Challenges In The Face Of Business Strategy Commerce Essay

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A business strategy is the focal point of the business practices and competitive strategies in the operational management. It is used to strike out a market position, conduct operations, attract customers, compete and achieve organizational objective. Thus, whether a company wins or loses in the marketplace, it is directly attributable to the calibers of a company's strategy and the proficiency with which the strategy is implemented and executed. It's often said that "without a strategy the organization is like a ship without a rudder, going around in circles". Strategic management involves the planning and implementation of the firm's future plan. It is always essential for a firm to have a business strategy. Basically a strategy is a commitment to undertake one set of actions rather than the other. In other words, strategic management is about looking at a range of options that a firm can undertake a range of causes a firm could set it upon in deciding which one to take. Some of the contemporary strategic issues are as follows: (https://da.mod.uk/colleges/rcds/publications/contemporary-Strategic-Issues)

The company's current or desired core competencies.

A description of how it would differentiate vs. competitors.

The industry or industries in which the company tends to compete.

The initiates that the company plans to implement in areas of marketing, operations, information technology, finance and organizational development.

A financial forecast that shows how the plans would meet the stakeholder's requirements over the next 3-5 years.

Dealing with the business ethics and corporate social responsibility of the organization.

.According to Mintzberg et al.(1998) ,10 schools of strategic thoughts" were as

The Design School

The Planning School

The Positioning School

The Entrepreneurial School

The Cognitive School

The Learning School

The Power School

The Cultural School

The Environmental School

The Configuration School

These ten schools fall into three groups. The first three schools are prescriptive in nature. These schools were more concerned with how strategies should be formulated than with how they necessarily do form. The first of which was presented in 1960's. The second school was developed in parallel in 1960's and peaked in a flurry of publications and practice in 1970's. The third school came into existence in 1980's, less concerned with the process of strategy formation than with the actual content of the strategies. The six schools that follow consider specific aspects of the process of strategy formation and have been concerned less with prescribing ideal strategic behavior than with describing how strategies do, in fact, get made. One final group contains one school although it could be argued this school really combines the others. It is called configuration.

PLANNING SCHOOL

In this school there is a clear distinction between the implementation and formulation. The leaders at the centre of the authority formulate their intentions as precisely as possible and then strive for their implementation- their transition into collective action- with a minimum of distortion. According to Goold and Quinn(1990),"in practice only few companies identify formal and explicit strategic control measures and build them into control systems."To ensure this the leaders must articulate their intentions in the form of plan, to minimize confusion, and then elaborate this plan in much detail as possible, in the form of budgets, schedules and so on, to pre-empt discretion that might impede its realization. Those outside the planning process may act, but to the extent possible they are not allowed to decide. As Steiner (1979) had stated," All strategies must be broken down into sub strategies for successful implementation".

Critique and Contribution

The plan is of no use if it cannot be applied as formulated in the environment surrounding the organization. So the planned strategy is found in an environment that is, if not controllable, then at least rather predictable. Some organizations are powerful enough to impose their plans on their environment. Others are able to predict their environments with enough accuracy to pursue rather deliberate, planned strategies. Many planned strategies in organizations that simply extrapolate established patterns in the environments that they assume will remain stable. The degree of deliberateness is not a measure of potential success of a strategy.

Case study

The United States government's escalation of military activity in Vietnam also revealed a rather planned strategy. Once Lyndon Johnson announced his decision to escalate in 1965, the military planners took over and articulated the intentions in detail (or pulled out existing contingency plans), and pursued the strategy in vigorously until 1968 when it became clear that the environment was less controllable than it had seemed. So the strategic plan failed. The intention to escalate was realized, in fact from Johnson's point of view, over-realized; it just did not achieve its objective.

ENTREPRENEURIAL SCHOOL

Proponents of this school saw personalized leadership, based on strategic vision, as the key to organizational success. They noted this especially in business, but also in other sectors, and not only in starting up and building new organizations, but also in "turning around" faltering established ones. Therefore, although "entrepreneurship" was originally associated with the creators of their own businesses, the word was gradually extended to describe various forms of personalized, proactive, single- minded leadership in organizations.

Critique and Contributions

Among the various characteristics attributed to the entrepreneurial personality have been strong needs for control, for independence, and for achievement, a resentment of authority, and a tendency to accept moderate risks. The entrepreneurial strategy is derived from one individual who need not articulate or elaborate them. Intensions do exist. These intensions are both more difficult to identify and less specific than those of the planned strategy. Moreover, there is less overt acceptance f these intentions on the part of the other actors in the organization. Moreover, entrepreneurs "move quickly past the identification of opportunity to its pursuit. They are the hawkers with umbrellas who materialize from nowhere on Manhattan street corners at the first rumbles of thunder overhead". Hence their actions tend to be "revolutionary, with short direction," in contrast to the administrators' "evolutionary" actions, "with long duration"

The strategy can have emergent characteristics as well. First, when vision provides only a general sense of direction. Within it, there is room for adaptation: the details of vision can emerge a route. Secondly, because the leader's vision is personal, it can be changed completely. There can be internal disputes within the organization regarding some of the strategies or vision of the entrepreneur. Another way, since here the formulator is the implementer, step by step, that person can react quickly to feedback on past actions or to new opportunities or threats in the environment. He or she can thus reformulate the vision. Visions contained in single brains would appear to be more flexible, assuming the individual's willingness to learn, than plans articulated through hierarchies, which are comprised of many brains. The entrepreneurial approach is risky, hinging on the health and whims of individuals. Collins and Porras(1994) suggest from their study that the role of charisma in establishing vision is very much overrated, and that attempts to substitute charisma for substance are often destructive

LEARNING SCHOOL

While other schools have questioned specific aspects of the "rational" traditions of the design, planning, and positioning schools, the learning school did so most broadly and forcefully, turning on their heads most of their basic assumptions and premises. That set up a disturbing debate within the field of strategic management, which continues today. W ho really is the architect of strategy and w here in the organization does strategy formation actually take place? How deliberate and conscious can the process really be? Is the separation of formulation and implementation really sacrosanct? At the limit, the learning school suggests that the traditional image of strategy formulation has been a fantasy, one which may have been attractive to certain managers but did not correspond to what actually happens in organizations.

Critics and Contribution

The organization is seen as having no control over ideology: rather, this is viewed as being in the hands of the workers. But they don't realize the fact that these ideology are in their hands. In the network of knowledge's for this, the more formalistic formulation-implementation loop is replaced with a more interactive and continuous acting-learning loop. Yet the whole school remains silent on how this loop should be controlled - its philosophy is anti-hierarchy, with perhaps the chapter's most evocative metaphor being strategy-as weeds in Mintzberg's (1989) "Grassroots model of strategy formation". Yet on the question of how one is to tell good weeds from bad weeds, or good practice from bad practice, the school says nothing.

The complex and unpredictable nature of the organization's environment, often coupled with the diffusion of knowledge bases necessary for strategy, precludes deliberate control; strategy making must above all take the form of a process of learning over time, in which, at the limit, formulation and implementation become indistinguishable. While the leader must learn too, and sometimes can be the main learner, more commonly it is the collective system that: there are many potential strategists in most organizations. This learning proceeds in emergent fashion, through behavior that stimulates thinking retrospectively, so that sense can be made of action. Strategic initiatives are taken by whoever has the capacity and the resources to be able to learn. This means that strategies can arise in all kinds of strange places and unusual ways. Some initiatives are left to develop by them or to flounder, while others are picked up by managerial champions who promote them around the organization and/or to the senior management, giving them impetus. Either way, the successful initiatives create streams of experiences that can converge into patterns that be come emergent strategies. Once recognized, these may be made formally deliberate.

POSITIONING SCHOOL

The Positioning School views strategic management as the process of selecting from a set of generic strategies and implementation after carefully considering the logic of each generic strategy. The Positioning School revolutionized strategic management by insisting that creativity was not required, actually and that it can be viewed as necessarily "deductive and deliberate".

Critics and Contribution

The positioning school is considered to be consultancy driven and programmatic after a study of its dialectic network of knowledge. The positioning school repackages negotiation as deduction which is much similar to the design school.

Positioning school is less concerned with the process of strategy formation than with the actual content of strategies. Both the planning and the design schools put no limits on the strategies that were possible in any given situation. The positioning school, in contrast argued that only a few key strategies- as positions in the economic marketplace- are desirable in any given industry: ones that can be defended against existing and future competitors suggested that an effective competitive strategy takes offensive or defensive action in order to create a defensible position against five competitive forces. The positioning school includes the various corporate portfolio models such as BCG, Shell/DPM. Product-market evolution model, ADL and risk return. Management's role is to choose a generic strategy based on the hard data anlaysis.

DESIGN SCHOOL

The Design school first presented in 1960's, is based on strategy formation as a process of conception. Strategy formation should be a deliberate process of conscious thought. The CEO of the organization is considered the strategist responsible for the control and consciousness. With the notable exception of Selznick (1957), however, most authors associated with this school do not accord a great deal of attention to values and ethics.

Critics and Contribution

The model of strategy formation is kept simple and informal; strategies are one of a kind: the best ones result from a process of individualized design-"Creative act" to build on distinctive competence. Primary emphasis on the appraisals of the external and the internal situations, the former uncovering threats and opportunities in the environment, the latter revealing strengths and weaknesses of the organization (SWOT). There is, in fact, evidence from the laboratories of cognitive psychology that the articulation of a strategy-just having someone talk about what he or she is going to do anyway-locks it in breeding a resistance to later change(Kiesler,1971).Two other factors are believed important in strategy making. One is the managerial responsibilities- specifically the ethics of the society in which the organization functions. The design process is complete when strategies appear fully formulated as perspective. The school offers little room for instrumentalist views or emergent strategies, which allow "formulation" to continue during and after "implementation". The design school promotes the dictum, first articulated by Chandler (1962), that structure should follow strategy and be determined by it.

Case Study

A strategy was designed by Robert McNamara, who just spelled out his approach to military strategy as secretary of defense. Based on the foreign policy, they build the military strategy to carry out the policy without even having a prior experience of geographic conditions in Vietnam. The result was a great resistance from the Vietnamese against the American army which was least expected by the Americans. Following the failure of strategy, the American troops were forced to retreat from Vietnam.

POWER SCHOOL

The power school characterizes strategy formation as an overt process of influence, emphasizing the use of power and politics to negotiate strategies favorable to particular interests. Power relations surround organizations; they can also infuse them. Mintzberg made a distinction between two branches of this school. Micro power deals with the play of politics- of illegitimate and a legitimate power- inside an organization. Yet we believe that strategies can and do emerge from political processes. Sometimes a single decision arrived at politically can set a precedent and thereby establish a pattern.To have arrived at a strategy politically usually means to have done so step by step through processes of bargaining and the like. According to Mintzberg et al.(1998) ,"When an organization uses the Power school, politics can become divisive and a lot of energy is used."

Critics and Contribution

Strategy formation is shaped by power and politics, whether as a process inside the organization or as a behavior of the organization itself in its external environment. The strategies that may result from such a process tend to be emergent, and take the form of position and plays more than perspectives. This school like each of the others overstates to make its points. By concentrating attention on divisiveness and fractioning, the power school may miss patterns they do form, even in rather conflictive situations. The political dimension can also be the source of great deal of wastage and distortion in organization.

ENVIRONMENTAL SCHOOL

Strategy formation, in the Environmental school, is described by Mintzberg et al.(1998) as a reactive process. The environment, presenting itself to the organization as a set of general forces, is the central actor in the strategy-making process. The organization must respond to these forces, or else be "selected out". Leadership thus became a passive element for purposes of reading the environment and ensuring proper adaptation by the organization. Organizations end up clustering together in distinct ecological-type niches, positions where they remain until resources become scarce or conditions too hostile, and unless they adopt, they die.

Critics and Contribution

The environmental school has its roots in contingency theory, based on the common sense realization that different situations give rise to different behaviors. Some of the dimensions of the environment responsible for the differences in organizations are stability, complexity, market diversity and hostility. An opposite non-adaptive view is the Population Ecology that assumes the basic structure and character of an organization is established shortly after birth. Subsequent actions make it more rigid and less able to make decisions that are truly strategic. As the environment becomes more complex and as organizations grow in size companies differentiate into functions. Research shows the more unpredictable the environment becomes the more decentralized the organization becomes, pushing the locus of decision making down the hierarchy. Organization conflict solutions are very much dictated by the need to adapt to the environment. The general systems approach is also a contingency theory.

Whittington School of Strategy

The Whittington school builds on four generic approaches to strategy. They are

Classical Approach

Evolutionary Approach

Processualists Approach

Systematic Approach

One important distinction which Whittington's classification draws out is the difference between the Classicist's and the Processualists attitudes to research and the development of theories of strategy. Classicists stress rational and deliberate processes. This is based on certain commitments to the rules and procedures of science as the only means by which valid and reliable knowledge can be obtained. Their characteristic way of proceeding is to conduct detailed analytical research in an attempt to deduce rules and laws which will work in all most circumstances. The human subject with its vagaries and inconsistencies tends to assume a more subordinate role- unless in the role of strategist. According to Chandler's(1962) "strategy is the determination of the basic, long term goals and objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary for these goals".

By contrast, Processual approaches tend to emphasize learning as a means of developing ideas; in particular, learning from experience rather than purely from research. Even this ignores the influential contribution of other modes of learning such as action research(Peter and Robinson,1984). Although it is difficult to criticize the idea of learning as being a 'good thing' learning approaches are not without their difficulties, many of which are recognized by their advocates. The more conventional view of how strategy develops relies on a careful analysis of published studies. For example, Eisenhardt and Zbaracki(1992) reviewed the 'dominant paradigms' of strategy, which they reviewed as rationality and bounded validity, politics and power and the 'garbage can' model of strategic choice. They examined the theory and empirical support within each paradigm and concluded that the empirical evidence showed:

That strategic decision-makers are bounded rational

That power wins battles of choice

That chance matters

A new research agenda in strategy might involve 'creating a more realistic view of strategic decision-making by opening up our conceptions of cognition and conflict to include insight, intuition, emotion, and conflict resolution and emphasizing normative implications.

These various approaches may influence the kinds of strategy which organizations pursue. Classical approaches stress rationality and clarity and hence are likely to lead to highly analytic and deliberate styles of strategy based in a few expert hands. By contrast processual approaches are more likely to recognize a range of factors and inputs leading to a range of outcomes, many of which will be unintentional. This is more likely to involve a wider set of people and to emphasize learning and bargaining rather than analysis as the means by which strategic insight is acquired. Henderson's (1989) concluded that business survival in a competitive market depends on the strategies of differentiation for each organization.

The Systematic Approach draws attention to the effect of local cultures and attitudes, and the Anglo-American roots of strategy itself. It is likely to lead to an interest in different styles of strategy in different cultures and hence to understanding and working with these differences rather than the 'one style fits all' approach characteristics of Classicists. This approach pays attention to differences and developing strategy accordingly. Whittington assesses this approach as being essentially deliberate; there seems to be no particular reason why an emergent stance cannot be adopted here also, or that it might incorporate a processual outlook. Another factor that was not considered by Whittington was the effect of the kind of organization being managed and its type of ownership. For example, small firms are likely to have little or no effect on the environments in which they operate. Also they may not need to persuade stock markets and analysts that they conform to 'accepted' practices. The classical rational planning approach, irrespective of its validity otherwise, would just be a waste of time for such an organization.

Conclusion

The schools have appeared at different stages in the development of strategic management. A few have already been established and have declined. Others still are developing. Strategy formation is a complex space. Strategy formation is judgmental designing, intuitive visioning and emergent learning. It is about transformation as well as perpetuation. It must involve individual cognition and social interaction, cooperation as well as conflict and all this must be in response to what can be a demanding environment.

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