Developing Effective Strategies between Schools - Term Paper Example

Strategic Management Table of Contents Introduction 3 Strategy Concepts 3 Mintzberg’s Ten Schools of Thought on Strategy Formulation 4 Whittington’s Four Strategic Lenses 9 Similarities and Dissimilarities between Schools of Thought and Strategic Lenses 10 Conclusion 11 Bibliography 13 Introduction A strategy is regarded as a statement of determination, describing where an organisation desire to be in the long run. It is about understanding the procedures that are involved in operations and avoiding any sort of challenge, which arises in planning successful tactics. Traditionally, strategy was described as the art of organising and guiding large military actions and the operations of war. Nevertheless, from the viewpoint of organisations, it is about plotting the organisational future and setting out the products or services that the business corporations or firms require to handle in specific business market segments (Keating & Moorcroft, 2006, pp. 129-131). A strategy enables an organisation to make sure that decisions are made on regular basis towards the accomplishment of predetermined business targets. In addition, a strategy also encourages employees and different departments of a larger organisation to perform cooperatively for the accomplishment of common objectives. There are various beliefs regarding the roots of strategy and several authors have delivered their opinions regarding strategy concepts and ideas (Scholes & Johnson, 2012, pp. 131-133). Based on this aspect, the essay intends to discuss about two key strategic concepts namely Mintzberg’s ten school of thoughts and Whittington’s four strategic lenses. Moreover, the usefulness between these two concepts would also be analysed in the essay. Strategy Concepts According to David (2011, pp. 5-6), an organisation’s strategy is developed by the combination of competitive tactics and business methods implemented by the managers in order to satisfy the customers. Strategy can direct an organisation towards successful accomplishment of organisational objectives and sustain business in this competitive landscape. David (2011, pp. 5-6) further defined strategy as a managerial procedure of forming strategic vision, setting objectives, creating an approach, applying the approach and initiating when believed appropriate. There are different levels of strategy that exist in an organisation namely corporate level strategy, business level strategy and operational level strategy among others. Various writers also wrote regarding preparation of strategy. For instance, Mintzberg & et. al., (1998, pp. 4-6) claimed that strategy thoughts and philosophies are best understood by classifying them in ten schools of thought. Then again Johnson & et. al. (2010, pp. 19-20) suggested that strategies have changed significantly over the years and hence, these could be best understood by using number of lenses. Mintzberg’s Ten Schools of Thought on Strategy Formulation Mintzberg has defined “ten schools of thought” that serve as useful guide towards strategic development. In other words, these ‘schools of thought’ discourse the approaches that organisations might use for developing an effective strategy. The “ten schools of thought” have been discussed in the following. The Design School: The design school denotes that strategy should be formulated by understanding internal abilities and external opportunities. This school of thought places much importance on evaluation of internal along with external business conditions and hence makes greater use of tools such as SWOT analysis in order to derive appropriate strategy (Ansoff, 1991, pp. 449-461). According to this particular school of thought, social responsibility and managerial values of an organisation play vital part in the formulation of strategies. This thought is useful in circumstances where business environment is stable, however, in reality it is well known that changes are often witnessed to be existing in the business environment. Thus, in order to remain much effective, it is quite vital to keep track on external changes (Mintzberg, 1990, pp. 171-195). The Planning School: The planning school of thought encourages analysis of present business circumstances and concentrates more on execution of strategies. In other words, the idea of planning school suggests that an organisation must evaluate its existing conditions, current position of business, contemporary issues and afterwards develop strategy and concentrate on its implementation. Planning school of thought inspires brainstorming, invention and assist organisation to assign resources according to the requirements (Rosen, 2011, pp. 65-69). This philosophy bears a resemblance to strategic management procedure and therefore is quite useful for modern business environment. The idea of planning school is quite better than design school because it has room for innovation and concentrate on external environment. However, this thought can generate conflict in management and most importantly, it is based on instinct (Grant, 2003, pp. 491-517). The Positioning School: The design and planning school does not provide restraints on those strategies that are possible to execute in a given condition. Focusing on this aspect, the positioning school claims that there are only few key strategies, which can help in safeguarding against existing and future rivals (Kipley & Lewis, 2009). This concept recommends organisations to focus on existing conditions and develop strategies that can change the current business position. In other words, the positioning school concept proposes that organisations should concentrate more on altering the present position in the market and to bring changes in customers’ mind. However, this strategy is useful for big organisations, because they can invest heavily and thus change their positions at large (Harfield, 1997, pp. 2). The Entrepreneurial School: The entrepreneurial school advises that strategy-building procedure is vested with a single leader and is established on a vision. The supporters of entrepreneurial school of thought believe that the key for accomplishing organisational success is tailored management based on strategic vision (Mintzberg & Waters, 1982, pp. 161-162). Organisations that follow this idea must possess visionary leaders who formulate strategy and make transformations based on contemporary business environment. The entrepreneurial school consider that strategy construction is centralised activity and the accountability of planning a strategy is entirely subjected to a idealistic leader (Slater & et. al., 2006, pp. 1221-1231). One key example of this type of strategy formulation was Apple Inc., which followed strategies that were originally formulated by Steve Jobs. The Cognitive School: Organisations that follow this school of thought usually formulate their strategy by evaluating psychological requirements of customers. The philosophy of cognitive school lay in the fact that more information than an organisation possesses, business decisions can be made more effectively. Therefore, by applying cognitive philosophy, an organisation can make best decisions. In other words, organisations that follow cognitive philosophy often concentrate on evaluating the reasons behind any specific behaviour of customers and their reactions to certain conditions. Organisations can use such understanding in order to develop a strategy after undertaking a vast research (Schwenk, 1988, pp. 41-55). The cognitive idea is swayed by psychology and seems very useful in the contemporary business environment. However, one drawback of this thought is that it is quite time consuming and expensive in nature. Furthermore, the idea of cognitive school is also based on several assumptions that often prove to be quite wrong as strategies can be framed according to the mind-set of strategy developers. One key example of using cognitive school in business is Toyota Motor Corporation. In Toyota Premio, the audio control was performed after analysing the customers’ requirements for manipulating the audio setting (Iqbal, 2010, pp. 1-10). The Learning School: The learning school of thought observe that strategies emerge at the time when individuals perform cooperatively in order to learn and understand organisations’ ability to deal with specific business situations. According to this concept, organisations frame the strategies by learning from the mistakes. The strategy formulation in learning school of thought is quite slow, as the managers are required to learn and slowly frame the strategy. This concept of strategy formulation is quite useful in present day context and it resembles to the cognitive school of thought. However, this concept is also quite expensive, as vast research is required to be conducted in order to develop a strategy (Young, 2002, pp. 1-28). One key example of learning school is Coca Cola. Coca Cola had failed to appeal the American market with its product New Coke and by learning from its mistake, the organisation again launched older version of Coke namely Classic Coke (Kennedy, 2011, pp. 1-4). The Power School: The power school concept suggests that organisations can formulate the strategies based on power comprising brand reputation and competitive edge or assets among others. In this type of strategy, organisations exert certain power on the customers. The power school of thought resemble entrepreneurial school of thought in the sense that visionary leaders can exert power for development of strategy. However, power concept of strategy formulation is usually adopted by such organisations that have monopoly position in the market. There are two kinds of powers to determine organisational strategy. One of this is micro power, which deals in politics in an organisation and the other one is macro power, which deals in use of power by an organisation. This process of strategy formulation is quite expensive as organisations have to invest heavily for making any statement and the misapprehension of being powerful can lead organisations to formulate an incorrect strategy (Hax & Majluf, 1986, pp. 2-8). A key example of power school of thought is Guerlain perfume. This perfume has quality fragrances that appeal several individuals and customers who have a tendency to purchase similar product, as it becomes their signature (Eltom, 2006, pp. 6). The Cultural School: The cultural school of thought believe that organisational culture helps in developing effective strategies. This concept generally inspires employee participation and thus, preparation of the strategy concerns the positive collaboration of the employees. The cultural school also bear a resemblance towards entrepreneurial school. Japanese organisations are regarded as key inspiration in using this particular school of thought. They have made culture as an inherent portion of their strategy (Ahmadi & et. al., 2012, pp. 286-299). The Environmental School: The environmental school is based on the fact that strategy must be designed according to the external business environment. Organisations that follow environmental school of thought develop strategy after evaluating the political, economic, social along with technological and legal aspects. However, one key limitation of this approach is that it ignores the internal environment (Littler & et. al., 2000, pp. 411-428). The Configuration School: Configuration school combines different other schools of thoughts. This school of thought suggests that organisations continue to change their decisions and develop new patterns for formulating effective strategies. This idea of strategy preparation is quite innovative because it keeps up with the change, however, strategy preparation according to this school require flexible organisational structure (Carlopio, 2010, pp. 3-4). One example of configuration school is Google as it has successfully adapted itself to the business environment. In reaction to the popularity of Facebook, Google has also came up with the thought of GooglePlus. Furthermore, Google has also made dominant position in the computer operating system segment. Whittington’s Four Strategic Lenses Unlike Mintzberg, Whittington had categorised strategy formulation in four different lenses namely ‘design’, ‘experience’, ‘ideas’ and ‘discourse.’ These have been discussed hereunder. Design: The design lens, which is also acknowledged as classical or rational approach believes that strategies are developed based on making effective decisions. Thus, organisations following design lens develop cost leadership strategy, which intends to enhance revenue at large (Johnson & et. al., 2010, pp. 29). Experience: Experience lens observe strategy as being established with indistinct purposes. According to this viewpoint, strategy formulation is influenced by certain important aspects such as cost constraints. Organisations that follow this lens of strategy development remain at very riskier position. Generally, executing strategies based on this sort of lens focus on checking whether they are appropriate or not and then re-invent if those become ineffective (Johnson & et. al., 2010, pp. 29). Ideas: This strategic viewpoint is often regarded as a procedure, which assists business organisations to get influenced by their respective external as well as internal business environment. The strategies that fall in this group are short-term in nature and are developed in order to sustain in the market for short-term rather than surviving for long-term purpose (Johnson & et. al., 2010, pp. 29). Discourse: Discourse lens is influenced by several external environmental aspects, particularly organisational culture and approaches of the local business environment. According to systematic viewpoint, the basis of strategic formulation mainly lay on the norms of social atmosphere (Johnson & et. al., 2010, pp. 29). Similarities and Dissimilarities between Schools of Thought and Strategic Lenses One of the prime similarities between the above discussed schools of thought and strategic lenses can be apparently observed as that both these strategic aspects assist the modern business organisations to attain their respective predetermined business targets. These organisations are often observed to consider these concepts as one of their prime success factors towards the attainment of business or organisational objectives. However, certain dissimilarities can be apparently noted to exist between them. In this regard, the schools of thought differ with strategic lenses in terms of nature, which can be clarified as that the former focuses on developing the individual performance of the organisational members and the later emphasises developing overall performance. Specially mentioning, schools of thought tend to derive short-term results, whereas, strategic lenses derive long-term results. Furthermore, from the viewpoint of ten schools of thought, strategic management is observed as a fragmented discipline, whereas, the four strategic lenses consider strategic management as continuous discipline. However, the ten schools of thought and strategic lens both provides an extensive evaluation of how strategy can be formulated by considering internal as well as external aspects and business environment (Johnson & et. al., 2010, pp. 29; Mintzberg & Waters, 1982, pp. 161-162). Thus, it can be affirmed both ten schools of thought and strategic lenses focus on assisting the business organisations towards adopting significant strategies with the aim of their predetermined business goals. However, these two concepts differ in terms of their respective nature, functionality and procedure. Conclusion Strategy is a crucial aspect, which can lead towards success or failure of an organisation. By comparing the two thoughts, it is worth mentioning that the ten school of thoughts are much useful than the four strategic lenses, as they provide more comprehensive information regarding the development of strategies. The major similarity between the ten schools of thought and strategic lenses lay in the fact that both these concepts enable modern organisations to attain their desired business objectives. Notably, ten schools of thought differ with strategic lenses in terms of functionality as well as nature. Justifiably, the ten schools of thought tend to develop the individual performance of the organisational members for short-term purpose, whereas strategic lenses tend to progress entire performance focusing on long-term purpose. The ten schools of thought provide diverse ways through which a strategy can be formulated. On the other hand, four strategic lenses demonstrate that what organisations must possess while developing a strategy. Thus, the above-discussed school of thoughts are quite useful for any organisation in modern day context as these teaches about the method of screening the strategies in order to make an ideal one. Bibliography Ahmadi, S. A. A. & et. al., 2012. 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