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Samenvattingen artikelenWeek 1) Competitive Strategy
Artikel 1 | Thinking about strategy
J.W. Stoelhorst (2008)
Introduction
Three aspects of strategic management can be distinguished:
1. The process: where strategies come from. (Week 3, 4 & 6)
2. The content: what good are strategies. (Week 1 & 2)
3. The context of strategy: how specific organizational or environmental
contexts affect the process or content of strategy. (Week 5) strategy
formation
‘Standard Model’ of Strategy
Developing a strategy:
1. Start with formulating organizational objectives (taking into account
expectations of the firm’s stakeholders)
2. Organizational objectives direct the analytical phase (internal and
external analysis)
- goal internal analysis: understanding the firm’s distinctive
competence and to identify
the strengths and weaknesses (that may affect the firm’s ability to
meet its objectives)
- goal external analysis: understanding the critical success factors in
the firm’s industry and
to identify the opportunities and threats
The resulting strengths, weaknesses, opportunities and threats (in SWOT
analysis) lead to the identification of the strategic issues which highlight
the main questions that a firm needs to confront to meet it’s objectives.
3. Generating strategic options (possible strategies to deal with strategic
issues. This concludes the strategic choice stage: considering their
suitability, acceptability and feasibility.
4. Considering the implementation of the strategy. First, chosen strategy is
broken down into detailed plans, then responsibilities and budgets are
assigned, and finally performance measures to control the implementation
of the strategy as agreed upon.
The four prescriptive schools had inspired the approach to strategy: it’s
the right way to develop strategy. The fifth (descriptive) school does not
agree with this normative message. Rather than telling managers what to
do, they tend to observe how strategy actually takes shape in the
everyday practice of firms. The standard model has value, because it
helps us organize and apply many of the concepts and tools that the fields
of strategic management has developed, but it is not a failsafe way to
develop successful strategy.
The Design School (1960): Strategy as a conceptual process
Central to the approach to strategy was the concept of a firm’s ‘distinctive
competence’ and the need to bring internal situation of the organization in
line with external expectations. At the core of this approach is the idea
that the specific characteristics of the firm should be confronted with the
external situation it faces. This idea has been made instrumental in the so-
called SWOT analysis (strengths, weaknesses, opportunities and threats).
Strategy and Organization | Universiteit van Amsterdam 1
,Mintzberg distill seven assumptions about strategy from writings of the
proponents of this school:
1. Strategy formation should be a deliberate process of conscious thought
Developing strategies is not an intuitive or natural skill, but must be
learned formally.
Effective strategies are the result of a tightly controlled process of human
thinking.
2. Responsibility for that control and consciousness must rest with the
chief executive officer
The manager at the apex of the organizational hierarchy is the architect of
organizational purpose: that person is the strategist.
3. The model of strategy formation must be kept simple and informal
The main goal of a model for developing strategy is to support ‘acts of
judgment’.
Elaboration and formalization of the process of strategy formation will sap
the design approach of its essence.
4. Strategies should be one of a kind
The best strategies are the result of a creative design process that builds
on the firm’s distinctive competence. Strategies do not result from a
system of general variables but are tailored to the specific situation of the
firm.
5. The design process is complete when strategies appear fully formulated
as perspective
Strategies are the result of an explicit choice for an overall concept for the
business.
These choices appear at a specific point in time, fully formulated, and
ready to be implemented.
6. These strategies should be explicit and simple
Strategies must be clearly articulated so that other members of the
organization can understand them. This means that strategies are best
kept simple.
7. Only after strategies have been formulated can they be implemented
Consistent with the classical notions of rationality – analysis followed by
prescription followed by action – the design school clearly separates
thinking from acting and makes a sharp distinction between strategy
formulation and strategy implementation.
Mintzberg’s critique of the design school is largely focused on the fact that
this school underplays the importance of hands-on learning. For starters,
the design school assumes that the strengths and weaknesses are
generally known, but this is not necessarily the case. Moreover, it could
well be that strengths and weaknesses are situation specific and that
changes in external circumstances make specific competences more or
less relevant. Such complications require a link between thinking and
acting to learn about the strengths and weaknesses of a firm as they
evolve over time. However, if top management is only responsible for
formulation and lower level management is only responsible for
implementation it is unlikely that learning will take place.
Strategy and Organization | Universiteit van Amsterdam 2
, Assumptions the design school makes about the strategy:
1. One brain can, in principle, handle all of the information relevant for
strategy formation.
2. That brain is able to have full, detailed, intimate knowledge of the
situation in question.
3. The relevant knowledge must be established before a new intended
strategy has to be implemented – in other words, the situation has to
remain relatively stable or at least predictable.
4. The organization in question must be prepared to cope with a centrally
articulated strategy.
The approach of the design school has made an important contribution to
the strategy literature, but is not the only or necessarily best way to
approach strategy. With its emphasis on confronting the internal and
external situation of a firm, the design school has laid the foundations for
the standard model of strategic management. It has also introduced
important concepts such as environmental fit and distinctive competence
to the literature. But at the same time, it makes a number of assumptions
that may limit its effectiveness in guiding complex organizations that
operate in dynamic environments.
The Planning School (1970): Strategy as a formal process
According to Mintzberg the difference between the assumptions of the
planning school and the design school is ‘one and a half assumption’. The
main difference is that the planning school advocates a formal and very
elaborate system for the development of strategy. This is in contrast to the
informal and simple system advocated by the design school. The more
subtle difference is that given the elaborate nature of the strategic
planning approach, part of the responsibility for the firm’s strategy lies
with the strategic planning staff. In principle they don’t differ: the
assumption is still that the CEO is the architect of the strategy. However, in
practice the involvement of strategic planning specialists means that part
of the responsibility shifts from the CEO to his strategic planning staff.
The planning school developed a rational and stepwise approach to
strategic management, and advocated breaking down the overall strategy
into more specific strategic plans and applying detailed strategic control
through budgets and performance measurement, which should result in
the firm meeting its objectives. Mintzberg summarize the assumptions as
follows:
1. Strategies result from a controlled, conscious process of formal
planning, decomposed into distinct steps, each delineated by checklists
and supported by techniques.
2. Responsibility for that overall process rests with the chief executive in
principle; responsibility for its execution rests with staff planners in
practice.
3. Strategies appear from this process full blown, to be made explicit so
that they can be implemented through detailed attention to objectives,
budgets, programs, and operating plans of various kinds.
Strategy and Organization | Universiteit van Amsterdam 3
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