Current business atmosphere need faster and more sufficient decision making by organizations than ever before. Since the environmental changes are exceptionally great, the decision makers may face complications in forecasting their futures. The theory of a strategy based on a purpose focused approach offer original strategic options. Since the idea of strategy is normally non figurative, there exist several viewpoints with respect to its creation and execution. In fact, academics and practitioners make statements on the varied aspects of strategy, for example, "there is no single, universally accepted definition of corporate strategy" by Pettigrew (1987). However there are definitions which are more reliable than other.
The present Critical Literature Review sets to explore the challenging task of envisaging, conceiving, and realizing crafting strategies by proposing a deep critical evaluation of the subject. Along the way the essay will compare and contrast different authors' views on an issue, criticise aspects of methodology, note areas in which authors are in disagreement, highlight exemplary studies, gaps in research, demonstrate how Mintzberg's work relates to earlier and later researches, show how his study relates to the literature in general and conclude by summarising what the literature says.
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Literature on strategy development has a long history (Bower, 1970; Bower and Doz, 1979; Burgelman, 1983; Quinn, 1978, 1980, 1982; Nelson and Winter, 1982; Mintzberg, 1978, 1987; Mintzberg and Waters, 1984, 1985, 1990; Prahalad and Hamel, 1990; Pettigrew, 1985). The 80's experienced the extensive approval of positioning theory. Even though the hypothesis start off with Jack Trout in 1969, it did not get broad approval till Al Ries and Jack Trout wrote their classic book "Positioning: The Battle For Your Mind" (1979). The fundamental principle of the theory in that era is that a strategy should not be criticised by interior corporate aspects rather than by the way consumers notices it compares to the rivals. Many methods were used for positioning theory, a several newly made-up but mainly lent from previous theories. The process view of strategy has been as well examine in the late 80's by Mintzberg study on "Crafting strategy" (1987), fallowing by the work of Hamel and Prahalad on â€žStrategic Intent (1996). However other academics sensed that interior corporate resources were the solution. In 1992, Jay Barney, for instance, described strategy as gathering the optimal blend of resources, together with human, technology, as well as suppliers, and afterwards arrange them in sustainable and exceptional ways. Although most of them share a common view on the practice and theory of 'strategy' as they agreed in general, strategy is a plan to be implemented in the future to accomplish specific objectives (Mintzberg, 1987). Mintzberg, Alilstrand and Lampel (1998, p.9) have summarized the contradiction of strategy with the next observation: The majority of people, managers and as above mentioned academics characterize strategy as a plan, or something correspondent a direction, a guide or course of action into the future, a path to get from here to there. However, this approach of strategy is limited and potentially dangerous since it conceals the rich and inconsistent nature of the broader idea of strategy, and it can result in significant opportunities and danger signs being overlooked. Strategy, therefore, according to Mintzberg (1987) has to be seen as a mixture of the actions that are designed to result in expected business outcomes; and the actions that appear as a product of the several compound activities that are carried out within a company.
Although it's not completely clear how this process should look like however it is obvious that the target of every corporation is to come up with the perfect strategy, a strategy that fit the enterprise's external and internal situation, build sustainable competitive advantage, and improve company performance. Numerous academics and managers states that the best way to approach this perfect strategy is by attempting to predict a probable future, making decisions in advance, and controlling the realization of strategic plans (Rumelt, Schendel, and Teece, 1991, 1994). In other words plan the future, the words "plan" and "strategy" are used in this setting as an interchangeably. The meaning of these words are rather parallel; a technique to accomplish a goal. Yet, there are also serious variations among these words. A plan is an arrangement, a pattern, a program, or a scheme for a specific reason. A plan has awfully solid character and does not tolerate for variation. However as there are as many potential futures as businesses a single formal plan cannot be used especially when it is based on prediction (Dess, 1987). A strategy, on the other hand, is a blueprint, layout, design, or idea used to achieve an explicit objective. A strategy is exceptionally flexible and capable of modification and adaptation when required. (Nutt, 1987). Although both approaches targeting an identical target to stake out a market position, carry out the corporation's functions, draw and satisfy consumers, compete effectively, and reach executive goals. The fundamental drive of it is undertaking moves to develop and reinforce the corporation's long term competitive situation as well as financial efficiency and preferably, achieve a competitive advantage above opponents that afterwards turn into the corporation's receipt to beyond normal profitability (Schweiger, Sandberg and Rechner, 1989). Mintzberg goes on to declare that planning and crafting strategy and intentional and evolve strategy are significantly and in fact go side by side. In real life, naturally, each strategy formation walks on two feet, one predetermined, the other evolve. For just as only predetermined strategy formation rule out learning, so only evolve strategy formation rule out supervision. At the limit, none of the approach presents any sense. Learning has got to be tied with supervision.
Always on Time
Marked to Standard
This is the reason behind why the McGill Research group apply the word strategy for equally evolving and predetermined actions. Therefore even though they have conflicting views on how to reach this goal they both typically use a blend of (1) predetermined and deliberate actions on the side of corporation's executives and (2) as necessary responses to unexpected alteration and new market circumstances. (Hamel and Prahalad, 1996: 242). Couple of years later in 1999, Constantinos Markides also reassessed the characteristics of strategic planning itself. Constantinos define strategy making and execution as a continuous, endless, incorporated process necessitate on-going re-examination and reorganization. Strategic management is predetermined and evolving, interactive as well as dynamics. J. Moncrieff (1999) furthermore pressure strategy dynamics. He identifies that strategy is partly predetermined and partly unintentional similarly to Mintzberg, Hamel and Prahalad theory in 1996. The unexpected factors appear from two sources: evolving strategies (consequence of the appearance of chances and threats in the surrounding) and Strategies in action (ad hoc actions by several employees from every division of the business).
Not long ago Welch sad it's more significant to be imaginative than to be predictive. Imagination is one of the major business challenges of the previous century. It's about developing an understandable plan of what is happening around the corporation and benefiting from that (Welch, personal communication, April 2002). Similarly to Welch, Mintzberg after carrying out over 20 fairly reliable researches clearly states that knowing the business capabilities well enough to think deeply enough about its strategic directions is greatly significant, but knowing the strategic direction does not mean having a strategic plan to reach that goal. Especially when a current study supports the fact that present strategies are created with uncertain decisions (Mintzberg 1976; Nutt, 1984), in organizations with various and conflicting goals (Quinn, 1980; Pettigrew, 1973; Eisenhardt and Bourgeois, 1988a), in unstable (Mintzberg, 1973; Fredrickson and Mitchell, 1984; Fredrickson, 1984) or quickly changing environments (Bourgeois and Eisenhardt, 1988b) and in big and multifaceted organizations (Bower and Doz, 1979; Burgelman, 1983). This means that the corporate landscape is neither stable nor predictable therefore making forecast and control very difficult, consequently the gained data is not reliable and planes should not be based on it. On the other hand, according to Rumelt, Schendel, and Teece foresight a precise view of the future is crucial in creating the finest forecasts and making accurate strategy choices which are essential for a strategic plan even though the circumstances might change along the way. Number of strategists also believes that precise view of the future is crucial as they use scenario planning techniques to deal with change. The means Peter Schwartz said it in 1991 is that strategic results cannot be identified beforehand so the foundation of competitive advantage cannot be known in advance. The quickly transforming business surrounding is excessively doubtful for managers to discover sustainable value in methods of perfection or competitive advantage. Alternatively, scenario planning is a method in which numerous conclusions could be generated, their association determined, and their possibility of happening assessed. According to Pierre Wack, scenario planning is about insight, subtlety and complexity not concerning proper analysis and numbers. However according to Mintzberg as change comes occasionally Core Concept Changing conditions will appear therefore it requires continues organizational attempts to advance the strategy since a corporation's strategy is emerging over time that presents the mission of crafting a strategy a work in progress, not a one-time event. As a result, a corporation's strategy at every certain point is demonstrating the momentary result of a never ending crafting, on one side imply rational and imaginative organizational exertions to craft an efficient strategy and, on the other side, constantly reflect and react to market modifications as well as continuous testing. Adjusting to fresh circumstances and continually learning what is effective enough to carry on and what requires to be enhanced is consequently a usual element of the strategy formulation process and results in an evolving strategy. (Dean and Sharfman, 1996; Miller and Cardinal, 1994) Their thoughts are very similar to the previously mentioned J. Moncrieff (1999); Constantinos Markides (1999) and (Hamel and Prahalad, 1996: 242) hypothesises. On the other hand Rumelt, Schendel, and Teece process theory's main goal is to translate the companies understanding of the future into point forecasts of main value drivers by assuming that the strategists hold the foresight which strongly disagree with Pierre Wack theory. These point forecasts enable for accurate estimates of net present value (NPV) and other financial measures, which, in turn, decide which strategy will bring the maximum return which is obviously the main reason for a strategic plan. Top of this, Rumelt, Schendel, and Teece believe that a profound, analytical understanding of today's market environment and today's business capability are the solution to develop foresight about the future. Similar to previously mentioned believe Porter's Five Forces, are at the centre of most typical processes since it is normally understood that understanding the microeconomic drivers of today's market environment is necessary to understand the strategies that will win in tomorrow's market. However, their strategy process views do not consider how industries and resource configurations in fact are developed in terms of management to action and process. (Cockburn, Henderson and Stern, 2000).
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Lewis E. Piatt, former Hewlett-Packard chief executive officer (CEO), reacted very similarly to the rapidly changing market environment as the previously mentioned authors Welsh and Mintzberg even thought he supports his theory from a practical source rather than academic, he said, "Anyone who tells you they have a 5 or 10 year plan is probably crazy." With rapid change comes uncertainty as it has been mentioned and with uncertainty comes danger and great opportunities. If the organization stake big today, for instance, they may primarily reshape a rising market to their benefit. Or they may experience losses that toss their organization into bankruptcy. If they wait for the uncertainty surrounding to clear up a possible chance can disappear, then again, they may avoid making some reckless mistakes or they might lose their first mover advantages to a more aggressive opponent. In selecting strategies under uncertainty, there are no easy answers. Yet several business strategists make it more difficult than it has to be, basically by relying on outmoded decision making and strategic planning approaches states Mr.Lewis. These "tried and true" approaches, intended to optimize strategic decision making in expected environments, systematically fail in times of high uncertainty, as it can be experienced today. Therefore a strategic plan is not a 5-10 year plan or managers trying to predict the future and make decisions in advance somewhat it means that strategic plan will informally form as a reflection of the environmental effects as they go exactly like Mintzberg or Hamel and Prahalad (1996) thought about strategy as a process or as Welch said strategy is taking benefit of what is happening around the company. Kaplan and Beinhocker also greatly supports their theory and after carrying out valid and reliable researches over 30 businesses he believes that successful companies only generate strategic plans to prepare their management team but real strategic decisions made in real time.
Similar to Porter's previously mentioned Five Forces theory Mintzberg (1998, p. 9) developed the theory of strategy as guide with an additional understanding that he explained as the "Five Ps for Strategy; Plan, Pattern, Position, Perspective and Ploy". It is bring to mind that strategy is often defined as a plan although when managers are asked what they in fact did, they define strategy as a guide, or replication of actions performed in former years, that are afterwards set to fit current measures. Hence, strategy as a plan is looking into the future and strategy as a guide is looking into the history; it is linking to past behaviours and actions. Both hypothesises is important, because planning could not be achievable without looking into the past and future. Apart from this, Mintzberg (1998, p. 13) suggests that it is just as significant to look outward and inward as well as up and down, which he explains, accordingly, like strategy as a viewpoint and as a position, "namely an organisation's fundamental way of doing things". His other idea, strategy as a ploy, treats it as a definite action intended to outsmart a rival or opponent. On the other hand, it is possible that this theory is more directly associated with tactics than with strategy. The five Ps of Mintzberg (1998) offer additional perspectives for looking at strategy. Although, his view adds very little to the mainstream theories of other academics who think that, in some important fashion, strategy is closely connected to planning. In 1998, Mintzberg also formed these 5 sorts of organizational strategy into ten "schools of thought". These ten schools are assembled into 3 classes. The first class is normative or adjective. It made up of "the informal design" and "conception school", "the formal planning school", and "the analytical positioning school". The 2nd class, made up of 6 schools, is more interested with how strategic management is in fact executed, instead of lay down selected plans or arrangements. The 6 schools are "the entrepreneurial", "visionary", or great leader school, "the cognitive" or mental process school, "the learning", "adaptive", or emergent process school, "the power" or negotiation school, "the corporate culture" or collective process school, and "the business environment" or reactive school. The 3rd and last class made up of 1 school, "the configuration" or transformation school, a fusion of the previous schools structured into step, managerial life cycles, or "episodes".
In more recent years there has been a rising number of views among academics in the field of strategic business management that a number of the main tenets of classical strategic concept are no longer as suitable as they might once have been (Westley and Mintzberg, 1989; Whittington, 1993; Mintzberg, 1994; Hamel and Prahalad, 1995; Camillus, 1996; Hamel, 1996; Kouzmin 1997; Mainwaring, 1997; Mintzberg 1998; Kouzmin and Jarman, 1999; Parker, 2002). However Mintzberg (1995) has suggest in the 90â€Ÿs that Chandler (1962) definition is the first modern definition of corporate strategy and if his definition were located in the earlier section on planning it could fit perfectly. Andrews (1965, p. 15) defines strategy similar to Mintzberg later theories: the outline of purposes, objectives or goals and the key rules and plans for accomplishing these goals, declared in such a way to define what industry the organization is in and the sort of organization it is to be which definition is also similar to Walsh's and Hamel and Prahalad (1996) idea of strategy. This caveat, that at least one task have to be accomplished, is possibly the first "generic" strategy. A strategy is the plan or guide that incorporates a company's key policies, goals, and action sequence into a consistent whole. A fine created strategy helps to allocate and organize a company's resources into a viable and exceptional posture based on its relative internal shortcomings, competencies and anticipated changes in the environment, and contingent moves by intelligent opponents (Mintzberg 1995, p. 7). This definition illustrate strategy as a plan or alternatively as a guide. The concept of strategy as guide is an idea that Mintzberg uses often (Mintzberg and Waters, 1985; Mintzberg 1998). Apart from Mintzberg (1987) article there are other similar approaches both in process views and strategy content for example managers as "architects" Andrews, (1980); formulating strategy as a "creative act", Christensen, (1982); managers as "craftsmen" Mintzberg, (1975); or strategy creation as "craft thought and action" Mintzberg, (1989). However now a day's some business planners are starting to use a complexity theory approach to strategy.
When Mintzberg in his article recounts the events of leading players like Volkswagen over a certain period of time the danger attaching to the biography apply. There can be little doubt that Mintzberg has precisely recorded events, but the interpretation of these events and the meaning of the actions that these corporations took are affected by the writer's personal paradigm.
"I have six honest working men
Who taught me all I know
Their names are: why and what and when
And who and where and how" (Rudyard Kipling).
Kipling's little verse which is quoted above is a significant guide to interpretation. These questions allow the interviewer to press more information out of the collected evidence. Analytical interpretation must be well-organized, and determination just drawn after it is entirely held up by proof. It is at this period that, the perception of "crafting" is mainly noticeable, as Mintzberg attach to the data in the look for exposure and insight, at the same preserving objectivity and impartiality which could be the most important part of a truly reliable research. Apart from gathering developed and chronological lists and graphs of the most important actions taken by each organization, he used interviews and in-depth reports to study what appears to be the key point of change in each organizations strategy.
Planned interviews pose explicit questions to the interviewee, which suggests that Mintzberg has an outline shaped by earlier studies which could damage the validity of the source. The unstructured interview, on the other side, gives the liberty to the interviewee to talk about what they consider was significant and appealing which could also result one viewpoint. However in practice, interviews have a tendency to be a combination of both approaches, free flow of ideas may expose more than the subject planned. Although the data gained from these kinds of interviews might be weakened to some extent, although if Mintzberg fallowed Bower (1970) excellent example of a powerful and very reliable study conducted on a corporation and its managers than the reliability of the data can be maximized. Even though some evidences are the part of history, they are frequently questionable of its truth; thereby Mintzberg cannot apply entirely scientific methodology to its interpretation. Wider knowledge of the period and the actors within it is required to develop a feel for the likely truth before going on craft and interpret the primary evidence.
There is no one perfect definition of strategy as its meaning is changing nonstop. Mintzberg came up with several fairly reliable researches regarding the process of a strategic decision. However as he made several logical and reliable points supported with reasonably valid data so did many others however as it has been mentioned there is more than one right definition. Although there are many researches and studies regarding strategic processes which identified various contextual influences among many other things (Pettigrew, 1985; Johnson, 1987), but less attention has been devoted to micro-level processes in strategy development (Johnson and Huff, 1998) as well as the real strategy activities that structure the strategic positions fundamentally stay unclear in strategy content research both of these subjects should be widely explored in the future.