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It simple to understand strategy management role underlines the important of managers with regard to strategy (Johnson, G and Scholes, K etc. 2008). Between this, strategy also known as the military, this is the strategy war planning by strategists, within the development process it need to determine with comprehensive analysis for several factors among the enemy and the firm military.
Moreover, the goal and mission of war will integrate and analysis of the war environment, developing war policies, allocating resources, as well as the specific tactics performance. Therefore, strategists who can overall win the war. At the same time, Strategy management is of vital importance as CEOs and managers have to constantly reassess their strategy management models and implement change and improvement wherever needed. (thinkingmanager.com)
On the other hand, strategy is working in business with the same logic. Business strategy and strategic management have long been view as the concept and process that link an organisation and its environment (Davenport, T and Leibold, M. etc. 2006). Thus, it is significantly engendered with industrial revolution and economic development. A long with nonstop productive force on development, external environment has undergone gradually change, science and technology leap-forward development, the production increase complexity, multiple, consumer demand, diverse and volatile.
As time went by, new strategy and technique are always occurring and the needs and wants of consumer would rather changes. Thus, the way people work, live and communicate each others have dramatically changed. The world is changing all the time and these changes happen so rapidly that it is harder and harder for contemporary organization strategy to keep a pace with them. But in realistic, not everyone wants to get change, nor they had to changes.
American Express has been found since 1850, it conducted business depend to several guiding principles over the year have become inextricably linked with its brand, product, service and its employees. "Company values" generation is before the phrase has entered the corporate lexicon,
American Express employees in the organization were expressing the same core structure upheld by the company today.
American Express was established as an express mail business in Albany, New York. It owned by Henry Wells (Wells & company), William FargoÂ (Livingston, Fargo & Company), andÂ John Warren Butterfield(Wells, Butterfield & Company, the successor earlier in 1850 of Butterfield, Wasson & Company), which known as a joint stock corporation merger express companies. Within this, in 1852 is another founder and directors objected to the proposal in American Express extend on operation in California. http://home3.americanexpress.com/corp/images/spacer.gifAmerican Express first recognize it's headquarter in a building at the intersection of Jay Street and Hudson street that later called the TriBeCa section of Manhattan. (http://home3.americanexpress.com)
Design school is one between three under prescriptive. Mintzberg et al. 1998 address that the design school, which proposes a model of strategy making that seeks to attain a match, or fit, between internal capabilities and external possibilities. In the words of this school's best-known proponents, Economic strategy will be seen as the match between qualifications and opportunity that position a firm in its environment (Christensen et al., 1982). Link this to how the American Express has set with the highest standard of integrity in all of their action.
At the same time, American Express has provided outstanding product and unsurpassed service, which work together deliver premium value to its customer. Furthermore, American Express has design a positive relationship different that made in its customers' live. Design school is an original view of strategy formation as achieving the essential fit between internal strengths and weaknesses and external threats and opportunities. (www.1000ventures.com).
Positioning school understanding the strategic position is concerned with identifying the impact on strategy of the external environment, an organisation's strategic capability and the expectations and influence of stakeholders (Bernadette, W. 2002). Also, positioning school is generic positions chosen through formalised analysis of business situation. Therefore, schemer became analysts. Moreover, positioning is type of strategic group that include value chains, game theories and so on, but this happened with analytical bent. Forecasting to the American Express has determined "We value our people, encourage their development and reward their performance". Thought, it is meaning to American Express will give a chain to every employee to show their ability, join all the activities, and if their performed is well receive they will be reward in the new position as they will be.
Planning is an important thing in the strategy of organization, though; planning school is an important influence in today business, it is reflect to most of design school assumption except a rather significant one. In the staff planners will sometime replace senior managers as the key work in process. Therefore, annual strategic planning has generated company little value. Action to this, company process should redesign to sustain making real time strategy and to promote creative accidents. With the planning of American Express, it has exhibit a strong will to win in the marketplace and in every aspect of our business. Work together, across boundaries, to meet the needs of its customers and help the company win.
What is strategy and strategic management? According to Griffin (2005: 238), strategy is a comprehensive plan for accomplishing an organization's goals. Thus, strategic management is a way for achieving business opportunities and challenges, it does as comprehensive and ongoing management aimed at creating and implementing effective strategies. Additionally, effective strategies are those that promote a superior alignment between the organization and its environment and the achievement of strategic goals (Andrew, 1980) & (Ansoff, 1965). Wright et al. (1992) define strategy as top management's plans to attain outcomes consistent with the organization's missions and goals. Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control (Wikipedia-Strategic Management: 2006).
In more detail, the Five Ps for strategy by Mintzberg et al. (2005: 026); strategy is a plan - some sort of consciously intended course of action, a guideline (or set of guidelines) to deal with a situation. By this definition, strategies have two essential characteristics: they are developed consciously and purposefully. As plan, a strategy can be a ploy too; really just a specific "maneuver" intended to outwit an opponent or competitor. Strategy is a pattern - specifically, a pattern in a stream of actions. By this definition, strategy is consistency in behavior, whether or not intended. It is also called "emergent" strategy - where a pattern realized was not intended. Strategies, in other words, form as well as are formulated. Strategy is a position - specifically, a means of locating an organization in its "environment". Position is usefully identified with respect to competitors. Finally, strategy is a perspective which looks inside the organization while the position looks out, seeking to locate the organization in the external environment. Here, strategy becomes the ingrained way of perceiving the world. Some organizations, for example, are aggressive pacesetters, while others build protective shells around themselves. Strategy in this respect is to the organization what personality is to the individual.
Do all strategies are good? Will just one strategy work in all kind of situation, environment, and short-term and long-term future? Over the last thirty years, strategic management has become established as a legitimate field of research and managerial practice (Shrivastava, 1986). In the evolution of strategy research, a diversity of partly competitive and partly supplementary paradigms has emerged. To provide an unequivocal definition would mean ignoring the versatility of strategic management. The choice of a definition and the application of specific strategic management techniques is greatly dependent on which paradigmatic schools of thought in strategic management one prefers (Volberda and Elfring 2002). A school of thought is understood to be the range of thought of a specific group of researchers, which has crystallized within the field of strategic management (Brown, 1993).
SWOT is seen as the centerpiece of this school. SWOT stands for strengths, weaknesses, opportunities, and threats; the strengths and weaknesses are statements of the internal capabilities of an organization to deal effectively with its business environment. Opportunities and threats exist outside of the organization in many different areas. Typically the environmental opportunities and threats presented in a market are the same for all competitors; the issue that will be their ability to capitalize on them. Ambrosini et al. (1998: 122) state that SWOT analysis is a popular tool used by managers as an organizing framework for intuitive information and as a means of summarizing and integrating more formal analyses about the external operating environment and an organization's current resources and capabilities. [See Appendices for basic design school model and the variables checklist for SWOT]. In sum, this school did not develop as much as provide the basis for developments in other schools. The criticism behind this strategy is that it locates an organization in a niche that can narrow its own perspective regarding to strategy formation. This school denies certain important aspects of strategy formation, including incremental development and emergent strategy, the influence of existing structure on strategy and the full participation of actors other than the chief executive (Mintzberg et al., 1998: 33). Every strategic change involves some new experience, a step into the unknown, the taking of some kind of risk. Therefore no organization can ever be sure in advance whether an established competence will prove to be a strength or weakness.
Critique of the design school, "marketing myopia" by Theodore Levitt, 1960, the basic point was that firms should define themselves in terms of broad industry orientation-"underlying generic need" in the words of Kotler and Singh (1981)-rather than narrow product or technology terms. To take Levitt's examples, railroad companies were to see themselves in the transportation business, oil refiners in the energy business. Why should a few clever words on a piece of paper enable a railroad company to fly airplanes, or for that matter, run taxicabs? Levitt wrote that "once it genuinely thinks of its business as taking care of people's transportation needs, nothing can stop it from creating its own distinctive competences. Words on paper do not transform a company. Levitt's intention was to broaden the vision of mangers. At that he may have succeeded-all too well. As Kotler and Singh, also from marketing, argued: "very little in the world . . . is not potentially the energy business". (Adapted from Mintzberg, 1994).
In another school of thought, the positioning, to summarize; strategies are generic, specifically common, identifiable positions in the marketplace. That marketplace (the context) is economic and competitive. The strategy formation process is therefore one of selection of these generic positions based on analytical calculation. Moreover, analysts play a major role in this process, feeding the results of their calculations to managers who officially control the choices. Finally, strategies thus come out from this process full blown and are then articulated and implemented; in effect, market structure drives deliberate positional strategies that drive organizational structure (Mintzberg et al., 1998: 85). Some of the model and idea in this school are; Sun Tzu's The Art of War (1971), Porter's Generic Model, Porter's Five Forces Model, Porter's Value Chain, and BCG Matrix.
(Mintzberg et al, 1998: 49), the same basic ideas: take the SWOT model, divide it into neatly delineated steps, articulate each of these with lots of checklists and techniques, and give special attention to the setting of objectives on the front end and the elaboration of budgets and operating plans on the back end. To summarize this planning school; firstly, strategies result from a controlled, conscious process of formal planning, decomposed into distinct steps, each delineated by checklists and supported by techniques. Secondly, responsibility for that overall process rests with the chief executive in principle; responsibility for its execution rests with staff planners in practice. Finally, strategies appear from this process full blown, to be made explicit so that they can then be implemented through detailed attention to objectives, budgets, programs, and operating plans of various kinds. But on the contrary, Ansoff (1965: 44) states that "We shall refer to the period for which the firm is able to construct forecasts with an accuracy of, say, plus or minus 20 percent as the planning horizon of the firm". The evidence on forecasting is, in fact, quite to the contrary. While certain repetitive patterns may be predictable, the forecasting of discontinuities, such as technological breakthroughs or price increase, is, according to Spiro Markridakis, a leading expert in the field, "practically impossible."
In the case of General Electric, Business Week documented the troubles in a cover story of September 17, 1984. "After more than decade of near-dictatorial sway over the future of U.S. corporations, the reign of the strategic planner may be at an end," the magazine exclaimed "â€¦ few of the supposedly brilliant strategies concocted by planners were successfully implemented." To Business Week, the upheaval was "nothing less" than a "bloody battle between planners and managers" (Potts, 1984).
According to Tung (1994: 54), "Marketplace is a battlefield". Sun Tzu's maxim's are rather general, such as "To subdue the enemy without fighting is the acme of skill" (77). Others come in the forms of ploys, such as "When capable, feign incapability; when active, inactivity," and Offer the enemy a bait to bait him; feign disorder and strike him" (66). In Porter's generic model, organizations may pursue a differentiation, overall cost leadership, or focus strategy at the business level. Differentiation strategy seeks to distinguish itself from competitor through the quality of its products or services. Firms that successfully implement a differentiation strategy are able to charge more than competitors because customers are willing to pay more to obtain the extra value they perceive (MacMillan and McGrath, 1997). Rolex pursues a differentiation strategy. Rolex watches are handmade of precious metals like gold or platinum and stainless steel, and are subjected to strenuous test of quality and reliability. The firm's reputation enables it to charge thousands of dollars for its watch (Griffin, 2005: 244). Next, cost leadership strategy which attempt to gain a competitive advantage by reducing its costs below the costs of competing firms. Timex has apply on overall cost leadership strategy. This firm has focus in its manufacturing relatively straightforward, low cost watches in the mass market. The price of Timex watches starting from $39.95 is to the company high volume efficient manufacturing capacity. Finally, the edge strategy deliberates on a specific regional market, product line, or group of buyer. Type of strategy may have other status, whereby the firm make its product distinction in the edge market, and overall cost leadership focus market. In the watch industry, Tag Heuer follows a focus differentiation strategy by selling only rugged waterproof watches to active consumers.
Another Porter's model, Value Chain (1985), it suggests that a firm can be disaggregated into primary and support activities. Primary activities are directly involved in the flow of product to the customer, and include inbound logistics (receiving, storing, etc.), operations (or transformation), outbound logistics (order processing, physical distribution, etc), marketing and sales, and after service (installation, repair, etc.). Support activities exist to support primary activities. They include procurement, technology development, human resource management, and provision of the firm's infrastructure (including finance, accounting, general management, etc.). Again from Porter, the five forces model. Firstly, threat of new entrants, an industry is like a club in which firms gain admittance by overcoming certain "barriers to entry," such as economies of scale, basic capital requirements, and customer loyalty to established brands. Secondly, bargaining power of firm's suppliers, since suppliers wish to charge the highest prices for their products, a power struggle naturally arises between firms and their suppliers. The advantage goes to the side which has more choices as well as less to lose if the relationship ends. Thirdly, bargaining power of the firm's customers; customers wish to get prices down or quality up. Their ability to do so depends on how much they buy, how well informed they are, their willingness to experiment with alternatives, and so on. Fourthly, threats of substitute products, competition depends on the extent to which products in one industry are replaceable by ones from another. Finally, intensity of rivalry among competing firms, all the previous factors converge on rivalry which to Porter is a cross between active warfare and peaceful diplomacy. Firms jockey for position. They may attack each other, or tacitly agree to coexist, perhaps even form alliances.
These above three schools of thought are prescriptive and the six other schools of thought are descriptive. In the entrepreneurship school, strategy exists in the mind of the leader as perspective, specifically a sense of long-term direction, a vision of organization's future. The process of strategy formation is semiconscious at best, rooted in the experience and intuition of the leader, whether he or she actually conceives the strategy or adopts it from others and then internalizes it in his or her own behavior. However, strategy formation is explain as the process concept of attainment in a person' head. Apparently, few but necessary is cognitive school has developed, which seeks to use the message of cognitive psychology to login to strategist's mind. Among the four schools are tried to suggest the process of strategy formation over the individual, to other forces and other involving. With the learning school business may seem as too complex to permit strategies to expand the whole in once with a clear plans or vision. Consequently, strategist should walk in step by step, as the clue for organization to adapt or "learn". Familiar to this, but with other action, is the power school that allows strategy formation is a process of negotiation, no matter by conflicting group or its own as they confront their external environments. On the other hand, there is other school, which defines the strategy formation as rooted within the culture of the organization. While, this result is seem as fundamentally collective and cooperative. Lastly, there is component of an environmental school, organization theorists who believe strategy formation is a reactive process in which the initiative lies not inside the organization, but with its external context. Accordingly, they seek to understand the pressures imposed on organizations (Mintzberg et al., 1998: 6).
In conclusion, we can see that these schools have appeared at different stages in the development of strategic management. Each school has its own strengths and weaknesses. Firms should not stick to one strategy in all kinds of environment and situation. Business today is changing rapidly and unpredictably. The absence of strategy is better than pursuing the wrong ones. Strategy, as mental set, can blind the organization to its own out datedness. Sometimes lack of strategy is temporary and even necessary (Mintzberg et al., 2005: 30). Moreover, Inkpen and Choudhury (1995) state that strategy absence need not be associated with organizational failure â€¦. Deliberate building-in of strategy absence may promote flexibility in an organization â€¦ Organizations with tight controls high reliance on formalized procedures, and a passion for consistency may lose the ability to experiment and innovate.
Among all competitors, those whose particular conditions happened to be most appropriate for testing and adoption will be 'selected' as survivors â€¦ The survivors may appear to be those having adapted themselves to the environment, whereas the truth may well be that the environment has adopted them. (Alchian, 1950: 213-214)