Whittington: Strategies And Business Perspectives

Whittington steps back and compares how different theories of strategy answer the questions ‘what is strategy’ and ‘how do strategies come about?’.He exposes the different assumptions underlying the different theories regarding human nature and the relationship between individual action and the environment.His description allows deeper insight into the difference between the ‘design’ school of strategy, which holds that strategy can be planned , and the ’emergent’ (or processual) view of strategy ,which holds that strategy is not the result of rational calculation but of experimentation and trial and error.

Whittington introduces us four basic conceptions of strategy which are rational, fatalistic, pragmatic and relativist in his book. These four basic approaches have radically different implications for how to go about doing strategy.

Generic perspectives on strategy (Whittington.R,What is strategy and why does it matter?, Thomson, 2001. 2.nd edition Page 3.)

Whitting to introduces us to four different perspectives on strategy:the classical perspective,the evolutionary perspective,the processual perspective and the systemic perspective.The classical perspective is the oldest and still most influential one. it assumes that the manager has near to complete control over how to allocate the internal and external resources of the firm , and therefore can control the internal organization of the firm to better suit these objectives.in this view ,strategic behaviour is conducted by self-interest, opportunism and rationality.The evolutionary perspective places emphasis on behavioural differences between firms.(e.g some firms base their decisions on rational calculations,others simply on imitation) and on the mark evolutionary selection mechanisms that allow some firms to grow and survive and others to fail.This view causes the image of the heroic entrepreneur,central to the classical perspective,to fall apart:it is not one manager but the mix between the forces of market selection,random events, and processes of positive feedback that determine performance.The processual perspective holds that economic outcomes emerge from the interractions between individuals and their environment.the result of this interaction is unpredictable because actions are often unintended.Human are not perfectly ratinal but `bounded` in their rationality.This,along with the fact that interaction between individuals is guided not only by self-interest but also by collective bargaining and compromise, causes economic dynamics to be fuzzy and unpredictable.The systemic perspective argues that each of the above approaches is characterized by a narrow view of the world :a western, often Anglo-saxon,view.The ‘rationality’ of a particular strategy depends on its specific historical,social and culturel context.Strategic behaviour is ’embedded’ in a network of social relations that includes cultural norms, class and educational background, religion and so on.Hence what is labelled as ‘irrational’ behaviour in one context may be perfectly rational in another.

Conclusion, Classical and Evolutionary approaches see profit maximization as the naturel outcome of strategy-making.Systemic and Processual approaches are more pluralistic, envisioning other possible outcomes aw well as just profit.

According to Whitington, Asian countries such as Japan , usually to encourage the companies to select their future focus of the sector.Furthermore, it provide support from the center of the country to bring foreign capital and technology to the country. The state does not enter manufacturing and services sector.Therefore,it is not competitive with the private sector. The government is not the manufacturer, it is the router.

Strateji and structure

Top managers spend more time and energy on implementing strategies than choosing them.Strategies that are well chosen will fail because of poor implementation.Getting the organizational structures right for a particular strategy is thus clearly critical to practical success.

Alfred chandler’s maxim structure follows strategy dominates the field.he decribes how their early attempts at diversification kept ending up in organizational chaos.the problem for these early diversifiers was not strategy,but an organization structure.if the companies didnt adopt new multidivisional structures in response to diversification tended to fail or get taken over by more structurally able companies.in short,structure has to follow strategy.

Toyota are able to manage extended networks of suppliers that are far more flexible and better at creating and sharing.(Dyer and Nobeoka 2000).Likewise,networks within firms can exchange knowledge more effectively than the typical chimneys of the multidivisional firm.Divisions communicate formally by going up the hierarchy,across and then finally down,not directly between themselves.

The classical and Evolutionary perspectives suggest that structure must follow strategy may be basically sound,but it is also a bit simplistic.Where firms enjoy oligopolistic security, or are subject to managerial control,or operate in different societies,Systemic theorists point out that the link between strategy and structure may not follow the precise forms of the textbooks.Sometimes it will be futile or even dangerous to impose Classical multidivisional structures upon diversified business.again the systematic advice is to be context.The Processual message, moreover,is not to expect that the relationship between strategy and structure necassarily follows the neat sequential logic of Classical theory.Organizational structures do not change easily.

Successful brand – Toyota has developed a trusted brand based on quality, good performance and for being environmentally friendly.

Innovation – Toyota is at the forefront of car manufacturing innovation.  It was the first car manufacturer to embrace lean manufacturing (known as Toyota Production System) which is a faster, more efficient process which leads to less waste compared to the traditional batch and queue method of manufacturing.  It also applied JIT (Just in Time manufacturing) and smart automation.

Product Development – Key to the success in the car market is new models which stimulate demand and loyalty to the Toyota brand.  Toyota has reputation for producing cars which are greener, more fuel efficient, and of good performance. Toyota has sought to meet government requirements (for reducing the impact on the environment), economic changes (as prices of fuel – oil continues to rise) through the development of hybrid fuels.  Toyota was the first car manufacturer to market hybrid (gas and electric) fuel, with the launch of Prius model, ahead of competitors.

It successfully entered markets and penetrated them with both manufacturing and sales subsidiaries.  Toyota gained first mover advantages by presence in globally strategic markets (Asia, Europe, US) first, whereas its nearest rivals (Ford, GM) gained footholds in only 2 of (US and Europe).  Toyota is well positioned to take advantage of the growth in South East Asian markets of China and India.

Toyota has moved to a global manufacturing model. Car manufacturing sites are expensive, requiring high fixed cost investment. Toyota has moved its manufacturing sites to where factor costs are lower (without comprising on quality) and now manufactures different parts of the car and carries out assembly in different locations around the world. It has been particularly successful at gaining cost efficiencies (locating and obtaining suppliers, components in low cost locations) and compared to the manufacture and assembly of cars in one location

Strategic leadership

For today’s business elite, ‘leadership qualities’ matter.

Management is about providing the order and procedures necesssary to cope with the everyday complexity of big business..Leadership,by conrast,is about coping with change.Management is important,but it is above all change that business will need to master in future years.In,this perspective Kotter concludes most US corporations today are overmanaged and underled.

According to some, leadershipqualities are a happy fluke of personal character.According to others ,they are the product of good training.For a fortunate few,at the top of some the world s largest firms,leadership is an accident of birth.

Leadership may be vital and empowering force in contemporary organizations,but it remains a cultural,historical and gender-specific phenomenon.Therefore breaks with the individualistic assumptions of the leadership tradition to emphasize the social character of managerial elites.Less personal and less celebratory,the Systemic approach stresses how top management shares collective characteristics,collective interest therefore breaks with the individualistic assumptions of the leadership tradition to emphasize the social character of managerial elites.Less personal and less celebratory,the Systemic approach stresses how top management shares collective characteristics,collective interests.

Hiroshi Okuda,the first chairman of the Toyota motor company from outside the Toyoda family,spent 200 coping with speculation about the likely succession of 43-year old Akido Toyoda to the leadership of the world’s third largest company.In big business, a good name still counts.