Contemporary Issues In Management Exam 2020

Running Head: TAKE-HOME EXAM 1 1 “Take-Home Exam 1” Course Name: Contemporary Issues in Management Submitted to: Professor Mikael Lundgren Submitted by: Natasha Latif Linnaeus University School of Business and Economics

Running Head: TAKE-HOME EXAM 1 1 A. ISSUES OF STRATEGIC LITERATURE IN LIGHT OF PERSPECTIVES According to the definition provided by literature of strategic management, strategy involves performing activities in a different context against your competitors (Porter, 1996). It also involves choosing different activities to establish a unique value system, else it is only a marketing tool (Porter) unable to compete to the competition. Based upon this definition, there are various perspectives and theoretical grounds that argue upon two major issues; what strategy actually is and where can it be found, both in theory and practical circumstances. According to authors Smircich & Stubbart (1985), strategy is more commonly defined as the answer to organisation-environmental problem. Advocates of this theory suggest that strategy deals with problems existing in the environment, be it objective or enactive environment. (p. 724) This theory has its roots traced in open- systems concept of 1950’s and 1960’s and contingency theory, where theorists argue that the circumstnces of environment determine if the organisation becomes succesful or not. The importance of strategy is highlighted by the contingency theorists as well, who argue that organisations become dependent on environment, so they have to adapt to the environment. For example, their customers or other factors that the organisation is not involved with might be a matter or problem for them. This theory serves as an umbrella theory to the theories that suggest that organisations need to have good environment, so that they don’t land into legal or labour market issues. Despite being a low economic theory, there are many customers or factors who need a lot of solutions. Therefore, it is the choices made by organisational strategies that solve the problems arising for organisations. In addition to solving organisational-environmental problems, strategy is also the answer to the choices that organisations make. It is argued that most organisations face strategic issues while making choices. According to Porter (1996), a choice is a trade-off where it is risky. Therefore, strategy helps organisations in making decisions through strategic analysis. It provides a framework regarding many contexts such as where to compete, scope of activities, what kind of customers to deal with, what kind of products need to be launched. So it assists in providing answers to the strategic choices. This can be seen from the fact that strategy plays many roles and functions. These functions include, for instance, role of decision support where strategy provides an overall central point to lead to a direction, else decisions might be random.It makes pattern of decisions clear. It also serves as what is called as the coordinating device for organisations to see where they are going to compete and where not. Lastly, strategy serves as a target providing an idea where to look. In this case, goals are important part of strategy. This role creates a focus to direct efforts, resources, energy, not investing randomly. It is a matter of efficiency to deal with organizations and organize complex system.

Running Head: TAKE-HOME EXAM 1 1 Having argued upon what strategy is, there is a counternarrative to the definitions of strategy, that is, what strategy is not. This school of perspective is where strategic literature gets diversified on the definitions of what strategy actually is and what it is not. More closely related to this concept is the notion of operational effectiveness, where strategy might get confused with it. (Porter, 1996) argues that operational effectiveness is not strategy. Operational effectiveness involves performing same activities in a better way than rivals, (p. 62) whereas strategy is about executing different activities in diversified ways through making choices. In this way, strategy helps organisations to establish competetive advantages they may require. He also states that strategy is different from visions and that strategy is how organisations reach goals, instead of actual goals. Moreover, strategies are more than just particular actions. These differences amongst the definitions of strategy are important to help organisations be clear about their strategic differences and strategic choices. It provides them with a direction to lead their actions in a proactive manner. The other debate arising in the strategic literature is the areas where strategy is studied and can be found. Strategies can be studied in strategic processes, a phenomena involving how organisations can make strategies within organistions. For example, some companies may use environmental judgments and ethics as a strategy. Secondly, strategic content of an organisation can also offer where strategy is studied. Strategic contents such as corporate or overall strategy and business strategy or the art of building competetive advanatge over your competitors are major areas of studying strategy. Thirdly, strategic contexts of the environment of such as corporations, industrial or international contexts also give a closer look where strategies can be studied. There are multiple avenues where strategies can be found. Fistly, they are found in the different types of formal documents of official nature, both( internal/external) as well as in strategic plans, providing avenues on how to deal with strategic plans. Strategies are also part of the actions or retrospective streams that lay out action plans for future organisations. Moreover, strategies can also be part of the frames of references or the percieved perceptions of the organisations (E.Weick, 1995). Organisations learn from their experiences or similar events to build upon strategies. Some questions they might consider in this regard include if they have shared frames of references regarding the future of organizations. At times, they might share and at times they might not the future in a common manner. Thirdly, strategies might also be found as narratives to be told to inculcate energy through credible, novel or familiar stories. Narratives have history and can be created in a manner that convinces people to follow a particular strategic direction based upon historical and cultural contexts., which Andrew (p. 430)defined as “strategist-as-architect” (Barry & Elmes, 2019) Strategy as a practice also serves where it can be found or not. According to intrepretive sociological perspective strategy is a sociological perspective and people perform strategy by being involved in organisations through creating meaning

Running Head: TAKE-HOME EXAM 1 1 (Smircich & Stubbart, 1985, p. 724) The model given by Blom and Lundgren, 2013 on how strategic practitioners and consultants perform in an organisation with reference to their “visibility” and “relation to the clients” is a good model. For example, the chancellor is a visible person and client managers might usually put them forward in front of clients to execute and handle organisation’s strategy. In contrast, the serf is a low class servant with covert visibility, and might not be expected to deliver organisational strategy in front of clients. To conclude, it can be stated that strategy is a complex phenomena different from operational effectiveness and may be visible both in organisational contexts, in practice as well as in study. C. CHALLENGES POSED BY STRATEGIC THINKING MODEL AND IMPLICATIONS FOR STRATEGY Strategic thinking is defined by (Heracleuos) as the ability to think and create new and imaginative strategies that redefine competitive environment. It involves the process of identification and comprehension of possible future environments for the organisations. Additionally, it encompasses the application of knowledge and imagination to expand future decisions (Heracleuos, 1998, p. 482). Despite having a theoretical foundation of its own, the concept is also part of strategic management. According to Mintzberg, strategic thinking is a useful part of the management process at different phases (Heracleuos, 1998). In recent times, there has been an emerging school of thought within the strategic thinking spheres that challenges core views of strategic management ,specially those that focus primarily upon strategic analysis for organisational success and operations. These views argue that businesses do not succeed based upon the industry analysis of external factors, nor succeed based upon the resources and capabilities, or the internal resources of an organisation (Hall, 1993). Rather, it is the states of mind and creative imaginations that create organisational success. The first challenge that this viewpoint might pose for the strategic management assumptions is the challenge to the classical organisation-environment strategic model. The relationship between organisation and environment has been challenged by the proponents of this viewpoint, suggesting that there is no special requirement for analysing or adapting to the existence of environments which exist for organisations. To support this argument, the concept of objective environment as provided by (Smircich & Stubbart) can be taken under consideration. The authors state that the objective environment is independent from the organisation and can be analysed simply through analysing information and hence, the room for strategic management or choices is low. Similarly, the perceived environment viewpoint poses another challenge to core views of strategic environment. The perceived environment is factual and independent. However, it requires perception upon the part of strategists to understand this environment and take strategic decisions. According to the

Running Head: TAKE-HOME EXAM 1 1 viewpoint, strategists face the challenges to perceive the environment because of factors such as they don’t have sufficient information or are unable to process the information as per the required standards. Strategic planning is defined as a thought process of analytical nature (Heracleuos, 1998). Although they have same contexts in strategic management (p. 481), the terms strategic planning and strategic thinking have been used by authors in different contexts. This leads to another challenge in which the proponents of strategic thinking challenge strategic planning viewpoint as the panacea for organisational success. It is argued by them that strategic planning is unimportant and need to be replaced with strategic thinking. Another challenge posed by the proponents of the same viewpoint hold argument that despite being used as parts of the same process, strategic thinking precedes strategic planning (p. 482) . They argue that planning is unable to produce strategies as it is an analytical process and appears after strategies get decided. This view is also associated with Henry Mintzberg's view of limited strategic planning, stating that is has certain fallacies. For example, fallacy of detachment supports the argument that effectual strategies are created from people from outside the business contexts. This view limits the importance of strategists who might produce strategic plans after analysing the situations. Owing to the above challenges mentioned, there may arise practical implications when strategies are worked out. The first implication is of a shift from strategic planning to strategic thinking. (Heracleuos) argues that strategic planning has changed since 1970's into a good system of strategic thinking. (p. 483) This view suggests that strategic responsibility should be shifted from line managers to staff and businesseses do become more decentralised. Also, the organisation-environment viewpoint criticised by strategic thinkers is then transformed with implications of strategising through out-of-box approaches. This implies that strategies should be formed by being creative within the environments. To expand further, enacted nevironment perspective is discussed, stating that such an environment puts strategists in creativity, imagination and alternatives that do not exist (Barry & Elmes, 2019). Thinking outside the box oppurtunities are not there to be found. Instead, oppurtunities are created in relation to the actions of what is happening in environment. In many cases, it is not about adaptation, it is about creation. Another implication for strategy is that the industrial frames of references and industrial wisdom are challenged by rule breakers. To elaborate,strategies are built by frames or references or the percieved experiences of people. The ”Industrial Wisdom” is also part of these frames,stating that the future of industries are affected by frames of references. Organisations need to have support of each other, and if they try to come out the box, they might not get supported. However, strategic thinking has

Running Head: TAKE-HOME EXAM 1 1 challenged these industrial wisdom and percieved frames by offering insights to people and organisations to become rule breakers, as they can become rule makers. An example of such a strategy can be given about the company Bosch, which produces nails. The company redefined the nail business by making nails adaptable to their boxes. This diminished the importance of brands of nails , as the people now get the names and brands of nail guns only. Lastly, the practical implications can be found in how strategists think about strategy. It is suggested that strategists should adopt an industry adaptation perspective, through, for example by processing information. They also need to focus more upon the creation perspective of industry for strategy working by being creative and imaginative and reflect upon their own thinking as much as possible. To sum up, it rightful to state that the emerging strategic thinking perspectives require business organisations to adapt a novel approach and add to the values of strategic management processes. This ensures what has been stated by (Heracleuos) as the double-loop learning for organisations, where mismatches in organisational context are recified through changing actions as well as analysing them. It can be rectified by anlysing the resources and capabilities of organisation through exploiting key strengths and managing key weaknesses in an organisation. (Hall, 1993). B. INDUSTRIAL ANALYSIS AND RESOURCES AND CAPABILITIES: DIFFERENCES BETWEEN THEIR VIEWS ON COMPETITIVE ADVANTAGE AND STRATEGY IMPLICATIONS Strategic management is defined as a specific type of activity in organisations that helps to establish competitive advantage over competitors. (Roos & Victor, 1999). Under the umbrella of the concept, strategic management can carry analysis, depedning upon the external or internal strategic fits of organisations. (ADD REFER). Two approches often come under the discussion for elaborating on how organisations form strategies and analysis. First approach, industrial analysis focuses more specifically towards the extenal environment of the organisation to judge the profitability level. The second approach of the resources and capabilities acknowledges the internal environment for strategy formulation, with more focus on internal resources. (Hall, 1993). As closely related these approaches might be towards formulating strategies and profitability, differences continue to remain amongst the two approaches. More specifically, the Porter’s five forces of strategy comes under contrast with the model of resources and capabilities. While discussing the competitive advantage concept, the goals of both the models differ. According to the resources and capabilities view, competeive advantgae can be established through development of resources and capabilities inside the organisation instead of seeking shelter from the competition outside (Hall, 1993). On the contrary, (Porter, 2008) argues that in order to

Running Head: TAKE-HOME EXAM 1 1 understand competition in an industry, one needs to analyse structures and resources that lie beneath the industry, in light of Five Forces, because all industries have the same drivers of profitability. Another differing view can be seen regarding the ability to establish competive advantage, when it comes to entering new markets. The resources and capability viewpoint emphasizes that ‘core competencies’ or the distinctive abilities of an organisation, with which it can target its customers serves as the basis for it to enter new markets. (Hall, 1993, p. 131) Whereas the industrial analysis model states that the purpose of new emtrants into the market is to gain market share and establish pressure on the existing market through pressures of investment and profitability. (Porter, 2008). Another factor that differentiates both the views is about the ability to sustain competitive advantage. For example, the resources and capability view argues that under the factor of replicability, which is an important component of sustaining competetive advantage, organisations can replicate resources and services from other industries and competetors such as in retailing, financial sectors. (Hall, 1993, p. 137). This differnce comes into negation to what is stated as the shifting threat of substituition by the industrial analysis viewpoint. According to this, owing to the technological advancements, it is not really easy to replicate from other competetors and that shifting substitutes are available within an industry, which makes it difficult for industries to replicate one another. This sustains the competive davantage for one organisation or industry. A competitor analysis is carried out to understand the implications for strategy formulation. Factors such as strategy of competetor, goals, performance, assumptions and resources are taken into consideration. In this case, both views possess different stances for strategy formulation. For the industry analysis view, strategies are formed mainly considering the structure of the industry, where buyers, suppliers, customers are given more importance. For example, it is argued by Porter (p. 13) that positioning a company in an industry’s structure, where it can experience least or weakest frces will help it to establish itself against the other competetors. (Porter, 2008). On the other hand, the resources-based view of the resources and capabilities model suggests that strategy should be formed inside the organisation because firstly; external environment is unstable and secondly; that the competetive advanatge form superior profitability, instead of the industry structure. (Hall, 1993, p. 122). The resources and capability view focuses upon analysing and seploiting key strenghths within an organisation, while also focusing upin the weaknesses that the internal resources might have, in order to formulate straetgies for the industry. For example, if a company VW posesses technical expertise, then it needs to develop upon further of its technical resources, facilities and sophistication. (p. 144) Likewise, comapanies such as Harley-Davidson were able to compete against major business magnates such as Honda, Yamaha and BMW due to making its weakness into a strenghth; it could ot compete on technology, but competed upon its old engines nad traditional engine designs to sustain its stratgic formulation (Hall, 1993, p. 145). On the contrary, the proponents of the industrial viewpoint might be interested in exploiting changes that

Running Head: TAKE-HOME EXAM 1 1 occur in an industry and they mostly base their strategies based upn the “market- myopia” concept, an ability amongst competetors to compete their competors by imitating their rivals straetgies and not being able to work upon their weaknessess or realise their strenthgs. Conclusively, it can be stated that both the industrial analysis viewpoint and the resources and capabilities view have defined and added to the strategic management field. Be it the external industrial factors or the resources-based view focusing on the tangible, tangible and Human resources of an idustry, both the views are important to predict market trends, establish competive advantage based upon core competencies, transferability, durability or replication.

Running Head: TAKE-HOME EXAM 1 1 References Barry, D. and Elmes, M., 1997. Strategy retold: Toward a narrative view of strategic discourse. Academy of management review, 22(2), pp.429-452. Heracleous, L., 1998. Strategic thinking or strategic planning?. Long range planning, 31(3), pp.481-487. Hall, R., 1993. A framework linking intangible resources and capabiliites to sustainable competitive advantage. Strategic management journal, 14(8), pp.607-618. Porter, M.E., 1996. What is strategy?. Harvard business review, 74(6), pp.61-78. Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard business review, 86(1), pp.25-40. Smircich, L. and Stubbart, C., 1985. Strategic management in an enacted world. Academy of management Review, 10(4), pp.724-736.