The ideology of Positioning Schools development


The ideas of the Positioning School developed during the period when the Planning School were in its ascendancy and were in many ways extensions of the Planning School concepts. [67] McKiernan (1996) identifies the conception of some of the ideas that would develop into the Positioning School as early as 1933 with the work of [15] Chamberlin (1933), who discusses the concept of product differentiation and consequently, although subliminally, considers positioning the product in the marketplace, and the position of the firm in the economy. This was followed by the studies of [69], [70] Mason (1939, 1949), where similar positioning issues were considered. [17] Coase (1937) differentiated the role of the firm and the role of the market in "organising" the economy. However, the ideas of the Positioning School were not to coalesce into a coherent theory of strategic behaviour until the advent of the economists.

In the early 1980s, with Modernist ideas of the Planning School firmly entrenched, and "management" theorists generally influencing ideas, business strategy was suddenly re-directed by the influence of Industrial Organisation (IO) economists shackled to the equilibrium assumption. IO is a branch of economics that considers the behaviour of firms within industry groups, maintaining that a firm's performance depends on the interactive relationship between the number and distribution of firms in a market and the behaviour they exhibit ([98] Shivasharan and Shashidhar, 2005). b89 b90 b91 b92 b92 Porter (1979, 1980, 1985, 1991, 1997) exemplifies this view that the fiction of the marketplace as an impersonal arbiter of social activity is at the heart of New Right ideology. There is a crucial mental leap between the individualism used by management to view the organisation and the individualism of actors in market economics, which reveals the ideological nature of this faith ([61] Kouzmin et al., 1996).

Lady using a tablet
Lady using a tablet


Essay Writers

Lady Using Tablet

Get your grade
or your money back

using our Essay Writing Service!

Essay Writing Service

[46] Harfield (1998, p. 3) claims that the entry of the economists allowed managers to abrogate their responsibility for creating strategy even further: by "letting the markets do the thinking ... the market becomes the most effective form of weeding out efficiency or lack of adaptation".

The IO economists argued that only a few key strategies, explicit as positions in the market that could be defended against competitors and potential competitors, could provide competitive advantage. This is clearly a concept dominated by the equilibrium assumption:

Economists study complex economic systems by constructing simplified models of economic behaviour, based on incompletely verified time and space evidence, in order to derive partial intuitive judgments about the past and future consequences of changes in the social-political context of economic activity (cited in [33] Fitzgerald, 1990, p. 24).

Firms that occupy the prime positions could command higher profits than other firms in the market and hence would have the economic power to influence the market. Consequently, there is only a limited number (or number of categories) of strategies that are useful - i.e.| their generic strategies (see Figure 1 [Figure omitted. See Article Image.]). As can be seen in Figure 1 [Figure omitted. See Article Image.], Positioning School companies could choose between only two generic strategies - differentiation and cost leadership - and these could be achieved in either a broad or a focused fashion. Other options would leave a company "stuck in the middle".

The application of the generic strategies was managed by a process of analysis and, many analytical tools were developed. The concept of generic strategies was not new; though [67] McKiernan (1996) suggests that the Positioning School ideas started with Chamberlin in the 1930s, [74] Mintzberg et al. (1998) propose that the strategies of the early military thinkers were essentially generic. In discussing Sun Tzu and Von Clausewitz, [74] Mintzberg et al. (1998, p. 85) suggested that these military thinkers "delineated types of strategies and matched them to the conditions that seemed most suitable". In an earlier work, [75] Mintzberg et al. (1995) describe at some length the strategies of Alexander the Great and relate them directly to the strategies of many war leaders through the centuries and into the modern era. They put forward that many modern practitioners utilised classical principles of strategy dating back to the Greek era. Perhaps one of the most startling analogies is that between the battle strategies of Patton and Rommel in the Second World War and those of the Macedonians, which were almost carbon copies of each other - i.e. planned concentration, rapid breakthrough, encirclement, and attack at the rear of the enemy. The same generic strategies that in the context of the First World War were such dismal failures.

Lady using a tablet
Lady using a tablet


Writing Services

Lady Using Tablet

Always on Time

Marked to Standard

Order Now

[78], [79] Ohmae (1982, 1985) has much to discuss competitive position, particularly the competitive positioning of successful Japanese companies. It is his view that the theories abounding in economic and economic policy circles concerning the importance of position have not been the drivers of Japanese success. He believes that strategy is not about beating the competition but about satisfying customer needs. Still further, [22] Deming (1986) expounds a fundamental concept when exhorting his audience to consider the concept of competition. It is his argument that people must learn to cooperate with others and to compete with themselves. In the context of strategy, the ideas of Ohmae and Deming, regarding the importance of customers is most important. Concepts of competition and, market share are of little use to the business principal and as a consequence, there is very little that the philosophies of the Positioning School can add to their strategy knowledge base. As with Ohmae's Japanese corporations, competitive advantage is driven by the ability to serve the needs of customers better.

[30] Ezzamel and Willmott (2004) and [64] Levy et al. (2001) agree that the field of strategy is still being dominated by the Modernist conceptions of strategy formulation and implementation, exemplified by b89 b90 b91 b92 b93 Porter's (1979, 1980, 1985, 1991, 1997) Positioning School thinking. Minimal attention is paid to the institutional context within which strategic decisions are made nor of any of the characteristics of the people. Porter's world is devoid of people:

Close analysis of Porter's work and subsequent developments provide considerable fuel for critical theorists ... as it highlights the contradictions between the idealised myths of "perfect competition" and the higher the grounded concepts of market power ([64] Levy et al., 2001, p. 5).

The remaining dominance of [90], [91] Porter's (1980, 1985) positioning concept in the field of strategic management, 25 years after its promulgation, suggest that Porter is another CMS "Bogeyman" ([80] Parker, 2002, pp. 119-20).

In addition to generic strategies, [90], [91] Porter (1980, 1985) developed several other modular concepts. The five forces model is shown in Figure 2 [Figure omitted. See Article Image.]. [90] Porter (1980) suggested that the task facing managers is to analyse competitive forces in an industry's environment. He claimed that only five forces needed consideration. [90] Porter (1980) argued that the stronger the manifestation of each of the forces, the more limitation, the ability of established oraganisations to increase prices and to earn greater profits. This is pure Modernist, Neo-economic thinking. The simplifying and "blinding" role of externalities in economics, blinds [90] Porter (1980) who is unable to postulate the role of government, or deregulation, in his five factor, positioning model at the very time he was proselytising the case of the US Airline industry under severe conditions of Reaganite, ideological deregulation of that industry ([60] Kouzmin, 2007). [93] Porter (1997, p. 162) preaches that many of these intangible forces are measurable and that there is a "chain of causality that runs from competitive environment to well position, activities, emprove employee skills and organisation".

This causal argument is further pursued with [91] Porter's (1985) concepts of the value chain (see Figure 3 [Figure omitted. See Article Image.]). The value chain analysis is based on the simple linear idea that every activity performed in an organisation will add some value to the final products or services produced. The final product is simply the aggregate of values contributed. As an aid, to analysing resources to allocate to the value chain even more analytical matrices were devised. Figure 4 [Figure omitted. See Article Image.] shows the resource audit matrix.

Modernist analytical simplifications associated with Positioning School thinking had been developing for several years before the advent of [90] Porter (1980). The Boston Consulting Group (BCG) was started in 1963 and from its inception the company sought to establish itself in the strategic planning area - [65] Lorange (1975) considers the BCG to be the pioneer of analytical business strategy. BCG worked with the Mead Paper Corporation on the development of an acquisition strategy. This project instigated the conception of a simple matrix, known as the BCG Matrix. It is ostensibly a simplification tool with only two parameters: relative market share and industry growth rate. The BCG Matrix is shown in Figure 5 [Figure omitted. See Article Image.].

The success of the BCG Matrix ([87] Phelan, 2005) led to some proliferation of variations on the theme. [119] Wind and Mahajan (1981) propose that, by 1981, four alternative matrices were in common use and five others were also in circulation. General Electric and McKinsey (Figure 6 [Figure omitted. See Article Image.]) developed nine-box matrices around the BCG concept ([77] Morrison and Wensley, 1991).

Lady using a tablet
Lady using a tablet

This Essay is

a Student's Work

Lady Using Tablet

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Examples of our work

The influence of the new IO economic thinking of [90], [91] Porter, (1980, 1985) influenced the consulting "boutiques" to develop the matrix ideas further, including a growth/gain matrix, a competitive advantage matrix, a matrix for market definition, and a 27 option share/strategy matrix ([77] Morrison and Wensley, 1991). How is it possible that the strategy can be reduced to two element matrices?

McKinsey and Co., another of [74] Mintzberg et al. 's (1998, p. 82) consulting "boutiques", developed the Seven-S Framework and published the idea in [113] Waterman et al. (1980). The concept, shown in Figure 7 [Figure omitted. See Article Image.], was that effectiveness stems from the integration of a number of factors, which by some happy coincidence, all start with the letter S, and of which one was strategy.

Analysis and simplistic cause-and-effect thinking were dominating the strategy field. One of Waterman's co-authors was Tom Peters ([113] Waterman et al., 1980) and, together they would come to develop a "concept of business excellence" which is described in - The Learning School. Their concept of excellence will ultimately lead them to be condemned for their ideas and to describe them as the third CMS "Bogeymen" ([80] Parker, 2002, pp. 119-20).

The Positioning School - still claimed by some ([64] Levy et al., 2001; [30] Ezzamel and Willmott, 2004) as the dominant force in strategic management - was the star for many years in the 1980s. Its complete dominance has since receded for many of the same reasons as the Planning School. Dynamic and discontinuous change in the market place means that the future has become less and less predictable. The reliance of the Positioning School on generic strategies and analytical investigation have become less useful as the future has become increasingly less like the past. Dominant Modernist epistemological concepts could not provide complete answers for business strategists.

The premises of the Positioning School are that strategies are generic, explicit as positions in the market place, which is economic and competitive. Strategy formulation is limited to the selection of one of these positions based on analytical calculation. Planners are replaced by analysts who influence managers to plan and implement. The Positioning School, as with both the other classical prescriptive schools, does not have a theory of strategy creation ([41] Hamel, 1997). Strategies already exist, perhaps like Plato's "Forms", and the unknowns are supplied by analysts utilising generic tools from the school's philosophical armoury.

The Positioning School took big ideas from macro economic concepts and applied them to single firms. Consulting organisations flourished as analytical tools and prescriptive models developed. However, the decline in the influence of the strategy boutiques mirrored the decline in the influence of the Positioning School. [93] Porter (1997, p. 162) continues to consider strategy creation as a deliberate and deductive process; he does not appear to recognise the existence of strategic learning, cognition, or strategic emergence:

If the strategy is stretched to include employees and organisational settings it becomes virtually everything an organisation does or consists of. Not only does this complicate issues matters, but it obscures the chain of causality that runs from competitive environment to enprove its position, activities, employee skills and organisation ([93] Porter, 1997, p. 162).

[74] Mintzberg et al. (1998, p. 119) respond to this by asking two fundamental questions that might be replicated by many of scholars from outside the Classical Schools, especially with a critical epistemological approach: "What is wrong in seeing strategy in everything a company does or consists of?" and "Why must there be any such chain of causality at all, let alone having to run in one direction?" ([74] Mintzberg et al., 1998, p. 119). This second question on directional causality is highly significant to this paper because directional causality is a feature of linear systems. Even when [74] Mintzberg et al. (1998) question these ideas of causality, they are still doing so from an essentially Modernist or Postmodernist perspective - they have not yet changed the fundamental underlying systemic philosophy or epistemological paradigm, that will better allow for concepts such as directional causality to be questioned.