20 page paper

Week 6 Assignment

Derrick L. Booker

California Intercontinental University

MGT 645

Dr. Roberto Gamarra

Introduction

As I reflect on the past five weeks, I am reminded of the various strategic management approaches. In week 1 & 2, we explored well developed models of strategic formulation, strategy implementation, evaluation, and control. Also, we discussed factors of selecting board members and business social responsibility; in which, business utilize a percentage of profits to aid the poor. According to Wheelan et al. ‘Carroll proposed managers of businesses to have 4 responsibilities: economic, legal, ethical, and discretionary in order of priority social responsibility.’  In week 3 & 4, we learned aspects of environmental scanning by examining environmental variables economic, technologic, political-legal, and socio-cultural forces and companies’ ability to implement a sustainability plan. We explored the STEEP Analysis of monitoring trends of societal and natural environments. Also, we identified ways for firms to gain competitive advantage by implementing core and distinctive competences and explored examples of business models, value chain analysis, and basic organizational structures. In week 5, we learned strategic formulations and completed an analysis of Fortune magazine survey of Best places to work for and Americas most admired company. All and all, the MGT 645 course was very enlightening offering an array of information; therefore, I can utilize the information acquired to perform a firm audit effectively. Ultimately, there are many components to factor when completing and audit and the strategic audit framework by Wheelen serves as a guide to conduct an effective internal and/or external audit. The purpose of this paper is to defend the idea that The Strategic Audit of a Corporation framework by Wheelen, Hunger, & Hoffman (2018) can be improved by utilizing the competitive factors of the Porter Model.

Strategy Defined

How is strategy defined? (Mitzberg, 1998), argue that strategy requires a number of definitions; five in particular. They suggest that a strategy is defined as: a plan, a pattern, a position, a perspective and a ploy. While these may not be one simple definition, they do share some general ideas and characteristics. According (Mitzberg, 1998), a good strategy will set direction, focus effort, and define and organization. Most importantly it provides consistency for the organization. (Porter, 1996) supports this view but adds two important factors to the list. One, a strategy must be deliberate for it to be successful. Additionally, it must be unique. “The essence of strategy is choosing to perform activities differently than rivals do” (Porter, 1964).

A refined definition of strategy can be stated as: policies, techniques, and procedures that define an organization’s deliberate and dynamic plan in which the company will operate in order to accomplish their unique objectives and to gain competitive advantaged.

Positioning School Origins

The positioning school is the last of the prescriptive schools as described by the text. It views strategy formation as an analytical process. It continues to build upon the design and planning schools by adding substance by focusing on content. The key premise of the positioning school is that strategies are generic. It argued that there were only a few key strategies, as positions in the economic marketplace, are desirable in any given industry (Mintzberg, 2005). In a sense, it describes a strategy that is plug-and-play. “If these conditions exist, this is the strategy that should be used.”

The positioning school was first explored and defined as a strategy process during the 1980’s. Although earlier work had been done at the Purdue University Krannert Business School, the foundational literature of the school was the book, ‘Competitive Strategy’ by Michael Porter. While this wasn’t the only work written on strategy, it focused the field, arguing that only a few key strategies, as positions in the economic marketplace, are desirable in any given industry (Porter, 1998). According to (Porter, 1998) the positioning school manifested through itself in three waves: (1) the early military writings, (2) the consulting imperatives of the 1970s, and recent work on empirical propositions.

Military strategists were employing the positioning school before its conception as a strategy. Sun-Tzu and Carl von Clausewitz are two such military strategist. Their writings deployed strategy based on the conditions set forth by the environment.

Sun-Tzu for example, presented maxims that linked generic strategies, such as when to attack, to generic environmental conditions. In a sense, making a playbook for the destruction of the enemy. These principles can easily be applied to today’s business world.

Clausewitz also used military maxims that illustrated the positioning school. Clausewitz argued that strategy depends on basic building blocks, which are used in attack, defense, and maneuvering (Mintzburg, 1998). His writings would influence modern-day authors and would help shape the literature on the subject of strategic management.

The second wave of the positioning school came in the form of consultation. As this school developed, it paved the way for consultants to specialize in matching the right strategy with the right conditions. At times they weren’t much more than the military maxims that they based themselves on. Key to this wave was the development two techniques that focused consultants on strategy. The Boston Consulting Group, and their growth-share matrix and experience curve, changed this (Mintzburg, 1998).

The third, and most developed wave, focused on the development of empirical propositions. Extensive studies focused on the relationship between external conditions and internal strategies. This wave consisted of the systematic empirical search for relationships between external conditions and internal strategies (Mintzburg, 1998). In this wave, the school was significantly furthered by Dr. Michael Porter. His works titled Competitive Strategy (1980) and Competitive Advantage (1985) became the jewels of the literature on the subject. In this wave, Porter’s generic strategies, he noted that three basic strategies; cost leadership, differentiation, and focus (market niche), could be used to produce above-average performance in an industry (Mintzburg, 1998).

Positioning School Content

The positioning school is based on five basic principles. First, the positioning school argues that strategies are generic, specifically common, identifiable positions within the market place. (Porter, 1980) refines these strategies now known as Porter’s Generic Strategies. These positions are cost leadership, differentiation, or market niche leadership. Porter argues that a firm can pursue only one of these competitive strategies or risk being stuck in the middle and not achieving a competitive advantage.

Second, the market place is economic and competitive. Porter’s article titled, ‘How competitive forces shape strategy’, identifies the economic forces that drive competition in any industry. His list includes the threat of new entrants or substitute products, the bargaining power of suppliers and customers, and the jockeying for position among current competitors. The collective strength of these forces determines the ultimate profit potential of an industry (Porter, 1979).

The positioning school also premises that the strategy formation process therefore selects one of those generic positions based on analytical calculation (Mintzberg, 1998). According to (Mintzberg, 1999), the positioning school looks behind at established data that is analyzed and fed into the black box of strategy making. The individuals tasked to analyze this data are important players in the positioning school. This analysis is often conducted by consultants who provide their analysis and calculations to the managers who ultimately make a decision based on their results.

Lastly, the positioning school prescribes for a product (strategy) that is complete and ready to be implemented. After all the numbers have been calculated and analysis has been conducted, the firm is presented with a written product that articulates and prescribes how the organization will go about its business.

Despite its significant contributions to the field, the positioning school has been met with many critics. Michael Porter’s influential works are still being challenged in field literature many of which have directly contradicted with the plug and play approach to the positioning school. Much of the current literature suggests that today’s business world is much too dynamic to force a square (generic strategy) peg in a round (ever-changing) business environment. Regardless of its critics, the analytical based positioning school has contributed a great deal to the advancement of the strategic management field.

Positioning School Process

The processes of the positioning school have been widely critiqued because of its robot-like tendencies. This school encourages the ‘back seat driver’ approach. As noted by (Mintzburg, 2003) the message of the positioning school is not to get out there and learn, but to stay home and calculate. The positioning school’s process is based on calculations. If situation ‘A’ exists, strategy ‘X’ must be applied. This strategy has proven successful in certain situations. The Army for example, encourages forces to attack only when they outnumber the enemy forces by a margin of three-to-one. While this is published war-fighting doctrine, leadership doctrine gives the commanders on the ground the authority to take into consideration situation on the ground and make the judgment call on whether to attack or not to attack.

Most critics of this school argue that using calculations does not allow for the organization to implement lessons learned or allow for employees to use the very creativity they are hired for having. (Hamel, 1997) suggests that Opportunities for innovative strategy don’t emerge from sterile analysis and number crunching. He believed that strategy was most effectively used when it incorporated the experiences of the organization and the strategist.

Learning School Origins

The learning school looks at strategy formation as an emergent process. In this view, strategies are emergent, strategists can be found throughout the organization, and so-called formulation and implementation intertwine (Mintzburg, 1998). This school suggests that strategy is learned over time by individuals and the collective organization as a whole. The learning school is one of the six descriptive strategies listed by (Mintzberg, 1998). These schools consider specific aspects of the process of strategy formation and have been concerned less with prescribing ideal strategic behavior that with describing how strategies do, in fact, get made (Mintzberg, 1998)

Some of the significant literature advocating this strategy includes an article titled ‘The Science of Muddling Through’ written in 1959 by Lindblom, Wrapp’s (1967) article on policy decisions, and most recently Quinn’s (1980) article ‘Strategies for Change.’ Supporting literature continues to be written as corporations desire to become more dynamic as the learning school becomes more attractive to strategists and organizations.

The learning school emerged from the desire to answer the question of how strategy was actually formed. Practitioners were looking to find not how they were formulated, but how they were formed (Mintzberg, 1980). The evolution of the learning school has roots in several phases. Disjointed incrementalism, logical incrementalism, strategic venturing, and emergent strategy were all represented by distinct bodies of literature.

Learning School Content

Disjointed incrementalism was an attempt to apply the concepts of policy making to that of strategy making. Braybrooke and Lindeman (1963) positioned that policy making is a serial, remedial and fragmented process in which decisions are made at the margin more to solve the problem than to exploit opportunities. His writings suggested that these findings could also be applied to a business organization in that policy making (strategy making) is typically a never-ending process of successive steps in which continual nibbling is a substitute for a good bite (Lindeman 1968). In the end, Lindeman was unable to rightly label his incrementalism as strategy.

James Quinn’s logical incrementalism furthered Lindemans work. Quinn was of the view point that the CEOs/leaders of an organization were more concerned with guiding the organization in the direction that it needed to go. The central actor, in Quinn’s view, becomes the team of top executives who remain the architects of strategy. In sharp contrast to the positioning school, the organization is less obedient and has a mined of its own (Mintzberg, 1998).

Learning School Process

In the learning model, in which cycles of events are characterized as an ongoing process of experience, reflection, interpretation, and action (Downs, 2003). The process of the learning school calls for organizations to be sensitive to the business environment it finds itself in. Strategy should allow for organizations to react to external factors. According to Oliver (2008) the learning process provides the potential to explore and solve complex organizational problems such as the question of how to develop a future business strategy. Critics however, argue that the process of the learning school fails to address such issues.

Strategy in Public Relations

As the business world continues to develop, public relations have begun to garner an increasing amount of attention from organizational leadership. When reducing cost, leadership first looks internally to reduce spending. Often times, the intangible entities such as marketing or public relations are the first to be cut. The public relations department is vulnerable to these arbitrary cuts because of the inability to quantify its reason for existing. In the past, organizations have looked to measure the impact of public relations on the bottom line; however the impact can be vague and hard to measure. CEOs are looking to public relation practitioners to develop public relation strategies that support the objectives of the organization.

In an organizational environment characterized by downsizing and zero-based budgeting, public relations no longer can convincingly argue that the function is justified without evidence of measurable results (Hon, 1997). In other words, public relations output increasingly must be tied to meaningful outcomes for organizations and clients (Holmes, 1996). It becomes incumbent on the PR practitioner to ensure the PR strategies are developed in support of the organizational goals.

The function of public relations has developed into an important entity within the organizational structure. CEOs are realizing the importance of and the capabilities of effective public relations programs and activities.

Conclusion

We have discussed two of the ten schools of strategy. The positioning school, which views strategy formation as an analytical process, and the learning school, which views strategy formation as an emergent process, have both been established through research as legitimate strategies amongst academic circles. Both schools have advantages and disadvantages depending on the business environment. These schools can also help provide the framework in which an organization can successfully develop its strategy. Strategy extends across all spectrums of the organization. We have also discussed the impact strategy has on the public relations department. All these factors must be utilized to ensure the organization is able to accomplish its goals.

REFERENCES

Braybrooke, D., Lindblom, C., 1963). A Strategy of Decision, Policy Evaluation as a Social Process, New York: Free Press of Glencoe.

Downs, A., Durant, R., & Carr, A. N. (2003). Emergent Strategy Development for Organizations. Emergence, 5(2), 5.

Hamel, G. (1997). KILLER STRATEGIES That Make Shareholders Rich. (cover story). Fortune, 135(12), 70-84

Holmes. P, A, (1996, April 18), Evaluation; What is more important that who. Inside PR. p. 2.

Hon, L. (1997). What Have You Done For Me Lately? Exploring Effectiveness in Public Relations. Journal of Public Relations Research, 9(1), 1-30.

Mintzberg, B., Ahlstrand, B., & Lampel, J. (1998). Strategy Safari: A Guided Tour Through the Wilds of Strategic Management. New York, NY: Free Press.

Mintzberg, H., Ahlstrand, B., & Lampel, J. (2005). Strategy safari: A guided tour through the wilds of strategic management. New York: Free Press. ISBN: 9780743270571.

Mintzberg, H., & Lampel, J. (1999). Reflecting on the Strategy Process. Sloan Management Review, 40(3), 21-30.

Oliver, J. (2008). Action learning enabled strategy making. Action Learning: Research & Practice, 5(2), 149-158. doi:10.1080/14767330802185715

Porter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review, 57(2), 137-145.

Porter, Michael, “What Is Strategy?” Harvard Business Review. November-December, (1996).