The Differing Schools of Strategic Thought - Essay Example

The Differing Schools of Strategic Thought strategy development within companies in both the profit and not for profit sectors Introduction “Strategic planning refers to the process of determining a company's long-term goals and then identifying the best approach for achieving those goals” (www.invesotrwords.com). There are four steps in the strategic planning process – Where is the company at present? What does it have to work with, like resources? What does the company want to aim at? and How does it reach those goals? Strategic planning processes are varied and equally complex both within for profit and not-for profit organizations. Goals-based strategic planning is the most frequently used in both for profit and non-profit organizations though it’s basically focused on mission and vision of the organization (De Wit & Meyer, 2004). Next there is the issue-based strategic planning approach which essentially recognizes such parameters of strategic management as issues related to its existence and continuity. On the other hand organic strategic planning is focused on the company’s leadership and cultural values and is ultimately connected with the organization’s vision. Finally some strategic analysts discuss a fourth model called scenario-based strategic planning. However many scholars regard it as a technique and not a model. Therefore this paper would focus only on the first three models. 1. Analysis 1.1. Goals-based strategic planning: Nike (a) Where is Nike at present? It has been pointed out that Nike, a basically sports products manufacturer with market leadership in many segments including sneakers, has adopted goals-based strategic planning. Nike is a for-profit business organization and is basically focused on both market leadership and strategic competition orientation. Such a business organization when adopting a strategic planning process would necessarily be influenced by its strategic internal environment and the external competitive environment. Nike isn’t an exception to this rule. In fact its global operations are essentially determined by goals-based strategic planning. For instance its emphasis on the mission and the vision of the company’s top management and particularly the founder is highlighted by the company’s aggressive benchmarking success during the last few years. Nike’s top management has been more or less bothered about successful operations abroad, including Asia and Europe. These operations require a goals-oriented strategic vision. Nike’s global super brands are well known throughout the world and right now its global position as the market leader in some segments enables it to strategically outdo rivals. (b). Nike’s resource base and emergent strategic planning environment The mission statement of Nike is “To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete” (www.samples-help.org.uk). This statement is intended to inspire athletes throughout the world. With the appointment of Mark Parker as the Chief Executive Officer (CEO) of Nike, the organization has yet again proved to the rest of the world how much the top command of Nike places emphasis on its modern innovative approach to business growth and corporate success (Thompson & Martin2005). While its current functional level structure is less vertically integrated there is a broader horizontal level integration of both managerial functions and subordinates’ tasks to achieve a broader level of integration within the defined hierarchy. These organizational outcomes are essentially associated with Nike’s VRIO (value, rarity, inimitability and organization) framework. This resource-based view of the organization is perhaps the best indicator of what strategic planning process would do in enabling the organization to achieve its long term corporate objectives. Its resources are uncopiable by rivals. Productivity at Nike has increased roughly by three folds during the last two years alone. Its current market expansion programs in the Middle East and Asia have paid off so well due to the fact that its employees are called upon to contribute to the success of the organization through participatory programs such as quality improvement and productivity enhancement (Abosini,1998). The company has successfully implemented innovation-centric approaches to growth. In fact Nike’s many current drivers of growth, innovation and technology transformation are based on its organizational structure related cultural attributes such as empowerment of employees and performance-related pay. (c). What does the company want to aim at? As for the external environment of Nike as much as it has been affected by it, Nike itself has affected it (external environment) by being what it’s today in the international markets for sports goods. In fact the company has invariably transformed the external competitive environment for sports goods, including apparels. Its brand equity or brand value enhancement strategy has been the envy of many multinational companies (MNCs) the world over. Above all it has been affected by nothing less than the way in which competitors have been trying to differentiate their own products through much more innovative strategies. Adidas, another sports goods manufacturer, for instance, has unsuccessfully challenged Nike’s market leadership in some niche market segments (Lynch2006). Nike’s competitive edge in these market segments such as sneakers is a direct outcome of this strategic price and quality war in well protected market segments. China and India in Asia are two good examples. Therefore it’s feasible to consider the question “What Nike has been aiming at?”by looking at the strategic competitive environment in particular and the operational environment in general. Its productivity growth along with innovation has affected its rivals in a way that the latter have been almost unable to compete on the pricing strategy. Though Nike has been accused of adopting degrading work practices in its factories in Asia due to lower wages, the company has been able to remain price competitive against its nearest market rival Adidas. Indeed Adidas has been cornered by Nike in its own country, Germany where Nike is likely to win a contract to sponsor the German soccer team for an annual payment of $63 million as against what Adidas pays, $14 million. Thus the national soccer team of Germany would wear Nike shoes and other sports gear. (d). How does Nike reach those goals? Nike has also affected the global sportswear market significantly by shifting its competitive strategy away from niche marketing to mass marketing. Its exclusive sports gear enables customers to identify themselves with brand related values. This brand value creation is far ahead of what its rivals couldn’t do. Puma and Reebok all have been affected by Nike’s market orientation strategy. Its competitive edge in mass marketing in Europe and Asia has come at a substantial marketing drive. Analysts point out that Nike’s superior marketing knowhow has been the result of its organizational structure because it’s experimenting with different advertising campaigns for different market segments headed by regional managers (Mintzberg, Lampel, Quinn & Ghoshal, 2003). On the other hand its competitors have been basically depending on a central marketing campaign to achieve organizational success. Nike’s highly decentralized region-based operational structure has put it ahead of its rivals in every sphere of competition. In fact its own directors (10 in number) head different divisions at the Head Office and make frequent visits to regional offices and facilities. On the other hand the company has been affected by this environment of intense competition in the same way. Its corporate strategy and sustainability programs have been influenced by these outcomes. Environmental organizations have been tracking its operations in different parts of the world to check its conformance with sustainability principles. Above all its European operations to a larger extent and North American operations to a lesser extent have been affected by the kind of regulatory environments. EU regulations have been refined over and over again and such regulatory regimes have such a big impact on the organizational structure as much it has an impact on the culture. 1.2. Issue-based strategic planning: NGOs (a) Where is UNICEF at present? Non-profit organizations such as Non-Governmental Organizations (NGOs), charities and public corporations might adopt goals-based or issue-based strategic planning. Yet there are many NGOs such as the International Red Cross (IRC) and UNICEF which function simultaneously as charities and International Non-Governmental Organizations (INGOs). Issue based strategic planning is a common feature of these organizations because they don’t have corporate goals such as profits and market share. UNICEF has been able to achieve many of its organizational goals in keeping with its strategic vision of helping the children throughout the world. (b). UNICEF’s resource base and emergent strategic planning environment Though the UNICEF like any other UN agency is funded by contributions made by member governments there is a considerable effort to develop its own resource capabilities to achieve long term strategic goals. The UN agencies including the United Nations’ International Children’ Emergency Fund (UNICEF) and United Nations’ International Development Organization (UNIDO) have been very much involved in countries to eradicate poverty as non-profit organizations. These organizations prefer issue-based strategic planning though it cannot be denied that goals-based strategic planning is adopted by them (Johnson Scholes & Whittiongton, 2005). For example the Millennium Development Goals have been incorporated into their agendas at international level. UNICEF’s current issue-based programs include not only those related to the Millennium Development Goals but also many others such as actively seeking the intervention by governments, NGOs and international financial organizations in children’s welfare in the world. This agenda includes such issues as how best to keep children in the developing world in schools and prevention strategies aimed at reducing the impact of conflict on children. Thus non-profit organizations often tend to act in conformance with issue-based strategic planning in order to achieve organizational objectives. (c). What does the organization want to aim at? The strategic vision of the UNICEF includes such activities as the advocacy of children’s rights including those rights to life, basic needs and finally ensuring the focus of prime attention on children by the global community. Despite this issue-based approach of the UNICEF there are much less definable achievements because non-profit organizations have no defined organizational goals that can be directly identified with some strategic gains. In the absence of a strategic thrust in policy or planning process there cannot be a proper goal-oriented achievement as such. (d). How does UNICEF reach those goals? Though non-profit organizations like the UNICEF focus on poverty eradication among children they also have come through a number of hassles in the process. Poverty eradication is often their goal but at the same time they focus their attention on big and often controversial issues like pure and drinking water for all by 2010. Despite the strategically significant nature of this issue there is a very high level of politically charged intervention by third parties in these programs. For example economically nothing can be given free and everything including pure drinking water carries a price. Thus economics plays a much bigger role than organizational aims in non-profit organizations’ strategic planning process (Mellahi et al, 2005). 1.3. Organic strategic planning: Wal-Mart (a) Where is Wal-Mart at present? Wal-Mart has been particularly known for its strategic planning efforts focused on an organic strategic planning approach. Organizational leadership style and culture play a very significant role here. Wal-Mart has been a very successful retailing business even during the hardest of times like the current recession. Many American business organizations have faltered including those which adopted an organic strategic planning approach but Wal-Mart has successfully overcome all such difficulties so far. Thus many analysts suggest that this success is based on its management or leadership style and organizational culture. Wal-Mart’s mission statement “is to enhance and integrate the supplier diversity programs into all of the procurement practices and to be an advocate for minority- and women-owned businesses” (www.samples-help.org.uk). Organizational culture is defined as the whole set of values, personalities, norms, assumptions, behaviors, beliefs, ideas and tangible and intangible signs of the organization in its internal and external environments of business conduct. Such tangible and intangible artifacts include organizational goals such as mission and vision. Culture is a tool for the manager to inculcate a set of values, beliefs and ideas in the employee whose vision is then transformed into that that of the organization’s vision (Haberber & Rieple, 2001). Wal-Mart has successfully fused its vision and mission into its culture and leadership style. (b). Wal-Mart’s resource base and emergent strategic planning environment Organic strategic planning requires leadership style and organizational culture to be inextricably connected with each other. For instance leadership styles might vary from autocratic to democratic; from transformational to transactional; and from entrepreneurial to paternalistic. Irrespective of the leadership style organizational culture plays such a pivotal role in almost every aspect of the management, marketing, Human Resource Management (HRM) and operations spheres. (c). What does the organization want to aim at? The evolutionary process of Wal-Mart’s planning strategy has been focused on giving the maximum benefits to the customer. In order to achieve this exalted objective Wal-Mart has been forced to adopt a number of other strategies. Its current leadership style one of them. There are many different leadership styles in the modern business world and almost every one of them has a particular reason or reasons for its existence. However Wal-Mart has been known to believe in its founder’s vision, i.e. reducing the price of the product to the final customer. It must be noted that Wal-Mart has been performing against all market-based odds successfully due to this fusion and its strategic organic planning vision. In other words Wal-Mart has transformational leadership style. A transformational leader is able to identify the future possibilities of the organization. Thus the staff including the multicultural staff is regarded as an asset to achieve the organization’s goals. (d). How does Wal-Mart reach those goals? Finally the impact of innovation on organic strategic planning at Wal-Mart is essentially connected with the retailing organizational goals (White, 2004).The customer-centric strategy of offering products at the lowest possible retail price and then expanding it to the concept of everything in the same store has enabled Wal-Mart to move beyond the ordinary retailing domain to a new high of market-orientation devoid of benchmarks. After all, benchmarks entail higher prices to the customer. Wal-Mart has reached its current position retail leadership in the world through a very articulate strategic planning process that has little parallel, if any. Conclusion Strategic planning at the organizational level involves a lot of efforts on the part of the top management. However, strategic planning is a process that is invariably connected with the organizational goals and the ways they are achieved. Thus Nike as the leading sportswear and gear manufacturer in the world has successfully adopted a goals-based strategic planning approach to achieve its organizational goals. Its mission is “to bring innovation and inspiration to every athlete in the world” ( www.samples-help.org.uk). Being a for-profit organization Nike wouldn’t concentrate on providing its customers with what they don’t want. Then there are those non-profit organizations like the NGOs and public corporations which are fast disappearing now. UNICEF is a non-profit organization under the UN banner. Its mission is essentially connected with ensuring children’s rights throughout the world including those basic rights as education and prevention of child labor. However its issue-based strategic planning endeavor is determined by the UN mandate. Finally, Wal-Mart has adopted an organic strategic planning approach with much of its resources being concentrated on achieving organizational goals through a fusion of organizational culture and leadership style. Its organizational culture and management style have been cited as one of the most revolutionary because its success has come from this fusion. REFERENCES 1. AMBOSINI, V., (1998), Exploring Techniques of Analysis & Evaluation in Strategic Management, Prentice Hall ,New Jersey. 2. DE WIT B & MEYER R (2004) Strategy Process, Content, Context (3rd Ed), Thomson Learning, Kentucky. 3. HABERBER, G.A & RIEPLE, A. (2001) The Strategic Management of Organisations, Prentice Hall, New Jersey. 4. JOHNSON G, SCHOLES K, & WHITTINGTON, R., (2005) Exploring Corporate Strategy Text & Cases. 7th ed, Prentice Hall. New Jersey. 5. LYNCH, R., (2006) Corporate Strategy (4th Edition), Prentice Hall. New Jersey. 6. MELLAHI, K. et AL, (2005) Global Strategic Management, Oxford University Press Oxford. 7. MINTZBERG H, LAMPEL J, QUINN J & GHOSHAL S, (2003), The Strategy Process, Prentice Hall , New Jersey. 8. THOMPSON, J. & MARTIN, F., (2005), Strategic Management (5th edition), Thomson Learning, Kentucky. 9. WHITE C (2004) Strategic Management, Palgrave Macmillan .New York. 10. Mission statement of Nike retrieved from www.samples-help.org.uk on July 21, 2009. 11. Mission statement of Wal-Mart retrieved from www.samples-help.org.uk on July 21, 2009. Read More