Comparing and Contrast Two Schools of Strategy
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Published: Mon, 5 Dec 2016
Strategy is considered as one of the interesting and engaging subject to discuss in business management schools. The strategy can be described or can be explained as a detail and systematic plan of particular action that has to be performed when it is required or when a requirement is envisaged (Grant, 2005). Different types of strategic problems form part of the strategic management process. Is it necessary for the companies or the organizations to focus more on the market share or focus on the revenue capital of the company or the organization? What are the plans and the processes required and necessary for the organization to focus on as to reach its goal and to reach the market shares? The great authors of Strategy Safari like Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel have explained strategies in their own words with their experiences. The strategy is explained in a different approach which includes design school, positioning school, and planning school, learning school or emergent school, configuration school or transformation school, cultural school, cognitive school, environmental school, power school and entrepreneurial school (Beaver, 2000). Each of these schools describes the strategy as follows:
1. Design school: According to the design school, the strategy has been described as a series of different operations performed to achieve the fit between the internal capabilities and external possibilities of an organization.
2. Positioning school: According to the positioning school, the strategy has been described as analytical process. It also mentions that strategy depends on the appropriate position or place of the firm in the market and within the industry.
3. Planning school: According to the planning school, the strategy is described as which highly praises the beneficial quality or advantage of the formal strategic planning arms itself with SWOT analyses and checklist.
4. Learning school or Emergent school: According to the learning school, the strategy is described as an emergent process. An emergent process can be thought some like an existence process. That means; the existence of the strategies appear as more people come to learn or know about the situation that has risen and as well as about the organizationââ‚¬â„¢s capabilities and the way of their dealing with the raised situations.
5. Configuration school or Transformation school: According to the configuration school, the strategy can be described as a process of transformation which means or which tells about the process that transforms the organization. It also describes the similar quality of strategies which were interrupted by the leaps to the new ones (Anderson et. al, 2008).
6. Cultural school: According to the cultural school, the strategy can be described as collective process and cooperative process.
7. Cognitive school: According to the cognitive school, the strategy can be described as a mental process. It also analyses the peoples awareness about the patterns and how they process they process the information.
8. Environmental school: According to the environmental school, the strategy can be described as reactive process. This means that how the strategy becomes the response of the focused environment.
9. Power school: According to the power school, the strategy can be described as a process of negotiation. That means, the process negotiation is processed or developed between the power holder who are present in the company and external stakeholders.
10. Entrepreneurial school: According to the entrepreneurial school, the strategy can be described as a visionary process. In other words it can be described as the importance given to the role played by the leader in the organization (Mintzberg, Ahlstrand, & Lampel, 2010).
Comparison between the design school and the positioning school:
1. According to the design school, no limits were put on any kind of the strategies where as, according to the positioning school, which also has no limit on any kind of the strategies but in contrast, they were some strategies for which there was a discussion (Stewart, 2006). The strategies were such as; discussion on the desire of a particular position in the industry in the economic market place which means an argument took place for the positions between the existing and future competitors, increasing the logic of strategy across the industry across the world.
2. The positioning school has a particular method to measure the interest of the industries and there are mainly three strategies which are required for the reaching the desired goal and for achieving the required advantages. The three strategies can be the focus which is required to reach the desired goal, differentiation and the leadership who is at the central position in the company. The resources that are required to view the strategies are depended on the managers who are responsible to manage the resources and the firms which are the collection of capabilities where as, design school is the other way round (Stacey, 2007).
3. Design school is actually a process of conception where the situations that are raised inside the organization are compared and matched to the situations that are raised outside the organization that is, the situation that are raised in the environments. This means that a strategy is required to develop that can easily fit in all the situations that are raised in the organizations. Where as, the positioning school is actually about the analytical process, this is a process that helps the business to grow according to the industry and fix within the context of the industry. It is also about the growth and improvement of the organizations within the industries and completeness between the organizations in the industry (Gavetti et. al, 2005).
4. The advantage with the design school is that it mainly focuses on the external factors that are required to be considered by the organizations, the processes require reconception, whereas the advantages with the positioning school is that it mainly focuses on the required analysis and calculations, which are necessary and can act as a strong support for the strategy development process (Andriani, 2007).
5. The disadvantage with the design school is that, great efforts are put on the forecast of the future, which means that the planner who plans the strategy needs to estimate the future forecast. Whereas the disadvantage with the positioning school is that, it is not allowed to be oriented toward the process.
Planning is a part of decision making. However, this process of decision making can be done for management, policy or economic development. It needs those skills which should assist everyone in handing out complex information concerning both past and present, about the work mechanism, and possibly, desirable futures as well (Dye, & Sibony, 2007).
The two basic proficiencies which make the process of strategic planning are foresight skill as well as implementation skills. First skill facilitates predicting probable future conditions. Then it’s time to select one of them which should respond to the needs, and hence, shaping them according to the goals. Second skill is implementation skills which enable seeking and achieving agreement on goals of the organization, pleasing futures as well as different ways of attaining them, amongst those entities which are the solution to the recognition of those visions.
Strategic thinking provides different theories as well as practices of strategic planning (Cravens, Piercy, & Baldauf, 2007). It comprises of compilation of various principles in addition to techniques which are pertinent to the administration of both, public as well as private non profit sectors.
There are various schools of strategic thinking, however, the two schools which are mainly taken into consideration are: design school and positioning school. First one is the design school which observes the strategic management as a medium of making a healthy connection among the internal capabilities as well as outer possibilities of a business organization. Whereas the second school which is basically known as the positioning school, is greatly influenced by the philosophy of Michael Porter. Michael Porter emphasize that strategy of an organization should be based on the firm’s positioning in the market and within the industry.
Identifying the root cause for design as well as positioning school
Many problems have various root causes which are relevant to the situations. Symptoms are indicators, which show or notifiy the problem area in the business.
The causes behind these symptoms are really important. An organization should always be concern about the root cause rather than identifying the symptoms. Symptoms can be similar for two or more problem; however, the root cause will be different. Hence, identifying the root cause is most important (Yin, 2008).
Design schools apply a systematic technique to identify the root cause for any problem which causes different symptoms, commonly known as differential diagnosis. Symptoms can be a low profit earning, mismatch between outer as well as inner world as per the designing, and many more. Both the schools have different line of businesses; however, the steps for analyzing the root cause are same.
First of all, the condition should be identified. Differential diagnosis plays the major role here. This type of diagnosis is basically a variety of scientific analysis.
To diagnose a problem, symptoms should be identified. Then according to the symptoms, probable root causes need to be identified. After that, proper necessary tests are required to get rid of possibilities till the time the disclosure of the most ultimate cause. As soon as the cause is identified, solutions are needed to be implemented (Johnson, Scholes, & Whittington, 2008).
Both the design as well as positioning schools, has their own type of risks. Political revolution, growing of governmental regulations, fluctuation in prices of energy and increase of competition are several common risk factors which makes every business usual irrespective of their own line of business. These are certain factors which are common in each and every line of business. Political uprising will affect both the business of design as well as positioning. Same thing comply with all other factors listed above and many more.
These days, almost all line of business has many risk factors involved. Few risks are certain, however few risks are uncertain. Certain risks are those risks which are sure to be faced by the organization; hence every necessary step is applied in order to avoid this risk. However, uncertain risks are those risks, upon which an organization has no idea and hence, no precautionary measures have been taken. These risks are more risky comparing to the previous one as organization does not get any idea that at what time these risks took place, and how to ignore them. However, uncertainty risk does not necessarily impact the business in a very dangerous way (Concha, Visconti, & Astudillo, 2007).
Indeed, risk plays very critical role in any line of business. As, to process any business and earn profits, change is essential. Nothing can be improved without changes and changes require risk. For example, competition is a healthy risk. Without competition, not a single organization will try to improve its strategy, because, it’s a confidence which says “I am the best”. However, in the same time, if there are lots of competitors present in the market, everyone will try to give their best in order to capture the market. Hence, risks are really very important for business development.
Despite the fact that risk is innate to each and every business, its amount of impact can differ according to several factors which includes globalization, input costs, competition, weather, compliance, regulations, competition, exchange rate, and many more. These factors effect different organization in different way. For example, some line of business must have a lot of competitors, while some have very less, hence, risks plays different role in different businesses.
Risk is divided into two categories: first one is direct and second, is indirect risk. These two types of risks are sometimes also known as internal and external risks.
Direct risks are usually those type of risks over which an organization have control or they can impact the organization. These risks frequently affect the business’s supply chain, labor force, operations as well as competitive position. On the other hand, indirect or external risks are those risks which include those factors which are beyond the control of the company. Interest rates, currency exchange rates, energy costs and weather are some of the examples of indirect risks.
One more factor which affects risk is efficiency and competency. Now days, the latest technology has introduced finely tuned level of efficiency. If the technology is very competent and the employees are well competent, risk can be ignored or reduced very easily. Hence, this is one of the essential factors.
An organization, regardless of size or industry, regularly deals with various types of risk whether by a formal or an informal way. Business leaders, usually make an attempt to manage or permit risk in order to handle them. Although, the amount of risk as well as other related activities contrasts widely with different line of business, the basis for creating effectual strategies for risk management includes analysis as well as planning.
Different schools choose different way in order to react to different outcomes as per their occurrence. As this approach is practiced worldwide, it became less appealing because the business as well as market instability continues to escalate. In addition, this reactive approach manages risk which requires both the schools to change their strategies greatly. This process of risk management, attenuate the focus of the company and needlessly amplify the cost by defining the operational plans each time.
Given adequate capacity as well as flexibility, few businesses can achieve agreeable results with the help of immediate risk management. Yet, in most of the cases, different line of business lacks the capability, knowledge as well systems which are required to continually alter courses and making new plans with confidence.
Another approach for managing risk factor is to lessen the risk itself, in addition to its potential effect on the business or school. Despite the fact that reducing risk will reduce uncertainty, it, in general, need better and larger resources comparing to the reactive method (Power, 2004).
Third approach for managing risk is to reduce the impact of risk. Initially, removing risk can be explained as one of the best approach in order to manage risk. However, removing risk or reducing the impact of risk can be too expensive and can reduce the return on the invested capital. Hence, three approaches to manage risks are: reacting to the risk to find solution, try to reduce risk as much as possible or removing the impact of risk.
Content as well as processing for schools of designing or positioning
Analysis of root cause is methodical, proof-driven process for discovering and selecting one, the most significant reasons for the performance related problem, the guiding philosophy about this analysis is to locate the real and essential reason for various problems, understanding their existence and at last, a need of therapy to fix them.
Problems can arise every time. Especially in design school, many problems usually arise because the market is very flexible. Now, the major factor is how to choose the solution for any given problem. Few steps are needed to reach to the solution and hence the implementation.
First step is to react to the problem. Addressing to the injuries, damages or loss which has been caused by now, making suitable notifications, preserving proof to its possible extent and initiating cleanup performance are needed to be done in this phase.
Next step is to mitigate the instant causes, taking necessary action to lessen the production and discharging the terrible thing, enhancing protections against it and finding a way to eliminate or diminish it.
Third step is to assess risk. This step is very crucial as identifying the risk will really help in examining the entire problem. Risk identification will also determine the condition of the problem, reviewing sufficiency of measures in proper place, assessing more risk of additional harm and deciding the requirement for deeper analysis.
Next step is the investigation step. Tracking the actual series of events, discovering what are the different changes of state which took place and determining the script or cause behind the trouble is very necessary to be investigated.
After the investigation step, next is the analyzing step. This phase comprises of breaking down of all the causes in order to determine the essential points, finding the space between actual and the expected environment, exposing the key forcing factors and determining the extent of cause. This phase actually discover various environmental factors.
Next phase is designing. Designing the solution is very important after evaluating all the risk and different environmental issues associated with the problem. Hence, first thing which is needed to be analyzed are the weaknesses. Later on picking up the points of maximum leverage, developing various solution options and deciding the best combination of activities is really important. However, few more things which are also essential for this designing phase is validating the plan and the arrangement, as well as funding.
After the necessary action as well as plan is designed, it’s necessary to execute them. Unless and until implementation is done, how one can check whether the designing phase took the proper action or not? Hence, in order to execute and process the plan, developing timeline, obtaining materials, initiating actions, collecting resources, initiating action, monitoring of performances and verification of completion is done. All the processes, in combine, make this phase successful. Without implementation, finding the root cause is not at all worth. This phase has the only power to identify whether the root cause has been correctly evaluated and content and process is working properly or not (Giroux, 2009).
Contextual stage for both design as well as positioning school
The contextual stage basically consists of review and adjustment phase. Review stage is needed to re-examine the effectiveness, after the implementation of solutions, in order to check various things like whether there is any scope for recurrence of original problem or not. Analyses of related problems are also necessary. Furthermore, verification is done to measure continued risk.
Last process is to adjust the plan on the basis of review. Deficiencies are needed to be addressed while executing the proposed strategy and assessing consequences of changes which can come from outside the plan. Identifying new as well as revised actions are also needed to confirm effectiveness.
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