Strategies To Develop Strategy

Critically discuss the approaches to developing strategy. Is there evidence in today's business world to suggest there is one best way?

The purpose of this essay is to critically discuss and evaluate the different approaches to develop strategy outlining their main characteristics. Strategy not only defines the direction of an organization to be taken, the term is vast and there is more than one definition or view coming from different directions. Today's business environment is very turbulent and chaotic therefore increasing the scope of the subject. As stated below the different forces that faces an organization such as technological developments, market instability and chaos, government policies and so on. All have contributed for this change in the environment, consequently affecting how business strategy is implemented and formulated.

Not all organizations face similar environments and they differ in their form and complexity ,therefore different ways of thinking about strategy development and different processes for managing strategy may make sense in different circumstances . Studies have shown that the main problem of the development of strategy is to cope with uncertainty, therefore it is handy consider this issue in terms of organizations facing different contexts; in simple and stable the environment is almost straight forward to understand as it does not undergo significant changes. In dynamic or chaotic environments conditions managers should consider and forecast the environment of the future not just of the past. The degree of uncertainty increases. In complex/chaotic situation face an environment difficult to comprehend, they may. Of course, face dynamic conditions too and therefore a combination of complexity and uncertainty. Gerry Johnson, Kevanscholes, Richard Whittington. (Page 590, 591).

Organizations need to analyze the six basic factors in the environment that influence corporate strategy such as: General evaluation of the environment; turbulent and chaotic, Pest (political economic, social, and technological), the industry (Porte's Five Forces) and (key factors of success). An analysis of the environment should be taken, with a general consideration of the degree of turbulence in that environment, if it is high, then this will make prediction difficult and impact on prescriptive approaches to strategy development. The PEST analysis studies the political, Economic, Socio-Cultural and Technological factors gives a good starting point to any analysis of the general environment surrounding an organization. The second analysis of the external environment is the industry analysis, the aim is to determinate the opportunities and threats facing the firm within the industry one of the most commonly used and famous techniques in industry analysis is the application of Porter's five forces model.

The essay proceeds as follows, the point of departure is a brief definition of strategy, follow by a reflection upon the Prescriptive and Descriptive approaches with regards to how strategy is formulated and implemented. In this part a review is made on the evolution of the field in terms of ten schools of Mintzbert. In the second part the different approaches are discussed further and contrasted. The last part contains evidence in today's world.

There are many definitions and assumptions of strategy coming from the schools of thought that we can outline, selections of which are reproduced below:

Quinn (1980) stated that Ð''Ð''a strategy is a plan that integrates an organization goals and actions into a cohesive whole". Johnson & Scholes (1997) define strategy as the direction and scope of an organization over the long term providing advantages for an organization through its settings of resources within a changing environment, to meet the different needs of the market, and fulfill the expectations of the stakeholder. Mintzberg and Quinn (1991) write that strategy can be a plan, a ploy, a pattern, a position or a perspective dependent upon the context. A starting point to begin with would be to explore the different approaches of the schools of thought regarding business strategy and how it is considered in contemporary theory.

Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel (1998) approaches put forward a focus on the central concept that uses organizational culture to explain why some strategies succeed and other don't. Mintzberg & Lampel (1999) listed 10 different schools in one of the most well-known taxonomies about strategic thinking. For them, they signify different processes for determining strategy all parts of the same process. Among the schools of thought that formulate analytic and prescriptive strategy approach in which the perspective of the goals objective has been defined before hand and the main elements of the strategy have been developed before commences, the objective may be adjusted if the environment or other circumstances change. The prescriptive schools, which are as follow: the Design school, Planning school, and Positioning school asses the environment in which the company is operating taking directions for action on the part of the company based on an assessment of its current situation and that of the environment within which it operates, and the second centers around the modernism in which the strategy allows to develop by the learning through interactions within the environment. (Strategy Safari A Guided Tour Through the Wilds of Strategic Management, 1998).

The main premises of the Design and Positioning schools are those on the process of strategies formation, the (CEO) ought to control and lead. This process is highly rationalized and formal which is quite influenced by the works of Michael Porter (1980) and his well known Five Forces model which is the basis for the three strategies he has described as follows: overall cost leadership, differentiation and focus. By undertaking one of these strategies the organization can improve its competitive positioning within the industry. Strategy is seen in the planning schools as a formal process that follows an extensive set of steps through the analysis of the situation to the development and exploration of the different scenarios. Chandler sees senior management formulating clear, simple, and unique strategies in a deliberate process of conscious thought which is neither formally analytical nor informally intuitive so that everyone can implement the strategies.

Modernism assumptions play a very important role on influencing the principles of the different schools of thought specially the prescriptive schools. The modernist approach to strategy focused on firms and captured strategy within a scientific methodological straight jacket. Mind controls matter, where strategy determines structure and in which

...