Strategy is as a detailed and systematic plan, with an objective to be achieved within a certain timeframe (Grant, 2005). The RCA (Root Cause Analysis) followed by hypothesis of the probable solution to the challenges faced by the business, forms part of the strategic management process. Few examples of the challenges are - Should an organization focus on enhancing the market share or revenues? What are the necessary plans and the processes organization should focus on, for achieving its identified objectives and to become a winner in the operating domain? Various researchers have investigated the subject of strategic analysis and postulated hypothesis on how best the organization's strategic challenges can be resolved. One of such research is strategy safari.
The strategy safari (Mintzberg, 2005) is a collection of various strategic thoughts, which include design school, positioning school, planning school, learning school or emergent school, configuration school or transformation school, cultural school, cognitive school, environmental school, power school and entrepreneurial school. Each of these schools describes various types of strategic thoughts as follows:
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1. Design school. According to the design school strategy, a series of variety of operations are required to be performed in order to achieve the best fit between the internal capabilities and external possibilities for an organization (Beaver, 2000).
2. Positioning school. This strategy considers the appropriate position or place of the firm in the market and within the industry. Essentially, it lays stress on the branding of the firm in the marketplace with intent of creating a recognizable niche.
3. Planning school. This strategy suggests effective use of the formal strategic planning tools like SWOT analysis, Porter 5 forces, checklists etc.
4. Learning school or Emergent school. According to learning school of strategic thinking, the pace of organization growth increases as the learning curve of the people joining the organisation reduces. This happens because the organization acquires the critical mass in the domain knowledge. Tenured employees in the organization develop understanding of the processes and situations. The experience on variety of situations makes them prepared for any upcoming, potentially perturbing event in the course of organization's business.
5. Configuration school or Transformation school. Strategy is described as the process of transformation in an organisation (Anderson et. al, 2008).
6. Cultural school. According to the cultural school, the strategy can be described as a collective and cooperative process.
7. Cognitive school: The cognitive school of thought describes the strategy as a mental process. It also analyses the awareness of the people about the patterns and how they process the information.
8. Environmental school. This school of thought considers strategy as a reactive process. The strategic response is considered as a reaction from the owner of the action.
9. Power school: The strategy in this case is described as the process of negotiation. The process of negotiation is between the stakeholders, for example, purchase department and vendor, management and workers, amongst departments within an organisation.
10. Entrepreneurial school: This school of thought is different from above all as it considers strategy as the process of identifying the vision of the organization. This thought process delves deeply on the role of a people leader (Mintzberg, Ahlstrand, & Lampel, 2010).
Comparison between the design school and the positioning school
1. The design school of strategy strives to attain the best fit between the organization's internal objectives with the external environment. It does not suggest any innovative methodology to move over the current competition; rather it simply expects the organization to align with the current business environment. On the other hand, the positioning school of strategic thinking relies heavily on the porter's way of thinking. The Porter's 5 forces model, which identifies the 5 forces in the business environment, is used in positioning the industry. The firm may either diversify or move out of current business, if it feels that it would be difficult to operate successfully. GE's consolidation exercise under the CEO Jack Welsh is a classic example of effective implementation of the positioning strategy (Stacey, 2007).
2. The positioning school (Stewart, 2006) has a specific methodology to analyse, identify and improve the organization's financial position. There are three primary strategies in positioning school, which are leveraged for attaining the desired objective. These three strategies are - Focus, which is required to reach the desired goal, differentiation and the leadership, which is at the core of any organization.
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3. Design school is the process of formulation of the strategy with intent to continuously sync the organisation with the changes in the environment. The purpose of this strategic thought is to develop a strategy, which can easily fit in all the mercurial environmental situations. However, the positioning school is an analytical process, which strives to find the solution for the business growth according to the industry norms. It is also about the growth and improvement of the organization within the vertical it is operating (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 in keeping pace with the ever-changing business environments. This process requires continuous review of the critical parameters of the organization vis-à-vis the similar industry parameters. The advantage with the positioning school is that it focuses on the required analysis and calculations, which are necessary for developing the independent 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 forecast the future scenario well. Whereas, the disadvantage with the positioning school is that, it is highly analytical in nature.
6. Thus, fundamentally, design school 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 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.
Planning is a critical part of Strategic decision making. The process of decision making can be used for policy decisions, management decision making or deciding on the actions for economic development. Strategic thinking can be done by an individual as well as by a group of skilled individuals across different domains in an organization. The outcome of strategic thinking assists everyone in the organization by providing the direction of the future progress. The inputs required in Strategic thinking discussions are the complex information concerning both past and present, about the work mechanism, and the vision of the future (Dye, & Sibony, 2007).
The two proficiencies, which make the process of strategic planning, are foresight skill as well as implementation skills. First skill facilitates predicting probable future conditions. This is followed by selecting one of the conditions, which should be appropriate to the current challenge, and hence, shaping the options according to the goals. Second skill is implementation skills, which enables seeking and achieving agreement on goals of the organization, planning futures as well as different ways of attaining it.
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.
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 notify the problem areas in the business.
The causes behind these symptoms are really important. An organization should always be concerned about the root cause rather than trying to solve 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).
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Both the design as well as positioning schools have 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.
In the current business environment, almost all lines of businesses have 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 of strategy 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.