Question mo Business & Management
Strategic Approaches to Preparing for Future Market Conditions
What are the ideal strategic approaches to preparing for future market conditions ?
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Answer Expert #26324
The traditional approach towards strategic management presumes that executives are able to predict future market conditions by applying powerful analytic management tools. Therefore they are able to choose a clear strategic direction for their businesses. This process of strategic management underestimates uncertainty in market conditions, which is increasing day-by-day due to the several factors, such as the exponential rise in competition (Lynch, 2012) which is partly caused by factors such as globalisation (De Wit and Meyer, 2014), reduced product life cycles (David, 2013), and growing complexity in consumer demands and rapidly evolving social trends (Thompson and Martin, 2010). In such circumstances, the traditional prescriptive approach towards strategic management based on the analysis of the organisation, its capabilities and resources and its external environment is at best marginally helpful and at worst dangerous (Courtney, et al. 2000).
In this context, Mintzberg (1994a) asserts that under uncertain market conditions, due to the volatility of extraneous factors, such as the changes in government policies and regulations, technological advancements or globalisation, only 10 to 30 per cent of strategy tends to be the intended one. In Mintzberg’s (1994b) view, emergent approach towards strategic management wherein strategy is incremental, evolving and continuous - a retrospectively rationalised process developing throughout its life – is the most ideal approach to prepare for future market conditions. Emergent strategies enable organisations to pre-empt and proactively take appropriate measures to respond to changing conditions and new information much more quickly than what a traditional prescribed strategic planning process may allow for. Through an emergent strategic approach, a company will be well positioned to aggressively change its strategy to bring about favourable change in the market under rapidly changing conditions or anticipate change and make relevant strategic manoeuvres under gradually evolving conditions.
ReferencesCourtney, H. Kirkland, J and Viguerie, P. (2000). Strategy under Uncertainty. McKinsey Quarterly June 2000. Available from http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/strategy-under-uncertainty (cited on 21st October, 2016).
David F R (2013) Strategic Management: Concepts and Cases, Pearson Education
De Wit B and Meyer R (2014) Strategy: an international perspective. Cengage
Lynch R L (2012) Strategic Management. Prentice Hall
Mintzberg, H. (1994a) The Rise and Fall of Strategic Planning: Reconceiving Roles for Planning, Plans, Planners. New York: The Free Press.
Mintzberg, H. (1994b). The Rise and Fall of Strategic Planning. New York, NY: The Free Press.
Thompson J and Martin F (2010) Strategic Management: Awareness and Change. South Western Cengage Learning