Nature of Strategy
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Transcript of Nature of Strategy
1- r.daa
(
TIIE
NATIJRE
OF
STRATEGY
1.
Origins:
The origins
of strategic
rnanagement can
be
traced back
to the
earliest
civilisations
where
people
began
organising
themselves
socially,
politically and commercially. The
term
"strategy"
is
derived
from the
ancient
Greek
('stratos'
-
army.
'agein'
-
to lead),
where
it
was used to describe
the elements
involved
in
the preparation and
conduct of
military campaigns.
The dominance
of the
military/state
on the development
of
stategy continued
up to
WW2.
Until this
period
leaders
such
as Napoleon,
Von Clauswiz,,I-eri4
Mao Tse-Tung, Sun
Te-Zu, and Montgomery,
etc.
were seen
as great
strategists,
positioning their
various
forces to overcome
some enemy.
pre
WW2 was inextricJbly
linked
to
military
power and
visa
versa. WW2
was
a
watershed in the
application
of strategy
in
that it
was recognised
that
many
of
the skills,
processes and contexts
used
in the art
of
war could
be used
independently to
gain commercial success.
In its simplest
form
a
the development
ofstrategy
in a business/corporate
sense
can
be
seen
in four
distinct
phases.
a. 1900's:-
Budgeting
and Control:
Featured
systematic
management;
assumed
that
past
conditions
would
prevail in the
future'
Dominated
by
military/bureaucracie
s.
b.
1950's:-
Long-Range
Planning: Plans
based
on forward
projection
of trends.
c.
1960/70's:-
Strategic
Planning:
Analysis
of the
business
environment
was
important,
as
were business
cycles, in
particular, annual
ones.
d.
1970's*: -
Strategic
Management:
Also
an environmental
emphasis
but,
due
to
the
failure
of the
planning regimes in
the 1970's,
the
process avoids
use
of
planning
cycles
and
depends on continual
adjustment.
The route
taken
has
been
one
that
has
recognised
the
increased complexity
of the
environment
in
which businesses
have to operate.
It acknowledges
that
our
understanding
ofthe
business
environment
has
increased,
as
has
the amount
of information,
resulting
in
more
detailed,
and
thus
complex,
analyfical
and
decision
making
techniques.
It is
important
to
recognise that strategic
management
is
about selecting
the
optimal
solution
for
your
parlicular
situation
from
the
information
at
your
disposal.
Definition
of Strategy:
There
are
many definitions
of
strategy.
J&S have
put
forward a
statement
that covers the main
aspects
of the
subject'
.
Sf,-ategy
is the direction
and
scope
of an organisation
over
the long-term
which
matches
its resources
to its
changing
environment
and, in
pafticular, its
customers/markets,
so
as to
meet stakeholder
expectations.
Notice
that J&S
do
not mention
planning. Strategic
management
is not planning. It may
well
include
planning but
strategy
is far
more
subtle
and responsive
than
a set of
plans. Planning
cultures
and regimes
frnd
it difficult
to
respond to rapid
changes
in their
environments
and
consequently
suffer
at
the
hands of
those
organisations
with less
rigid management
systems.
Michael
Porter
at Harvard
led
the
field in strategic
determination
with respect to
the external
environment
(MBV).
Other
writers,
notably,
Hamel
and
Prahalad
have championed
internal
aspects
through
RBV.
We can
suppose
that
the best
approach
to
strategic determination
both
intemal
and external
factors
since
it
would
be foolish
to
claim
that an organisation
can
operate
without
regard
to its
external
environment
and
in the
same
vein
it is impractical
for organisations
to
develop suicessfully
without a
clear
understanding of
their
own
internal resources
and capabilities.
Increasingly,
writers and
practitioners
are moving
towards
a holistic
(the
organisation
and
environment)
approach
towards
strategic
determination.
The
scope of strategy:
Strategy
should
consider all
the
elements of
an organisation
and
how
they
inter-relate
with eaih
other
and,
most importantly,
with
the environment
in
which
they
operate.
It
should
not
be
the
preserve
of the
board
of
directors to
formulate
strategy.
Both
formulation
and
implementation
should
involve
other
members of
the organisation'
2.
3.
/4
c:
f
i
i
t
t
t
t
t
I
t
t
t
t
F
F"
t
Essentially
the process
of
sEategy
making
should be
viewed
within an
external
environment
continuum.
If
the
environment
is
stable
then
a iational
approach
is
appropriate.
If
environment
is
fast changing,
or
even
chaotic,
then
emergent
(descriptive)
techniques
ar€ more
appropriate.
The
incrementalist
view
seeks
to
build
a
'change culture' within
the
company
such
that
some
aspect
of stategic
change
is
always
being determined.
Incremental
(descriptive)
change
usually
happens
in moderately
dynamic/dynamic/chaotic
environments.
Minuberg
has
written
widely
on
this
subject
and developed
a concept
of
ten strategic
schools,
which
distinguish
in
the
way
a corporate srategy
is
formed.
Essentially, however,
the
division
is
between
prescriptive
approaches
(three
schools:
Planning, Positioning,
Design)
and
descriptive
approaches
(seven
schools:
Entrepreneurial,
Cognitive, Learning, Power,
Cultural, Environmental,
Configuration.)
The
choice
essentially
relates
to
the state of
the
environment
and the
cultural
make-up
of the company.
(See
Strategy
Safari: Minuberg,
Ahlstrand
and
Larnpel,
Prentice
Hall,
1998)
C
/cJ