Today's world becoming more rivalrous, such as in the world market place there is lots of competition between the corporations however only few of them can be successful. Why do companies succeed? The reason of successful business is to have good strategic management in organizations. What is the strategic management? The word "strategy" derives from classical Creek word "strategios which means plan to defeat enemy". Therefore business strategy is concerned with the match between the internal capabilities of the company and its external environment.
According to Henry Mintzberg, Bruce Ahlstrand and Joseph Lampel " We are all like the blind men and the strategy process is our elephant. Everyone has seized some part or other of the animal and ignored the rest. Henry Mintzberg studied lit on strategy wrote "Strategy Safari". He determined that the strategy has 10 schools which mean 3 prescriptive schools and 7 descriptive schools. Prescriptive schools defines strategy "As a special course of action designed to achieve objectives " on the other hand this school consider on strategy formulation. Prescriptive schools can complete from design school, planning school, positioning school.
The design school: the original view sees strategy formation as achieving the essential fit between internal strengths and weaknesses and external threats and opportunities. Senior management formulates clear and simple strategies in a deliberate process of conscious thought which is neither formally analytical nor informally intuitive so that everyone can implement the strategies. However this school's promotion of though independent of action strategy formation above all as a process of conception rather than as one of learning. We can see this most clearly in a fundamental step in the formulation process, the assessment of strengths and weaknesses.
How does an organization know its strengths and weaknesses? On this the design school has been quite clear-by consideration, assessment, judgment supported by analysis, in other words by conscious thought expressed verbally on the paper. One gets the image of executives sitting around the table discussing the strengths, weaknesses, and distinctive competences of an organization. Having decided what these are, they are then ready to design strategies. Therefore no organization can ever be sure in advance whether an established competence will prove to be strengths and weaknesses. For instance: in its retail diversification efforts, a supermarket chain was surprised to learn that discounted stores, which seemed so compatible with its food store operations, but it didn't work out well, while fast-food restaurants, ostensibly so different, did. On the other hand the similarities of the discount store business how products are displayed, moved about by customers, and checked out were apparently overwhelmed by subtle differences of merchandising : styling obsolescence and the like.
The planning school: This is the basic ideas which mean take the SWOT model, divide it into neatly delineated steps, articulate each of these with lots of checklist 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. Therefore strategies result from controlled, conscious process of formal planning, decomposed into distinct steps, each delineated by checklists and supported by techniques. Responsibility for that overall process rests with the chief executive in principle, responsibility for its execution rests with staff planners in practice. Strategies appear from this process full blown, to be made explicit so that they can then be implemented though detailed attention to objectives, budgets, programs and operating plans of various kinds.
Strategic planning the idea that strategy can be developed in a structured, formalized process. Planning itself has other useful functions in organizations.
To engage in strategic planning an organization must be able to predict the course of its environment to control it, or simply to assume its stability. Otherwise, it makes no sense to set the inflexible course of action that constitutes a strategic plan. While certain repetitive patterns may be predictable, the forecasting of discontinuities such as technological breakthroughs or price increases, is according to Spiro Makridakis, a leading expert in the field, "practically impossible". In his opinion "very little, or nothing" can be done, "other than to be prepared in a general way to react quickly once a discontinuity has occurred ". The only hope for planning therefore is to extrapolate the present trends and hope for the best. Unfortunately that "best" seems to be rate: "long-range forecasting (2years or longer) is notoriously inaccurate" ( Hogarth and Makridakis, 1981:122)
Strategic planning requires not only predictability following, but also stability during, strategy making. The world has to hold still while the planning process unfolds. Responsive strategies do not appear on schedule, immaculately conceived. They can happen at any time and at any place in an adaptive organization. If strategy means stability (as a plan into the future or a pattern out of the past), then strategy making means interference unexpected interference.
Effective strategies: Effective strategies, in contrast, are not people who abstract themselves from the daily detail, but who immerse themselves in it while being able to abstract the strategic messages from it. Also managers who rely primarily on such formalized information ( accounting statements, marketing research reports in business, opinion polls in government, etc) often have so much trouble coming up with good strategies. Effective strategy making connects acting to thinking which in turn connects implementation to formulation. We think in order to act, to be sure, but we also act in order to think. We try things, and the ones that work gradually converge into patterns that become strategies. Effective strategies inevitably exhibit some emergent qualities and, even when significantly deliberate, often appear to be less formally planned than informally visionary. Above all, learning , in the form of fits and starts, discoveries based on serendipitous events, and the recognition of unexpected patterns plays key role, if not the key role, in the development of strategies that are novel. Accordingly we know that the process requires insight, creativity, and synthesis, the very things that the formalization of planning discourages. The formal systems could certainly process more information, at least hard information, consolidate it, aggregate it, move it about. However they could never internalize it , comprehend it, synthesize it. Strategic planning should have been promoted as a process to formalize, where necessary, the consequences of strategies already developed by other means. Ultimately the term "strategic planning" has proved to be an oxymoron. Planners can act as analysis by providing data inputs at the front end, particularly the ones managers are prone to overlook. They can also scrutinize the strategies that came out the back end, to assess their viability. Planners also act as catalysts, not to promote formal planning as some kind of imperative, but to encourage whatever form of strategic behaviour makes sense for a particular organization at a particular time.
The positioning school: the third of the prescriptive schools, this school has been one simple and revolutionary idea, for better and for worse. The positioning school, in contrast, argued that only few key strategies-as positions in the economic market place are desirable in any given industry: ones that can be defended against existing and future competitors. Ease of defence means that firm which occupy these positions enjoy higher profit than other firm in the industry. And that, in turn, provides a reservoir of resources with which to expand, and so to enlarge as well as consolidate position.
Cumulating that logic across industries, the positioning school ended up with a limited number of basic strategies overall, or at least categories of strategies for example, product differentiation and focused market scope. These were called generic.
Premises of the positioning school: strategies are generic, specifically common identifiable positioning in the marketplace. That marketplace is economic and competitive. Also the strategy formation process is therefore one of selection of these generic positions based on analytical calculation.
Analysts play a major role in this process, feeding the results of their calculations to managers who officially control the choices.
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.
For example if you start doing business in fast food like chicken fries burgers so on. Your restaurant located in central zone also close to Macdonald and KFC. In this case customers choose Macdonald and KFC surely because they are already well known worldwide. Therefore your business will start lose money for rent, gas, electricity etc. In this case your positioning was wrong as a result of this you will have lots of loss. On the other hand if you choose right location like in suburban area or close to market area you can get more customers rather than central area. Then you can make more profit also your business will expand and it can be successful.
Now we are consider on description schools which includes: entrepreneurial school, cognitive school, learning school, power school, cultural school, environmental school, configuration school. Each of these schools has different role and effect on strategic management.
The entrepreneurial school: the entrepreneurial school has done exactly the opposite from design school. This school has not only focused strategy formation process exclusively on the single leader, but it has also stressed the most innate of mental states and processes-intuition, judgment, wisdom, experience in sight. This promotes a view off strategy as perspective, associated with image and sense of direction, namely vision. The most central concept of this school is vision: a mental representation of strategy, created or least expressed in the head of the leader. That vision serves as both an inspiration and a sense of what needs to be done- a guiding idea, if you like.
The entrepreneur figures prominently in neoclassical economic theory. His or her role, however, was confined to deciding what quantities to produce and what prices. Competitive dynamics took care of the rest.
Proponents of this school saw personalized leadership, based on strategic vision, as the key to organizational success.
some of the most interesting questions in business management centre around issues of strategy. Should a company diversify or stick to its knitting? Should it try to gain market share, or focus on return on capital? Is there a right time to adopt a specific strategy? Why do some strategies succeed while others fail?
Considering the scope of the subject, it's no wonder that strategic management has spawned a vast literature. The problem, however, is that management strategists tend to see strategy in the same way the six blind men saw the elephant -- one looked at the tusk and believed the elephant was like a spear, another grabbed the trunk and thought it was like a snake, another touched the ear and thought the animal was like a fan, and so on.
Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel, the authors of Strategy Safari: The Complete Guide Through The Wilds Of Strategic Management,point out that, similarly, experts on strategy saw the subject through their own limited experience, and there is a need to draw these diverse experiences together in order to grasp the subject in its entirety.
The authors identify 10 approaches to the subject. These include:
- The design school, which sees strategic management as a process of attaining a fit between the internal capabilities and external possibilities of an organisation.
- The planning school, which extols the virtues of formal strategic planning and arms itself with SWOT analyses and checklists.
- The positioning school, heavily influenced by the ideas of Michael Porter, which stresses that strategy depends on the positioning of the firm in the market and within its industry.
- The entrepreneurial school, which emphasises the central role played by the leader.
- The cognitive school, which looks inwards into the minds of strategists.
- The learning school, which sees strategy as an emergent process -- strategies emerge as people come to learn about a situation as well as their organisation's capability of dealing with it.
- The power school, which views strategy emerging out of power games within the organisation and outside it.
- The cultural school, which views strategy formation as a process rooted in the social force of culture.
- The environmental school, which believes that a firm's strategy depends on events in the environment and the company's reaction to them
- The configuration school, which views strategy as a process of transforming the organisation -- it describes the relative stability of strategy, interrupted by occasional and dramatic leaps to new ones.
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