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Strategy in the ancient Greeks terminology means chief magistrate or a military commander in chief. It was only in the twentieth century that its use in business manifest.
Whittington (2001) outlines four generic schools of thinking in strategic management. It is a particular perspective. An alternative perspective is Mintzberg, Ahlstrand and Lampel (1998) which sees strategy in ten schools.
Much of strategic language has a military lineage such as price wars, troubleshooting, e.t.c. Another valid locus is through Isaac Newton and the enlightenment through Adam Smith and economics through the industrial revolution and the inception of management is redolent of this lineage-leveraged buy-out, turning the wheels of industry, reengineering, and going like a sewing machine.
From the military perspective we move to the notion of science and the impact of Newtonian Physics. The impact of science has become so absorbed into our thinking that it is often not considered; its legacy in management is that of positivism. Positivism suggests that management is a scientific process that can be observed and modelled (theorised), then proved experimentally. Science can then be used to repeat success in their situations. This idea has underpinned such ideas as forecasting, linear programming and critical path analysis for example. These allow techniques to be applied to business situations.
In the 19th century, there was the desire of validating all professions as being scientific, as scientific equated to truth and puissance. If Newtonian Physics gives us the science of the inanimate object then Darwinism gives us the science of the evolution of living things. This implies that firms are complex organisms co-existing in an environment which impacts upon their development and survival.
Whittington (2001) has organised some of this thinking into the four generic strategies of classical, evolutionary, processual and systemic. He suggests that strategies can be divided up into those that are unitary i.e. have a single outcome or goals, i.e. pluralistic. There is a further dichotomy between schools of thought that view strategy as a deliberate act and those for whom it simply emerges out of everyday processes of the organization.
With classical strategic management, the thinking of strategy (strategising) is separated from the doing of strategy (strategic action), this is particularly prevalent in the public sector (Goldsmith, 1997). The separation fits with the economic view of hierarchy as a way of organising the firm. Here, top managers think about and/or design strategy while managers lower down in the hierarchy implement and deal with the operational aspects of strategy.
Chandler's (1962) famous 'structure follows strategy' aphorism sums up this 'top down' approach. This again implies a separation of the thinking and doing which in turn implies that some people can do strategy whilst others can't do and so must follow those that can. It is a situation of luck.
Strategy is the long-term direction and planning that a company carries out in order to determine how it can best compete and succeed. Johnson and Scoles (2006) define strategy as "the direction and scope of an organisation over the long term which achieves advantage of the organisation through its configuration of resources within a changing environment to meet the needs of the market and shareholders' expectations." Grant describes how strategy has developed over the last 50 years from the initial budgetary planning and control favoured during the 1950s through to corporate planning, strategy and then in the 1980s and 1990s a greater emphasis on the "quest for competitive advantage and finding that advantage from within the firm" and "strategic innovation being the key for strategy development." (Grant: 2002) He cites Porter who maintained that "competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value".
Quinn puts forward that strategy is "the pattern or plan that integrates an organisation's major goals, policies and action sequences into a cohesive whole. A well formulated strategy helps to marshal and allocate an organisation's resources into a unique and viable posture based on its internal competencies and shortcomings, anticipated changes in the environment and contingent moves by intelligent opponents." (Mintzberg et al. 2003)
Most strategic writers agree that there are various ways in which organisations can develop their strategies, however, much will be dependent on the nature of the organisation, the culture and political landscape of the firm in addition to the external environment. Much debate (Mintzberg, Johnson and Scholes; Grant) has taken place between the planned and intended strategic direction and the actual emergent strategic direction that takes place. How well a firm realises its intended direction will often depend on how close the "strategic fit" of plans, resources, culture and the external environment.
Strategy is developed at three levels. Corporate level strategy is "concerned with the overall purpose and scope of an organisation and how value will be added to the different parts of the organisation" (Johnson and Scoles: 2006). Corporate level strategy will make decisions as to whether or not to adopt a global strategy, or whether to grow organically or by merger or acquisition. It was a corporate level strategy decision to develop globally by merging the two companies and in this case study.
The second level is concerned with the business development, i.e. how a company should compete in different markets, which products should be developed for which markets and how to achieve competitive advantage. By organising strategic business units (SBU) in each of their major markets, STM Electronics is hoping to achieve long-term profitability and growth of market share by being geographically close to its major markets.
The third level of strategic decision-making is at operational level. This is concerned with how "the component parts of an organisation deliver the strategies" (Johnson and Scoles: 2006), i.e. how they actually operate to meet the goals and objectives. Decisions regarding recruitment and selection policies would be one example of an operational level strategy. The decision to adopt total quality management can be seen as an operational level strategy.
De Wit and Meyer put forward that organisations' ability to compete will "depend on the business systems, the way it conducts its business system needs to create superior value for buyers and it must be able to supply a product more closely fitted to client needs than any other rival. " Creating a competitive advantage often comes from doing things differently.
Johnson and Scoles describe the different ways in which firms can achieve competitive advantage through the competitive strategy options; price based, differentiation based or focus strategies. These options are also described by other theorists "in selecting a competitive scope, firms can vary anywhere between being widely orientated and very tightly focussed" (De Wit and Meyer: 2002) they suggest strategy can be based on price, features, bundling, quality, availability, image, and relations. Firms have to determine what the buyers find important. Porter (cited in De Wit & Meyer) suggests that firms must chose between lower cost or differentiation. He says you cannot do both.
What will be important is that the firm's buyers' needs are being met more closely than by any other firm.
De Wit, B and Meyer, R: 2004: Strategy: Process, Content, Context 3rd Edition Thomson
Grant, R. 2002: Contemporary Strategy Analysis 4th Edition Blackwell Publishers, Oxford
Johnson, G. and Scholes, K. 2006: Exploring Corporate Strategy 7th Edition Prentice Hall, Europe