Prescriptive and Descriptive Schools of Strategy Essay

Introduction

Strategic management may be described as a process that involves execution and evaluation of cross-functional decisions with the objective to influencing the attainment of organization’s short-term and long-term goals. In the resent times the study has advanced as different schools come up with different analysis of how the overall process should be undertaken. There are basically three levels of decision making each undertaking specific roles; the corporate strategy level deals with corporate decisions that permeate across all units, business strategy level deals with decisions that affect specific business units at the middle level of management and the functional strategy level deals with functional issues at the lower level of functional area of the organization. The prescriptive school of strategy mainly seeks to analyze the future positioning of the organization using the current and past and the related industry analysis. The descriptive school of strategy on the other hand seeks to analyze the firm’s progress basing on the individual power to reason and make rational decisions. These two schools of thoughts therefore use different tools and techniques in their analysis. This paper seeks to critically analyze the prescriptive and the descriptive school of strategies.

The role of the prescriptive school of strategy

The prescriptive school of strategies enables the firm to maximize on its internal strengths and opportunities as a move of increasing efficiency in the production process. Their critical analysis also enables the firm to effectively position itself within the market. The market competitiveness has in the recent past become an important strategy which ought to be utilized by all firms regardless of their operational industry. The firms are also able to analyze their past performances and trends and use their information to plan for the future operations.

The role of descriptive school of strategy

The school mostly dwells on the decision making process. According to them firms can only succeed if they make rational decisions within the stipulated period of time. Since the school mostly majors on individual decisions, a lot of cautiousness is required when appointing and selecting a leader. The leader or the decision maker should also possess reasoning power and wisdom which will always enable him or her to rationally and prudently decide for the firm. The school also addresses the cultural and environmental impacts on the firm decisions. According to them decisions made should factor in the cultural and environmental issues in order to ensure growth sustainability.

The debates surrounding the contemporary strategic issues

The prescriptive schools of strategy mainly discuss and explain corporate operations. They address both the internal and external conditions which influence the performances and operational progress within an entity. A thorough knowledge of the internal environment enables the organization to effectively maximize its limited resources to ensure output improvement. In actual sense the prescriptive school of strategy assumes a conceptual process of strategy formulation. The prescriptive schools are mainly comprised of three schools; the design school is mostly based on SWOT model (Strengths, Weaknesses, Opportunities and Threats) (Danca, n.d) while the planning school on the other hand uses the past experiences to establish new objectives, budgets and strategy evaluation process. The overall management strategy therefore includes the objectives setting, external and internal audit, strategy evaluation and implementation and scheduling. The planning school therefore assists the investor to effectively use and manage the limited resources that are available from both internal and external sources. The general computerization process in the global market however greatly influenced the efficiency and effectiveness of the planning school. This is because it mostly operated using the manual operations which needed change with the new information technology advancement. The positioning school which is also one of the prescriptive schools, bases its argument on the organizational competitiveness. It therefore majors on the Michael Porters competitive strategy which seeks to efficiently position the firm within the market place. The positioning school is however criticized for its easy emulative ability (Sadler & Craig, 2003, p.15). This characteristic makes it easy for the firms to copy another’s strategy in order to effectively compete in the market.

The descriptive schools of strategy arguments are based on a single entrepreneurship, and in this case, it analyzes the intuition power of judgment and decision making as a management strategy. Among the schools which follows the descriptive school of strategy includes the entrepreneurial school, the cognitive school, the cultural and the environmental school of thoughts. The entrepreneurial school centers its arguments on the individual vision as that is what basically controls and determines the firm’s progress. According to this school of thoughts the entrepreneur should possess some leadership traits in order to ensure success. The intuition power of judgment, wisdom and the acquired competencies and experiences mainly boosts the decision making process of such leaders. According to their argument decision maker of an entity mainly expresses cognitive bias which enhances the firm to efficiently sail through its difficult moments. The school therefore holds that strategy formulation should be molded by power and politics. According to them power controls and shapes the firm’s progress and success. The entrepreneurial and cognitive schools are nevertheless greatly criticized for not acknowledging the brainstorming aspects among individual groups. This is because the school only appreciates the individual decisions which may sometimes cause severe consequences to the organization. The cultural school of thoughts analyses the share traditions, beliefs and customs to shape the current and future progress of a firm. According to this school of thoughts the firm’s current behavior will more or less be similar to the firm’s past behavior as the culture greatly influences the workers thinking and actions. The strategy therefore seeks some social interactions which are mainly based on the shared values and beliefs. The culture mainly dominates and influences the behavior of the individuals as it is psychologically entrenched in their minds. The environmental school of thoughts mainly bases their argument on the environmental conservations. According to them, the behavior and the production process of a firm can be altered due to its environmental impacts. According to this school the environmental condition will significantly determine the future sustainability of any given firm. This is because the environmental conservation will ensure that there is perfect atmosphere to run and operate the business. The environment is therefore the central focus which should be used in the decision making process. According to the school the organizations are not left with choices since it either they adopt or perish for the adoption failure (Kazmi, 2008, p.18).

Comparing and Contrasting the Different Levels of Strategy

The strategy levels can be broadly categorized into three. This includes the corporate, the business and the functional level strategy, with each strategy level operating within a certain specified scope of the enterprise.

The three strategy levels have various differences. First, the corporate level strategy mainly seeks to address the entire operation within which an enterprise is operating, thus it has a wide definition as it influences multiple operations within the firm including market definition. The business level strategy on the other hand enables the firm to strategize on how it should navigate and penetrate into the market, thus seeking to strategically place the firm in order to earn a competitive advantage within the market; while the functional strategy level connects both corporate and business level strategies and is concerned with the coordination of the various functional areas within the organization.

Second, in the event of a new venture, corporate level strategy will evaluate the investment portfolios alternatives, make key financial decisions and make decisions on market diversification such as the production of new products and new market ventures (Hitt, Ireland & Hoskisson, 2009, p.155), while the business strategy level will analyze the target market using management tools such as porter’s five forces, SWOT and PEST, and identify the product market niche which maximizes the organizational returns. The functional level strategy on the other hand will play the role of publicizing the new product or business venture in the target market through promotional strategies.

Third, the corporate level strategy focuses of the long-term objectives which the firm should implement and follow in order to enhance its sustainability, including the acquisition and divestment issues which are vital in the organizational operations. It mainly relies on Boston Consulting Group (BCG) matrix assess the performances across business segments. Business level strategy on the other hand focuses on the marketing of the firm including conducting the market monitoring process to ensure conformity with the current stage of evolution; the performance of the business units is mainly assessed by the porter’s five forces. Functional level strategy on its part focuses on ensuring efficient utilization of the staff and resource within the functional area, as well creating a conducive environment for the smooth running of the corporate and business strategies, more so in terms of timing. For instance, strategy enables the firm to undertake timely procurement of the raw materials and other essential goods that the firm may need to operate effectively (David, 2006, p.160).

Lastly, corporate level strategy is handle by top level managers, and regulates and coordinates the operation of the entire organization making decisions that are mostly rigid in nature though influenced by the industrial and market changes; thus it is mainly applicable in large organizations such as Pepsi, General motors and Toyota. Business level strategy mainly concentrates on decisions in major business units in the upper and middle level of management, thus it is applicable in almost all kinds of organizations. Functional level strategy on the other hand deals with issues at the departmental level or lower level of management and thus its main concern is to address performances within specific departments.

Despite these differences, the three strategies have some common characteristics. First, all of the focus on ensuring that the organization attains its objectives by working interdependently, such that while the corporate level strategy allocates resources in the entire organization, business level strategy ensures the coordination and integration of various activities within the organization, and the functional level strategy ensures the corporate and the business-level strategies work simultaneously to realize the overall firm’s objectives. Similarly, when a firm seeks to invest in a new market, all the three strategies will work hand in hand to ensure the success of the venture such that when corporate strategy level makes all the corporate decisions on resource allocation, business strategy level supports by providing adequate market information while the functional strategy level will coordinate the functioning of the allocated resources.

Another similarity is that all the strategies tend to be intertwined when applied in a single-product organization such that it becomes difficult to separate the roles of any of the three strategies. Thus, all the three strategies seek to define the performance of the business. In actual sense, the three strategies work hand in hand such that when the corporate strategy defines the market, the business level will offer support through market navigation tools and the functional strategy will coordinate the functionality of the two.

The strategic management and other social science disciplines

In order to effectively and efficiently explain its arguments and analysis, the strategic management borrows ideas from other social science disciplines such as economics, psychology and sociology. The economic disciplines enable the scholars and the users to effectively establish a practical function which can be used to gauge the organizational performance using measurable parameters. As a result the theoretical arguments of the strategic management are supported by functions which maximize profit and minimize costs.

The human resource strategy uses the sociological integration of individuals within the organization. The up-down and the bottom-up leadership styles arte all meant at ensuring that there is a cordial relationship between members. The cognitive and the entrepreneurial strategies use the psychological discipline as it tries to understand the mind set of individuals. It is therefore appropriate to say that the strategic management is an interdisciplinary fish scale unit which upholds and incorporate diverse disciplines in its analysis (Baum, 1998, Para. 10). It is due to the interlocking character that the field has effectively succeeded in ensuring growth and development in many organizations. The fish scale aspect of the strategic management has also enabled the field to become more user-friendly. The understandability of the field has become easier as various disciplines are used to explain it.

The various strategic management theories

Among the notable schools of theories that have been used to analyze the strategic management process includes the behavioral and the system school of theories. The behavioral school of theory mostly deals with human factors in the management decision making process. The theory also vividly explains some of the internal environment which influences the productivity within a firm. For instance the behavioral interactions, relationships, conflicts and culture within a firm can assist the decision makers to rationalize their decisions in order to incorporate all the internal factors. It is also through the behavioral theory that the attitudes, perceptions, values and expectations are all synchronized together to establish a rational decision.

On the other hand the system school of strategic management theory focuses on the dynamic status of people within an organization. Among the notable theorists of the system school included Chester Bernard. He argued that the organization is characterized with some cooperative systems which have social and personal components and works towards particular objective realization. According to Bernard the willingness to serve a common purpose can be realized when the organization ensures that there is effective communication between the principal departments within it.

The contingent theory is a subset of the systems theory, but it seeks to analyze the managerial practices and techniques which are reliable and appropriate within a particular environmental conditions. The contingency theorists have therefore designed some effective managerial patterns which factors in the multitudinous and interrelationships within the firm’s operations (Rabin, Miller & Hildreth, 2000, p.148).

These theories have therefore been used appropriately within the organizational management although there have been some evolutions which aim at ensuring that the firm suits the current marketing and environmental situations. The various management tools and techniques also enable the firm to position itself better within the market. The porter’s generic strategy and the Michael Porter competitive strategy are some of the effective tools used in the strategic management, which, after being invented by Michael porter, have been of great help to the firm which strive to ensure they maintain competitive advantage in the market. The tools have continuously and effectively been used by firms in analyzing both the internal and the external factors that influences their operations.

Conclusion

Strategic management basically executes and evaluates cross-functional decisions in pursuance of organizational goals, both short-term and long-term; however, different schools of thoughts which have been used to analyze the strategic management process. The prescriptive schools of strategy mainly discuss and explain corporate operations. They address both the internal and external conditions which influence the performances and operational progress within an entity. A thorough knowledge of the internal environment enables the organization to effectively maximize its limited resources to ensure output improvement. In actual sense the prescriptive school of strategy assumes a conceptual process of strategy formulation. The descriptive schools of strategy arguments are based on a single entrepreneurship. The school therefore analyzes the intuition power of judgment and decision making as a management strategy. Among the schools which follows the descriptive school of strategy includes the entrepreneurial school, the cognitive school, the cultural and the environmental school of thoughts.

There are also three different levels of strategy all which aim at ensuring that firm operates successfully throughout its operations. The corporate-level strategy mainly seeks to address the entire operation within which an enterprise is operating. It therefore has a wide definition as it influences multiple operations within the firm. Among the major tasks that the corporate level is responsible of addressing includes the resource allocation and the marketing department. The business level strategy on the other hand enables the firm to strategize on how it should navigate and penetrate into the market. It therefore seeks to strategically place the firm in order to earn it a competitive advantage within the market. The strategy also focuses on the entire business performance. This strategy can however be used to target a particular market, product or industry depending on the size of the organization. The functional-level strategy is concerned with the coordination of the various functional areas within the organization. This level therefore joins together the corporate and the business-level strategies in the organization. Some of the major objectives of the functional strategy in a firm includes: to ensure efficiency utilization of the staffs and the integration of activities within the functional area.

Reference

Baum, J.A.C., 1998. Introduction: Strategic Management as a Fish-Scale Multiscience. Toronto, University of Toronto Press. (Online). Web.

Danca, A.C., SWOT Analysis. (Online). 2010. Web.

David, F.R., 2006. Strategic management: concept and cases. Hong Kong, Tsinghua University Press.Web.

Hitt, M.A., Ireland, R.D & Hoskisson, R.E., 2009. Strategic management: competitive and globalization: concepts & cases. Boulevard, Cengage Learning. Web.

Kazmi, A., 2008. Strategic Management and Business Policy. New York, McGraw-Hill Companies. Web.

Rabin, J., Miller, G & Hildreth, W.B., 2000. Handbook of strategic management. New York, Marcel Dekker, Inc. Web.

Sadler, P & Craig, J.C., 2003. Strategic management. London, Kogan page. Web.