Schools of Strategic Management Thought - Essay Example

Two Schools of Strategic Management Thought: ENVIRONMENTAL and CULTURAL are chosen to be critically discussed in an essay Introduction The expansion of globalisation worldwide has led firms to develop strategic plans that could help them to stabilize their position in the market and keep their competitiveness towards their rivals. Traditionally, strategic management has been aligned to the needs of businesses as these needs are differentiated within markets of different social, political, economic and technological characteristics. Theorists that have studied the specific field developed a series of theories that could be used for supporting the strategic planning of businesses in various market conditions; these theories have been included in particular theoretical frameworks also known as Schools of Strategic Management Thought. In accordance with Volberda et al. (2001) ‘a School of Thought is understood to be the range of thought of a specific group of researchers, which has crystallized within the field of strategic management’ (Brown, 1993 in Volberda et al., 2001, p.1). This paper focuses on the examination and the evaluation of two of these Schools: The Environmental and the Cultural Schools of Strategic Management Thought. It seems that these two Theoretical Schools have many common characteristics addressing similar business needs; on the other hand, their strategic tools are likely to be differentiated – under certain conditions – as they are related with particular elements of the internal or the external organizational environment. 2. Environmental and Cultural Schools of Strategic Management Thought – Origins and framework The Environmental and the Cultural Schools of Strategic Management Thought belong to the Schools of Strategic Management Thought that are known as Descriptive – as differentiated from the Prescriptive Schools of Strategic Management Thought, which consists the ‘Design, Planning and Positioning Schools’ (Sadler, 2003, p.15). The key characteristic of the Environmental School of Strategic Management Thought is that business is considered as closely depended on its environment – being unable, in a way, to take initiatives that would support its various activities. In accordance with Sadler (2003) the specific School of Strategic Management Thought is based on the contingency theory. In this context, it is noted that businesses that are influenced by the Environmental School of Strategic Management Thought have the following characteristics: a) their strategic decisions are likely to be influenced by the organizational environment, b) all organization’s decisions and activities need to be aligned with the environment, c) the leaders of these organizations do not have power to act independently; rather they should focus on identifying the conditions of the organizational environment and ensure the alignment of the business decisions with these conditions, d) businesses that follow the rules of the specific School of Strategic Management Thought are finally become unable to keep their identity and to realize their goals; this result to the gradual loss of the power of the organization to face the environmental conditions – which are likely to become hostile; in the long term, this phenomenon could lead the organization to stop its operations. In accordance with Matthews (2005) the Environmental School of Strategic Management Thought is based on ‘strategy formation as a reactive process’ (Matthews, 2005, p.29). The origins of the Environmental School of Strategic Management Thought can be identified in 1960s when the strategic management became an academic field (Drejer, 2002, p.1) – a fact that resulted to the development of a series of theories interpreting the strategic decisions of organizations in different industrial sectors; the above phenomenon is made clear in the work of Mintzberg (1999) who studied the theories developed in the strategic management field and categorized them in accordance with their characteristics (Drejer, 2002, p.1). As for the Cultural School of Strategic Management Thought, this is based on different rules and theoretical approaches; the origins of the specific School of Strategic Management Thought can be identified in the work of Pettigrew (1985), Rhenman (1973), Normann (1977) and Kotter (1992); the above theorists have tried to describe the key elements and characteristics of the organizational culture and came to the conclusion that under the common market conditions, the culture of organizations is likely to be related with specific traditions and habits – as developed within the organization – being expressed as ‘a series of tangible manifestations as stories, buildings, the way employees address each other and so on’ (Sadler, 2003, p.21). In the context of the Cultural School of Strategic Management Thought, organizations are expected to develop the following characteristics: a) all organizational decisions are based on the social framework applied on the particular organization – referring to the values to which the organizational decisions and operations are related, b) employees need to adopt the values and the beliefs on which their organization is based; the specific process is characterized as ‘process of socialization’ (Sadler, 2003, p.21) which can be pre-designed – in terms that all employees of the organization have to follow the suggested process of socialization – or it can be differentiated among employees of different organizational levels, c) usually, the employees that participate in the above process have not fully understood all aspects of these beliefs and values – even if they are – kind of – obliged to adopt them, d) the intervention of culture in the development of strategic organizational decisions is not decisive; this means that the influence of values and beliefs on organizational plans can be limited – not having the power to lead to changes of strategic business decisions (Sadler, 2003, p.21). 3. Strategic tools that are developed from or used within these Schools of Strategic Management Thought In the context described above, Environmental and Cultural Schools of Strategic Management Thought are based on different strategic tools; in the Cultural School, the collectivism is strongly supported across the organization (Kozami, 2008, p.19); it is through the specific strategy that the rules of the Cultural School of Strategic Management Thought can be achieved. Other strategic tools of similar scope would the ‘customer-relationship management and the benchmarking’ (Carsrud et al., 2007, p.77). On the other hand, in the Environmental School, the conditions of the environment are used as a basis for the development of strategic organizational decisions (Kozami, 2008, p.19); the strategic tools chosen for the implementation of the rules of the Environmental School in a particular organization can be differentiated in accordance with the resources available and the willingness of the employees to participate in these initiatives; examples of such strategic tools are the following ones: ‘total quality management, SBU-thinking and net-working/ strategic alliances’ (Carsrud et al., 2007, p.77); in any case, leader has a key role in the identification of the strategy that would be most appropriate for aligning the organizational plans with the conditions of the organizational environment. 4. Critique of Environmental and Cultural Schools of Strategic Management Thought – Relationship In accordance with the issues discussed above, the environmental and cultural Schools of Strategic Management Thought have a series of common characteristics: a) they both focus on influencing the strategic decisions of organizations, b) they exclude the co-existence of different theoretical approaches – referring to the theories and rules on which strategic business decisions can be based and c) they usually lead to the limitation of the power of organizational leaders to take initiatives and proceed to changes on existing organizational strategies. In other words, both these Theoretical Frameworks can cause delays to the development of organizations within their market keeping their strategies depended on rules that cannot be changed in order to be aligned to the market trends; this is particularly a problem regarding the Cultural School of Strategic Management Thought which emphasizes on the dependency of strategic business decisions on organizational tradition and beliefs – no matter if these they need to be changed – under the influence of the changes in market trends, customer preferences and the technology available for the realization of business plans. At this point, the Cultural School of Strategic Management Thought is differentiated from the Environmental School of Strategic Management Thought; the latter allows for greater independency in regard to the strategic decisions developed within a specific organizational environment – which is likely to be changed requiring the change of the organization’s strategic decisions. The difference between the Environmental and the Cultural School of Strategic Management Thought can be also identified in the fact that the former regards the ‘strategy formation as a reactive process’ (Matthews, 2005, p.29) while the latter is based on ‘strategy formation as a collective process’ (Matthews, 2005, p.29). 5. Environmental and Cultural Schools of Strategic Management Thought in Practice Modern organizations have adopted the rules of Schools of Strategic Management Thought; this adaptation has based on specific criteria: the principles and the rules adopted need to be appropriate in terms of the organizational aims and vision; they should also be related to the organizational environment – referring especially to the internal organizational environment, i.e. to the resources available for the realization of strategic business decisions but also to the expected responses of employees to the suggested organizational plans. A characteristic example of a modern firm, the strategic management of which has been influenced by the rules of the Schools of Strategic Management Thought is IBM; the above organization has developed a strategic framework, which is strongly related to the rules of the Cultural School of Strategic Management Thought; in fact, because of the strong influence of culture on the firm’s strategic decisions, the introduction of PCs as part of the firm’s operations was delayed (Sadler, 2003, p.22). In the specific case – taking into consideration the role of PCs in the development of this firm’s activities – the principles and the values of the Cultural School of Strategic Management Thought have been an obstacle for the expansion of business operations; if a different strategic decision framework was adopted or if the specific one was further processed – being aligned with the actual organizational needs and characteristics – the phases of development of IBM would be differentiated – leading also to the earlier introduction of PCs in the global market. 6. Conclusion The strategic decisions of organizations worldwide need to be based on specific rules and principles ensuring their feasibility but also their appropriateness in terms of the organizational aims and vision. Theorists that have worked on the specific field have introduced a series of different theoretical approaches on which organizational strategies can be based – ‘the industrial organizational tradition and the institutionalist perspective’ (Jashapara, 2004, p.178) are examples of such initiatives. In the context of the Schools of Strategic Management Thought examined in this paper – referring to the Environmental and the Cultural Schools of Strategic Management Thought – it has been revealed that theory can support organizational activities – including the development of strategic decisions; however, the effects of this relationship are not always positive; in fact, if the theory employed in the development of a firm’s strategic decision process is not appropriately aligned to the organizational characteristics and vision, then it is likely to cause delays to the realization of organizational plans. The Environmental and the Cultural School of Strategic Management Thought propose a series of valuable rules in regard to the strategic decision making process of organizations; however, their involvement in the strategic management process need to be carefully planned and monitored emphasizing on the support of organizational vision and aims – rather than on the continuation of various theoretical approaches which may be valuable in supporting organizational activities but they may cause delays to the organizational plans – especially if they are not appropriately adopted to the organizational needs and targets. Bibliography Breuer, M. (2010) Socio-Cognitive Dynamics in Strategic Processes. BoD – Books on Demand Carsrud, A., Brannback, M. (2007) Entrepreneurship. Greenwood Publishing Group Dettmer, W. (2003) Strategic navigation: a systems approach to business strategy. American Society for Quality Drejer, A. (2002) Strategic management and core competencies: theory and application. 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