Potential Advantages and Disadvantages of the Formal Rational Approach to Strategy Development - Essay Example

The formal approach to strategy development consists of a controlled process that has distinct procedures for decision making with identification and analysis of the current state, development of strategic alternatives, identification, and implementation of an appropriate initiative, and evaluation of the alternative as the major steps. The approach is also structural with a top to down hierarchy for decision-making and assumption of responsibility. While middle-level managers implement decisions in the approach, full responsibility remains with the top organs of an organization’s structure. Developed strategies, from the approach, are also detailed and cover wide scopes. One of the advantages of such a bureaucratic approach is the cost-effectiveness that arises from the organization because only necessary steps and necessary personnel are involved in the strategic development process. This makes it affordable and allows for the utilization of saved resources in other areas of an organization’s needs.

The formal approach is also associated with an efficiency that could arise from a focus on a few individuals in the process and continuous involvement of the individuals in the process, a factor that identifies benefits of specialization. Efficiency promises quality decisions for effective strategies towards supporting desired objectives. Related to the efficiency advantage is the speed with which the formal approach can yield desired strategies. with well-defined structures and specific and specialized personnel, the decision-making at the different stages of the approach is faster and is, therefore, able to respond to emergency needs. Other advantages of the bureaucratic approach are its stability and continuity. These are because the formal structure eliminates possible barriers such as internal resistance and it is easy to replace a member of the decision-making team for the sustainability of a strategy development process or a developed strategy.

Disadvantages of the formal approach to strategy development
One of the disadvantages of the formal rational approach is its concentration of power in the hands of a few people, and this could be risky if the individuals lack necessary competence or have a conflict of interest. The bureaucratic scope of the approach also means possible implementation of poor strategies or decisions because decisions at higher levels bind people at lower levels of an organizational structure. The bureaucratic approach is also likely to induce time inefficiency because involved parties are likely to format their schedules to fit the allocated time even if lesser time could be used. The structural approach may also focus on merit in promotions and decision-making and instead undermine creativity, a factor that could undermine the development of highest-quality strategies. In addition, the formal approach is likely to extend to people’s social lives and therefore degrade the quality of life because of the involved rigidity.   

ConclusionThe formal rational approach identifies a bureaucratic approach that could threaten outcomes because of possible conflict of interest at higher levels of an organizational structure and restricted creativity at lower levels. Inefficiency and adverse effects on social life are other disadvantages but such advantages as cost-effectiveness, efficiency, speed, stability, and continuity are more significant because the identified disadvantages can be managed within an organization. The formal rational approach is therefore recommended because of the significance of its benefits.