Reasoning Behind These Varying Views Of Strategy Commerce Essay Example

the concept of strategy or clarifying the diverse perspectives surrounding this pivotal aspect of business.

The ability to specify scheme can be contentious as there is no universally agreed upon definition. Various respected experts have each devised their own definitions of scheme. Michael Porter, a renowned authority on company strategy and international competition, defines scheme as "the creation of a unique and valuable position, involving a distinct set of activities" (Porter, 1996). Henry Mintzberg, an internationally recognized academic and author on business and management, defines scheme as 'a pattern in a stream of decisions' (Mintzberg, 2007). In the textbook by Johnson, Whittington, and Scholes titled Exploring Strategy, which is now in its 9th edition and widely used, scheme is defined as "the long-term direction of an organization" (Johnson et al, 2011).

In simple terms, it is extremely difficult to capture the essence of strategy in a concise sentence or definition. This contributes to the ongoing debate about what strategy is. Strategic direction is a crucial field of study that incorporates various disciplines (Dobbin and Baum, 2000). The business landscape and its operating environment have undergone significant changes in recent years. For instance, the impact of liberalization, globalization, and e-commerce on strategic decisions is evident due to rapidly changing lead times and other factors. To navigate these complex issues, managers and executives must understand and consider the theory and practice of strategic art.

The concern of concern scheme can be by and large agreed upon by scheme authors - scheme seeks to fit the internal capabilities of the company with the external conditions prevalent (Kay, 2000). Strategy is composed of a mission, visions, and values. Within these, an

organization lays out their long-term objectives (mission), the future outlook signaling where stakeholders want to see the organization, level of market share, image of its brand etc. (vision), and the processes intended for use so that the mission will be completed (values). The composition of strategy and the path to be taken in order to fulfill the mission come under much disagreement.

In the realm of scheme formation, there are various attacks, theories, and schools that present different perspectives. This leads to a significant amount of dissension. To address this issue, I will critically analyze the following aspects:

• The role of internal fit versus external fit
• The perspective approach versus the descriptive approach
• Economic approaches to scheme versus sociological approaches
• The psychological perspective,
• The deliberate versus emergent scheme continuum.

Internal and External Fit

Whittington (2001) has categorize four types of schemes based on years of published strategic theories. The classicist and evolutionary approaches serve as excellent starting points for the debate on whether strategy is internally or externally led. The dominant approach in the 1960s can be characterized as the classicist approach.

Chandler and Ansoff support a planning-dominated, logical, rational, top-down approach to scheme formation. The main goal of this approach is to maximize profit and trust in the directors' abilities to achieve this. It is an internally driven system that focuses on finding the right fit between internal strengths and weaknesses and potential risks and opportunities. The adopted strategies aim to

gain advantage at competitive levels, such as through cost leadership and product differentiation, as well as at corporate levels by pursuing policies of vertical integration, diversification, and multinationalization. These economic components allow an organization to gain a competitive advantage (Douma and Schreuder, 2002).

In contrast, organizations may aim to gain competitive advantage with an external stance towards the market. This relates partly to the evolutionary approach (Whittington, 2001). Managers are seen as unable to keep up with the nearly perfect efficiency of markets in securing profits. Hence, industry analyses are conducted to identify the opportunities and threats present. Porter's (1979) five forces provide a comprehensive framework for conducting such detailed industry analyses. Porter (1996) advocates for market orientation and explains that an organization's ability to achieve fit by integrating activities instead of building competitive advantage, which can be imitated by competitors, will allow for the delivery of greater value to consumers and ultimately lead to success.

However, the combination of both Porter and the evolutionary position does not fit harmoniously, as few theories normally do when discussing strategy. Porter explains that positioning is of critical importance to organizations so that they can meet the demands of necessary consumers. In contrast, the evolutionary perspective views the market pessimistically, expecting it to act in a hostile and unpredictable manner. The changing perspectives of strategy between inward-to-outward orientation are explained by Hoskisson et al (1999). Hoskisson's work explains these pendulum swings as advancements in strategic management which change the focus of research and ultimately allow for "enriching the field's entire body of knowledge."

The Prescriptive and Descriptive Approaches

Strategy Safari, a book by Mintzberg, Lampel, and

Ahlstrand (1999), discusses 10 'schools' of strategic process. These encompass three normative schools and seven descriptive schools. The prescriptive approach focuses on decision-making by upper management, where subordinates follow instructions from their superiors. In contrast, the descriptive approach involves lower levels of hierarchy in the decision-making process, promoting wider involvement across the organization in strategy formation. As a result, the developed strategies vary.

The design school, the first of Mintzberg's strategy schools, focuses on the procedure of forming schemes with a strong emphasis on planning and performance outcomes. According to Mintzberg, strategy is seen as a mental process of identifying strengths, weaknesses, threats, and opportunities, as well as determining competencies and/or success factors to develop a "best-fit" strategy. Mintzberg considers this perspective to be the most influential in the strategy-formation process (Mintzberg et al., 1999).

According to Pelling (2004), the success of Harvard's desire to learn "the art of persuasion by showing negotiated truths as if they were scientifically justified'' may be a contributing factor. The design school is an important source for strategy development. It has not been extensively developed, but it has served as a foundation for other strategic schools such as planning and entrepreneurial schools, both of which draw inspiration from design. Mintzberg also criticizes the school for its separation of planning and execution. In addition, the normative use of SWOT analysis for strategy formation is considered to be a risky idea.

According to Pelling (2004), using SWOT analysis as a myth-maker and story-teller rather than an analyst is unnecessary for intangible organizations in the modern business world. This means that applying SWOT analysis to a company like Amazon.com would be unnecessary. Haberburg (2000) argues

that simply categorizing a company's characteristics as strengths and weaknesses without considering everything in between can result in important information about areas where the company's resources could be developed further being overlooked. In contrast, the descriptive section focuses on strategy content.

It is a matter of functionality rather than procedure in decision-making, as the content decided upon is more important. Additionally, at lower levels of descriptive planning, there is more likelihood of daily and monthly variations. This understanding allows for the program itself to change. To exemplify, I will discuss the constellation school as a case of best practice.

This school believes in integrating elements from various schools to create an approach that promotes integration. Mintzberg (1999) explains that the purpose of this school is to change the direction of an organization, while also stabilizing its strategies. This strategic approach reflects the organization's life cycle and operating environment by accepting and normalizing changes. Another aspect of this approach is based on Khandwalla's (1970) work, which suggests that effectiveness can be attributed to the intercorrelations among multiple properties.

The construction honors the true essence of the "it is" construction by following a specific scheme. By implementing this scheme, the construction is able to create a harmonious balance between preparation and execution, while also facilitating collaboration among similar functions. This strategic approach also allows for adaptations to be made over time in response to environmental, structural, or any other alterations that may occur. The constellation model incorporates aspects of Lewin's (1946) theoretical framework, which emphasizes planned change and behavioral shifts in order to achieve desired outcomes.

In an organizational context, implementing such a procedure allows for changing and eventually normalizing

new behaviors, resulting in successful changes to new management cultures, reward systems, or structures.

Economic and Sociology Perspectives

Regarding the various interpretations of what strategy entails, there are numerous issues related to the overall concept of strategy. Strategy operates at different levels – corporate, business, operational. In this instance, the environmental mindset of strategy in terms of purpose and scope is discussed. This means considering whether strategy is influenced primarily by economic factors or sociological factors. A strictly economically-based strategy prioritizes organizational efficiency, while a strictly sociologically-based strategy seeks to explain that organizations are fundamentally about power.

This is an important question because theories, mechanisms, and paths are shaped accordingly. I will now discuss the components of each perspective and mention theories as part of each. To begin, there are different perspectives from these viewpoints. The economic strategic perspective examines efficiency from the company's viewpoint (Dobbin and Baum, 2000). The methodological imperative is to develop needed theories regarding the optimal use of strategy based on practical examples. Thus, the strategic theorist aims to explain the success of strategy before its implementation.

The competition and demand for efficiency fuel this behavior. However, from a sociological perspective, the focus is on the consequences of efficiency on the corporate landscape (Dobbin and Baum, 2000). The aim is to explain the context and history of management approaches once they are in use, incorporating multivariate models. Economic contributions to strategy do not form a concise structure; instead, they influence strategy at the business level (competition strategy) and corporate level. Economic contributions, however, become clearer when linked to the actual information organizations need and the real decisions that need to be made. Therefore, several steps

involved in strategic planning are used to present economic contributions (Douma and Schreuder, 2002).

Strategy is observed to have both an external and internal position within the management. Initially, industry analysis is conducted based on Bain's (1951) industrial organization (IO) and is later developed into Porter's five forces model. Bain's IO paradigm explained that behavior determines performance with the model; structure determines behavior, and behavior determines performance. The lack of clarity in terms of causation paved the way for Porter's model, which illustrates the forces that impact industry competition. Organizations differ in this aspect based on key variables such as research and development (R&D) and pricing. Rumelt (1991) finds that these differences between firms in the same industry are more significant than differences between industries.

According to his argument, if construction were to determine behavior, there would be no distinction between houses in the same industry. This reasoning led to Porter's theoretical account. By analyzing construction, competition, and profitability, the goal is to seek competitive advantage through the usage of competitive strategy. Competitive strategy involves making choices regarding strategic dimensions of an industry. Two popular methods of business-level strategy that aim to gain competitive advantage are cost leadership and product distinction.

Competitive advantage in a resource-based position (RBV) is based on the ownership of specific resources. The sustainability of this advantage is achieved through the difficulty or cost for competitors to acquire the same resources. In order to achieve above-average returns, a company seeks typical inputs that can generate standout products and services that attract customers. Additionally, they may also offer low-priced goods to further increase returns. Transaction cost economics (TCE) considers the firm and market as separate

governance structures. An organization must choose between two methods of production - producing internally or outsourcing to the market. Therefore, an organization must carefully assess its alternatives.

The theory of economic exchange states that if it is more expensive, then production will be done internally and the organization will grow. However, if it is more expensive to produce internally, then the organization will seek external market options. This theory provides an explanation for the corporate strategy of vertical integration. Sociology is the study of human social behavior, specifically focusing on the structures and institutions within society. It is clear that modern societies are made up of complex sets of institutionalized rules and patterns (Meyer and Rowan, 1977).

These established regulations offer a template for the formation and development of formal administrations. While the economic aspect of the plan emphasizes the limited rationality of actors, sociology focuses more on behaviors and relationships. Economic sociology is an attempt to reframe, using sociological terms, questions that are traditionally addressed by economists. Thus, economic sociology aims to study multiple administrations (as opposed to a single organization like their economic counterparts), the interconnectedness of administrations, entire sequences of administrations, and administrations as open systems (Swedberg, 2003).

Resource dependence theory (RDT) is a perspective that explains how organizations must acquire important resources from the external environment in order to survive. The direction of the relationship with the external environment and the environment itself are crucial factors. In contrast to the resource-based view, RDT emphasizes the importance of interacting with the external environment to ensure resource availability. On the other hand, RBV takes a more defensive approach to protect resources, highlighting a sociological perspective on

inter-organizational dependence.

Population Ecology theory (PET) posits that the survival of an organization is determined by the external environment. According to this perspective, a poorly-performing firm is deprived of resources by the environment, reflecting a Darwinian approach. However, applying PET to industries with high barriers-to-entry and regulatory models is challenging. Additionally, assessing an organization's capabilities in achieving its goals becomes difficult. On the other hand, new institutionalism theory (NIT) provides an alternative solution to the drawbacks of PET. NIT suggests that organizational behavior is influenced not only by the environment but also by various social and cultural pressures.

According to Powell and DiMaggio (1983), organizations are influenced by coercive, normative, and mimetic pressures. This means that organizations deal with uncertainty by imitating other patterns. Considering these theories, the sociological perspective on strategy expands an organization's opportunities for studying strategy formation. There is much debate about what determines organizational success – whether it is the capabilities of the organization or the environment.

Issues surrounding the roles of directors, capabilities of companies, and their influences are similarly relevant. With such emphasis on the interdependence of the environment and organizations, the function of administration is reduced to being a byproduct of market inefficiencies. However, administrations still argue for their importance in creating value offerings and their ability to acquire and sell products that would otherwise be unavailable (such as oil, iPods, and out-of-season fruits/vegetables).
Psychological Perspective
The psychological perspective of strategy focuses on the processes and concepts that aim to explain how directors and administrations process information.

There is a wide range of psychological tools that can be used to enhance understanding in a strategic environment - for example, schema, cognitive maps, and repertory

grid systems. Cognitive function allows organizations to identify core competencies and create structure in complex situations (Eden and Ackermann, 1998). This complements economic sociology as it aims to explain similar topics, such as group dynamics, using alternative methods. Managerial and organizational knowledge (MOC) is based on concepts, theories, and methods from cognitive science. The focus here is on limitations: the boundaries of stimulus processing and strategies acting as filters, which can lead to biased and inappropriate decisions (Hodgkinson, 2007).

There are arguments both in favor and against this concept. Stubbart (1989) claims that this particular area of study connects environmental conditions with strategic action. However, Hambrick and Mason (1984) contradict this notion by stating that top executives ultimately determine direction and outcomes. They propose a three-step filtering process that ultimately "supports the tendency for executives to understand only a limited portion of all potentially relevant information."

Deliberate and Emergent Strategies
Mintzberg and Waters (1985) discuss the varying degrees in which strategy is implemented along a continuum of distinct strategies in practice. On one end, there are strictly planned strategies - where strategy is realized as intended. On the other end, there are strictly emergent strategies - where there are patterns of consistency despite the absence of intention.

There are eight schemes along this continuum, representing the complexity of the scheme formation procedure. This continuum includes two extremes and several schemes within, observed in real life. The varying degrees of scheme formation show that organizational bases differ in their processes. Centrally controlled administrations enforce tighter control on scheme while decentralized, loosely coordinated administrations rely on emergent scheme.

Therefore, when it comes to disagreements about strategy, issues regarding the role of directors

may arise. Is a strategic approach that unintentionally results from environmental forces a realistic method of concern? However, there is room for different opinions. Emerging strategy may represent management that is open, flexible, and responsive. In this context, it would positively coexist with a traditional view in terms of relying on the capabilities of the director.

Decision

Strategy is a complex and significant process that should encompass the entire business in order to set objectives and guide core functions towards achieving a desired outcome. It is clear that there are numerous issues surrounding the definition of strategy.

The text discusses the scope of strategic management, which encompasses various activities within organizations, including cognitive procedures of directors and economic, sociological, and psychological factors. Throughout the development of strategic management, there have been shifts between internal and external focus. According to Hoskisson (1999), these shifts are expected as our understanding of strategy evolves. The different perspectives on normative and descriptive approaches also reflect the evolution of work in the strategic field. The design school, influenced by early strategy thinkers like Chandler, gives way to the constellation school, supported by Mintzberg, which emphasizes the integration of multiple schools of thought.

The work on economic, sociological, and psychological positions reflects the wide range of influences on the strategic field. The issues that arise are a result of the broad scope of the scheme within multiple fields of study. Ultimately, the emergent and deliberate continuum provides a comprehensive understanding and breadth to the strategic formation process. This is achieved by explaining the organizational foundations and subjectivity and their impact on how scheme develops.

In summary, these findings suggest that it is difficult to establish a

comprehensive consensus regarding scheme. The breadth of this discipline makes it challenging to construct a consistent and comprehensive framework. Strategy aims to integrate various elements to incorporate the "long-run way" into the operations, processes, functions, and approaches of organizations in order to achieve their objectives.