Advantages and Disadvantages of Henry Mintzbergs Prescriptive Schools of Strategy - Essay Example

Advantages and Disadvantages of Henry Mintzbergs prescriptive Schools of Strategy Henry Mintzberg, a theorist from Canada and a developed ten strategic approaches in business management strategy which have significantly helped managers in effective planning and running of organisations. These are approaches under which a plan of action can be construed and formulated from in order to achieve the organisation’s set objectives in the competitive market industry. A strategy can be defined as laid-down measures through which actions are undertaken to accomplish a particular task and achieve objectives (Koontz, 2010:18). The management team is tasked with formulating ways through which the organisation can succeed with the use of available resources to beat the rest in the industry and meet set goals. Strategic management is essential and is guided by structured perspective ideas known as schools of thought as conceptualised by Henry Mintzberg. This paper aims as critically assessing and analysing the ten prescriptive schools of thought in strategic management as proposed by Henry Mintzberg and determine the merits and demerits of each so as to appreciate which is best for what situation. Design School According to Kim et al. (2005:117), this school of thought focuses on instrumentation in which strategic management is based on using implements and equipments that are aimed at evaluating the company’s environmental factors both from within and without. It provides for doing an analysis into the organisation using the tools that are at its dispensation. According to this perspective, an organisation is expected to construct a clear, strong and relevant build-up through using analysis such as SWOT. This enables the firm to evaluate and determine potency, flaws, risks and chances that it is exposed to thereby making it plan in consideration to these factors. This makes strategists become aware of the state of the company both internally and externally within the environment such that they can be matched with the available resources to achieve the best results (Bilton, 2010:231). For instance, a multi-national organisation like Subway which deals with fast foods need to design its strategy in such a way that they know what opportunities they are exposed to in the market, what can cause them hazards and what their weaknesses and strengths are in order to best achieve their objectives (Kim, 2005:119). Advantages and Disadvantages of Design School This perspective is very important because of the weight it gives not only to the factors interior to the organisation but the external too. Stiff competition is affected by both the internal and the external factors, therefore, prominence given to the external as well makes the organisation be on the look-out from all corners This synchronisation between the external and internal business environmental factors make it possible to make decisions that will positively impact on performance as the organisation operates on a platform that it best understands. It is very well applicable to organisations that are in a non-changing state as the analysis can be easily done. The need to design strategies is most welcomed in those firms that require ‘once-for-good” complete change in which every aspect of the organisation is evaluated at one particular time. However, it limits workers’ originality and novelty as it champions for stability. It is not useful in an environment that records progression and dynamics (Lockhood, 2010:112). The nature of this approach does not allow time to time change and it is only needed when a complete re-orientation of the firm is necessary. It, therefore, limits the need to introduce or innovate other ways of operations within the organisation (Bryson, 2011:99). Planning School This strategy is linked to and embedded on the ‘goal-based strategic planning model’ that analysis the available resources, formulate objectives and draft the process of implementation to achieve the results (Barksdale, 2006:116). The steps of goal-based strategic planning models are followed and include: setting up a purpose, objectives and visions then developing the right framework to realise them, consolidating the organisation’s mission and vision plus the set objectives into a document and monitory management of the process designed for mission accomplishment. It is a strategy that appreciates change and the need for creativity in working towards the accomplishment of tasks in an attempt to make things work. It champions for developing ‘formal strategic business plans’ that are well thought through aimed at guiding the decisions of the management team. Subway Company when using this strategic approach will focus on setting formal plans that will guide in evaluating the process they need to follow such as management structure formation, production among others that will make them succeed in the industry. An example is the Turkish Airline that uses the famous footballer Messi as their promotion pillar as the footballer is known all over the world. This is a strategic plan that the Turkish Airlines used in order to appeal to those who recognise this football icon to identify themselves with the company as well. Several other plans have been used as philanthropic projects and charity missions as used by Microsoft founder, Bill Gates, that are aimed at increasing the company’s influence amongst the target group ( Kim, 2005:91).. Advantages and Disadvantages of Planning School The school is of much advantage compared to the ‘design school’ due to the fact that it allows for creativity and dynamism in the business environment (Kim, 2005:108). Those people who are planning can analyse and strategise early enough the course of action that the business intends to follow so as to avoid future risks and losses (Kim, 2005:111). For example, a company like Subway can plan on how to maximise its profits by engaging in production of new advanced products such as cocktail juice. Subway has done well in the competitive global market because of the right strategic plans that it has developed in the past to see off their competitors and add customer loyalty to their brand by introducing services such as ‘face-face production’ in which the customer is blended for the juice that he/she needs right on the spot. This continuous change of plans when new ideas are developed makes a company flourish more than those that are rigid to their old ways. However, it is disadvantageous when the focus is put much more on the procedure involved in production that the final product. It emphasises on the efficiency rather that effectiveness. The main aim of an organisation is to achieve the results that are beneficial to it and sometimes the process does not so much matter. It, therefore, becomes unfortunate when a lot was invested in the process but good results have not been achieved (Kim, 2015:99). Positioning School This is based on strategising the ‘position’ the firm has both in the business sector and in the minds of its target group (Kim, 2005:98). It involves working to give a different but effective perception of the company brand into the minds of the potential buyers. This is strategy is ‘war-like’ that is based on the military conception that the image one has against the opponents will greatly determine its chances of success or failure. For example, a firm may feel discouraged from entering an industry when it will keep a low production image in comparison to its competitors. This approach is embedded on the notion that image in the market is very important such that it influences the company’s performance. For instance, a company like Toyota can benefit more from positioning because they are known to produce even big vehicles. The psychological impact that a company creates both on the industry in which it operates and on the target group is very important. This should be carefully considered when putting up a strategy. This is what the position approach is focused on as it gives an outlook that would enable the company survive and outdo its potential competitors while at the same time increasing its market influence (Kim, 2015:121). Advantages and Disadvantages This strategy benefits those firm that are already big and need to expand more in terms on production and market capture as continued investment of resources in production will further their market influence. The approach’s stress on the need to compute ways of market success and evaluate critically on the image it gives on the outside is such a useful style in the management strategy as it exposes the firm to the psychological position of the company and the outside world (Kim, 2015:119).. However, it work against the disadvantage of small firms which lack the resources for great expansion since the aim is to appeal to the market and industry about the firm’s new achieved production prowess. How Organisations May Achieve Competitive Advantage and Make Competition Irrelevant By Using Reconstructionist Strategy Reconstructionist approach is based on winning competition in the market when the organisation has few or low supply of resources and the nature of organisational structure are not conducive. It is about surviving in a hostile business environment using limited resources. The structural conditions within an organisation are critical in influencing the competitive forces around the organisation. The need to regulate cost- value relationship arises for an organisation to survive these conditions (Galbaraith, 2007:100). Costs have to be reduced while at the same time raising the product value so as to attract the customers in the market. In an industry where the competitors/ rivals are well-ensconced and established, it takes better strategies to outdo them with the little resources that are available for an organisation. Adopting a Reconstructionist strategy, an overwhelming competitive advantage can be achieve and render other players irrelevant if it is properly applied (Hill, 2005:123). According to Wittmann et al (2008:97) ,an organisation may be restrained by the unavailable structural resources such as human workforce, limited capital, and low supply of resources among others but can still emerge and compete well if good strategies are put in place. There are two situations in the market place that an organisation may face; one is where the market is also laid and there are several firms within the industry that produce the same products. The competition is already outlined and regulations and laws regarding to the competition have been formulated. Firms, therefore, enter the industry when they are well versed with what is expected of them and how to conduct themselves (Stelzner, 2011: 23). In such cases, the conditions are usually very hostile and competition is high so unless an organisation has the right strategies, it may not compete fairly and sustain itself in the industry (Siegemund, 2008:142). This has been described as ‘Red Ocean Strategy’ as the market has been exploited already and the company is set to enter and sustain in a market that projects low profits due to many players. On the other side is the ‘Blue Ocean Strategy’ which is used to render competition irrelevant. This strategy is used when a company develops a new product and the market is set anew. It involves value innovation which other firms had not thought of and, therefore, the competition is not necessary due to the fact that new products have been innovated creating a new unexploited market. Here, the rules for competition have not yet been made hence the name Blue Ocean due to its cool and non-conflicting competition nature (Siegemund, 2008:145). Value Proposition Through using the recontructionist strategy, the firm gets to produces products that are of high quality that are supplied to the customers at no extra cost. This is a utility that the customers enjoy when Blue Ocean Strategy as it aims at innovating new products probably a combination of several items to bring out a uniquely super-standard commodity. It, therefore, works to the advantage of the buyer when Reconstructionist strategy is adopted by the company (Siegemund, 2008:88). Profit Proposition Generation of the highest revenue possible in the industry is what all companies exist for and using this strategy means the products will attract a large volume of customers due to lack of competitors and high value of products. This, therefore, translates to increased profits due to the low cost of operations. This is not including the production and distribution cost (Kaplan et al., 2008:156). People Proposition To make this Blue Ocean Strategy work, those who are working in that particular company needs to inspire and reinforce since change is usually resisted by most people. Some token and incentives, therefore, have to be put in place to ensure this. When this strategy is worked on as a team with highly motivated staff, innovations and inventions are usually enhanced leading to effective productions (Chakravarty et al., 2005:77). Value Innovation The Reconstructionist strategy is based on the need to create new-fangled markets that have not been identified by the competitors. It is about restructuring the environment and constructing markets that never existed before so as to have an upper hand in the industry. Value innovation is step that companies take to make sure that the limited resources that they have can produce for them products that are unique and anew at low costs (Ross eta al., 2006:77). Consider the football industry in the United Kingdom where football clubs are competing to make profits through sale of tickets and revenue generated from winning trophies and cups as well as sell of players. Looking at this, the industry is already filled with fierce competitors such as Chelsea, Manchester United, Manchester City, and Arsenal among others. The Reconstructionist strategist, therefore, would generate new markets that would make them have added advantage over their opponents by creating opportunities in the market that will reduce their cost of production while at the same time increasing the value of the products (Ross eta al., 2006:79). For example, if Chelsea club management teams decide to open a football manager’s training college just for English football still within the industry of football, something that its competitors never do while at the same time reducing the cost involved and maximising the profit then it renders competition in this market irrelevant. Through value innovation, the costs are reduced while services are enhanced (Schermerhorn, 2006:219). To achieve a competitive advantage over competitors, the revolutionist strategy enables the company to increase value of the product that translates into more customer base due to quality products, the firm will accrue high profits since the number of customers have increased and high performance by the workers due to the improved changes that have been witnessed. These put a company at a ‘high advantage table’ against its competitors (Mcloughlin, 2010:167). ‘’Creating New Markets and Reaching Current Demand’’ The blue Ocean Strategy enables companies to exploit other avenues within the market industry not yet contested. Blue Ocean strategists’ believe that out there exist markets that have not been explored and identified and it is important to create new ones. Sometimes competitions can be so stiff that good strategists should be able to tap out new opportunities so as to stay away from the raging competition atmospheres (Gibbs, 2009:133). Attention is diverted from the Red Ocean Strategy that involves competition to creating new markets through value innovation. A company will have an advantage in the competition because it is not facing competition in the first place because of the new markets it has reached which never existed in the first place after innovating new products and developed new markets. Competition in this case is, therefore, irrelevant as it does not even exist due to the monopoly the firm is enjoying (Porter, 2008:46). Companies that have Implemented Reconstructionist Strategy A company such as TATA Motors embraced Reconstructionist strategy in which they produced a unique car called “Nano Twist ’’ a move that shifted them away from the highly busy and competitive motor vehicle industry. This car is obviously the most affordable ranging from $3000 to $3500. This is relatively the cheapest motor vehicle in the whole world and it has attracted very many customers. Of advantage to the producers is that it is manufactured using low cost resources thereby reducing the operational and production cost (Gilbert et al: 2013:66). This has drifted away TATA Motors from the many competitors it would have been competing against thereby giving it a competitive advantage. Competition in this ‘small cheap car’ industry is rendered irrelevant as this is a new market that has just been tapped by TATA Motors. The company, therefore, enjoys these benefits of market competition due to this innovation. Its profits have also grown up due to the low production cost incurred. The customer’s demands have also been met with the recognition that there so many individuals out there who needs cheap and small vehicles to move around with. Significantly, people’s proposition is taken care of as the employees’ level of morale and motivation as they work in this company is high due the result the Reconstructionist strategy has created. They, therefore, are more likely to work even harder to produce wonderful performances. TATA Motors, therefore, has greatly benefited from this Blue Ocean Strategy by creating a differently unique market through value innovation (Gilbert et al: 2013:67). Consequently, China Mobile is another company in the mobile technology industry that keeps on exploring new markets by coming up with new innovation most often so as to avoid direct competition with its rivals (Wiliamson, 2013:32). It keeps on tapping into new ‘lands’ that have not been identified by combining existing technological knowledge in mobile industry to come up with unique products that amazes the customers at relatively low costs. This it does by exploring those living in the non-urban areas as its market by supplying them with products that cheap but valuable. This has made it record a high profit of about $10.75 in a short period of time (Gilbert et al, 2013:70). Conclusion As demonstrated in both essays, effective strategic management is very vital in the success of an organisation. Strategy forms the platform or ladder through which a company rises to success considering the fierce environmental forces and restrictive structural factors that the organisation faces along its ways to achieving its mission and realising its vision. It is upon the management to decide on what school to subscribe to. A combination of some of these schools of strategy may sometimes be applied when the organisation needs to be looked at from myriad viewpoints. Considering the Red Ocean Strategy and Blue Ocean Strategy, it is evident that to sustain and succeed in a stiff competitive market environment, extraordinary measures must be undertaken and that includes exploiting new markets through value innovations in which low cost are incurred while producing valued goods. This gives a firm an added advantage and renders competition irrelevant. References Barksdale, S. & Lund, T. (2006) 10 steps to successful strategic planning, Alexandria, Va, ASTD Press. Bilton, C. & Cummings, S. 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