have a tendency to accept relative risk and do not seek security. Exhibit overconfidence, are strong decision makers, and do not need a lot of information and observations to make a move. Group 3 40 03 Entrepreneurial School Contribution
  • 41. Entrepreneurial School Contribution View their circumstances way more positively, always see solutions; strengths other than weaknesses, opportunities other than threats. Believe in luck, being at the right place at the right time, timing of ideas, places and people, hence always seem to strike deals, reach agreements, have resilience, and always have the resources needed for a strategic move. Are brilliant and smart, with great people skills, crafty, can be unsentimental, lacking empathy, cunning, smooth, free spirits, and autonomous highly independent individuals, with lower needs for affiliation, non-conformists and with great interpersonal effect on people around them. They are enigmatic and have admirers and supporters. Group 3 41 03 Entrepreneurs (Cont’d):
  • 42. Google’s Vision Statement: “To provide access to the world’s information in one click” Mission: “To organize the world's information and make it universally accessible and useful” Google’s vision is being kept alive by it’s a good environment that nurtures creativity hence their innovation, in the form of advanced search algorithms to revolutionizing online marketing with adwords. Group 3 42 03 Entrepreneurial School Context (Google Case)
  • 43. Larry Page - Google co-founder Envisioned a search engine that would be capable of downloading the entire web and keeping the links. Directly involved in every single hire at Google. This fostered a good relationship with his team. While some left to start their own companies, many stuck around because of his approach. 3 of the 6 people presently leading Google’s product divisions are among the first ten employees that were hired when Google was first incorporated. Group 3 43 03 Entrepreneurial School Context (Google Case)
  • 44. When one treats people with benevolence, justice, and righteousness, and reposes confidence in them, THE ARMY WILL BE UNITED IN MIND AND ALL WILL BE HAPPY TO SERVE THEIR LEADERS.” Sun Tzu Group 3 44
  • 45. Entrepreneurial School Criticism Although this school of thought has made significant contributions in the field of strategy, it is not without criticism; 1. Portrays the strategy formation process as being wrapped in the behavior of a single person. 2. Is lauded and thought to be glamorizing by some scholars whereas others find it to be irrational and deterring. 3. High risk and uncertainty. 4. Vision may not necessarily be useful due to the unpredictability of the future. Group 3 45 03
  • 46. Entrepreneurial School Criticism 5. Centralization of strategic decision making can foster flexibility and adaptability since there is full knowledge of operations. 6. C.E.O can drown in the operations at the ground to the extent of them losing their strategic vision. 7. C.E.O can be too focused on his vision while in his position at the top, and end up losing touch with the goings on on the ground; whereas his vision may no longer be relevant. Group 3 46 03
  • 47. Entrepreneurial School Criticism 8. Stacey (1992) is quoted by Mintzberg et al. (1998) as finding it absurd that the leader and the leader alone is expected to provide a general direction as the vision dictates. Places an “unrealistic burden” on the leader. 9. Should something unfortunate such as death happen then the company’s visionary leader and key strategist will no longer exist. Group 3 47 03
  • 48. Positioning School Summary Group 3 48 04 Model An Analytical Process Approach •The positioning school places the business within the setting of its industry and •Looks into how organisations can enhance their strategic positions within their given industry Basis •Industrial Organizations and Military Strategy Contributions •Looks at strategic management as a science. It provides content in a systematic way to the existing way of looking at strategy •It focuses on facts and numbers •Useful in the early stages of strategy formulation Limitations •Neglects factors such as power, politics and culture •Biased to large corporations Concepts •The Art of War PIMS Porter’s Value Chain •Experience Curve Porter’s Competitive Analysis Game Theory •BCG Matrix Porter’s Generic Strategies
  • 49. Entrepreneurial School Summary Group 3 49 04 Model A Visionary Process Approach •The Leader and the strategy formulation process •Growth seeking •Focuses on opportunities rather than the problem solving Formulation •Intuition, judgment, experience and insight Contributions •Vision concept Personalized leadership Creativity and innovation Limitations •Wrapped in the behavior of a single person •Irrational and deterring/high risk and uncertainty…. Vision may not necessarily be useful due to unpredictability of the future •Leadership loosing touch with the goings on the ground •The leader and the leader alone is expected to provide a general direction •If the leader is no longer there, then a key strategist will no longer exist •Biased to large corporation Concepts •Style and strategy coupled together •Strategic visionary leadership
  • 50. Group 3 50 Thank You ! Any questions?