Chapter 2 - Alternative Strategies Flashcards
Problems rational strategy approach
Not dynamic
Bureaucratic and inflexible
Difficult getting mid level participation
Uncertainty does not allow needed analysis
Stifles innovation
Complex and costly
Benefits rational strategy approach
Long term view Ident. key strategic issues Goal congruence Comm. responsibilities SBU coordination Security got stakeholders Strategic control
Pro’ s and con’s rational approach
Pro: Avoids short-termist behaviour Identifies strategic issues Goal congruence Improves stakeholders perceptions basis for strategic control develops management potential
Con: too infrequent to be dynamic forbids radical or innovative strategies difficult to implement loss of entrepreneurial spirit impossible in uncertain business environments too expensive for SME's
Define uncertainty
inability to predict the outcome from an activity due to a lack of information about the required input/output relationships or about the environment
Factors increasing uncertainty
Impacts of uncertainty
complexity
dynamism
reduces planning horizon
lead to conservative strategies
increased information needs
4 alternatives to rational strategy approach
emergent approach
incremental approach
freewheeling opportunism
political approach
Emergent approach
Definition and considerations (4)
unplanned strategies
try and error approach - needs culture of innovation
Manage stability: not feel compelled to constantly rethink the business’s strategic future
Detect discontinuity: managers must know their business and detect environmental changes
Manage patterns: management should encourage strategic initiatives
Reconcile change and continuity: radical changes can be disruptive
Incremental approach
Lindblom: muddling through
Monitoring the progress and the direction as the company is moving along its course
Quinn: logical incrementalism small steps Managers know where they want to go Strategy is incremental and step by step Managers keep decisions small and flexible
Managers function as: formal and informal communication sense need for change build political support initial trial of strategy press the strategic changed forward
Freewheeling opportunism
no long term plans, just short term ones
pro’s:
established clarity of purpose and direction
established mechanisms for coordination, communication and control
develops creativity
flexible
continuity and contingency exist
increased flexibility
decentralization of decision making and increased reactive
dynamic, exciting, innovative
con’s:
independent agenda’s
major environmental changes
short term profit instead of sustainable profits
Strategy Safari (Prescriptive schools)
Design School: Concept of internal and external capabilities: ie SWOT
Planning school: formal Strategy development
Positioning school: Analytical combination of defensive and offensive moves driving the industry: BCG or Porter
Strategy Safari (Descriptive schools)
Environmental school: Reactive strategy based on external influence
Cognitive school: Mentally developed strategy based on how the mind works and processes information
Entrepreneurial: vision dependent on vision and direction of an individual
Power school: Negotiation between powers in an organization
Cultural school: Collect strategy through social interaction
Learning school: Strategy based on learning processes
Structure and Strategy
influencing factors (6)
debatable what comes first
which defines which depends on:
- objectives
- nature of environment
- diversity of the organisation
- future strategy
- technology (IT resources and tools)
- human resources (people in the team)
Strategy development in difficult contexts:
SME’s: owners goals, limited scope or market choice, limited resources, org structure
Public Sector or non profits:
multiple objectives (no profit, but service access or quality)
measurability (ie school learning outcomes or defense spend)
stakeholder control: shareholders vs. politicians or stakeholders
payers and benefitionairy are not the same
Public Sector or non profit 3 E’s (and their measure)
Effectiveness (output or goal), Efficiency (input vs output), Economy (input)
Political approach
internal or external power struggle leading to negotiations and formulation of a startegy
