2) Alternative Approaches To Strategy

Question 1

The advantages to the rational approach to strategy formulation?

Answer 1

• long term view
• identifies key strategic issues
• goal congruence
• communicates responsibility
• co-ordinates SBU’s
• security for stakeholders
• basis for strategic control

Question 2

The disadvantages of the rational approach to strategy formulation?

Answer 2

• inappropriate in dynamic markets
• bureaucratic and inflexible
• difficulty getting the necessary participation to implement the strategy
• impossible in uncertain environments
• stifles innovation and creativity
• complex and costly for small businesses with informal structures and systems

Question 3

What impact does environmental uncertainty have on business strategy?

Answer 3

• reduces the planning horizon
• may lead to conservative strategies
• increases information needs of organization
• some writers believe that high uncertainty brings into question the idea of planning a strategy at all.

Question 4

Emergent approach

Answer 4

Mintzberg argues that successful strategies can emerge in an organization without formal, deliberate prior planning. The ‘pattern’ is often made up of the intended (planned) strategies that are actually realized and any emergent (unplanned) strategies. - look at diagram pg 52.

He believed it was unlikely that a firms environment could be totally predictable as it would need to be for all intended strategies to workout. Thus the emergent strategy to be superior.

Some strategies may be deliberately emergent, in that Managers may create the conditions for new ideas to flourish and strategies to emerge. To do this, managers must exhibit the following skills:

• manage stability
• detect discontinuity
• manage patterns
• reconcile change and continuity

Question 5

Incremental Approaches & managerial functions of incrementalism?

Answer 5

Lindblom - ‘Muddling through’: look on Internet for explanation.

Quinn - logical incrementalism: Quinn identifies that a manager must map where he or she wants the org to go and then proceed towards it in small steps.

The main managerial functions of incrementalism are:

• formal and informal communications
• need for change
• build political support
• initial trial of the strategy
• press the strategic change forward incrementally

Question 5

Freewheeling opportunism

Answer 5

This involves not having a plan or having a series of short term plans as a replacement.

Question 6

Strategy safari

Answer 6

Pg 19 of key cards

Pg 57 of textbook

Question 7

Political process

Answer 7

This approach views strategy formulation as a political process, where political and stakeholder analysis must be carried out in order to identify the main sources of power. Once the key players have been identified, a power struggle may then take place which, through negotiations, results in the formulation of strategy.

Question 8

The rational approach may be unsuitable for SMEs. Why?

Answer 8

According to Birley (1982), the formal top-down process may be unsuitable for small businesses for four reasons:

• differences in goals
• limited scope of product/ market choices
• limited resources
• organizational structure

Question 9

Public sector organizations, charities and non profit organizations often have difficulty in developing strategy using the traditional private sector based approaches. Why?

Explain how to address this problem using the ‘three Es approach’?

Answer 9

Such organizations have problems for the following reasons:

• it is more likely to have multiple objectives
• it will be more difficult to measure objectives
• there may be a more equal balance of power between stakeholders
• the people receiving the service are not necessarily paying for it

The ‘three Es approach’:

• effectiveness
• efficiency
• economy