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Strategy management is divided into ten schools of thought, each deeply embedded, though narrow, concepts typically dominate current thinking on strategy. The taxonomy of Schools of Thought in strategic management, as proposed by Henry Mintzberg (1) is:
2.1 The Design School
This school defines strategy as achieving the essential fit between internal factors such as strengths and weaknesses; and external factors as threats and opportunities (SWOT analysis). Here strategy is neither formally analytical nor informally intuitive. Senior management formulates clear and simple strategies in a deliberate process of conscious thought. This was the most important school on strategy till 1970.
2.2 The Planning School
Planning school is a contemporary of the design school. Like the Design school it also flourished till the1970s and faltered in the 1980's. it continues to be an important influence today. The planning school shares all the assumptions of the design except the assumption that the process was not just cerebral but formal. This meant that staff planners replaced senior managers in strategy formulation. Even at the 21st century the value gained from annual strategic-planning process is very little and it is better to have a real-time strategy making and encouraging 'creative accidents'.
2.3 The Positioning School
This was the next developed form of strategy which was advertised by Harvard professor Michael Porter in 1980. However, the basement of Positioning school is 'Art of war' written by Sun Tzu in BC 500. For Sun Tzu; war strategy reduces to generic positions selected through formalized analysis of military situations. In modern strategy military situation is replaced by industry situation. So planners are analysts. Strategic groups, value chains, game theories, and other ideas were developed with positioning schools - but always with an analytical bent.
2.4 The Entrepreneurial School
This school is similar to the design school by having a centralized decision maker, which is the chief executive. But unlike both the design and planning school the decision is taken on the basis of intuition. His vision replaced the precise designs, plans used in other schools of thought. This strategy had its success mostly in start-ups, niche players & unlisted companies. However to apply this strategy a visionary leader was necessary.
2.5 The Cognitive School
As strategies developed in people's mind as frames, models, or maps, those mental processes also needed to be understood. Research has grown steadily on cognitive biases in strategy making and on cognition as information processing. A new view in this school is that cognition is used to construct strategies as creative interpretations, rather than mapping reality into objective way.
2.6 The Learning School
In this view, strategies are emergent, strategists can be found throughout the organization. This school challenged the omnipresent prescriptive schools by also having many works that like incrementalism; conceptions like venturing, emerging strategy, retrospective sense making and the so-called formulation and implementation intertwine etc.
2.7 The Power School
This school focus on strategy making rooted in power, in two senses.
Micro power: Development of strategies within the organization is essentially political, which involves bargaining, persuasion, and confrontation.
Macro power: Organization uses its power over others and among its partners in alliances, joint ventures, and other network relationships to change strategies in its interests
2.8The Cultural School
In contrast to the power school; cultural school focuses on common interest and integration. Here strategic formation is a social process rooted in culture, which can discourage a significant strategic change. Strategic advantage can be the product of unique and difficult-to-imitate cultural factors. After the impact of Japanese management; culture became a big issue in the United States and Europe.
2.9 The Environmental School
The environmental school throws light on the demands of the environment prescribed by Population ecologists, some organization theorists, splitters, & positivists in general - especially in the Anglo-Saxon countries. An example for application of this school is contingency theory; which considers what responses are expected of organizations when faced with a particular environmental condition. However this school has severe limits to strategic choice.
2.10 The Configuration School
This school is the most popular one at present. This school is more academic and descriptive. It sees organization as configuration - coherent clusters of characteristics and behaviours. Hence it seems to integrate the claims of the other schools, which are concerned only in cluster. For organizations to be described by such states, change must be described as transformation - the leap from one state to another. Consequently literature and practice of transformation, a more prescriptive and practitioner oriented and consultant promoted developed.
This theory can be represented as the diagram(2) below
3.So what is Strategy?
"Strategy is a course of action for achieving an organization's purpose" (De Witt & Meyer, 2005). In the complex world of organizations it must be stated that there is no "best way" to generate strategy and strategic management, and nor is there any "one best form" of an organization (Mintzberg, Ghoshal and Quinn, 1998). Strategy is conventionally studied as a distinctive field of activity that exists independently of efforts to specify its features and/or prescribe for its perfection.The context in which the strategy is set is of great interest.
The seemingly simple definition of Strategy seen in all text books is made up of elements that have important implications. First of all it requires to identify the problems that exist. Generally problem identification is more difficult in comparison to solution; because a wrong identification of problem may lead the organization in the wrong way; which defeats the core purpose of strategy.
The ten schools of thought above, suggest that the practice of strategy in built environment as a complex and important decision making process which cannot be understood fully from a single perspective or school of thought. Infact no universal school of thought can be depended fully to manage an organisation under all circumstances. Each school has its own pros and cons. All schools on thought on strategy presume that they know how the market behave in advance and it does in accordance of the knowledge which is considered 'genuine'. This position assumes that the market is both transparent and unchanged by the theory/methodology that accounts for them. So it denies the interpretation, evaluation and approproation of social theories that eexplain the real world.
Strategising is not just setting long term goals or vision, or restructuring the organization or inventory in accordance to the different schools of thought. The selection of the school of thought depends on many factors like the Stake holders, Partners, management, Employees, the size of the organisation, inventory, Unions, Customers/Users, Suppliers, investors, Government and regulators, Competitors and the opportunities available in the market, etc. Mintzberg H. (1998) In the complex world of organizations it must be stated that there is no "best way" to generate strategy and strategic management, and nor is there any "one best form" of an organization (Mintzberg, Ghoshal and Quinn, 1998). The context in which the strategy is set is therefore of great interest.
The context and content of strategy has been discussed & considered because organizations exist to fulfil a purpose and to create value (Schilling, 2005, De Witt & Meyer, 2005). Strategies are employed to ensure that the purpose of organization is satisfied(De Witt & Meyer, 2005). Any organization that has a goal to accomplish must have a methodology of strategic planning. The problem is that most organizations do not know formulating a plan that is parsimonious and flexible at the same time. When attempted most organizations do it in the wrong order. Some see disintegration of jobs as the first task, while other see market analysis as the first one.
Non-financial aims, which are the basic strategy in public service departments,like cutting rates of polio (helath department) or improving labour rules(Human resource department) also arise in business firms. eg. Greyhound busline (USA) targets passenger volumes while mobile service providers aims to increase the numbers of subscribers. Anyway aims like this are indirectly linked to revenue or profit. Also some objectives may also be constraints on others, such as catering to niche segment alone may reduce market share. So a strategist must try to find a balance between all these. Objectives also change as we make progress towards them - if it is looking easier than expected to hit a goal, then a new, higher aim may be chosen.So a strategist must find a balance between all objectives.
Generic literature differentiates the different stages of strategy: analysis stage, formulation stage and implementation stage (Thompson & Strickland, 2001; Mintzberg, Ghoshal and Quinn, 1998; De Witt & Meyer, 2005). In the analysis stage, strategists recognize the opportunities and threats in the environment, as well as the strengths and weaknesses of the organization. Next, in the formulation stage, strategists decide which strategic options that are obtainable to them, evaluate each and select one. Lastly, in the implementation stage, the selected strategic option is translated into a number of actual activities, which are then carried out (De Witt & Meyer, 2005).