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    Strategy Formulation Assignment Help

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    Strategy Formulation Assignment Help


    Strategy Formulation Assignment Help

    Abstract

    Great strategies are worth nothing if they cannot be implemented [1]. It can be extended to say that better to implement effectively a second grade strategy than to ruin a first class strategy with ineffective implementation [2]. Thus, effective implementation of strategies is important to the success of every entity. There are many ways of classifications of strategy. However, there are ten schools of thought that dominate recent thinking on strategy. These ten schools or models of strategy formulation were proposed by Henry Mintzberg, Bruce Ahlstrand and Joseph Lampel in their book “Strategy Safari: A Guided Tour through the Wilds of Strategic Management”. The “learning school” is one of these schools. From the perspective of this school, there is the emer-gence of strategies as people act individually but most of the time through concerted efforts, learning about a phenomenon as well as their entity’s competence in dealing with it. There are criticisms of this model saying there is the danger of going to the opposite extreme which may re-sult in no strategy, lost strategy or wrong strategy. However, the study provides insight into the adoption and application of this strategy as well as the enormous benefits that accrue to learning organizations. The authors, having reviewed a vast number of literature, have summarized the concept of the learning school as “all hands-on-deck phenomenon” where individuals or employ-ees are empowered in teams to improve their desire and ability to create and explore what they want in order to understand and manage the organization and its task environment.

    Keywords:-  Learning School, Strategy Formulation, Emergent Process, Strategic Management

    1. Introduction

    The business environment today is rapidly changing and organizations are developing new and innovative ideas to help achieve most if not all its objectives. The objectives differ from one organization to another which range from profit maximization, shareholders wealth maximization, customer satisfaction, growth and survival, coop-erate social responsibility among others.

    These objectives cannot be achieved effortlessly. They need concerted efforts by the owner(s) of business or-ganizations and others through well designed and thought-through plans. These plans are carried out through an integrated and coordinated set of commitments and actions known as strategy. Thus, strategies must be analyzed, formulated and implemented well to achieve a desired outcome or earn above average returns. The process of analysis, formulation and implementation of strategy is called strategic management. The use of strategy has ex-isted for many centuries although its use in management has been a more recent history, dating back about 40 years.

    Strategy was borne out of military conflicts and the use of a superior strategy enabled one warring party to defeat another [3]. Von Clausewtz, writing in the nineteenth century, states that the decision to wage war out to be rational, that is based on estimates of what can be gained and the cost incurred by the war [4]. War should also be instrumental, that is waged to achieve some specific goal, never for its own sake, and that strategy should directed to achieve one end, in this case, victory. Thus, strategy is simply an outline of how a business intends to achieve its goals.

    The use of strategy in decision-making is the primary way in which managers take into account of a con-stantly changing external environment. An effective strategy allows them to use their organization’s resources and capabilities to exploit opportunities and limit threats in the external environment in order to achieve com-petitive advantage. A debate arises when we try to pin down “what strategy is” and, importantly, “how is strat-egy formulated?” This discussion has continued for decades and is rooted in a desire for managers to undertake better strategic thinking and therefore better strategic decisions [3].

     

    Figure 1. Strategy context, process and content, linked to organizational purpose.Source: De Wit, B. and Meyer, R. (2004)

    It is thus not surprising that, after a comprehensive strategy or single strategic decision has been formulated, significant difficulties usually arise during the subsequent implementation process. The best-formulated strate-gies may fail to produce superior performance for the firm if they are not successfully implemented [12]. With-out execution even the most brilliant strategy is useless. Being successful requires skills and knowledge to carry out strategic decisions and plans. Since the 1970s research on strategy processes has been addressing this chal-lenge by examining the processes of strategy formulation and implementation [13]. The main topics of strategy process research have been strategic decision making [14]-[17], incremental strategy formation [18]- [20], and organizational politics [21]. There are many ways of formulation of strategy by different authors and available literature. However, the authors of this paper find Henry Mintzberg, Bruce Ahlstrand and Joseph Lampel’s ways of formulation of strategy as one that is in line with the main aim of this paper which examines the application of the learning school model of strategy formulation to organizations. Mintzberg, Bruce Ahlstrand and Joseph Lampel came up with ten (10) ways or schools of formulation of strategy which include the learning school of strategy formulation. According to the learning school, strategy in an organization emerges as a result of trial and error learning within an organization. It recognizes that strategy must be consonant with the patterns of be-havior and response that are inherent within an organization. In each of the ten (10) schools, the process of strategy formulation itself is regarded as something of a “black box”—none of them are able to clearly describe how an individual or group is able to leap from the collection and analysis of information, to the conceptualiza-tion of alternative courses of action (although they do concede that the cognitive school comes closest). Overall, the authors appear to prefer the “learning school” because of the emphasis that it places on an organization in-corporating input from its environment, and adapting over time [22]. The remainder of this paper is structured as follows: Sections 2 and 3 present classification of strategy and model’s foundation respectively. The origin, premises and the ideas of the learning school are covered in Sections 4, 5 and 6 respectively. Section 7 presents how the learning school model will be applied in organizations while Sections 8 and 9 cover the criticisms & limitations and contributions of the learning school respectively. The success story of Honda is used as case study to illustrate how organizations benefit from applying the learning school model. This is presented in Sec-tion 10. The conclusion of this paper is presented in Section 11.

    2. Classifications of Strategy

    A number of classifications of strategy exist, all of which attempt to classify strategy into groupings or schools representing different approaches, philosophies or even language-usage [9]. In 1993, Whittington organized strategy into four broad groupings namely Classical, Evolutionary, Processual and Systemic along two dimen-sions—whether companies aim for profit maximizing or pluralistic outcomes, and whether strategy is deliberate or emergent [23] as shown in Figure 2 below.

    Figure 2. Whittington’s four generic approaches to strategy. Source: Whittington, R. (1993).

    Strategy can also be divided into two main groups namely neoclassical and socio-ecological [24]. The com-petitive activity among firms is the emphasis of neoclassical approaches [25]-[28]. On the contrary, the socio-ecological point of view emanated in Tavistock approaches to open systems theory [29]. Another famous and comprehensive classification of strategy is Mintzberg’s categorization of strategy formation into ten schools [30]. These ten schools have recently been refined, described and critiqued extensively [31]. The correlation between the ten dominant strategy schools is shown in Figure 3 [32] whiles Table 1 names these schools and matches them with the type of process most closely associated with each, and with the overall tone—is it: prescriptive (instructing us how strategy should look); descriptive (outlining how it actually looks and works in practice); or integrative (trying to join all the different approaches together and find a role for each) [9]? The world of strategy is perceived by the cognitive school as really a complex one and therefore overwhelms the prescriptions of the design, planning, and positioning schools. Then the question is “how are strategists sup-posed to proceed?” They learn over time [31]. This is the focus of the learning school.

    Figure 3. Correlation between the ten dominant strategy schools. Source: “Strategy Safari”, Mintzberg, Ahlstrand and Lampel (1998).

    Table 1. The ten schools of thought.

    3. Model’s Foundation

    The process comprises critically examining what works and what does not work for the organization gradually in the day-to-day running of the organization. Learning before implementing theory-use of experience in making decisions forms the basis of this model. Strategy is created as strategists learn over time. There is always the in-tegration of the lessons learned out of the experience and monitoring into the overall action plan of the organiza-tion. Proponents of the school postulate that the world is too sophisticated for strategies to develop in a pop up mode and have them implemented as clear visions and plans. Therefore, the learning school is of the view that strategies must emerge gradually over time which will allow organizations to learn and adapt. Organizations are must learn and apply. They could re-try the same or something else if they do not succeed. Therefore, strategic management becomes “no longer just the management of change but the management by change” [33] [34]. The learning school has been modelled graphically in Figure 4.

    4. Origin of the Learning School

    This school was originated by Charles Lindblom in 1959 in his publication “The Science of Mudding Through”. He put forward that there is no neat, orderly and controlled process of policy making in government because of the complex nature of the world [35]. Every basis of management may have almost been contravened by Lind-blom’s concepts. However, they seem significant as behaviors accustomed to individuals and in businesses are been described as his Lindblom’s concepts were not only peculiar to governments. Some authors followed with similar school of thought including H. Edward Wrapp who published an article “Good Managers Don’t Make Policy Decisions” in 1967. He postulated that things are not what most people believe them to be in the

     

    Figure 4. Learning school model. Source: Authors’ construct.

    top management world. Top managers do not spend most of their time making broad policy decisions, formu-lating objectives, conceptualizing long-range plans or meditating on the role of his organization in society [36]. However, the learning school gained grounds in the 1980s when James Brain Quinn published a book titled “Strategies for Change: Logical Incrementalism”. Since then vast number of literature have emerged and entered the mainstream of current strategic management [20].

    5. Premises of the Learning School

    The following premises can be identified from the vast collection and review of available literature associated with the learning school of strategy formulation [33]:

     The complex and unpredictable nature of the organization’s environment, often coupled with the diffusion of knowledge bases necessary for strategy, precludes deliberate control; strategy making must above all take the form of a process of learning over time, in which, at the limit, formulation and implementation become indistinguishable.

     While the leader must learn too and sometimes can be the main learner, more commonly it is the collective system that learns: there are many potential strategists in most organizations.

     This learning proceeds in emergent fashion, through behavior that stimulates thinking retrospectively, so that sense can be made of action.

     The role of leadership thus becomes not to preconceive deliberate strategies, but to manage the process of strategic learning, whereby novel strategies can emerge.

     Accordingly, strategies appear first as patterns out of the past, only later, perhaps, as plans for the future, and ultimately, as perspectives to guide overall behavior.

    6. Ideas of the Learning School

    Learning school is the most complex of the descriptive schools. Learning school is initiated from incremental-ism, a working method, based on the chain of small, sometimes unplanned, projects. The method deploys a step-by-step approach, with many small changes over a period of time. Such changes serve to the purpose to create one significant change. The school evaluates strategy as “an emerging process” where stakeholders learn the situation and organization’s capability in reaction to different aspects. Burgelman contributed to the learning school by evaluating top executives, managers and operating managers in terms of their values [37]. Noda and Bower in 1996 summarized the “Bower-Burgelman Process Model of Strategy Making” as involving “multiple, simultaneous, interlocking, and sequential managerial activities over three levels and involving four sub-pro-cesses: two interlocking bottom-up core processes of ‘definition’ and ‘impetus’ and two overlaying corporate processes of ‘structural context determination’ and ‘strategic context determination’” [38]. This model is shown in Burgelman’s version in Figure 5 [39].

     

    Figure 5. Burgelman’s process model of internal corporate venturing (ICV). Source: Burgel-man (1983a).

    The idea of learning may be simple itself, but it is not that simple to be implemented. The central point of the school is that it values individual and collective knowledge, experience, and efforts to contribute toward strategy formation. People learn about situations and organization’s capability to manage them by maintaining specific behavior. Such behavior can be transformed into strategy [20]. In a related publication by Pelling in 2004, he postulates that, strategy is a network of knowledge where “people continue to develop in respond to anomalies” [40]. He further states that the learning school replaces formal “formulation-implementation” process with “act-ing-learning” process, but does not specify how it is controlled. Pelling’s arguments were that the school focuses on the experience, but there is a clear explanation on how to differentiate good practice from bad practice. Learning school incorporates several “streams of inquiry” and logic vision [20]. Pelling’s approach was criti-cized by Mintzberg as “unclear or ambiguous” because it is not obvious whether a strategy is formed together with a strategic vision or whether such vision is developed before strategy formulation, by the strategy developer and through consolidating “previous successful attempts to strategic change” [41].

    7. Application of Learning Strategy to Organization (The Learning Organization)

    Managers of businesses and non- profit organizations as well as the worlds of education at large view the concept of learning organization as great importance in recent years. Fundamentally, the dominant “bureaucratic” para-digm that has existed at the core western civilization for some 200 years has been challenged by the principles of the learning organization [47]. Learning organization concept places emphasis on managers to be interested as never before in the process of learning, as well as the results. The focal point of the learning organization has two aspects: 1) that a key success factor for any business in the age of global competition is its ability to inno-vate continuously, appropriately, and faster than its rivals, and 2) that can only happen through unleashing the untapped capabilities of all its employees [48]. Corporations in an attempt to gain competitive edge better them-selves continuously to improve their programs. However, successful programs are lesser than failed ones and lower improvement rates recorded. The accounting factor for such massive program failures is that most compa-nies have failed to recognize a basic principle that people must learn first before they can improve. In order for this to materialize, priority must be given to the fundamentals instead of concentrating on rhetoric and high phi-losophies. David Garvin, Harvard Business School Professor, in 1993 cites three critical issues that must be ad-dressed before a company can truly become a learning organization [49]:

     First is the question of meaning: a well-grounded, easy-to-apply definition of a learning organization.

     Second comes management: clearer operational guidelines for practice.

     Finally, better tools for measurement can assess an organization’s rate and level of learning.

    The definition by David Garvin starts with a simple principle: new ideas form the pivot of learning process. Companies or organizations that do pass this definitional test have, by contrast, become adept at translating new knowledge into new ways of behaving. Examples of such companies are Honda, Corning, and General Electric. In these organizations, many key strategic issues come under the direct control of individual professionals, while others can be decided neither by individual professionals nor by central managers, but instead require the par-ticipation of a variety of people in a complex interactive process. As illustrated in the accompanying Figure 6, the decisions controlled by individual professionals, by central managers, and by the collectivity are examined below [31] [54]:-

    1) Decisions Made by Professional Judgment

    Professionals who work in government, business, the legal system, medicine, and many other settings make critically important decisions every day [55]. Decision making in organizations are trusted into the hands of in-dividuals as professionals. Professionals are left to decide on their own only because years of training have en-sured that they will decide in ways generally accepted in their professions. Individual freedom becomes profes-sional control when pushed to the limit. Professional judgment is emphasized to imply that while judgment may be mode of choice, it is informed judgment, basically influenced by professional training and affiliation. Deci-sions taking here include:

     determination of basic mission

     identification of specific services to be offered and to whom

    Figure 6. Three levels of decision-making in the professional organization. Source: Mintzberg et al. (1998).

    2) Decisions Made by Administrative Fiat

    Professional autonomy sharply circumscribes the capacity of central managers to manage the professionals in the ways of conventional hierarchy. But certain types of activities do fall into the realm of what can be called administrative fiat. In order words, they become exclusive prerogative of the administrators. They include:

     taking financial decisions

     controlling many of the non-professional workers

     determining the procedures by which the collective process functions (what committees exist, who gets nominated to them, etc.)

    3) Decisions Made by Collective Choice

    Many decisions are handled in interactive processes that combine professionals with managers and adminis-trators from a variety of levels and units. The decision making process tend to be a fully interactive process in-volving several layers of standing committees composed of professionals and administrators. It may sometimes involve outsiders such as government representatives. Decisions taking here include:-

     creation and discontinuation of the activities and units of various kinds

     hiring and promotion of the professionals

     budgeting

     establishment and design of interactive procedures

    7.1. Three Major Thrusts Related To Learning Organization

    7.1.1. Learning as Knowledge Creation

    The ability to create new knowledge is often at the heart of the organization’s competitive advantage. Some-times this issue is not treated as part of knowledge management since it borders and overlaps with innovation management [56]. Some scholars have tried to simplify knowledge transfer and creation [57]-[61]. However, Nonaka in 1994 argued that knowledge can be created, shared, improved, and justified via collaborative, social processes and individual’s cognitive processes such as reflection [62] [63]. Knowledge creation according to the Nonaka’s SECI (Socialization, Externalization, Combination and Internalization) model as depicted in Figure 7 is about continuous transfer, combination, and conversion of the different types of knowledge, as users practice,

    Figure 7. The spiral of knowledge. Source: Adapted from Nonaka and Ta- keuchi (1995: 71).

    interact, and learn [64]. In order to join the process of individual and organizational learning together, a systemic and systematic management of organizational knowledge is helpful [65]. Human knowledge can be categorized into two simple types: tacit and explicit knowledge [58] [66]. The key function of the effective knowledge-creat-ing process depends on the interactions between these two types of knowledge, a process called knowledge conversion [58] [62] [67]. The knowledge conversion process has four modes: 1) socialization (from tacit to tacit, 2) externalization (from tacit to explicit), 3) combination (from explicit to explicit), and 4) internalization (from explicit to tacit). Figure 8 summarizes all four phases with key actions of each phase [68] [69].

    7.1.2. The Dynamics of Organizational Capabilities

    Firms increasingly operate in a dynamic environment. To stay competitive in such an environment firms have to develop organizational capabilities and know-how that enables them to deal with core organizational problems. The concept of organizational capabilities understands organizational change as a continuous and open-ended process of organizational development [70]. Dynamic capabilities are linked to “the firm’s ability to integrate, build and re-configure internal and external competencies to address rapidly changing environments” [71]. In 1995, Leonard developed a knowledge-creation model based on the premise that knowledge-creation activities build up an organization’s core competencies. Due to the fact that in today’s environment conditions change rapidly, companies must be able to continuously create new technological knowledge internally [72]. Many practitioners are of the perception that strategy depends on learning, and learning depends on capabilities. These concepts were popularized by C. K. Prahalad and Gary Hamel through some of their publications including “The Core Competence of the Corporation” and “Strategy as Stretch and Leverage” in 1990 and 1993 respec-tively [73] [74] together with a book published in 1994 called “Competing for the Future” [75]. They postulated that dynamic capabilities approach consider strategic management as a collective learning process. This is aimed at developing and exploiting distinctive competences that makes imitation highly impossible. Their concept fits into the learning school of strategy formulation naturally [31].

    7.1.3. Chaos Theory

    Chaos theory is a scientific principle describing the unpredictability of systems. Most fully explored and recog-nized during the mid-to-late 1980s, its premise is that systems sometimes reside in chaos, generating energy but without any predictability or direction. These complex systems may be weather patterns, ecosystems, water flows, anatomical functions, or organizations. An arena within which chaos theory is useful is that of organiza-tions. Applying chaos theory to organizational behavior allows theorists to take a step back from the manage-ment of day-to-day activities and see how organizations function as unified systems. An organization is a classic example of a nonlinear system. This means that it is a system in which minor events have the potential to set off grave consequences or chain reactions, and major changes may have little or no effect on the system whatsoever. In order to exploit the chaotic quality of an organization, one needs to try to see the organizational shape that emerges from a distance. Instead of pinpointing causes in the organization for organizational problems, the company is better served, according to chaos theory, by looking for organizational patterns that lead to certain.

     

    Figure 8. Knowledge creation practices and key actions. Source: Song (2008) p. 92.

    types of behavior within the organization. Organizational expectations for acceptable behavior, and the degree of freedom with which individuals are allowed to work, shape the way a company’s problems and challenges are handled by its members. By allowing people and groups within an organization some autonomy, businesses en-courage the organization to organize itself, enacting multiple iterations of its own functioning until the various pieces of the organization can work together most effectively. An organization that encourages this type of management has been termed a fractal organization, one that trusts in natural organizational phenomena to order itself [76]. The chaos theory therefore supports the basis of the learning school which encourages participatory decision making process.

    7.2. Levels of Organizational Learning

    Organizational learning is the ability of the institution as a whole to discover errors and correct them, and to change the organization’s knowledge base and values so as to generate new problem-solving skills and new ca-pacity for action [77]. Various literature and authors suggest three general learning styles (Single-loop, Double-loop and Duetero) [78]-[80]. The three types are discussed in details below [81] [82]:

    7.2.1. Single-Loop Learning

    The first level of organizational learning is single-loop learning. Single-loop learning solves the presenting problems. It occurs when people attempt to correct the mismatches between actions and intended outcomes sim-ply by changing their actions when the governing values or assumptions that underlie those actions are not open to change. Single-loop learning as depicted inFigure 9, asks a one-dimensional question to elicit a one-dimen-sional answer. It addresses a difficulty but ignores a more fundamental problem, i.e. why the mismatch or error existed in the first place. Single-loop learning is present when goals, values, frameworks and to a significant ex-tent, strategies are taken for granted.

    7.2.2. Double-Loop Learning

    Double-loop learning takes an additional step or, more often than not, several additional steps. It occurs when, in addition to detection and correction of errors, the organization is involved in the questioning and modification of existing norms, procedures, policies, and objectives. In other words, double-loop learning as depicted in Figure 10, asks questions not only about objective facts but also about the reasons and motives behind those facts. Double-loop learning provides opportunities for discontinuous steps of improvement where reframing a problem can bring about radically different potential solutions [83]. Therefore organizational problem-solving capability is increasing when double-loop learning takes place.

    7.2.3. Deutero Learning

    The third, and highest organizational learning level of the model is deutero-learning, which can be regarded as learning to learn. The members of an organization ask more and more fundamental questions about their or-ganization, reflect on and inquire previous contexts for learning. This model of organizational learning as shown in Figure 11 [84] [85] refers to the organizational capacity to set and solve problems and to design and redesign

    policies, structures, and techniques in the face of constantly changing assumptions about self and environment. There can occur all three levels in organizational learning but the second and the third learning level are as-sumed to be of critical importance to enhance the survival and success of organizations.

    7.3. New Directions for Strategic Learning

    Senge in 1992 described the core of a learning organization’s work as based upon five learning disciplines which represented lifelong programs of both personal and organizational learning and practice [86]. These five disciplines of learning chart the path for new directions for strategic learning as shown in Figure 12 [87]. The five disciplines have been briefly discussed below [88]:

     Personal Mastery—individuals learn to expand their own personal capacity to create results that they most desire. Employees also create an organizational environment that encourages all fellow employees to de-velop themselves toward the goals and purposes that they desire.

     Mental Models—this involves each individual reflecting upon, continually clarifying, and improving his or her internal pictures of the world, and seeing how they shape personal actions and decisions.

     Shared Vision—this involves individuals building a sense of commitment within particular workgroups, de-veloping shared images of common and desirable futures, and the principles and guiding practices to support the journey to such futures.

     Team Learning—this involves relevant thinking skills that enable groups of people to develop intelligence and an ability that is greater than the sum of individual members’ talents.

     Systems Thinking—this involves a way of thinking about, and a language for describing and understanding forces and interrelationships that shape the behavior of systems. This discipline helps managers and em-ployees alike to see how to change systems more effectively, and to act more in tune with the larger pro-cesses of the natural and economic world.

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