The primary research in the whittinggton strategy

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The primary research question examined the "Whittinggton strategy classification (1993) is whether ethnic and non ethnic family firms in the United Kingdom differ in their strategy making. Drawing on a questioner study of 76 high growth family firms ,and subsequent in depth field work with 40 of these, the findings shows that the ethnic origin of the controlling family has a significant influence in determining the dominance of a particular strategy paradigm. Sample consisted of both Angelo axon and south Asian origin competing successfully in the food and drink, clothing and service sectors. The focus group discussion elicited six dimensions. These were used to construct questions across the four schools of thought discussed above. These six dimensions were:

role of woman

forming networks and alliances

attitudes to growth

explicit commitment to formal planning

role of family in decision making process

reliance on external directors

1.1 Ethnic dimension

The importance of studying the ethnic dimension in the family firms even of greater importance in the western world, operate alongside and in competition with there counterpart. Studies investigating the term ethnic entrepreneurship stress the importance of family as a source, from which to gain competitive advantage over the enterprises owned by the host country community, which is also emphasized by the Michel porter "Diamond theory" .The interest generated as a result of the rapid expansion of the Asian-owned small businesses in Britain has led to a steady output of publications in the field in the last ten years,

According to Waldinger et al's interpretation of the 'cultural resources' approach, Asian entrepreneurial activity is seen as likely to develop and succeed if there are social structures through which members of an ethnic group are attached to one another and on the ways in which these social structures are used (Waldinger et al 1990).

Some observed evidence is suggested that culture may indeed be key to understanding Asian business development. Srinivasan undertook a survey of small Asian business owners in Oxford in 1989-1990 (Srinivasan 1992). Within the city of Oxford, 83 small shops and 22 restaurants were identified as Asian owned. This constitutes 12 per cent of shops and restaurants in Oxford while the Asian population makes up 8 per cent of the total population of Oxford. Interviews were carried out with 76 shop and 18 restaurant owners. Detailed information was collected about these self-employed Asians, in terms of their educational and occupational background, their work history, their family and residential patterns, their business practices, their attitudes to racism and assimilation, their ethnic solidarity, their hopes and aspirations.

2. Whittington's perspective on strategic management

Whittington (1993) proposes four generic approaches to understanding strategy by arranging the strategy literature into four different 'schools' of management thought differentiated by two variables - strategic goals and strategic processes. These are plotted using two axes as shown in figure 2. The horizontal axis reflects the characterizing the strategy process as either set of deliberate acts, or alternatively, as an emergent strategy. The vertical axis measures the intended outcome of the strategy making as either profit maximization, or a combination of other goals such as market share, competing stakeholder interests, company image and so on.

Outcome

Profit Maximization

Processual

Systematic

Evolutionary

Classical

Emergent

Deliberate

Pluleristic

Figure 01: Four Different Management Thought (Whittington's strategy Classification (1993)

2.1 Classical Perspective

Classical school was established as a dominant paradigm with the contribution of Whittington (1993), and Porter (1980, 1985) credits the work of Chandler (1962), Ansoff (1965), Sloan (1963),Assuming managerial activity as rational, these writers categorized as 'classicists' regard profit maximization as the supreme goal of business, with this to be achieved through deliberate planning. The environment surrounding the organization is believed to be dynamic but essentially predictable and controllable. Creating a perfect environmental fit between opportunities and organizational resources is, thus the primary objective of the strategy process. Consequently, the strategic planning process is seen as being based upon setting clear objectives, environmental scanning via prescribed tools and matrices (PESTEL and Porter Industry analysis), leading ineluctably to the formulation and implementation of superior strategies that are rewarded by above average financial performance.

2.1.1Criticisms of the "Classical school"

However, compared with the other strategic perspective classical school is very static, which is not incorporate or response to the changes in the outside environmental factors. Mid -1970 on wards due to the increasing rate of changes and the associated macroeconomic instability was questioned the practicality of the classical school. Particularly damaging was the first oil price shock of 1974. This produced fuel shortages and inflation was rendered the prediction of the corporate planners virtually useless.

Further, in reality strategy formulation is not simple step by step process aimed at the best way of meeting the objective. Formulation of strategy is much more jumbled up process which may include revisiting the earlier stages of the strategy.

At the same time strategy formulation through deliberate planning, top management suffers from the 'bounded rationality". This means that they can not have perfect knowledge of the future so any strategies developed will fail to take in to account any emergent trends in the environment.

2.1.3 Observation of the "Whittington

This prescriptive process was developed without any reference to cultural issues surrounding the management, and is believed by most adherents to the school to have universal application. In particular, the classical school predicts that high growth family firms which differ only as regards the ethnicity of the top management should develop and implement strategy in the same way. Limited number of studies, however, has been conducted to investigate the similarities and differences amongst the strategy planning practices of specific immigrant family businesses and other family businesses. In one such study, nam and Herbert (1999) report differences in strategic planning practices of Korean 561 family businesses and non-ethnic family businesses. In line with this assumption, Hypotheses suggests likeliness of differences between ethnic groups:

However the as per the observersation of the Whittington (1993) of his sample non ethnic group much more towards the long term planning as "We have been doing medium term planning, since we established ourselves as major niche player ten years ago. But now we are more persuaded to cost efficiency and return on investment. Alternatively South Asian group had different view regarding the long term planning. As stated by them there is no such a thing as long-term planning. We have been successful, primary because of our day today work.

2.2 Evolutionary Perspective

The second approach to strategy is termed as 'Evolutionary' Perspective" to the evolutionary school. Evolutionary school believes that environmental changes are too fast to be predicted in advance: thus rational long term planning for an unknown future becomes a futile exercise. A Darwinian process of natural selection is the guiding principle and efficiency and day-to-day planning regarded as essential ingredients for success. Accordingly, management is characterized by discretionary production, replication, and optimization of strategic fit with the environment in the short term. The accumulation of these decisions and actions over a period of time would approximate a long term strategy. Since market forces practically eliminate the scope for strategic choice, the effect of ethnicity in family firm strategic decision making should be minimal, leading to the development of the following null hypothesis. Thus, this is emphasized the importance of "emergent strategy" which response to the rapid changes in the uncontrollable outside environment

.

The research of Mintzberg (1987) suggests that few of the strategies followed by the firms in the real world are as deliberately planned as the rational model suggest. The real strategies of the real world are long way from mental maps designed by rational model. Instead, they are planned combination of the planned strategy and another unanticipated emergent strategy. He regards it's unlikely that firm's environment can be as totally predictable. The emergent strategy often response to unexpected contingencies and resulting as a realized strategy. The same view was presented by the Whittington as evolutionary perspective.

Eg: In 1959 Honda entered in to the US motorcycle industry. The main reason behind the Honda success is that the redefining the US motorcycle market via an intended strategy. They develop there strategy to sell the 250ccand 350cc bikes in us. But as thing turned out, the sales of the 250cc and 350cc bikes were disappointing. However Honda executives were using 50cc bikes to run around the los angels and there presence attracted the lot of attention. Finally Honda strategy was shifted producing 50cc bikes for target segment instead of 250 and 350 cc bikes. By 1964 nearly one out of every two motorcycles sold in USA was a Honda.

2.2.1Possitives of Evolutionary perspective

Evolutionary school is more emphasized the changes in the outside environment and its incorporation to the strategy. Since today business environment is subjected to the rapid changes, the dynamism and the complexity of the environment has increased. Therefore strategy developed on a static model will not be work. Strategy developed on emergent basis will quickly incorporate such changes in the business enviourment and to cope with the outcome.

2.3 Processual Perspective

The third approach to strategy is described as 'The Processual School'. According to Whittington (1993) this emerged in 1970s with writers such as Pettigrew (1973, 1985) and Mintzberg (1973, 1987). This school does not believe in the idea of rational economic man or markets being responsible for profit maximization: 'satisfying' rather than 'profit-maximization' is what firms do.

These authors argue that strategies and change are greatly influenced by, and are the results of, wide ranging political activities within the organization. Therefore invisible political hand is highly influenced to the strategy formulation. This is beyond the conventional management style which is identified as an extra ordinary management.

Further, Strategy accordingly may not precede action but may only emerge looking back. Rejecting the logic of long term deliberate planning, Mintzberg (1987) characterizes strategy as a craft, and argues that strategists need to retain the closeness and the awareness to adapt quickly to the market place. Sudden changes in the market place are quickly incorporate to the on going strategy to adapt to the changes in the market place.

He also avers that, there is no one best way to make strategy, claiming: "Effective strategies can show up in the strangest places and develop through the most unexpected means."(Mintzberg, 1987) Consequently, Whittington (1993) argues that according to processualists," The idea of environmental scanning, portfolio analysis and other techniques Used to arrive at strategic decisions by classical theorists are inappropriate."The argument of the processual school is that strategy formation is a cognitive process, which takes place in the minds of the various individual actors.

Eg: The conventional claim settlement procedures followed by all the insurance company in Sri Lanka was changed suddenly due to the unique idea created in the mind of the CEO of Ceylinco Insurance to the on the spot claim settlement procedures which was made revolution in the Sri Lankan insurance industry which is accepting the processual school.

In case of processual school, the importance of the rational planning is comparatively reducing, and satisfying by various influential stake holders of the business rather than profit maximization is central to the objective which is laid down by classical school. Internal process therefore plays a dominant role and the role of family and woman in the family business become more significant. Firms are also keen to learn from networks and may seek to establish alliances to perceive joint opportunities.

Research suggest that power and politic play a concentrating influence in ethnic family firms for an instance ethnic family firms mangers display a strong resistance to opening up the family firms to out side directors and are more likely to employ family or friends in senior positions because they belong to the same community, casts, and value system as that of the family and its patriarch. Dutta (1997) argues that this is one of the reasons Indian family businesses have traditionally being less active in the globalization than their non ethnic counter parts.

2.4 Systemic Perspective

The fourth generic approach to strategy described by Whittington (1993) is 'Systemic'. However, they disagree with classicists that the rationales underlying strategy are same in each and every context. Classicists have not given serious thought to operating in different cultures. According to Whittington (1993), the systemic school conveys the message that managers are not isolated individuals interacting in purely economic dealings, but people rooted deeply in densely interwoven social systems. This means that people's economic behavior is embedded in a network of social relations that may involve their families, the state, their professional and educational backgrounds - and even their religion and ethnicity (Whittington1992). Systemic theorists believe that firms differ and perform in line with the social and economic environment which they operate in. Accordingly, strategy formulation is a process of social interaction based on the beliefs and understandings shared by the members of an organization (Mintzberg et al. 1998).

Strategy is seen as a social process and is shaped by the nature and the culture of an organization. This school was first introduced in 1960 to challenge the pure economist view of business. It was further promoted in 1980 thanks to the Japanese. Recent emphasis on Corporate Social responsibility (CSR) has taken this school of thought to a higher podium position.

E.g.: In resent years most of the international firms have changed there strategy to adapt to the different cultures to downgrade the impact of the multicultural barriers. No beef burgers in McDonald in India. Due to the reason being social cultural value system and religion has enormous impact to change there mind to not have beef. Further KFC in Sri Lanka launched there new product portfolio to adapt to the Sri Lankan consumers taste and preference.

In case of the systemic school, rationales underlying strategy are the product of particular social contexts. Hence, family firms may differ according to the social and economic systems in which they are embedded. Aspirations to growth may be different: firms may benefit from community networks and may be more open to reliance upon external experts in some cultures than others. Furthermore, the role of family, and that of woman, becomes more relevant to understanding differences in ethnic and non-ethnic family firms.

2.4.1 Highlighted Area of Systemic Perspective

Systematic theorist believes that firms perform in accordance with the norms of the social and economic environment in which they operate. Thus, the cultural background of there is likely to profoundly influence how they interpret the efficacy of their decision. Therefore it gives different view of strategy formulation which is not considered by other three perspective of the Whittington.

2.5 Limitation of Whittington strategic management paradigms

It is possible to determine for limitation to this study first to achieve a clear test of the influence of ethnic origin on the strategic choices of family firms, the sample was limited to high growth firms in three industrials sectors in which ethnic firms were concentrated.

The sample size was 76 family firms. If the response rate had been higher this would have enabled the results to be analyzed on a differential basis across the three sectors.

Questioners and in-depth interviews were used for data collection. Longitudinal research is in studying the strategy making of a selected number of family firms would have completed the current study. Further accuracy of the data can changed the whole decision of the Whittington.

3. "Nature of Today Business Environment"

The social revolution that took place form 21 century to the present day which transformed the world in to one large market place, "A Global Village", occurred because of the external and internal influences of threats and opportunities in the environment on the individuals . Globalization is the term used to describe the growing integration of the world economy. It is considered that as globalization take place, national economies are becoming integrated in to single global economy with common features. Links could exist in the world between related businesses, between competitors and between businesses and consumers. Businesses make decisions on the basis of what is happening in the world market, rather than in the national market. This has lead to an increasing production as well as increasing volume of international trade.

An organization does not operate in isolation but is part of the environment with which it interacts. The environment consist of a range of factors of constrain, which are external to the business. These factors and constrains have a direct or indirect influence on its decision making and ability to achieve its objectives. The environment can be favorable or some time it can pose threats, depending on the type of industry and the way they are manage. Therefore it emphasizes the requirement of emergence strategy rather than strategy develops in a rational basis.

While organization can influence the environment in many ways the environment also influences the organization. Therefore both organization and the environment are naturally interdependent in many ways. The external environment means those events, circumstances and factors which occur outside the organization which may influence what happens within it. Anything, which impinges on the firm, can be included in the environment. An organization however does not operate in isolation, but it is part of the environment with which it interacts.

The external environment not stable. In fact it is increasingly turbulent due to changes occurring macro and micro environments. Therefore uncertainty of the business environment is significantly high due to the influence of uncontrollable contingencies occurring in the outside environment.

E.g. In order to cope with the impact of September 11 incident British airways reduced there operation by 50%.

The pace of change is accelerating, requiring continuous response on the part of the business organization. The bushiness should respond to the environment and device strategies to take advantage of the opportunities that are presented or to cope with the challenges presented.

Therefore due to the dynamism and complexity of the global business environment uncertainty of the business has highly increased. Now organization are concentrating to incorporate such contingencies by

Reducing the long-term planning

Emphasizing the emergent strategies

Concentrating on management tools such as Scenario Planning to mitigate the uncertainty.

Hence, In order to adapt to the changes in the external enviourment organization now has to follow the sudden change management programme to implement there quick strategies, came from market itself.

3.1 Suitability of the Classical Perspective

As previously discussed Classical school regards profit maximization as the supreme goal of business, with this to be achieved through deliberate planning. The environment surrounding the organization is believed to be dynamic but essentially predictable and controllable. Creating a perfect environmental fit between opportunities and organizational resources is, thus the primary objective of the strategy process. Consequently, the strategic planning process is seen as being based upon setting clear objectives, environmental scanning via prescribed tools and matrices (PESTEL and Porter Industry analysis), leading ineluctably to the formulation and implementation of superior strategies that are rewarded by above average financial performance. Therefore classical school has following drawbacks, specially comparing to the Evolutionary perspective.

However, compared with the other strategic perspective classical school is very static, which is not incorporate or response to the changes in the outside environmental factors. Mid -1970 on wards due to the increasing rate of changes and the associated macroeconomic instability was questioned the practicality of the classical school. Particularly damaging was the first oil price shock of 1974. This produced fuel shortages and inflation was rendered the prediction of the corporate planners virtually useless.

Further, in reality strategy formulation is not simple step by step process aimed at the best way of meeting the objective. Formulation of strategy is much more jumbled up process which may include revisiting the earlier stages of the strategy.

At the same time strategy formulation through deliberate planning, top management suffers from the 'bounded rationality". This means that they can not have perfect knowledge of the future so any strategies developed will fail to take in to account any emergent trends in the environment.,

Due to the drawbacks of the classical school, it is questionable to implement the strategy developed in rational model in today uncertain business enviourment. Therefore any incremental or transformational changed within the organization can not be managed efficiently and rapidly, if the whole organization strategy has been developed in a static basis established by classical school. It does not response quickly to the environmental changes, since the strategy and the cooperate culture has been developed believing external environment is not subjected to changed and firm capabilities are mach with the enviourment. Therefore sudden transformational or incremental changed can't be implemented within the classical view and gain or maintain the sustainable competitive advantage.

3.2 Evolutionary Perspective and Changed Management

Evolutionary school believes that environmental changes are too fast to be predicted in advance: thus rational long term planning for an unknown future becomes a futile exercise. A Darwinian process of natural selection is the guiding principle and efficiency and day-to-day planning regarded as essential ingredients for success. Accordingly, management is characterized by discretionary production, replication, and optimization of strategic fit with the environment in the short term. The accumulation of these decisions and actions over a period of time would approximate a long term strategy. Since market forces practically eliminate the scope for strategic choice, the effect of ethnicity in family firm strategic decision making should be minimal, leading to the development of the following null hypothesis. Thus, this is emphasized the importance of "emergent strategy" which response to the rapid changes in the uncontrollable outside environment.

Therefore Evolutionary Perspective to Strategy formulation is inline with the today turbulent business enviourment, since it is believe the nature of the enviourment is unpredictable and uncontrollable. Thus it is emphasized the importance emergent strategy rather than concentrating on deliberate planning. Thus, implementing any changed Management programme will be more comfortable with Evolutionary Perspective, since the strategy and the culture of the firm has been developed, believing envoiurment is subjected to changed. Therefore any transformational or incremental changed can be implemented successfully within the evolutionary view, since the capabilities and resources has been developed, expecting the need of emergent strategy.

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