The origins of the Strategy Essay Example
The origins of the Strategy Essay Example

The origins of the Strategy Essay Example

Available Only on StudyHippo
  • Pages: 8 (2096 words)
  • Published: October 10, 2017
  • Type: Case Study
View Entire Sample
Text preview

The company has rapidly evolved in this sphere to achieve its goals. The current corporate scheme involves setting long-term objectives and goals that add value. Each aspect of the organization, such as people, finances, products, and the environment, has its own function.

The corporate strategy is driven by the company's goal, which can include providing employment, distributing dividends to stakeholders, or offering a wider range of products to customers. According to Porter, the objective of any strategy is to create a competitive advantage comparable to competitors and provide value to customers.

Lynch (1997) defines corporate strategy as a set of objectives, goals, and essential policies or plans that define the nature and business of the company. Corporate strategy also facilitates the connection between internal resource management and external relationships with various stakeholders such as suppliers, customers,

Currently there are two main approaches to corporate strategy: Emergent and Prescriptive strategies.Inthepast,normativewasusedexclusively;however,factorslike


changesinenvironmentalconditionsespeciallyfluctuationsinoilpriceshaveincreaseduncertaintyforcompanies.Anewapproachcalledtheoutgrowthschemehasemergedasaresult.The purpose of this study is todiscussanddevelopthesetwostrategiesusingMaerskLineasanexample.There are two strategies for developing and implementing plans within an organization: the prescriptive strategy and the outgrowth scheme. The prescriptive strategy involves setting objectives in advance, with top management closely overseeing the planning process. Initial requirements are established by top management, and lower levels of the organization convert them into actionable plans. Headquarters then analyzes how resources will be coordinated and redistributed within the company, creating a linear system where every aspect of the strategy is known from beginning to end.

On the other hand, the outgrowth scheme takes a different approach. It recognizes that uncertain and dynamic environments can hinder the development of a predefined strategy. Instead, it focuses on continuous learning, adaptation, and flexibility. This allows companies to effectively respond to changin

View entire sample
Join StudyHippo to see entire essay

circumstances and seize new opportunities as they arise.

To summarize, there are two strategies for developing plans within an organization: prescriptive and outgrowth. The prescriptive strategy follows a linear approach with defined objectives and close supervision by top management throughout the planning process. In contrast, the outgrowth scheme emphasizes continuous learning and adaptability in response to uncertain environments.The following text explains the steps involved in a study that explores and demonstrates strategies using Maersk Line as an example. The process consists of three distinct steps: developing a scheme that aligns with the company's environment and resources, prioritizing maximum return on capital, and reassessing missions/objectives when necessary. After considering all available options, the company selects the most likely one to achieve its objectives. The strategic path for achieving these goals is determined through rational choice, considering factors such as consistency, financial resources, suitability, validity, feasibility, hazards, and stakeholder expectations. This evaluation process is crucial for strategy development. Finally, the chosen strategy option is implemented in the final step."Everything will be defined earlier than the company in the market" (Corporate Strategy, 2006, Lynch p.54-55)

Illustration of Normative Scheme

Beginnings: hypertext transfer protocol: //


Complete overview of administration
Possibility to compare all aims
Clear image of different picks for company resources
Possibility to detect and evaluate implemented plan
Beginning: (Corporate Strategy 2006 Lynch)

Disadvantages & Troubles

According to Mintzberg and Porter, accurately predicting the future is difficult for rational decision making. The text highlights that placing too much emphasis on strategy coordination can limit creativity and hinder long-term strategic planning. Proposed strategies are logical and manageable but controlling variables can be challenging. Decision-making tends to be centralized at

the senior management level, with the chief executive having sole power. This concentration of decision-making authority can lead to potential challenges if flawed decisions are made. The concept of an emergent scheme is introduced as a strategy that develops and adapts over time. Unlike a top-down approach, an emergent strategy can directly emerge from market ideas and feedback.The process of developing an emergent strategy has various possibilities and variations. Participative management tools like Simons' management system control (1995) and Strategy Safari by Mintzberg, Ahlstrand, and Lampel promote openness to new ideas and flexibility in defining goals to facilitate necessary changes in strategy. Input from those working directly in the field is crucial for understanding market outlook. According to Henry Mintzberg, an emergent strategy allows adjustments and redesigning to seize opportunities. Winston Churchill's famous quote emphasizes prioritizing perceiving opportunities over challenges. The emergent methodology involves experimentation and ongoing discussions to identify objectives and explore possibilities. Implementation is closely intertwined with development. Once goals are established, the strategy is discussed, implemented, and optimized as required. If the strategy fails to achieve its objectives, all members engage in discussions about alternative compromises. This cyclical process enables continuous evolution and flexibility in adapting to new resources, policies, and market expectations (Corporate Strategy, 2006 Lynch).In rapidly changing markets, this method proves highly efficient and facilitates constant development as the company gains insights into both the strategy itself and market conditions. The execution process undergoes redefinition and becomes an integral part of the strategy development process. By adopting a day-by-day approach, an optimal culture can emerge instead of relying on impractical planning processes. However, there are certain disadvantages and challenges associated

with this method. To prevent any confusion that may be detrimental to the company, all members must possess a comprehensive understanding of its operations. A unified vision is imperative for effectively addressing this concern. Experience also plays a pivotal role in tackling these challenges.

According to Mintzberg, developing a normative strategy is more complex than the strategy itself. It constantly changes and has long-term implications. However, the procedure for selecting a strategy must remain flexible based on directors' acceptance. This does not mean it is incorrect; rational decisions made with evidence have a greater chance of success compared to relying on intuition or personal preference.

After discussing both emergent and normative approaches, it is interesting to consider the debate between these two strategies in an upcoming section titled "Discussion".Many companies currently face the challenge of finding a balance between their capabilities and adaptability in a changing market, while also maintaining control and stability in mature strategic activities. We are currently navigating between emergent and normative approaches to address this issue. Jansen's idea from 2005 serves as an example of how companies can find a combination by adapting to change, exploring new ideas or processes, and developing products/services for emerging markets. However, there is a conflicting choice that management must make between exploration and development. In 1998, it was argued that a company's strategy is not solely determined by deliberate planning but also emerges from its actions and responses to external factors. The importance of learning through experimentation and incremental steps in shaping organizational capabilities is emphasized. This perspective aligns with Schumpeter's argument that innovation is inherent in the emergent approach as companies need to continuously experiment and

adapt to maintain their competitive advantage. However, Mintzberg warns against relying solely on bureaucratic or analytical planning processes as they may lead managers astray into thinking they are strategically planning for the future without actually improving existing processes.D. Powell argues that effective planning should involve both analysis and critical thinking, rather than simply changing labels or methods, although his approach has been criticized for lacking depth (source: Mintzberg raises valid concerns about strategic planning but does not provide concrete solutions (MARCH 1991, p71). Both Schumpeter and Mintzberg highlight the interdependency of innovation and a company's success but differ in their views on how strategic planning should be approached – with Schumpeter emphasizing continuous innovation through an emergent approach while Mintzberg warns against overreliance on bureaucratic or analytical processes without critical thinking involved. According to (1999, p.198), any strategy dealing with the real world must combine deliberate strategies and emergent strategies while exerting control and promoting learning. However, the company faced a dilemma between development and exploration as it had to implement intentional and deliberate strategies while also detecting and formulating new strategies to adapt to competitive environments. Simons (1995, p.98) suggests using interactive control systems to guide bottom-up processes of strategy emergence. This differentiation between diagnostic control and interactive control represents two models of management control representation.Since its establishment in 1920, Maersk Line Strategy has always been an advanced transportation company specializing in the chemical industry. Nils Smedegaard Andersen, the CEO of Maersk, recognized the potential for further development and decided to upgrade their fleet with intelligent engines to increase productivity and gain a competitive advantage. In contrast, their competitors continued using outdated engines.

After 30 years, due to growing market demands, Maersk began constructing larger vessels and a new port that provided more space for bigger boats to operate. This adjustment was influenced by market trends as they aimed to transport more units in one location. In the 60s, they implemented a diversification plan due to the revolution of containerization and invested approximately $2 billion in standardizing cargo exchange – considered the largest investment at that time. This allowed them to enter an emerging market and implement an innovative strategy. In 2008, Maersk Line introduced a new strategy focused on achieving sustainable profitability and strengthening their leadership position in the transportation market.At present, Maersk is now ten times larger than it was ten years ago. However, the company acknowledges that its current operations do not align with its increased size and recognizes the need for change. As the company has grown over time, both complexity and bureaucratism have also increased within the organization.

The strategy of Maersk is based on recent market experience, which has resulted in improved financial results and customer satisfaction. This strategy consists of four key elements: filling ships with profitable cargo, providing reliable products that are in demand by customers, offering faster and more responsive service near customers' locations, and reducing complexity and costs.

To address these issues, Maersk has decreased its global organization by eliminating 2,000 to 3,000 positions mainly in middle management. The focus has been on reducing regional organizations and creating smaller teams. In order to support employees during this transition period, the company has provided advance notice of future job cuts to business people so they can explore alternative solutions or seek

new positions.

Furthermore, decision-making authority has been delegated as close to clients as possible. By implementing a new procedure, bureaucracy has been reduced and processes have been streamlined leading to less complexity. These changes benefit both clients and internal efficiency.

Additionally,the decision-making process itself has undergone a redesign to be more responsive and closer to clients. This empowerment strengthens both Maersk's position along with their clients'. Decisions can now be made faster worldwide without having to wait for feedback from headquarters.The decentralized management approach will encourage local strategy development and give importance to implementing a proximity service strategy. Working closely with clients and establishing long-term relationships is a solution for the company's future. The strategy was implemented within a few months, as stated in an article from Traffic World Journal dated January 21, 2008. This article emphasizes how market acquisition and experience provide valuable knowledge for companies. Eivind Kolding, the CEO of Maersk Line, believes that the new management team has the necessary experience and capability to drive the company's strategy and achieve positive outcomes. The organization recognizes that market experience is crucial for maintaining competitiveness, as highlighted in a previous report. By understanding customer expectations and market dynamics, they have successfully implemented an optimal strategy. The benefits of this approach are already evident as Maersk Line has positioned itself favorably with better-than-expected results. In Q1 2010, they achieved a net profit of $168 million compared to a loss of $581 million during the same period in 2009. This progress is also reflected in their turnover which increased from $4.661 billion in Q1 2009 to $5.743 billion in Q1 2010Kolding states that Maersk is benefiting from improved

market conditions and is successfully adapting to seize opportunities even in challenging economic circumstances. The company aims to enhance its competitiveness by leveraging new opportunities presented by the current economic situation. This study examines the distinction between emergent and normative approaches in Strategic and Corporation Management, incorporating academic analysis from various perspectives along with a case study on a specific company. The analysis indicates that the normative approach involves systematic strategies where experience plays a crucial role. JONK LOCKE contributes to this discussion with several statements, highlighting the importance of understanding customer expectations for organizational success, the significance of experience in implementing effective strategies, and how favorable market conditions have allowed companies like Maersk Line to capitalize on different situations. Ultimately, Maersk's objective is not only to enhance competitiveness but also to take advantage of new opportunities arising from changing economic circumstances.

Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds