Critical Appraisal Of The Disparate Schools Of Thought Relating To Strategy Business Essay

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This assignment is made in an attempt to identify and discuss the practicality of the classical approach to strategy by Whittington or the prescriptive schools of thought, namely, design, planning and positioning schools according to Mintzberg originated by "the Business Historian Alfred Chandler (1962) and Igor Ansoff (1965)". These classical schools of thought have been known to dominate the world of pedagogy (Mintzberg, 1990, p188) or in the mainstream textbooks (Whittington, 2001, p11).

These schools of thought have been made to feel practical as they all agree that "strategy is a rational process of deliberate calculations and analysis designed to maximize long term advantage" (Kalpic, 2002 & Chandler, 1962) and are considered "Most obviously relevant to the needs of practicing managers to help them to form strategies and to take action" (Macmillan & Tampoe, 2000, p26)

To assess practicality of the perspective classical strategic school of thought it is necessary to determine the required success factors. Part of these factors could be, simplicity (to be understandable to whom do participate in strategy formation), flexibility (to be able to be developed to new changes), time efficiency (strategy formation should not consume time and could be introduced at the critical times), cost efficiency (process should not cost unsuitable amount to overall value of the process objectives) and innovation (process ability to introduce innovative strategies).

We begin analyzing the practicality of classical school of thoughts with the design school. This school of thought describes that strategy should consciously be made simple and articulate. This makes sure that even outside directors can understand the business without being in the business and requires only brief time of understanding (Mintzberg, 1990, p179). This ceases to be practical if the range of the company's activities spans too many industries & technologies(Mintzberg, 1990, p.177).

"It still works on the assumption that the CEO can design an explicit grand strategy for the entire business" (Elfring & Volberda, 4). Since the CEO is solely responsible for formulating the strategy then there is a huge possibility that the implementation will not be in line with the formulated strategy.

The tool being used in the design school, SWOT analysis can not be done accurately without considering the external context (Lenz, 1980) but since design school slights the "environment in favor of the organization itself there is a tendency to overstate strengths & under emphasize weaknesses" (Mintzberg, 1990, p182) these in itself does not make the analysis accurate & hence, strategy ineffective. "Corporate Strategy must dominate the design of organizational structure & processes" (Andrews, p543) therefore, "it puts an assumption that each time a new strategy is formulated the state of structure & everything else organizational is to be considered anew" (Mintzberg, 1990, p179) where in fact the practicality is questionable since it is dependent on the available resources required to carry out the necessary change.

Planning school, being the second in line in classical prescriptive school of thoughts, "focuses on long term planning aimed at achieving a fit between organization and its internal environment" (Ansoff, 1965: Learned et al., 1965: Argenti, 1974: Andrews, 1987) and "defines strategy to be formal process with rigorous set of steps taken from the analysis of the situation to the execution of Strategy" (Mintzberg, et al,). It was embraced in the 1960s "as the best way" to devise and implement strategies that would enhance the competitiveness of each business unit (Mintzberg, et al,). In spite of this it has been dismissed as a failure in inventing new categories for real strategic change.

To ensure that strategists (planners) are not influenced by the essentials of daily operations there should be a degree of detachment in order for true policy direction to be possible as the knowledge capture is carried out by the administrative systems (Jelinek, M., 1979). This all seems sensible until the quality of the facts is in question. Further due to deliberate detachment of the top management during strategy formation it causes inconsistency during strategy implementation causing Strategic gap (Mintzberg) and also at times top management use planning to gain control over others. This fallacy can be resolved and success rate in strategy increased by ensuring that the chief planner comes from lower position in the organization (Amstrong, 1982).

As planning school involves extensive analysis which requires necessary resources it only seems practical if large strategy change is necessary (Amstrong, 1982) and carried out in medium to large organization (Thune, S. & House, R., 1970). Mintzberg has claimed as planning school is impractical in fast changing external environment they fail to adapt themselves, though this has been counteracted by Igor Ansoff,(1991) stating that "In 1972 the overall perspective of the subject was broadened from strategy formulation to the overall process by which organizations adapt and succeed in turbulent environments". Also, Armstrong cited that strategic planning calls for generation to alternatives of strategies which would invariably consider the changes in the environment. In situation where decision making is time consuming this procedure also helps to save time and is of great importance in organizations which find themselves in rapidly changing environment.

Finally, looking into the last prescriptive school, known as the Positioning, promoted by "Porter's Competitive Strategy (1980) and considered 'a watershed' in the development of strategic management thought as it met the needs of both academics and managers who were looking for a 'theory of strategic management'" (Harfield). We recognize strategy to be analytical which "looks at how organization can improve its strategic position within the industry and for the positioning school; strategy means to position oneself in a competitive environment "(Clegg et al). Since this has an emphasis on the competitive environment this approach does not focus on the resources of the organisation (Mckiernan 1997). The continuous drive towards competitive advantage in terms of profitability at a point becomes tiresome, and tends to lose focus on innovation, which if successful can lead to uniqueness and is competitive advantage in itself.

Porters approach has also been criticised to be static and prescriptive and highlights competition rather than collaboration (Stonehouse, G. et al, 2004). "Even though the analysis of industry and competitors was developed especially for managers in large mature corporations, Porter's generic strategies and five - forces industry framework presented academics with models which could be empirically tested" (Miller & Dess, 1993).

Furthermore, in forecasting future trends, the positioning school utilizes historical and present data which is insufficient and of high risk that may lead to failure in strategic implementation (Royer, S., 2005)

To recapitulate, in spite of the counter arguments of the various scholars in support of the classical schools of thought we find that, they still fall short in addressing the issues concerning effective strategy formulation based on changing environment, allowance for flexibility in terms of learning and absorbing innovative ideas and inappropriate to the varying critical time. Therefore, it can be safely concluded that, albeit the classical schools being dominant in the world of pedagogy, it necessitates to undergo a radical transformation in order for it to be practical.

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