Chapter 2 – Strategic Management Flashcards
What is the rational strategy?
The rational view of strategic management is based upon the presumption that the people undertaking the strategic management will always act in a logical, structured and proactive manner.
Ansoff (1990) suggests that organisations are ‘purposive’ that they have to achieve something. He further suggests that an objective was a means by which success or failure could be identified.
What are the four objectives outlined by Ansoff? FENS
- Economic: the efficient use of available resources to convert inputs into outputs
- **Non-economic **- the ability to satisfy expectations of stakeholders
- Self renewal - building of an organisation through re-investment
- Flexibility - be able to adapt to enable an organisation to survive
Further to the rational model outlined by Ansoff, what does Johnson et al’ differentiate between?
Johnson et al (2017) reports that strategic management needs to include, but also differentiate between, the day to day operational (shorter-term) decisions made by managers and the process undertaken by the same managers of making strategic (longer-term) decisions.
Johnson et al state that strategic management has four core aspects. What are they?
- Analysis: the collection and interpretation of appropriate data to enable the understanding of reality, resource and expectation
- Choice: the evaluation of the strengths and weaknesses of different potential options arising from the analysis, and the ability therefore to establish a method of how to choose a preferred option
- Implementation: the ability to put the chosen option into action.
- Control: the establishment of a method of monitoring outcomes of each stage of the process of strategic development
What are the limitations of the rational model as outlined by Mintzberg? DRIP
- Data: it is difficult to gather, control and structure the required levels of data to enable the formulation of a rational plan in the first place, thus making the starting point impossible to contain
- Routine: rational plans very often form a recurrent part of a planning process, often in an annual cycle, but an organisation cannot allow itself to wait 12 months before addressing problems
- Inertia: once a rational plan is established, people are unwilling to question it; this can lead to an obsession with performance measured against the plan rather than a readiness to cope with uncertainty
- Politics: the rational plan ignores the political environment and power struggles that exist within most organisations
How has the rational model evolved from crafting and intuition perspectives?
Ohmae (1982) – Japanese companies - human traits of creativity and obsession were as important as a rational and logical approach in the formation of strategy. He suggests that this combined approach better informed the analysis of available data and the making and implementation of strategic choices.
Handy (1989) – planning is as much based on intuition as on analysis
Following further concepts of the rational model, what does Porter say on competition?
Porter (1980) considered the competitive markets within which organisations operated, and suggested that the underlying rationality of their strategic development was often geared to enabling an advantage over the various competitive forces.
According to the chaos theory, a rational strategy plan will be subject to VUCA before the plan is concluded. What is VUCA?
Volatility
Uncertainty
Complexity
Ambiguity
What is the emergent model?
All strategy is initiated through an intended strategy which can go 1 of 2 directions:
1) Some of the intentions will not succeed e.g. a company changes its strategy after market research shows no demand for their planned product or service – non-realised strategy
2) Deliberate strategy route to eventually become realised strategy. e.g. a company has a strategy that is well received by customers and rapidly becomes part of the core process - realised strategy
What causes the emergence of different strategic ideas or the alteration of a strategic requirement?
- People: someone leaves or joins the organisation; someone changes their mind or opinion on an existing process
- Direct organisational events: a customer fails to buy; a supplier fails to supply; a piece of significant machinery breaks down; people go on strike
- Indirect wider economic and other external events: taxation or interest rates change; change in government
In the context of the emergent theory, what happened to Ocado?
Initially launched as an online business partner of Waitrose in 2002 – growth of online shopping: improved technology, faster broadband and better mobile devices – emergent strategy of freeing themselves from a sole partner arrangement and developing a much wider customer base
The emergent theory has since evolved - name two theores
Pettigrew and Whipp (1991) - Context, Content and Process
Martin (2007) - Integrative thinking
What are the strategic decision elements identified by Pettigrew and Whipp?
- Context - the environment within which the strategy operates and is developed - the people; the organisational structure; the internal and external politics; the resources available; and the performance rewards from the stakeholders involved;
- Content - the strategic vision, a strategic plan and an implementation plan
- Process - how the actions link together or interact with each other as the strategy unfolds - the available and required leadership; the identity of the change managers; the communication routes required; change impact analysis (people and system); and a projection of the perceived route to deliver the strategy
What does Lynch say re: rational vs emergent strategy?
Both perspectives need to be included: the ‘bigger picture’ of the ultimate stakeholder expectation but tempered by the practical operational realities of the day-to-day.
**The timeframe and length of a strategy will have a significant impact on the interaction of rational and emergent thinking. **A short-term strategy will have more chance of remaining within rational boundaries, whereas a longer-term strategy will inevitable be more affected by emergent strategies.
What are the three Cs identified by Ohmae relating to the theory of Competitive Structures?
Successful strategic development relies upon the recognition and interplay of the three Cs:
- Customers: those who will fund our organisation as the result of a successful business cycle
- Competitors: those who will seek to take our customers, or those whose customers we wish to attract
- Corporation: the organisational structure itself and how it is designed to operate within the various competing environments where it is situated
