The Importance in the Investigation of 5Ps of the Process of Strategy - Essay Example

Introduction According to Mintzberg (1987a), there is an importance in the study of 5Ps of the process of strategy making that can be present in any organization. It is essential to recognize that the 5Ps started as just a conceptualization of strategy making process but now it has been recognized as the strategy making process itself. In this essay, we argue that the 5Ps captures all the aspect of strategy making process although it presents an incomplete view of the topic. First the essay will discuss the 5Ps and then suggest why it represents an incomplete view under each of the Ps and afterwards a discussion will follow. Plan Strategy formation is seen as a conception process in planning. Plan represents the alternative course of action, a set of guidelines to deal with situations (Mintzberg, 1987a). Strategy encompasses leaders establishing organization direction based on a course of action that is predetermined. This means that planning involves integrating the whole set of decisions and formalizing them before implementing them. Planning is executed through systematic process that characterizes the planning aspect. Taking Coco cola Inc, as an example of corporation, it has acquired growth through acquisition strategy. This has been one of the major plans by the corporation to achieve competitive advantage. Mintzeberg (1987) suggested that explicit and systematic procedures if followed may surface strategy making process. This may be achievable through formulating a plan. The organization needs to position itself by ensuring its strategy making is driven by being ahead of the competitors. This is in other words is known as positioning strategically. Regarding perspective, strategy making is guided by the meanings that come along with particular practices and behavior in an organization. Boyd and Reuning (1998) attempted to come up with planning operationalization and with regard to this tested empirically some indicators of a consistent plan such as statement showing the mission of an organization, trend analysis, ad organization’s competitors’ analysis, the long term and short term goals, and evaluation of ongoing operations of an organization. This planning model has been tested and proved to be valid and reliable. It thus clearly shows Mintzberg’s view as incomplete. In order to strategically, reach a better quality of outputs, managers are guided by appropriate methodologies and analytical tools. According to Zahra and Dess (2001), these analytical tools take the form of SWOT analysis. These abbreviations stand for Strengths of an organization, its weaknesses, Opportunities and the Threats that may come along the way. Each step of SWOT analysis is then articulated with the objectives and aims of the organization and then sealed at the last stage with routine plans and budgets. Position Formation of Strategy is viewed as a process which involves analytical procedures. The organization is placed in the context of the industry it is in, and also gives an overview on how the organization can achieve an improvement within the industry it is operating with regard to strategic positioning. Strategy can be equated to generic strategic positions which are chosen though a formal analysis of the conditions existing in the industry (Mintzberg et al., 1998) In general terms, positioning may be taken to mean the position an organization places itself regarding external and internal environment, external environment being the major focus for example market structure driving positional strategies that are intended (Mintzberg et al., 1998). Mintzberg, (1987a) only suggested that position only externally defines an organization. Positional strategies will thus be taken to be the force to link force between environment and organization and also link force between internal and external environments. Strategy helps companies to be positioned in such a way that they meet competition or avoid it. Coping with competition is the reason for companies formulating strategies. According to Hax and Majluf, (1984), the meaning of being situated in a true leadership position is significantly having a competitive advantage. The organization need to be able to defend itself against any threat of competitors like having a bargaining power both to its customers and suppliers, and also be able to influence these forces to its favour. Every organization occupies a market niche. A market niche is a good example of strategic position. The purpose of a market niche is to help the organization to shelter itself from the existing and potential competitors. Mintzberg (1987a) suggested that strategy is a descriptive idea that is inclusive of an organization making a choice of a market niche and the main rules to aid in coping with the market niche. An organization needs to be a cost leader. To have cost leadership, an organization should have access to raw materials at the lowest cost possible, use resources available in the efficient possible way, spend the lowest expenses in advertising and have tight control of overhead and other costs. The organization will thus channel its resources in terms of reinvestment in new technology and this will help the firm in achieving cost leadership. Product differentiation refers to producing goods and services that are unique in the market and superior in terms of brand, technology, service to the customers, and its features. Product differentiation makes goods and services win customer loyalty, increase profit and overcome the entry barriers to the market (Segev, 1989). The focus will be both to cost and differentiation so as to enable the firm to be efficient and effective than its market competitors who are capable of attacking from every angle. Differentiating a product or a service enables a firm to develop a brand that is superior and enhance its image. Perspective Viewing strategy making in a perspective dimension, strategy formation is a process that is collective with its roots being the culture. Mintzberg, (1987a) referred perspective as culture. Strategy formation is thus a socially interactive process based on members of an organization understanding on each other and also their beliefs. Perspective is based on interests that are common in nature and integrating thus is shared among the members of the organization. Culture in actual sense integrates the entity, in turn becoming the mind of the organization created out of cognition that is collective (Mintzberg et al., 1998). The vision of an organization and its values defines its culture to which perspective relies on. Culture consist resources with physical existence and those that are intangible and lay the foundation of perspective mode of the process of strategy making. If utilized efficiently and effectively by a company can offer the greatest benefits and put the organization in a better position to beat its competitors. According to Covin and Slevin (1991) structures in an organization and strategic decisions get influenced easily by the philosophies of the people making the strategies, values and beliefs. In perspective view point, strategies are abstractions that can only be found in the mind of parties interested to an organization. Those who engage in these abstractions get interested in their pursuit or get influenced by observing others doing it. Considering this situation, culture is attached to the operations of the company that may spearhead or frustrate the strategies formed. Ploy Strategy is a negotiation process. Strategy can also be referred to as power (Mintzberg and lampel, 1999). Mintzberg (1987a) suggested that strategy gives a direct competition and every advantageous step is taken for survival. The ploy as a mode of strategy making is based on bargaining power and ability to negotiate of the executive, strategic decision making politics, and the role played by coalitions that come into play in strategic management (Hax and Majluf, 1991). Power should not be ignored while making strategies because they not only revolve around organization but also act as an infusion to them (Mintzberg et al., 1998). Ploy represents politics that are among the parties with goals that are conflicting involved in strategy making and also includes arrangements of cooperatives. Ploy therefore, focuses on fragmentation of an organization and self interest of the conflicting parties. Pattern Pattern can be defined as actions being consistent which are driven by an organization’s CEO. Vision is the guiding principle as it plays the most critical role in strategy formulation. Strategy formation is thus a process that is visionary according to Mintzberg et al., (1998). The vision can be initiated by one great leader who might be founder, manager who may be employed in an organization which could be a corporation. An organization’s strategy are ideally made in a leader’s mind and afterwards put into action and this individual exerts authority. Mintzberg (1987a) argued that the strategy formation is influenced by only one person who has the key to making decisions. The organization then makes moves according to what the influencing individual wants. The rest follows the decisions that are made by one or more gifted decision makers. Pattern lays emphasis on judgment, experience, insight and wisdom of some specific talented individuals (Mintzberg et al., 1998). A leader’s skills and knowledge of the operations of an organization is one of the main characteristic of the pattern mode of strategy making. It is the leader’s intuition being based on wisdom that is the driving force. A strong leader who exerts authority can provide clear directing vision that is complete and allows flexibility for adjustments and reworking on that vision. Vision is capable of being detected though the pattern of the steps taken by entrepreneurs and their style of operation which is a staircase of emerging strategy. Patterns may be detected but according to Eden and Ackermann (1998), opportunism makes it hard for the organization to achieve its objectives and vision. According to Mintzberg (1987a), pattern appears without preconceived notions and developed without intentions. There is little or no planning and the time limits are short focusing on the operation of the matters rather than the developed master plans. Strategies revolve around the implicit, vague leaders’ vision but mot formally and explicitly elaborated. Pattern is one of the entrepreneurial strategies which are described by Dess et al. (1987) to be characterized by experiments, taking risks, seeking of available opportunities, being innovative and taking decisive actions being spearheaded by a strong leader. Strategy is thus dominated by searching of any new opportunity, the orientation being active instead of passive. Growth is the main goal of pattern mode of strategy highlighting three key aspects that is, nature that is proactive, the role of personal leader, and the strategic vision (Mintzberg et al., 1998). Discussion on why 5Ps for strategy are incomplete This argumentative essay has the intention of trying to invent a new description to the misunderstood concept of strategy formulation process in an organization. A strategy is not itself a fixed plan. Systematically, it does not change at the will of the management. The word ‘formulation’ is misleading because we refer to strategies as many patterns in the decision of an organization that are formed without thoughts that are deliberated consciously. In an organization with aggressive bureaucracy and uncertain environment, it is risky to make explicit strategies because the plans may tend to become actualized. The term strategy from Henri Mintzberg 5Ps has been defined in many ways always with a theme that is common. It is a set of guiding principles that are determinant of the future. In management, strategy determines the long term goals and objectives of an organization, adoption of a course of action, and allocating the required resources needed to carry out and achieve the objectives. According to Mintzberg (1987a), 5Ps of strategy making is incomplete for the organization and also not operational for a researcher. They conceal and hide one part of the bahaviour of decision making by an organization that can be considered strategic. Strategies are also restricted to be explicit and a priori guidance. It henceforth, forces study by researchers regarding strategy formulation to be a phenomenon that can be described as perceptual reducing the conclusions to an abstract made of normative generalizations. There is a sixth and seventh Ps to be added to Mintzberg’s original list namely power and politics. The ability to have and use power, to manage political behavior plays a key role in strategic management process. A firm must be in possession of key strategic assets and emphasize on the need to sustain the sources of its competitive advantage. Mintzberg (1987) 5Ps of strategy do not discuss the main levels of strategy. A company like Coco cola by acquisition followed the strategy of growth by adopting corporate strategies. Strategies that occur at product level or business unit level are referred to as business strategy. Apple computers emphasize innovative products with superior designs. This is differentiation competitive strategy. Other types of strategies are Functional and operating strategies. They are departmental and are concerned at providing the firm with competitive advantage. Conclusion From the essay, it is notable that there is importance of multiple strategies rather than a single strategy. This brings the need of advancing the Mintzberg’s 5Ps for strategy (1987a) to make it an integrative framework. Plan integrated with both position and perspective will give exhibit innovation mind, taking risks and being proactive. When position and pattern are together, they influence competitiveness. Plan and perspective tends to impose a greater autonomy in an organization. Plan and position with perspective is thus brought out as the major predictors in multidimensional strategy making. Poly is absent in the whole equation and this brings out the incomplete nature of Mintzberg’s 5Ps for strategy. Lastly, position and plan with perspective acts as influencers to risk taking. Susceptibility to failure is therefore, high when risk component is involved. Lack of strategy implementation can thus be felt in the 5ps for strategy which is a great aspect of strategy. Reference list: Azhar, K. 2002. Business policy and Strategic Management, Tata Mc Graw Hill, New Delhi. Boyd,B., Reuning-Elliot, E. 1998. A measurement model of Strategic planning. 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Zahra, S., Dess G. 2001. Entrepreneurship as a field of research: Encouraging Dialogue and Debate. Academy of management Review, 26:1, 8-10 Read More