Global Strategy and Leadership
MODULE 1 AN INTRODUCTION TO STRATEGY & LEADERSHIP
1.7 – 1.14
What are the ways strategies can be developed?
Approaches to understanding strategy: ❖ Rational - based on a model in which the conception and execution of strategy are treated as discrete, sequential activities.
Chandler (1962) defined strategies as a straightforward process made up of two chronological activities.
The following steps are typical of the method employed in this approach: 1. The establishment of clear strategic objectives 2. The analysis of an organisation’s strategic situation, its external environment, and its internal resources and capabilities. 3. The generation, evaluation and choice of strategic options based on their potential to optimise the achievement of the established objectives 4. Implementation of the chosen strategic option, which is usually expressed in a strategic plan.
Michael Porter’s (1980) five forces model is an example of the rational approach. This approach has an external focus.
❖ Processual – this approach view strategy formulation and implementation as entangled activities, and not separate stages. Processualist, because of their belief that external markets and environments are unpredictable and imperfect, focus more on competencies of the organisation in a concern to build the requisite internal skills and resources.
❖ Evolutionary – this approach argues that market forces, rather than managerial actions, will determine which organisations will survive and prosper and which will fail. The ‘environment’ will select organisations for either success or failure as markets are too unpredictable and uncontrollable for planned strategies to be effective. Therefore, an organisation’s leaders should work on achieving competitive advantage by improving operational efficiencies in the short term, and also focus on creating a range of innovative products and services, improving the
1.7 – 1.14
What are the ways strategies can be developed?
Approaches to understanding strategy: ❖ Rational - based on a model in which the conception and execution of strategy are treated as discrete, sequential activities.
Chandler (1962) defined strategies as a straightforward process made up of two chronological activities.
The following steps are typical of the method employed in this approach: 1. The establishment of clear strategic objectives 2. The analysis of an organisation’s strategic situation, its external environment, and its internal resources and capabilities. 3. The generation, evaluation and choice of strategic options based on their potential to optimise the achievement of the established objectives 4. Implementation of the chosen strategic option, which is usually expressed in a strategic plan.
Michael Porter’s (1980) five forces model is an example of the rational approach. This approach has an external focus.
❖ Processual – this approach view strategy formulation and implementation as entangled activities, and not separate stages. Processualist, because of their belief that external markets and environments are unpredictable and imperfect, focus more on competencies of the organisation in a concern to build the requisite internal skills and resources.
❖ Evolutionary – this approach argues that market forces, rather than managerial actions, will determine which organisations will survive and prosper and which will fail. The ‘environment’ will select organisations for either success or failure as markets are too unpredictable and uncontrollable for planned strategies to be effective. Therefore, an organisation’s leaders should work on achieving competitive advantage by improving operational efficiencies in the short term, and also focus on creating a range of innovative products and services, improving the