Strategic Schools of Thinking in Three Dimensions

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Introduction

Strategic management is the continuous process that involves three major activities, which include; determination of a strategy, actual implementation of the strategy and monitoring and control of the management strategy with the sole purpose of achieving the set organization’s goal and vision (Mintzberg 1989). It is important to note that strategic management is not static but rather dynamic process. As per the definition, it’s a continuous process that involves evolving activities that are relevant to an organization’s goal (David 1984). It takes place in three phases i.e. the strategic goal definition phase, strategy planning phase, implementation phase and finally the evaluation and monitor phase.

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Strategic Schools of Thinking in Three Dimensions

The strategy definition phase is more concerned with the establishment of a strategic goal that an organization works towards attaining or achieving, purposefully to gain competitive advantage in the market. The goal is the organization’s set objectives that include vision and mission. The planning phase in itself involves the formulation of a further strategy or sub-strategies/activities that are geared towards realizing the organization’s goal. It is a phase that essentially requires managers to think, make conclusive analysis and plan. The third phase which is the implementation phase is the most important and practical. According to Kazmi (2008), it can be referred to as ‘putting in action’ phase whereby the formulated strategies are implemented through actual activities, both at the managerial and administrative. Finally, the evaluation phase is all about assessing how the strategies that were formulated and are implemented are effective towards achieving the organization’s strategic goals. It is therefore important to note that, as per the results of the assessment, decisions can be made on how to fine-tune the implementation or further make a complete overhaul of the plan (Eagleton, 1991). The sole purpose of strategic management is to ensure the realization of an organization’s goal, it is therefore important to understand what it is all about.

A strategic goal describes the purposes unto why an organization exists. It is critical to realize that a business goal is the single most important entity in an organization since it is the mechanism that lays down the platform under which businesses operate. An organization’s mission can also be represented by continuous steps that are geared towards the goal itself. In a deeper perspective, it could be a representation of organizational statement of vision and mission. A mission must always be feasible or rather have high aims and more importantly remain attainable. It must also be precise i.e. not too large to render it meaningless but restrictive at the same time. A mission must always remain clear enough to guarantee action to be taken towards making some kind of progress.

It should also be motivating enough to make staff members to be in a position to give maximum effort while working. Another point to be noted in coming up with a business mission is distinction. When different organizations make similar mission statements then there would be less difference between them, thus compromising competitive advantage policy. A mission statement should show clearly the major components of a business strategy that are to be adopted to have a clear indication of where and when not to make emphasis. Lastly, a mission statement should show clearly how objectives of an organization are to be achieved by providing relevant clues. In other terms, it can be referred to as a business definition or model. It is therefore important to note that a business goal is the single most important entity in an organization since it is the mechanism that lays down the platform under which businesses operate.

There are three well known levels of management, namely, the corporate level. This is whereby top strategic decisions are made that define various duties, which are to be performed by each strategic business unit within an organization. It has to do more with the objectives setting, resource distribution or rather allocation management of the individual strategic business units to maximize on performance. The next level is the business level that defines objectives for strategic business units, appropriate distribution of resources between the functional units and control for optimal performance. It is also important to note that this level at times is referred to as the strategy business units (SBU) level. Last but not least there is the functional strategy level that comprises of departments such as the finance level, marketing, operation, human resource management and the information department. This level of strategy is in a way restricted to the kind of decisions it can make and also the operations to execute. They only deal with the distribution of resources and crafting of functional objectives concerned with the achievement of goals under their departments. They interact with each other making relevant contributions that are geared towards achieving the business and corporate strategy level objectives.

Corporate Level

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School of strategic management

Ten schools of strategic management were formulated by Henry Mintzberg. These ten schools include; the design school, planning, positioning, entrepreneurial, cognitive, learning, power, culture, environment, and configuration school. In more descriptive terms, the design school model viewed strategic formation as a set of activities that were geared towards conception and is represented as predetermined perspectives. The entrepreneurial school viewed strategy in a visionary way while the cognitive school was all about a neural process. The learning process on the other hand viewed strategy formation to be unpredictable while the power school treated it as a set of negotiation process that tried to bridge a gap between the self interests of various stakeholders. The cultural school viewed strategic formation as a collective process that coalesced rather than change, while the environmental school viewed strategy formation as a process that reacted and had severe penalties for poor strategic choices. Finally there is the configuration school that viewed strategy formation as a set of activities that went through a series of transformations to favor instant or even slow change. It is thus important to note that Henry’s sole purpose of developing this approach towards management was the need to have a systematic view and improved result oriented practice of management that was narrow and less confusing. This paper compares the planning and positioning schools of strategy, analyzing them across the root, content and contextual dimension.

The planning school

This is a school of strategic management that tends to describe the formation of strategy as a process that involves intentions and is very formal. Here strategy is always viewed as a formulation that is further divided into sub-activities or strategies that are interrelated and cannot execute without the other. To mention a little history about the planning school, it is necessary to bring to our attention that, just like the design school, it emerged and developed concurrently with the design school in the 1960s and was intentionally purposed to work like a machine. Creativity and innovativeness was not to be condoned in this school since every activity was intended to be automatic without room for choice or having options for alternatives. It went ahead to become the most dominant school of thought in the mid 1970s. Even though it was overtaken in the 1980s, it is still very influential in the management practices of today.

The activities in the planning school therefore began with the objective definition phase, external audit phase and finally the internal audit phase. The last two phases were achievable based on hard data i.e. information gathered from studying the internal operations of an organization as well as the environment under which it operates. Notably, the planning school tried to merge between the old global/ traditional business practices with the new global practices of managing risks and uncertainties. The old practices involved analysis of past hard data and stories whereas the new world practices involved the collection of both internal and external data for analysis, evaluation and making predictions that would assist in developing risk prevention mechanisms. For this to be possible, it is necessary to form an abstraction of the way the businesses in question operate and with this information execute a variety of scenarios. It is important at this point to note that planning school is still an important part of management strategy today since companies have continued to meet new emerging challenges and this school provides a very important mechanism that helps in restructuring processes to enhance instant strategy making as challenges occur.

The first phase of the planning school as earlier noted is usually not very specific and involves a combination of stored hard data and past formal stories and theories. These theories and the stored hard data can never work commensurably and therefore, for objectives to be formed easily and be achievable they must be negotiated. Since creativity is not allowed in planning school, it is also not condoned in the prediction process and this is because the external environment or data acts an intuition rather than as a support mechanism to the process of making a strategy decision. It is also important to note that this school does believe in the occurrence of any type of uncertainty. The reason is that strategy is done away with when business needs are collected as goals and objectives that are programmatic, and an assumption is made that all the activities involved are sequential. This school of strategic management is an actual representation of the point in time when business modeling started. This was by the application of uncertainty or risk management handling modes to an institution’s drawn models of statistics. One of the factors undermining this approach as raised by Mintzberg is the “fallacy of predetermination” which in short explains why the future is considered to be uncertain. The other one is the “the fallacy of detachment”, which also explains why the collected hard data is delayed in most cases, not very informative and too much aggregated.

As earlier stated, the planning school is a formal process that involves step by step specification of how different activities are to be performed towards achieving an organizational strategic goal. These activities run sequentially and not concurrently and therefore, for their success the relevant resources must be allocated for each activity measurable to the amount of work that is to be performed at each level. This is done by the top management when drafting the organization’s goal or rather objectives to be achieved and at the same time setting up the execution of project team. Another factor that influences the way resources are to be effectively allocated and managed is the abstract model that is usually developed to represent a business’ operations. This model can be used to make a detailed study of an organization’s past activities and ventures and therefore be able to depict different views of different implementation scenarios that may be applicable for a certain business project. It is also important to note that market structures have a major influence on strategic options under the planning school of strategic management.

Market structures are the interlinked features of a market which may be the amount and ability of customers and sellers as well as the level of interaction between them. It also looks at the kind of competition a product faces in the market as well as its differentiation. There are four basic types of market structures and these are; perfect competition whereby there are many buyers and sellers with no ability to influence the price of a product in the market. The second one is known as oligopoly where many big organizations have some level of control over prices in a market. The third is what is referred to as monopoly, a business environment where there is only one large company that has high amount of control over the supply and pricing of a product. Last but not least, there is what we call the monospony, which is a situation whereby there is a single buyer of a product that has a high level of influence and control over the demand and pricing of a certain product. With this in mind I would therefore like to bring to your attention the kind of influence a market structure has on an organization’s strategic options under the view of the planning school of thought.

As earlier stated, the planning school of management strategy is an automatic process where there are no choices and room for innovativeness. It would therefore be very difficult for a business to survive in an environment where market structures keep changing since it is not flexible enough to react to change. Therefore the best way to approach a fast moving business environment within an organization is to have an incisive detailed study of the internal and external data as well as the past practices of an organization. This information will enable the top level management of an organization to be able to plan appropriately for the changing needs within their business environment. This can be done by setting appropriate and detailed objectives for the organization that captures what is expected of an organization that coexist in a fast moving environment.

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The positioning school

The strategic school of positioning was in a great way influenced by Michael Porter in his books, “Competitive Strategy” of 1980 and the “competitive advantage” of 1985. This was the school that was most widely acknowledged in the 1980s. Here, strategy was viewed in terms of positions that were generic. These generic positions came about as a result of a formal analysis of an industry’s conditions/competition and environment under which it operated. It made business planners become more of analysts with the ability to make predictions or rather forecast what should be anticipated in an organizational environment. The positioning school therefore became a very important discovery for the learned and consultants who performed detailed analysis of the stored hard data to support their scientific discoveries to organizations and written commercial journals. This school of strategy is therefore also described as an analytical process that is very systematic and developed with a very clear intention. Its major contributors were Schendel and Hatten in the 1970s and also Porter in the 1980s.

Linguistically the term strategy can be defined as an establishment or definition of what one is required to do currently to be able to carry on with what you would want to do or execute later. It also entails an evaluative prediction of what one’s competitors plan to do, to be able to develop and execute a faster counter strategy (Tofler 1970). It is therefore important at this point to try and understand the two theories that influenced the emergence of the positioning school. First and foremost, according to porter (1980) competitive strategy presented a very appropriate platform for many different people to come to understand the real forces of competition in their business environment.

In a more strict perspective, competitive strategy is more about long term success in terms of the growth of a business’ assets. Most entrepreneurs agree that, to achieve an effective method of allocating the business resources, every business needs a strategy and this strategy is also very essential during decision making (Learned, Christiansen, Andrews & Guth 1965). Another important purpose of strategy is to make sure that a business is flexible enough to react appropriately when the need for change arises. In general, these competitive strategies are important in assisting businesses compete, grow and keep making profits over a long period. In coming up with a workable and effective strategy that can help a business maximize on its profits, the following factors are to be considered; the first being, market targeting to capture a market/a certain group of customers and thereafter identifying reliable market niches with minimal if not no competition at all.

The third factor to consider is a way of realizing the needs of customers and the most appropriate way of meeting these needs. Still on this the fourth factor is the determination of how best to apply the current and new technology and the anticipated enhanced developments for improved results and outcome. The next factor and very important factor is determining a way of studying and understanding your competitors and ways in which to avoid seen and predicted competition. Finally the last factor to consider is the way to encourage and boost morale of the company’s staff to work extra hard putting enough effort towards achieving the strategic goals of the business. It is important at this point to note that Henry Mintzberg who came up with the theory of the management strategic schools raised the point that competitive strategy can be through either planning, entrepreneurial and adaptive schools of management thoughts. He argues that the right alternative out of the three for an organization is fully dependent on an organization’s age and the strength of the major decision making organ. The planning mode is a clear systematic approach that involves objectives setting, critical analysis of a company’s operations and its environment and finally a set of defined activities that are to be performed to reach these objectives. This is the best approach when the organization in focus is already highly established with efficient resources to engage in opportunity analysis and environmental uncertainties are minimal.

The adaptive mode in itself involves an organization’s objectives and a plan of action that is continual and dynamic for easy adjustments. This mode is the most essential when an organization anticipates uncertainties that are environmentally concerned. The entrepreneurial mode on the other hand presents a kind of methodology whereby a strong leader with great influence on the organization makes a personal or individual rule on the direction an organization is supposed to take.

On the other hand, competitive advantage is the state whereby an organization is at that point whereby it can meet its clients’ needs more comfortably and effectively than their competitors in the industry (Porter 1985). This is said to be done when and only when the company or rather organization has managed to add some level of real quantifiable value for their clients. The value adding process is an unending or rather continuous process that must always be maintained to keep fighting the ever growing competition in the industry to always remain successful (Moore 1985).

It is important at this point to understand that the value adding process is influenced by the following factors; the first one is to maintain a close relationship with your customers or rather market in other terms to be able to understand them and the way they view value. The second factor is to always maintain or insist on quality of your products and keep a high standard of service delivery. The fourth factor is the ability to always keep a straight focus on your competitors to be able to act appropriately and within time towards the competitive threats and opportunities as offered by your competitors. It is important to note that under this school of thought, market structures have a direct and major influence on the strategic options that an organization is supposed to take.

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In a monopolistic structure or environment, a company can decide to limit supply and raise the supply of a product and still maximize on its profits. On the other hand, in market structure with perfect competition an organization can decide to add more value to its product and cut on its price to gain a competitive advantage (Hammer & Champy 1993). It is important also to mention that in a fast moving environment under this school of thought, the best way to approach this is to always remain flexible and non resistant to change to be able to allow enhancements and necessary modifications of operations and products as the market dictates (Levin 1984).

Conclusion

It is noted that in any business environment it is important to have a strategy for managing your organization to be able to achieve your goal and maximize on profit. A strategy is necessary in management of risk and uncertainty that would expose your business to unmanageable competition. To avoid misappropriation and loss of resources within an organization you need a strategy to guide on the best allocation techniques (Elcock 1986). The schools of strategic management offer a platform for various strategies or ways of managing an organization in a more systematic approach (Pine & Gilmore 1999). The planning school views strategic management as a process that is formal and strategically divided into sub-units and the main player is the planner whiles the positioning school views strategy as a process that is analytical and the main player is the analyst.

Reference list

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Elcock, H. (1996). Managing the new public services. New York: Macmillan.

Hammer, M. & Champy, J. (1993). Reengineering the corporation. New York: Harper Business.

Kazmi, A. (2008). Strategic Management and Business Policy. New Delhi: Tata Macgraw hill.

Learned, E. P., Christiansen, C. R., Andrews, K. R., Guth, W. D. (1965). Business policy: Text and cases. Homewood, IL: Irwin.

Levinson, J. C. (1984). Guerrilla Marketing, Secrets for making big profits from your small business. New York: Houghton Muffin Co.

Mintzberg, H., Ahlstrand, B., and Lampel, J. (1998). Strategy safari: A guided tour through the wilds of strategic management. New York: The Free Press.

Mintzberg, H (1989). Mintzberg on Management: Inside our strange world of organizations.New York: Free Press.

Moore, M. H. (1995). Creating Public Value: Strategic Management. Cambridge: Harvard University Press.

Pine, J. & Gilmore, J. (1999). The Experience Economy. Boston: Harvard Business School Press.

Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.

Porter, M. E. (1985). Competitive Advantage: Creating and sustaining superior performance. New York: Free Press.

Toffler, A. (1970). Future shock. New York: Bantom Books.

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