APPROACH TO STRATEGY
Managerial Choice and
Constraints
Learning Objectives
1. Discuss the origins, development and
popularity of organization strategy
2. Describe the main features of the
Perspective stream of strategy
3. Discuss the key elements of the Analytical
stream of strategy
4. Understand the key differences between the
Perspective and the Analytical stream
5. Appreciate the relationship between
strategy and change
The Origins of Strategy
Strategy comes from the Greek; “stratego”,
meaning ‘to plan the destruction of one’s
enemies through the effective use of
resources’
The rise and fall of long range planning
In order to cope with the new and rapidly
changing, manager began to adopt long
range planning techniques.
Long range planning was a mechanism for plotting
trends and planning the actions required to
achieve the identified growth targets
Long range planning failed for a variety of internal
and external reasons :
1. Internally, many systems involved little more
than extrapolation of past sales trends
2. Externally, in 1960s the relatively comfortable
conditions of high market growth gave way to
lower levels of growth
Long range also could not cope with environmental
turbulence. In response to the failure, concept
of strategic management began to emerge
Strategic management focuses more
closely on winning market share from
competitors.
The positioning approach to strategic
management which write by Porter
said strategy as a rational process,
whereby managers gather hard,
quantitative data and from this
information come to rational decisions
regarding their future
Defining Strategy
Henry Mintzberg argued that we need at least
5 definitions of strategy to gain full
understanding :
1. Strategy as a plan
2. Strategy as a ploy
3. Strategy as a pattern
4. Strategy as a position
5. Strategy as perspective
Johnson (1987) said there are 3 basic view
which reflect to strategic management :
1. The rationalistic view
2. The adaptive or incremental view
3. The interpretative view
A consensus of opinion does emerge with
regard to the basic features of strategic
management and decisions:
1. Concerning the full scope of an organization
activities
2. The process of matching the organizational
activities to its environment
3. The process of matching its activities
to its resource capability
4. Having major resource implication
5. Affecting operational decisions
6. Being affected by the value and belief
7. Affecting the long term direction of an
organization
Approach to Strategy:
The perspective Vs the Analytical
Stream
Mintzberg and Johnson, there are 2 further
issues to be considered:
1. Is strategy a process or the outcome of
a process ?
2. Is strategy an economic/rational
phenomenon or is it an
organizational/social phenomenon ?
With 2 questions above, there are 2
parallel competing :
1. The perspective stream; sees strategy
as a controlled, intentional,
perspective process, base on rational
model.
Grew in 1940s and 1950s
2. The analytical stream; sees more
interesting in understanding how
organization actually formulate
strategy
Grew 1970s
Mintzberg draw distinction between
1. Deliberate strategy which focus on
control – making sure that managerial
intentions are realized in action
2. Emergent strategy emphasize learning
– coming to understand through the
action
3. Umbrella strategy : the broad outlines
are deliberate while the details are
allowed to emerge within them
Child and Smith (1987), suggest 3 area
firm sector linkage which shape and
constrain the strategies
1. The objective conditions for success
2. The prevailing managerial consensus
3. The collaborative networks operating
in the sector
Understanding Strategy :
Choice and Constraints
Whittington identifying 4 generic approach to
strategy :
1. The classical approach
2. The evolutionary approach
3. The processual approach
4. The systemic approach
Constraints on managerial choice
Business environment
Industry/
Sector
Managerial
Choice
National
Characteristics
Organizational Characteristics
Summary
1. Managers have considerable freedom of action
and wide range of options to choose from
2. Manager freedom of action is seen as being
constrained or shape by the unique set of
organizational, environmental and societal
factors
3. Manager can also exert some influence over
strategic constrains and select the approach to
strategy that best suits their preferences