Emergent and prescriptive approaches and business requirements
Emergent and prescriptive approaches and business requirements
Emergent and perspective approaches to strategy
Introduction
The overall scope and purpose of an organization in most cases conflicts with the concept of corporate strategy. The idea of corporate strategy entails the design of long-term objectives and goals that copes with the uncertainty of present times and adds worth to the business. It consists of allocating resources and implementing courses of action in conduct necessary for carrying out the general objectives as a practice. The emergent and prescriptive approaches are generally recognized as the principal theories for policy growth and should be examined in the viewpoint of an increasing highly competitive, dynamic, and global business setting. Businesses are forced to make impressive upgrading to survive and compete to prosper. Thus the paper examines the importance of determining how efficiently the emergent and prescriptive approaches meet the requirements of businesses today when creating strategy (Flood & Jackson, 1996).
The Emergent Approach
The Emergent Approach model stresses on learning. Managers at several organizational levels should have a key contribution into the definite strategies pursued by the organization since formulation of policies runs parallel to achievement. An emergent approach can lead to more responsive and creative strategy making which is suited to the unpredictable environments and hyper-competitive of today. For example Microsoft which is among the most successful firm in the world does not use the determined plan. This inspires recent theories which center on the value of understanding as the central part of organizational ability for gaining competitive advantage. The emergent approach challenges the status quo as focused by prescriptive approach which creates a fit between emerging opportunities and established strengths, by purposely making a misfit between these factors (Bennis, Benne & Corey, 1976).
Thus it is more suited to prompting constructive, organizational change such as diversification. It has also the benefit of reducing opposition to change as it permits time to build worker support while the taking shape. Unconstructively, when accomplishment and formulation occur at the same time there is a danger that strategy development becomes disorderly and slow process. Thus valuable opportunities can be neglected along the way. At the same time contradictory objectives from dissimilar groups can deter strategy development, especially when power shifts are taking place in a major strategic variation such as a merger. Objectives can be short of precision and there may be no basis for assessing performance without identifiable aims and strict analysis. An over-reliance on emergent strategy formation can result in underperformance (Boulding, 1964).
The Prescriptive Approach
The prescriptive approach considers strategy maturity as deterministic and arranged process in which performance of the organization, its analysis and external surrounding results to the creation of a long-term, rational plan. Higher management is responsible of defining the ultimate the plan and objectives and then put into achievement through the consecutive layers of the organization. The Porter’s structured Five Forces model for Value Chain Analysis and industry analyzation are among the techniques which feed this process. These highlight accessible capabilities as a firm foundation for competitive advantage.
The firms in fast-paced, competitive surroundings that use a organized process for strategic planning dominate their marketplace. The rational, critical approach allows these firms to devise pre-emptive and predictive strategies from which they meet new opportunities. EasyJet used foresight in 1995 to initiate low cost flights which allowed it to benefit from a cautious European marketplace. This approach enables organization of a greater degree of control over different business units and complex activities. Contrary the prescriptive model includes several hypotheses that are unsustainable in today’s business world. It implies that strategy expansion is always calculated and that strategies are achieved according to plan. But investigation refutes this, because changeable events, such as the introduction of new rules, can frequently act to force the original strategy off its course. The prescriptive approach of planning also falls short in enabling for any learned essentials to be engrossed into the strategy and so limits an organizations ability to react flexibly in the rapidly changing environment. It focuses on established areas of business and capabilities in a convergent way which can deter big transformational change where reinvention is vital. The prescriptive model does not harmonize modern organizational civilizations where employees at junior levels are part of the decision making process. Thus, organizational creativity can be muted and employee disagreement can occur because at these levels work processes are most understood (Anderla, Dunning & Forge, 1997).
Positioning Approach to strategy
Among the various factors that limit a company’s range of strategic decisions are the societal expectations and the competitive environment under which the company operates. An industry’s opportunities and threats are well defined by its competitive environment with its corresponding attendant risks and the potential rewards. Societal risks give a reflection on the company’s impact on such matters as social concerns, government policy, evolving mores and some others. These factors must be taken into account before a business develops a realistic and practicable set of business goals and objectives (Cummings & Srivastva, 1977). Once a company has analyzed all these factors then it becomes easy for it to compete under the situation in the market. The approach to strategy development as recommended by Porter involves the following activities:
Identification of the respective company’s current strategy.
Making key revelations on the underlying assumptions about the company’s position, its competitors and the industry trends affecting it.
Analyzing the opportunities and threats facing the company.
Determining the levels of the company’s strengths and weaknesses in the context of the realities of the environment
Proposing feasible and implementable alternatives to the company’s current strategies.
Choosing the alternative that best relates to the company’s situation and its immediate environment.
There are quite a number of strategies that companies can adopt to keep themselves afloat in the fast evolving business world. Some of these strategies are;
Low cost leadership: This is one of the first generic strategies that enable businesses to achieve as well as maintain strong competitive advantages as compared to their competitors. Overall cost leadership as a strategy can enable a company to realize above average profits even in the absence of very strong competitive forces. Nevertheless, this is one of the most difficult strategies to implement. Companies that employ low cost strategy must always examine every activity undertaken in respect of its cost. For instance, fair access to raw materials has to be arranged, products have to be appropriately designed for easy of manufacturing, processing and manufacturing equipment and facilities as must be continually upgraded and the production process must take advantage of the economies of scale. Besides these shortcomings, low cost production strategy requires that a company implements tight controls across all its operations to guard against possibilities of misuse of funds and also avoid marginal customer account deficits (Barry, 1993).
Differentiation; companies that employ differentiation strategy create a product or offer a service that is considered to be unique in the entire industry. Such companies may attempt to differentiate their products or services and thus themselves on for instance the basis of product design and features, production technology, brand image, customer service, product marketing and distribution et cetra. The basic logic behind product differentiation is to attract customers with unique offers that meet their needs better than their competitors and for which the customers will be willing to pay a premium price. The strategy of differentiating products and services is intended to create authoritative brand loyalty among the company’s customers and thus give solid profit margins. It is worthy to note that differentiation strategy alone may not help a company to achieve a high market share because effective differentiation requires a perception of exclusivity. Naturally, there is market risks associated with the adoption of differentiation strategy. For instance, competitors may easily imitate the unique features or customers may lose their initial attraction and interest in the unique features. Worse still a keen low cost competitor may undercut prices in such a clever way that may easily erode the brand loyalty created by differentiation strategy (Ackoff, 1974).
Focus: this is another ideal business strategy that any business organization can overlook at its own peril. Companies that undertake this strategy direct their business attention at serving a particular market segment. The market segment could be a specific customer group, geographic region or specific product segment. The reasoning behind focused strategy is to identify a particular market and serve it more effectively that ones’ competitors the basis of low cost producer, product differentiation, etc. focusing on a small market segment enables a company to limit the market share it can command and thus makes it able to make up for the lost sales with increasingly high profitability. Focus strategy like any other strategy comes with its own share of risks. One such risk is that there is always a possibility of competitors to exploit potential submarkets which lie within the strategic target market thereby narrowing the overall market. Further high costs associated with serving a target market may limit any advantage likely to be gained through differentiation (Cohen & Stewart, 1994).
Other important strategies that are worth consideration include the following:
Technical innovation strategy. This involves offering perceived and demonstrable superior products so as to attract and secure the zeal of customers who are always in need of low price high quality products and services. This strategy is normally aimed at driving customers away from the competitor’s products.
Product adaptation strategy. This requires modification of existing products so as to create a general perception of uniqueness and superiority in one’s products.
Security and availability strategy. Entails making strategic decisions on how to overcome transport risks by way of countering perceived risks. Indian buyers are traditionally sensitive when it comes to transport, quality and currency problems.
Low price strategy. This is purely a penetration strategy and involves setting of a special price called penetration price which however is revised with time to match the prevailing market circumstances and also help meet business objectives.
Conformity and total adaptation strategy. This strategy requires that the foreign market entrants fully confirm to the new market’s state and statutory legal requirements so as to avoid possible cases of legal redresses which are too costly to resolve besides being time consuming.
Consideration of business models
Porter’s Diamond model
The high profile of corporate strategies has been evident internationally and all businesses have to focus on global business environment. These pose significant influence on the market considering competitors, the buyers and the sellers as well as new entrants. To determine why some of the nations are competitive relative to others, a model was introduced by Porter. This also applies to the disparity in competition among industries. According to the model, the organization’s home base is a critical factor in advantage achievement on an international scale. Some important factors are inherent in home base that leads to propping up or hindering the extent of competition 9 Baldwin, 1996).
A graphical illustration of the Porter’s Five Forces
Strategy formulation in corporations of large size precisely falls under the domain of the management at the highest level in the organization. The responsibility of the top managers entails the formulation of the strategies and the direction that should be followed by the organization which are translated in the annual strategic plans of the organization. The plan is later disseminated to the existing departments in the organization as well as the employees who implement the plan in their respective spheres of influence (Casti, 1994). The stable external environment offered a conducive functioning for this approach but the changes in the environment of business in convectional world has necessitated that more proactive strategies be formulated. The business environment has contributed significantly to the changes that have been eminent. This has been compounded by the volatility of the international marketplace coupled by the level of competition. There is thus a need for changes in companies so as to cope with the increasing demands of the customers. Another contributing factor to these changes is the requirement for the employees to have a greater control in their working lives. The employees have actively participated in the processes of the strategies making the company more responsive to the strategies.
Business models compete across the European railway industry and the common ones include the following:
PEST Analysis
PEST Analysis resembles SWOT analysis although greater specialization as will as focus to external environment is associated with the model. This is an acronym that stands for Political; Economic; Social and Technological factors that are behind the business strategy and the company needs to address the factors for their success.
PESTEL analysis
Numerous factors exist in macro-environment which has a significant impact on the decision making processes among the managers. The analysis of these factors is based on the classification by PESTEL model. These include the analysis of political factors, economic, factors, social factors, technological factors, environmental factors, and the legal factors.
The application of PESTEL model is likely to yield a higher level of sustainability in competitive advantage
The main strategic options that are available to either European railway companies or the low cost airline companies include the following:
Market development; Market development is used to imply to a strategy of growth based on the adoption of different ways.
Diversification; with respect to diversification, in case it is unrelated then it can lead to some synergy with the original company business. This is consequently associated with a risk in that the detailed knowledge of the most vital success factors may pose some important limitations to the company.
Bibliography
Ackoff, R., 1974, Redesigning the Future: A Systems Approach to Societal Problems, NY, John Wiley & Sons, Inc.
Anderla, G. Dunning, A., & Forge, S., 1997, Chaotics: An Agenda for Business and Society in the 21st Century. Westport, CT, Praeger Publishing.
Baldwin, J., 1996, Bucky Works: Buckminster Fuller’s Ideas for Today. NY, John Wiley & Sons.
Barry, R., 1993, A Theory of Almost Everything. Chatham, NY, Oneworld.
Bennis, W., Benne, R.. & Corey, C. 1976, The Planning of Change. NY, Holt, Rinehart and Winston.
Boulding, K. E., 1964, The Meaning of the 20th Century. NY, Prentice-Hall.
Casti, J. L., 1994, Complexification: Explaining a Paradoxical World Through the Science of Surprise. NY, Harper Collins.
Cohen, J. & Stewart I., 1994, The Collapse of Chaos. NY, The Penguin Group.
Cummings, T. G. & Srivastva, S., 1977, Management of Work: A Sociotechnical Systems Approach
Flood R. L. & Jackson, M. C., 1996, Critical Systems Thinking: Directed Readings. NY, John Wiley and Sons.
