Prescriptive And Descriptive Schools Of Strategy: A Comparison And Analysis

Levels Of Strategy

Compare and contrast the prescriptive and descriptive schools of strategy proposed by Mintzberg ( 2000). To what extent have the strategy lenses (Johnson, Scholes and Whittington, 2013) enhanced our understanding of these schools of strategy?

Strategic management is the management functions applied by the company for which the management needs to understand the relation between the considerations and levels of strategy before making a correct strategy. There are three levels of strategy, which are business level strategy, corporate level strategy and operational level strategy. These different levels of strategy can be explained with the Mintzberg’s descriptive and prescriptive schools of strategy.

1. Business level strategy is the type of strategy, which guides the company to compete successfully in a specific market. One such example of business level strategy is when McDonalds adopted the strategy to remodel its restaurants in France by improving the ambience and menu of the restaurants (Adair, 2011).

2. Corporate level strategy is the type of strategy, which is connected to the overall scope and purpose of the company and measures taken to add value to various parts of the company. Example of the corporate level strategy is when P&G shared same distribution and sales method for paper towels and disposable diapers. This strategy in this instance is a success because both these products are costly and bulky to be shipped.

3. Operational level strategy is the type of strategy, which involves in the effective use of processes, people and resources to both the business and corporate level strategy. For example, KFC the historical data relating to past sales and customer visits in order to prepare their menu accordingly (Bekaert and Hodrick, 2012).

Prescriptive strategic management means that the upper level management makes all the organizational decisions and the junior level management has no role in the decision making process. The managers apply the prescriptive strategies, which focus more on the method of undertaking the strategy. The managers develop the strategy based as per the management plan developed in advance.

Descriptive strategic management means that the organizational decision-making is done at the lower level management. The managers apply the descriptive strategies, which focus more on the quality of undertaking the strategy. The descriptive strategic managers believe that the business environment is continuously changing, so they take decisions that are more spontaneous (Berk, DeMarzo and Harford, 2012).

As per the prescriptive strategic management and descriptive strategic management, Mintzberg has formulated ten schools of strategy.

Prescriptive Strategic Management And Descriptive Strategic Management

1. Design School- As per Mintzbeg, the design school of strategy is developed using certain techniques and tools, which are model of Ashridge Mission and SWOT analysis.

2. Planning School- As per Mintzberg, the planning school of strategy suggests the analysis of the present business situation of the company based on which the strategies should be implemented effectively.

3. Positioning School- As per Mintzberg, the positioning school of strategy is based on the present position of the organization.

1. Entrepreneurial School- As per Mintzberg, the entrepreneurial school of strategy suggests that the leader formulates all the business strategies and the entire organization follows those strategies.

2. Cognitive School- As per Mintzberg, the cognitive school of strategy is developed by analyzing the customers’ psychological needs

3. Learning School- As per Mintzberg, the learning school of strategy suggests that the company develops its strategies from the learning acquired from its past mistakes and experiences.

4. Cultural School- As per Mintzberg, the cultural school of strategy is depended on the corporate culture of the company

5. Power School- As per Mintzberg, the power school of strategy suggests that the concept of developing strategies by the company is based on the power or competitive advantage of the company.

6. Environmental School- As per Mintzberg, the environmental school of strategy suggests that companies as per the analysis of the external factors of the market environment prepare its strategy.

7. Configuration School- As per Mintzberg, the configuration school of strategy suggests that the company will develop some business strategies and keep on changing those strategies with the changing market environment.

• Cognitive School- . The strategy is based on the focus of the organization on the wants and needs of its customers and how the individual customers respond to the present situations. Organizations carry out rigorous and detailed market research to understand the customers’ needs and wants and the customers view about the company. Although this school of strategy is assumed to be, useful but in the contemporary business world it is not feasible to be used because it is a very expensive and time consuming process. Another constraint of his strategy is that as it is based on psychology of the customers so sometimes the strategy makers fail to take the correct decision due to the ever-changing market condition and customer taste (Brooks, 2013).
   
• Positioning School- As per the strategy concept, the company should focus in changing its present position in the market as well as in the mind of the customers. This is generally witnessed when a company is entering new market segment with a new product. If the analysis of the organizational position shows that the company is not doing well currently then the strategies are made to develop and change the position of the organization. For example, a small company will try to change its position by increasing its sales in the particular region and develop their brand value. A big company instead aims to reduce its cost, increase the sales revenue and increase the profit margin, which in turn will help the company better position itself in the market. Although it seem that organization of any size can use the positioning school of strategy but realistically it can only be used by the big companies because they have that financial strength to change it position in the market (Brigham and Ehrhardt, 2014).
   
• Planning School- This strategy concept encourages innovation, brainstorming, establishes objectives and goals and helps the organization to allocate their resources according to their goals. The analysis of the present business situation of the company means the evaluation of the external factors of the business, the business position of the company, the financial issues and the other contemporary issues. This strategy concept encourages innovation, brainstorming, establishes objectives and goals and helps the organization to allocate their resources according to their goals. Urban planning influences this strategy and has a vast room for innovation. Its scale and effectiveness makes it a better school of strategy as compared to design school of strategy. One of the contradicting factor of planning school is it requires constant monitoring by the managers during the time of execution of the strategies (Moles, 2011).

These three schools of business strategies are different in terms of their operations and applications.

As per operations-

• Cultural School- This kind of school of strategy is generally useful in case the company is going for a merger or acquisition. The cultural school of strategy is depended on the corporate culture of the company. This advantage of this concept is that it is very effective and useful for the managers. However, at the same time some of its constraints are it is very time consuming and at times may be the management will be left with no proper strategies to make. In addition, it requires heavy expenses to carry out the entire process. For example when Coca Cola launched a new product with a new brand name, it did not appeal to the American market. Then Coca Cola re-launched the new product with its old brand name Coke (NicolaÌ€s, 2013).

• Design School- The design school of strategy is developed using the SWOT analysis. Using the SWOT analysis will help the organization understand its internal factors, which are its weakness and strength and external conditions of the market like the threats and opportunities associated in the market. As per the SWOT analysis, the organization can determine its organizational objectives and goals and as Mintzberg suggested the strategy is developed (Brealey, Myers and Marcus, 2012).
   
• Environmental School- Like the other two, environmental school of strategy is depended on effective study of the market factors and suggests that companies as per the analysis of the external factors of the market environment prepare its strategy The Company uses the PEST analysis to understand the external environment. The PEST analysis includes the political, economic, social and technological factors. There are some similarities between the environment school and the design school. Many companies use this strategy because it helps the company assess the changing market environment and prepare its strategy. For example, during the global recession in 2009-10, Dell introduced a low price computer that appealed both to the big corporate and the general customers (Pitt and Koufopoulos, 2012).

• Learning School- The learning school of strategy suggests that the company develops its strategies from the learning acquired from its past mistakes and experiences. Although it is time consuming but if implemented will give clear results.
   
• Cognitive School- The strategy is based on the focus of the organization on the wants and needs of its customers and how the individual customers respond to the present situations. This kind of strategy is also depended on effective analysis and research which makes it similar to learning school of strategies (Eun and Resnick, 2012).
   
• Configuration School- Although this school of strategy seemed to be very effective but while applying, it in the real case scenarios is not at all possible. This is because for this kind of school of strategy, the company requires a flexible approach and also the employees need to be flexible to adjust to any changes which are just not possible in real life industry scenarios (Kemp and Waybright, 2013).

• Cultural School. In this kind of concept, the employees are encouraged to involve and co-operate the management in the strategy making. It focuses on better work culture and employee involvement in organizational decision making. Although like the entrepreneurial school, it involves a visionary leader but it also requires the involvement of the employees. This kind of school of strategy is generally useful in case the company is going for a merger or acquisition. One of the importances of the cultural school of strategy is that it develops a strong employee and employer relationship (Edmonds, McNair and Olds, 2013).

• Entrepreneurial School- The entrepreneurial school of strategy focuses on the leader who will develop all the business strategies. The strategies of the leader are followed by everyone and a centralized order is maintained. It will fail if there is no proper involvement of the employees in the strategy formulation. These strategies are followed until the end with some occasional changes made in the strategies as per the changing market environment. The best part about these strategies is that it is formulated by the visionary leader of the organization and is centralized all over the organization. But there are some negative aspects of this school of strategy because some conflict of interest may arise where the employees are not involved in the decision making process which restrict their knowledge about the utility of the strategies (Brigham and Houston, 2012).
   
• Power School- The power of the company can be defined as its market reach, brand image, high amount of capital, strong market sales and large company size. The advantage of this school of strategy is that if any company enjoys a monopoly market then it can formulate its strategy and make it to the best use of its power. However, sometimes it may delusion the company due to which it may end up taking wrong decisions. For example, BMW Miniseries are successful in selling small luxurious cars in London and due to which it can determine its market price accordingly. Like the other two, power school of strategy is also depended on effective decision making and thus suggests that the concept of developing strategies by the company is based on the power of the company which could be its strong brand image or goodwill (Lasserre, 2012).

For evaluating the alternative viewpoints, the strategies are explained as per the four lenses explained by Richard Whittington. The four different lenses are-

• Design lenses say that the strategies are developed with the objective of maximizing the profit. As per the internal factors of the company the strategies are formulated which generally focuses in reducing cost and maintaining a standard sales revenue. The classical perspective aims to provide the products at the least cost possible. Example- Design and entrepreneurial school;
   
• An experience lenses is developed with incomplete objectives. This kind of classification is depended on the experience and psychology of the employees, customers and the management and accordingly the strategies are formulated as per the internal factors. The strategies, which belong to this kind of perspectives, are risk oriented and so it is necessary for the company to develop the strategies and check it constantly to avoid any kind of failures. Examples- Cognitive school (Lynch, 2012);
   
• Idea lenses say that the company prepares its strategies as per the external market factors. Strategies belonging to this kind of perspectives are generally for the short term and aims to make short time survival instead of long time sustainability. Example- Environmental school;
   
• Discourse lenses are based on legitimacy and say that the company prepares its business strategies as per the external factors like the attitudes and culture of the local market in which the company operates. The main aim of the strategies belonging to these perspectives is to blend the products and commodities of the company to the local regional market. Example- Cognitive school (Madura, 2012);

Conclusion

The assessment deals with the Mintzberg’s theory of ten school strategies. In the assignment, the concept of prescriptive strategic management and descriptive strategic management and all its ten school of strategies are discussed. The similarity and difference between the schools is analyzed and the examples are shown wherever possible  Finally, the schools are discussed from an alternative viewpoint based on Whittington’s four perspectives theory. Thus, it can be concluded that the role of strategic management and the strategic formulation process in organisations is explained.

References

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