Differences Similarities Between Prescriptive And Descriptive Strategies Schools Business Essay
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In today's competitive world the word strategy has never ceases in people's mouth being individual or organization. Sometimes one hears that a certain strategy of a company has failed or it has succeeded, the word strategy is so influential but the question is what does it mean? Scholes K et al 2008 define strategy as a direction and scope of an organization over the long term, which achieves advantage in changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations. (Scholes et al 2008 pp 2) While Baker define it as a frame work that provides guidance for actions to be taken and at the same time it's shaped by the action taken (Baker J M 2007 pp 23), other say it's a top management's plans to attain outcomes consistent with the organization's mission and goals (Wright P et al 1992) all these are the ideas of what strategy means but at the end all are giving an idea of something which can guide in the future achievement.
So if a strategy is a plan towards achieving a certain objective then business strategy is a long term approach to implementing firm's business plans to achieve its business objectives, and strategic management is concerned with relating a firm to its environment in order to successfully meet long term objectives. (Meyer R& Wit B 2004, pp231)
Strategy making brings into play the critical managerial issue of how to achieve the target results in the light of organization's situation and prospects. Objectives always are the ends and a strategy is the means to achieve the ends. A company strategy represents management answers to such fundamental business questions whether to concentrate in single business or build a diversified group of businesses, whether to cater for a broad range of customers or focus on a niche market, whether to develop a wide or narrow product line, whether to pursue competitive advantage with low cost or product differentiation. (Strickland J and Thomson A. 2003, pp10)
The management needs to know different things in strategic management especially the concepts its having which are the goals of a business, the objectives of how is that goal going to be achieved and lastly reviewing the entire process if the particular strategy is worthy it or not.
Strategic management allows an organization to be more proactive than reactive in shaping its own future, it allows an organization to initiate and influence activities and thus to exert control over its own destiny and this benefit the organization in planning for the future development as it makes an awareness of competitors strategies, awareness of the threats surrounding the organization thus being able to make other strategy for their survival. (Burgelman R et al 2004)
Every organization or company view business strategy in different ways, this is because each organization's formation and implementation of its strategy varies. Some say business strategy is a mixture of luck and judgement or opportunism and design and others say it's a more of an art than a science all these views depends on how people form, implement and review its strategy.
It can be said as luck first of all luck is a fortune a success which it's hard to identify how it has happened and it cannot be explained logically. Some strategies are being formed in the company but are not being implemented still the company survive in the market whatever fierce the competition is. Example SEMCO a Brazilian who have no mission statement, rule book or headquarters example it allows its employees to set out the salaries and make their own targets but still it makes wonders in the market, still it grows by 30% to 40% this can be countered as luck because the company has objectives of being in the market but no strategy on how it's going to survive, (www.freeonlineresearchpapers.com)
Also if business is operating in an environment where the level of competition is high, it has to formulate some strategies on how to over win its competitors. But sometimes, these strategies may fail to accomplish their purpose to the level expected and before new strategies are put in place, some forces/influences may make the business perform better as compared to its competitors. Example: change of political systems in a country (in which case the competitors may not find favourable to them) or economic downturn (in which case competitors may be affected badly) giving the business an opportunity to win the market example Dstv and Gtv Under these circumstances, though the business strategies were not as good as those of competitors, external factors have made the company to win thus proving business strategy as luck.
Though on the other hand business strategy cannot be luck in a competitive world as strategies have to be in place no one can just live with the objectives without ways to implement them and expect the person to win same in business an organization cannot be planning to be the leader in the market and just operate like a blind person not knowing how can it be a leader without doubt the company is likely to fail. Hence this disproves the theory of business strategy being luck.
(The guardian news paper 20th July 2009)
Another scenario of business strategy as judgement whereby it means that business strategy should be based on experience as a founder or leader in the organization make a decision due to past experience or wisdom example if the problem has occurred such as the new competitors have emerged with low price sell in their product a leader can use what they did in the past may be decrease the price or just leave it as they have loyal customers who are not going to leave the company even if the competitors have reduced the price this shows a judgement as the leader judges on what to do. (Wiley J & Sons 2009 pp 255-273)
Though this cannot guarantee the success of that strategy the world is too changing to use the same strategy over and over example customers needs changes thus if a company uses the same judgement it used three years before might not work in a current situation example Adidas who were producing trainers shoes always have been using judgement strategy in which at the end of the day could not work as customers wanted new type of shoes thus other companies emerged and win by following customer needs. Taking a business strategy as judgement is not bad though due to the changing world on technology and the environment in general the companies need to adopt new way of forming and implementing their strategy. (www.thetimes100.co.uk)
Some take business strategy as a conscious policy or practise of taking advantage of circumstances with little regard for principles. This can work in organization as some do not follow any strategic planning tool like SWOT, competitive advantage or value chain to analyse anything in the business but just take any chance as opportunity by trying one after the other the one which succeeds can be taken and the one which fail is left behind but from the beginning no principles are being set like which step to start and which one to be the last. This way is viewing business strategy as opportunism example at first in 1970's and 1980's many Japanese companies like Sony and Sega were having this kind of view like they were imitating and emulating each other by taking advantage of this they went on winning the market. So they took their strategy as opportunity that is to say when they saw the strategy of imitating the competitors work they took advantage of doing the same and they gained competitive advantage (Burgelman R et al 2004, pp116). Also another company which took an opportunity in the market is Virgin around 1970's where the organization realized that many business people travel around the world and they can pay more so they introduced a business class in their aeroplanes. So by taking this opportunity of a niche market that can pay than other people in economic class led to the winning of the market in that time, though for now it's not an opportunity any more.
However taking business strategy as an opportunism is risky as the organization might not know what next step to take when the problem occur example when Sony continued to use this strategy it failed because it took the opportunity of producing many products at the same time so that they can sell in bulk but the problem was that they had insufficient manufacturing structures in which it decreased its product quality that led to their decline in product competitiveness. So taking business strategy as opportunism can have its advantages at the same time creates disadvantages which might affect the organization badly thus the need to look careful before taking the advantage of any circumstance. (Benson M 2006, www.wonova.com)
Other scholars view business strategy as a design in which it follows formula and processes whereby internal and external factors are viewed, to see if they match or not. This is the type of many business approaches as a lot of organization use different processes to look on which strategy to take like scanning the external environment by using Porters five forces or internal environment using SWOT so as to know things like weakness which they can turn into strength by choosing a better strategy example many food retailers use this view of strategy like Tesco, Sainsbury's, Morrison's to mention but few such as Tesco who analyses every time their threats like its competitors and come up with a strategy on how to cover/win its threats for it to remain in the market. (www.businessteacher.org.uk) also other design view sees strategy as a plan in business using an example of Porter's generic strategy in which the company looks at which strategy to plan for the competitive advantage be cost leadership (where the organization cut costs in their value chain while charging low price in their end product) , differentiation(a company differentiates its product from other competitors products) or focus (Companies employ this strategy by focusing on the areas in a market where there is the least amount of competition ).( Pearson, 1999) Below is the business strategy design of which a company can use for it to gain its competitive advantage.
Companies do make a lot of research using different models so as to find a good strategy which can accomplish their objectives. Principles have to be followed in order to formulate a business strategy first the organization has to follow the following model
The company has to know its mission and vision taking an example of Primark as a company which uses this systematic model to develop and implement its business strategy its mission statement is 'look good for less' and the objectives are to maintain robust growth in its core information businesses and intends to gain additional growth through the integration of data content from its various companies with software tailored to meet the needs of specific niche markets. (http://www.researchandmarkets.com)
Also when the companies reach the stage of analysing they use different models to check the environment surrounding before they make the strategic decision be in marketing, human resource or operation. Models used are like PEST and SWOT analysis, BCG, An off, Porters five forces to mention but few. For example Primark uses five forces to analyse its environment.
Hence, descriptive strategy is a kind of statistical research which is main goal is to describe the strategies to be put in place and characteristics on what is being studied. The descriptive is mainly done when the researcher wants to gain a better understanding of what strategies are required to be put in place so that it can work appropriately. . It explores the existing certain phenomenon that the details of the fact wont be known. `And the prescriptive strategy is the approach whose objective has been defined in advance and whose main elements have been developed before the strategy commences. The objective may be adjusted if circumstances changes signicantly. After defining the objective, the process then includes analysis of the environment, the development of strategic options and the choice between them. The chosen strategy is then implemented. (Lynch R, 2006, pp 40-41).
The descriptive strategy final objective is not clear and elements are developed during the course of its life as the strategy proceeds. The process is one of experimentation to find the most productive route forward, it does not have a single, final objective; strategy develops over time. In fast developing markets, the time period may be short; in slow developing markets, it's likely to be longer. To test these type of strategy its important to examine how the strategy has developed in practice over a defined time period. The advantages of the process include its consistency with actual practice in organisations; it takes account of people issues such as motivation; it allows experimentation about the strategy to take place; it provides an opportunity to include the culture and politics of the organisation; it delivers flexibility to respond to market changes. (Lynch R, 2006, pp 46-47).
There strong similarities to descriptive and prescriptive strategies. As the definitions states ; descriptive is what is usually done while prescriptive is what can be done most realistically. It could end up being the same outcome on many occasions .The even make sense when put together. What is usually done is most likely what can be done most realistically. However, when studied in depth , these strategies have their differences. (Lynch R, 2006, pp 68-70).
The descriptive strategy is done based on past evidence. It something that has been most likely done in the past. Unlike the descriptive , the prescriptive takes other factors in account while analyzing multi[le criteria and conflicting objections. After this , then chooses what strategy would or could be done realistically based on the objectives previously listed. According to the prescriptive , the second best decision might be more appropriate. The prescriptive approach includes an analysis of possible decisions around a chosen solution known as sensitivity analysis . A descriptive approach may be making a decision on a topic only based on past experience .If it was positive , then the decision is made. If it si negative then a different decisions made. prescriptive strategy analyzes all options before deciding based on all factors , what the best option may be.( http://www.oppapers.com/essays)
The prescriptive and descriptive strategies can be contrasted by adapting Mint berg's analogy whereby the prescriptive strategy is Biblical in its approach, it appears at a point in time and is governed by a set of rule s, fully formulated and ready to implement .While the descriptive strategy is Darwinian in approach, an emerging and changing strategy that survives by adapting as the environment itself changes. Given the need for an organisation to have a corporate strategy, much has really been about the process of achieving these strategies. No common way agreement on the way this can be done.
On one hand, there is the prescriptive process, which involves a structured strategic planning system .It is necessary to identify objectives, analyse the environment and the resources of the organisation, develop strategy options and select among them. The selected process is then implemented. On the other hand, there is the descriptive process, which does not identify a final objective with specific strategies to achieve this. It relies on developing strategies whose final outcome may not be known. Managers rely on more on trial and error and experimenting to achieve the optimal process.
Develop or define organisation's objective
Analysis and projection of the environment surrounding the organisation: macroeconomic analysis, political climate, etc.
Reconsider objective(and change it if the environment requires this)
Develop strategy option
Select option against the likelihood of achieving objectives
Implement chosen strategy option
How the prescriptive corporate strategy process works
Within the descriptive strategies, four main groups were identified:
The human resource based route- places the emphasis on people in strategic development. Motivation, politics culture and desires of the individual are all important. Strategy may involve an element of experimentation and learning in order to take in to account all the factors.
The innovation and knowledge based route- this emphasises on the contribution of new ideas and radical ways of thinking and sharing knowledge if an organisation is to outsmart its competitors. (Lynch R, 2006 ,pp 68-69 ).
One view of how the descriptive strategy process works.
Discuss with immediate managers
Identify problem or objective
Identify related or subsequent initiative
Discuss with immediate managers
Discuss with other departments or companies in group
Try compromise B
Try compromise A
Discuss with other departments or companies in group
In conclusion business strategy is a mixture of luck and judgement, opportunism and design because all these fall together in different cases example a company can have a strategy and it does not work though the change environmental factors can favour the company and ending up making profit than its competitors thus confirming the luck and opportunism part of the strategy, at the same time having processed the strategy with a good strategy design for a particular problem or challenge in the company can bring the success and the design can be drown from the judgement of the past experience hence making business strategy a mixture of all the four elements however no element can stand alone to satisfy that a business strategy is that element.
Also because of the globalization the environment factors do change every day and the competition is high thus business strategy cannot be a sitting duck but a moving target that is to say the organization strategy has to be developed in each particular time example some companies which are so innovative and do not use static strategy they change their strategy by creativity and innovation according to changes happening thus agreeing that business strategy is more of an art than a science. For example IBM company.
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