Marketing Planning: Planned Strategy versus Emergent Strategy, Concept of Driving Markets - Term Paper Example

Marketing planning is an aspect that is carried out in many organizations. Analysis however shows that it is quite important to find a balance between planned and emergent approaches strategy. This paper will therefore compare the effectiveness of game theory as proposed by Nalebuf and Brandenburger and driving markets as proposed by Jaworski. This is basically the differences between the two approaches. This is in relation to assisting marketers to find a balance. This paper will also elaborate on the strengths and weaknesses of game theory and concept of driving markets. (Brandenburger, 1994, p. 800) It is quite essential that a balance between the planned and emergent approaches to strategy be found. Strategic planning involves putting clear future goals of an organisation. In this case, planners put in place steps that have to be implemented in order to achieve goals. Analysis of various planning strategies shows that they end up creating a climate that is uncongenial to stakeholders. This is one of the main reasons as to why a balance between planned and emergent strategy is important. It is quite clear that planned strategy puts across foreseen aspect in a market. (Bell, 1980, p. 295) Planned strategy has been known not to use a committing but a calculative style. In this case the managers only look at the ultimate goal and not bother about stakeholder preferences. This means that managers only push employees towards achieving the ultimate goal. This type of approach kills employees’ enthusiasm. It is quite essential that a balance between planned and emergent strategy be reached. In this case, the management can use planned strategy to have a clear view of what they want achieved but at the same time consider other stake holder’s views and market changes. It is very essential that a balance between planned and emergent strategies be reached. This is because planned strategy basically focuses on assumptions that are linear based. On the other hand, emergent strategy bases on the business reality on the ground. (Steiner, 1979, p.30) This means that in the pursuit of goals and objectives, managers need to recognise that assumptions made during planning may not necessarily follow a linear framework. Planned strategy is mostly carried out through beliefs, common reasoning and experience of the planners. The planned strategy consists of a structure that is expected to be followed by stakeholders. This structure undergoes conditioning once defensive and challenging customs emerge in an organisation. Emergent strategy recognises that the business world is quite dynamic in nature. This means that changes need to be managed and initiated accordingly. Some of the changes in a market may be quite chaotic in nature. This aspect is not put into consideration in the planned strategy. Emergent strategy highly recognises elemental interaction of multifaceted systems in a market. This is whereby both positive and negative feedbacks are analysed accordingly. This strategy easily deals with strategic behaviour within an organisation. This strategy perceives strategic behaviour as an observable fact that materializes in a way that is not predictable. This is due to various facets of interaction and influence that occur in business organisations. Emergent strategy greatly analyses the performance of planned strategy. In case the planned strategy is deemed to be ineffective then appropriate measures are taken. These measures may include re-engineering and restructuring of organisational systems. This clearly indicates that the emergent strategy enhances evaluation as compared to planned strategy. Planned strategy is therefore still very imperative as without it then nothing would be there to be evaluated. That is why it is very essential for managers to find a balance between planned and emergent strategy. Both strategies have to be considered and effectively carried out in order to achieve positive results. (Derek, 1993, p.137) Through emergent strategy, any unforeseen eventualities are dealt with. This approach is known to produce very good results. In an emergent strategy, random fluctuations are easily dealt with. This is whereby a business environment is not perceived to be static in nature. In this strategy equilibrium in a business or market sector does not in any way connote retardation. There are various advantages and disadvantages to both planned and emergent strategies. The following are the advantages of planned strategy. It gives management framework of what needs to be done Makes goals within an organisation very clear It becomes very easy to hand over duties and responsibilities in case of absence of stakeholders It gives a picture of future happenings Every thing normally has its strengths and weaknesses. Planned strategy is not an exception. The following are the disadvantages of planned strategy. It mainly focuses on the quantitative and not qualitative Many future predictions of business and market are usually wrong. There is always the assumption that no changes will occur in the market that negate plans. It is rigid in the sense that it strictly expects implementation to be carried out chronologically Can easily de-motivate employees Unplanned changes in business environment may render planned strategy null and void It encourages authoritarian style of leadership. This is whereby employees are required to follow the planned strategy without question. This in the long run hampers employee-employer relationships. (Mintzberg, 1989, p. 115) Analysis of the emergent strategy shows that it has its strong points. They include the following; It has very high flexibility to possible changes in business environment or market This strategy highly recognises the input of stakeholders and their preferences It is known to produce greater results in business fraternity It is very easy to manage change when it occurs It is easily allows restructuring and re-engineering of systems It highly encourages democratic style of leadership. In this case decision making considers all the stakeholders within the organisation. This is known to enhance employer-employee relationships. Through this strategy great success is witnessed. It brings fulfilment to the stakeholders in the organisation as they feel that they are important and are playing a great role in the organisation. The following are the disadvantages of the emergent strategy It is not predictable and therefore one can not plan for it in advance It assumes that resources for carrying out change are always available within the organisation It is sometimes time wasting especially when all the stakeholders views have to be taken in. The views of stakeholders may not be similar hence take time to decide on the step to be taken Despite the differences between the two strategies, it is quite important to note that they cannot work in isolation. The best results in any organisation come about when both strategies are used. This means that the emergent and the planned strategies cannot in any way substitute each other but compliment. That is why mangers need to find a balance between the two in order to achieve the best results. (Macbeth, K.1995 p. 12) Research shows that companies and organizations in general need to play the right game in order to succeed. According to the game theory, there are two types of games in the business fraternity. In this scenario, the first type is whereby players have to adhere to the set rules of the game. These rules emanate from the signed contracts, trade agreements or loan agreements. The other type of game theory is whereby there are no rules to be adhered to. In this case the stakeholders have a business model that is unstructured in nature. In the rule based game theory each and every action taken by stakeholders prompts a reaction. In this case any move by an organisation, the management needs to analyse the reactions to the same. This means that one can only take away as much as he or she brought in. Analysis of the game theory reveals that it has its strengths and weaknesses. The strength of the game theory is the fact that in the first type, there are rules that have to be followed. This means that organisations will be very keen on the steps that they take. In this case it limits stakeholders from taking steps that are only beneficial to them and not the other party. (Brandenburger, 1994. p 600) For instance, when a client gets a loan from a bank, the bank can only make monthly deductions of the amount agreed in contract. The violation of the same contract means that the client can take an action against the financial institution. In the same case, if a client fails to repay a loan then the relevant financial institution takes action Game theory has got a win-win strategy which when well implemented results in opening up of very many opportunities for a business or an organisation. This is a strength that very many business ventures are using in the automobile industry. Research reveals that in the 90’s the automobile industry had stiff competition that was destructive in nature. In this case dealer discounts were adversely affecting profits. (Gleick, 1988, p.56) In the year nineteen ninety two, General Motors Company liaised with household bank and issued a new credit card. With this card the card holders could get six percent of their charges in relation to leasing or buying a new car. This was up to a maximum of three thousand five hundred dollars. This eventually increased General Motor’s sales by thirty percent. This was indeed a win-win strategy. It is also evident that the game theory gives managers a very good framework to design their own games that are fit for their organisations. On the other hand, the game theory has weakness in the sense that actions by a stakeholder can drive players out of the market. This means that when some players leave the market, there will be high levels of unemployment. Driving markets means that an organisation or an individual carrying out actions that manipulate or influence the structure of the market. This action could also influence the rest of the players in the market to the advantage of the business. This can be carried out in different ways. This includes having an approach that concerns modification of functions. Another way is through a destructive approach where the players in the market are eliminated. Another way of influencing a market structure is through structuring modified market players. This is usually referred to as a construction approach. Jaworski, 1979, p. 187) The issue of driving markets has got its effective and ineffectiveness. This can also be referred to strengths and weaknesses. The concept of driving markets has strengths where consumer restrictions are eliminated. For instance, there can be shortening of business channel where customers had to go through a very long process to acquire products. This becomes very cheap to customers hence increase in consumer satisfaction. The weakness evident in this approach is the fact that it highly encourages monopoly. As understood, this may mean that the monopolistic organisation may influence high product prices. A driving markets approach can restrict competition by limiting the type of products in the market. This means that consumers will not have a wide variety of products to choose from. In this case they may be forced to buy those that are available even if they are not the consumer’s preference. (Hakanson, 1995, p. 187) In conclusion, planned strategy is all about putting in place step by step plans that have to be achieved in order to achieve organisational goals. This strategy encourages stakeholders to pursue goals and objectives. Emergent strategy recognises the dynamism in business sector. It therefore endeavours to initiate and manage these changes so that maximum results are achieved. It is important to find a balance between the two strategies in order to succeed. There are two types of game theories. One type involves rules while the other is free of rules. Whatever the game type, players aim at winning the game. Driving markets concepts concerns actions are carried out to influence the market structure. Both the game theory and driving markets concept has its advantages and disadvantages. Reference: Baker, M. 2000, Marketing Management and Strategy, 3rd edition, Macmillan Business; p 45-79 Bell, D. 1980, Defining the Business: The Starting Point of Strategic Planning; Prentice-Hall, p 290-299 Brandenburger, M (1994): The Right Game; Use Game Theory to Shape Strategy; London; Oxford Press p. 567-901 Derek, A. 1993, Managing with dual strategies; New York; Free Press; p. 113-156 Gleick, J. 1988, Chaos; Making a new science; Cardinal; London; Harvard Press; P. 56 Hakanson, H. 1995, Developing Relationships in Business Networks; London International Thompson Business Press; p. 187 Jaworski, B. 1979, Market-Driven Versus Driving Markets; U.K; London Business School; p. 187 Macbeth, K. (1995): Emergent strategy in managing co-operative supply; U.K, Gaslow University; p. 12-39 Mintzberg, H. 1989, The Fall and Rise of Strategic Planning; New York; Prentice Hall; p. 68-119 Steiner, G. 1979, Strategic Planning; What every manager must know; New York; Free Press; P. 30 Read More