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There are many paradigms on the origin of strategy. Critically evaluate the various schools of thought that exist in both the prescriptive and emergent schools.
Use a specific organisational example to critically evaluate the key characteristics of each. Mintzberg model of 10
This report will attempt to analyse strategy, using Mintzbergs 10 schools of thought relating to strategy. Organisations will be used to demonstrate the various schools and to critically evaluate each one.
Strategies exist at a number of levels in an organisation; individuals may have a strategy to get where they want to be in their careers as well as the organisational strategy. Johnson G et al (1) states that there are at least three levels of strategy
·Corporate strategy
·Business unit strategy
·Operational strategy
'Corporate strategy is concerned with the overall purpose and scope of the organisation to meet the expectations of owners or major stakeholders and add value to the different parts of the enterprise' Johnson G et al (1) An example of this can be seen with Gateshead Primary Care Trust (GPCT) who are required to develop a strategy for patient care. For example, it is essential to have along term plan where we want to be in 10 years time. Often money is available from the Government, but there is a tight deadline, without a strategy GPCT would not be ready to put plans into action, securing the funding available. This is not to say that all plans made come to fruition, this also depends on various factors, most importantly the Government of the time. Especially in Public Sector, plans need to be changed when a Government comes into power as each part has its own agenda for the Health Service. This is an example of an organisation that has a prescriptive strategy, which often become emergent due to outside pressures. In private companies corporate strategy is very much affected by the demands and expectations of shareholders and the stock market.
'Business Unit strategy is about how to compete successfully in a particular market' Johnson et al (1). Strategies need to be linked to a strategic business unit, which is a part of the organisation, which has an external market for goods or services. In the Public sector such as the Health Service this might be a part of the service, which deals with a specific client group and how their needs can be met. An example of this can be seen with the Out-of-hours work currently going on, a strategy has been put in place for 004 when GP's are no longer required to provide an out-of-hours service. This is a prescriptive strategy, as GPCT know what is required of them, however it becomes emergent as guidelines are released from the Department of Health.
Chaffey (1) also stated that strategies exist on different levels 'Firms have corporate strategy (what business shall we be in) and business strategy (how shall we compete in business)
The third level 'operational strategies are concerned with how the component parts of the organisation in terms of resources, processes, people and their skills effectively deliver the corporate and business level strategic direction' Johnson et al (1)
This is the level where most decisions or activities happen; organisations usually depend on people and their skills to deliver the strategic plans. It is therefore important that the decision makers are aware of what goes on at grass root levels and takes opinions and suggestions on board.
Chaffee(185) sees strategy as having three distinct pathways
·Linear strategy - is the planning and forecasting carried out by an organisation.
·Adaptive strategy is the closest to strategic management as it focuses the managers attention on best fit, an example could be again GPCT who because of limited funds need to plan its services accordingly providing the best fit of services, which are not always the ideal.
·Interpretative strategy this sees strategy as a metaphor and is not something which can be measured in qualitative terms.
Mintzberg talks about deliberate strategies and emergent strategies. This can be seen in GPCT where a strategy is made, but over time it is realised that other departments are effected by decisions made. The strategy then become emergent as other ideas and goals are sought. This is a way of planning a stage at a time, which eventually produces a plan, which comes together. This may not be the original plan or strategy the organisation had in mind. It is important that companies can change and mix these two forms of strategy to allow for changes and learning patterns and to be able to react to the unexpected. Chaffee10 states 'strategies are not purely deliberate, theorists agree that intended emergent and realized strategies may differ from one another'.
Mintzberg uses an elephant to describe strategy and organisations and its managers as blind people. He says that no one has had the vision to see the entire beast, that we have merely grabbed some part and we are ignorant to the rest. He also goes on to say that to understand strategy we need to understand the various parts, this will enable us to grasp the beast strategy. He uses ten schools of thought to describe ten parts of strategy-formation.
The first school is the Design School; this is a prescriptive school, which views strategy as providing the best possible fit. It regards it as matching the internal situation of the organisation to the external situation of the environment. Porter states 'establish fit is the motto of the design school'
The strategy is developed through a deliberate process based on the SWOT analysis; this is carried out when a new project is being launched to ensure that the correct model is being implemented
A manager may decide a strategy, but the structure is usually already in place, therefore it is important to look at the history of the company. Strategy and Structure do go together, but any change would be gradual rather than both changing together.
'Structure follows strategy, as the left foot follows the right' Chandler (16), this is to say that a structure of a company is affected by its strategy, but this is not always true, dependant on how established the present structure is, sometimes it requires tweaking to establish best fit.
Gateshead Primary Care Trust (GPCT) can be used to illustrate a 'design school' as it has attempted to build its structure around its strategy. GPCT is a relatively new organisation that initially was able to restructure, slotting existing staff into new positions. Mintzberg states that this is the best time to lean towards the design school, as it must have a clear sense of direction in order to compete with its more established rivals. Chandler (16) and Miles & Snow (178) say that a strategy based on the analysis of the environment must be chosen and then an appropriate organisational structure must follow to create a fit between these.
GPCT's strategy is governed by Government legislation, which sets out targets in patient care. GPCT went through a period of time when there appeared to be no strategy in place, Directors were not in post and the organisation had the feel of drifting, with no goals or direction. This can be very unsettling for staff who were used to working for a much larger Acute Trust. It is also difficult to plan a strategy, taking into account this 'drifting' period as the outside environment changes so frequently within the Health Service, what was topical last month may not be now.
The PCT must look to its population needs, areas of depravation and decide the best fit for services with resources available; they strive for 'Equity in healthcare'. As the funding comes direct from the Government, services must also be designed to meet the many targets imposed, there are reporting mechanisms in place to ensure this happens.
Although this school seems to be quite simple, matching the internal environment with the external, this is not the case in the majority of situations. GPCT had a strategy in place to meet access targets for GP patients in Gateshead. They changed the structure within the Strategy & Modernisation Directive to include 4 posts as Practice Liaison managers working across the borough. They also appointed an access manager all designed to ensure targets were met, whereby patients could access a GP appointment within 4 hours. This was thrown into disarray with the Ryton practice that 'threw' 000 patients from his list. This left the PCT with a massive problem as people in Ryton did not have access to a GP. Although the practice liaison managers were in place there was very little they could do and GPCT were required to rethink their strategy and work on contingency plans. This is also an example of a prescriptive strategy, changing into an emergent strategy as events beyond control come into focus. It was not possible to predict the future (Mintzberg 10)
However due to the fact that GPCT underwent a major change in situation, due to the formation of a new Trust and the break away from the Acute Trust it still fits into the design school. Mintzberg states 'the design school model would seem to apply best at the junction of a major shift for an organisation, coming out of a period of changing circumstances and into one of operating stability'. It has taken GPCT over a year to reach this stage, but the Trust has finally settled into a stable organisation, with its own strategic direction and policies and procedures.
It will always have to adhere to Government legislation, but due to the Modernisation Document produced by the government now have clear objectives and goals. Trusts are always competing for best practice status and are constantly looking at the changing environment, linking in with new housing and regeneration areas.
Although GPCT have turned a corner in relation to their planning it was seriously under performing in regards to budgets; 5 months into the financial year, they were showing a deficit of £5m. There has recently been a change of Chief Executive, the former leaving at a moments notice. The acting Chief Executive has held meetings with senior staff to carry out a SWOT analysis to determine what measure need to be taken to get the Trust back on track. Although GPCT were looking at the external environment, it had not budgeted for the internal emergent strategies, such as the contingency plan for Ryton GP's.
Pettigrew (185) and Mintzberg (10) argue that fully-fledged strategies seldom exist, with strategic decisions seldom being the result of planned moves. The new Chief Executive appears to realise that he will need to adjust his strategy according to outside influences. The last Chief Executive it would seem did not allow for this.
This change in leadership seems to have the Directors working together to realise Government targets and to carry forward the ideals of the design school.
The design school underlines the basic principles of strategic management, that 'strategy represents a fundamental fit between external opportunity and internal capability' Mintzberg (1)
The Planning School is the second prescriptive school, which is a formal and complex process, often relying on professional planners. It follows a rigorous set of steps from the first analysis of the situation to the development of various alternative scenarios. (Mintzberg 18)
(Grant 00) states that success requires a strategy which provides a consistency of direction based on a clear understanding of the 'game' being played and an acute awareness of how to manoeuvre into a position of advantage. This demonstrates the need to plan each move for maximum gain.
Capland and Norton (1) states 'Strategic planning is a pro-active, holistic approach to building your business that allows you to create your future, not simply react to current trends. Define the future you want to create for yourself and your business. Establish your values, set clear goals and specific time frames, and crystallize the action steps that will help your vision become a reality'
An organisation that would demonstrate the design school is Marks & Spencer (M&S), a large multi national company who hit financial problems due to poor planning and realised it needed a strategic plan to reinstate them as leaders in the marketplace.
The first step was to appoint a new Chairman and Chief Executive, Luc Nandevelde who looked at the recovery plan in place and decided this wasn't enough to address the problem, Marks and Spencer needed to get back its core strengths, allowing them to regain their place in the market.
The first step he took was to appoint a new board of directors who could take existing staff forward to realise their true capabilities. Their objectives were to make M&S famous once again for quality and service.
M&S put together a prescriptive strategy, which outlined plans to enable them to regain their place in the market. They developed an operational plan, which included the company returning to selling its own brands, guaranteeing customers quality, value and service. They also looked at redesigning stores creating more selling space and creating a core up market design.
M&S appointed Walker Media as their planning agency and although the plan they put in place took longer than they anticipated to prove successful, they were always convinced it would work as they focused on the key areas, which were important to their customers, their products, stores and people.
M&S have succeeded in forecasting their success because they were already a well established organisation that had loyal customers, Mintzberg states ' organisations develop plans for the future and they also evolve patterns out of their past'.
With such a turn around of store layouts and the introduction of new clothing lines such as 'per uno' the customers were encouraged to give them their support again. Although Ansoff wrote in Corporate Strategy, 165 that a company could construct forecasts with accuracy of say plus or minus 0%, in the case of M&S they could predict a much higher success rate.
In comparison, a company who have not survived despite using a planned approach is C&A, who had 11 stores across the UK. C&A were established in 1 and were popular as they offered affordable clothing for all ages. However it did not predict discount stores such as Matalan and Peacocks and failed to overcome the dramatic change in the market. Mintzberg states 'how in the world can predictability be predicted', this is true in the case of C&A who tried a range of initiatives to protect itself from the growing competition, but after racking up huge losses decided that closure of its UK operations was the only answer.
Johnson and Scholes (00) talk about strategic actions and choices, but as shown in the case of C&A they are not always enough to secure the future of an organisation.
Another prescriptive school is the Positioning School, which is influenced by the works of Michael Porter (180). The principles are an analytic process, which places the organisation within the context of the industry that it is in and looking at how it can improve its competitive positioning within that industry. 'Firms that occupy these positions enjoy higher profits than other firms in the industry' Mintzberg et al (18)
Porter states that an organisation must find its niche, 'being all things to all people is a recipe for strategic mediocrity and below average performance'
Positioning in the market is important as demonstrated by Nestle who have applied their competencies and products to foreign markets where competition is minimal. Nestle will have competitive advantage over a company who places all its activities in a single location. Nestle must still evaluate the decision to enter a foreign market and whether this positioning will realise returns in the future.
During the early 10's, Nestle faced increased competition due to saturation in the European and North American markets, also branded foods were being replaced by supermarket own brands. This led to price competition in several areas of the food market, for example cereals, coffee, soft drinks.
Nestle decided to concentrate its markets in Eastern Europe, Asia and Latin America, which were attractive because as they had entered a stage of economic growth and market orientated economic policies by the government. Consumers in these nations. The core strategy of Nestle is to enter the markets early, before its competitors, thus positioning itself to gain competitive advantage of the market share. Porter (18) states 'Competitive strategy is the search for a favourable competitive position is an industry'
Nestle have decided to concentrate on just a few strategic brands, building a superior marketing position in each of these niches.
This strategy adopted by Nestle offers great growth opportunity and the chance to build a substantial position with regard to its competitors. There is risk attached to positioning in emerging markets and the company need to be flexible and adapt to difficult situations. The company should focus on long-term perspective rather than short-term profitability.
Nestl have several strategic business units (SBU's) that have overall responsibility for business development, one of these is responsible for co-ordinating the activities of domestic and foreign divisions within the product group.
Although the positioning school is primarily a prescriptive school in the case of Nestle it has also experienced emergent strategy. In Nigeria for example Nestl had to rethink its traditional distribution methods because the road systems were poorly developed. They built a network of small warehouses around the country, employing local staff to enable them to respond to local conditions quickly.
The company were able to take a prescriptive strategy and quickly adopt an emergent strategy to respond to need.
It is almost impossible to look at the positioning school as solely prescriptive as organisations change direction and find their niche in the market. Advances in technology allow firms to compete and trade on a global basis, which dictates that they need to be able to respond to changes and produce an emergent strategy. Before the advancement of technology organisation would be able to position themselves in the market and concentrate on one area without strong competition, however this has changed in recent years.
Nestle could also be used as an example of an entrepreneurial school as they are very innovative in their thinking.
The fourth school is the Entrepreneurial School which 'focuses the strategy formation process exclusively on the single leader, but it has also stressed the most innate of mental states and processes intuition, judgement, wisdom, experience and insight' (Mintzberg et al 18) The organisation becomes responsive to the vision and dictates of an individual.
The strategy of the Entrepreneurial school is emergent as the leader has the foresight to move with the times. They are able to adapt to change and although they may have planned their strategy they will not be averse to changing it if demand shifted or changed.
A company, which demonstrates this, is Easyjet, with its founder Steios Haji-Ioannou, who still controls this company and other EasyGroup companies such as EasyInternet Cafe, EasyCar.com and EasyValue
His vision is to keep costs low by eliminating unnecessary costs and 'frills'. His most successful venture has been the EasyJet airline, which has grown since its launch in November 15. Initially it was Luton based, offering two routes from Luton to Glasgow and Edinburgh, it has now grown to offering 114 routes from 8 European airports. Following the merger with Go-fly in August 00 it became Europe's Number 1 low cost airline.
Haji-Ioannou saw a gap in the market for cheap fares available to everyone and was one of the first airlines to sell seats on line in April 18. Now 0%of all seats sold are sold over the Internet making EasyJet one of Europe's biggest Internet retailers.
Ioannou looked at the airline industry and saw ways of cutting costs, which were innovative; he had the vision to look at the needs of people but at the same time providing an efficient cost effect airline. Some of the things he introduced were
·Ticket less travel confirmation and travel deals are sent by email
·No free lunch as everyone complains about it why provide it
·Efficient use of airports turn around times reduced to 0 minutes
·Paperless operations The management and administration of the office is run entirely on IT systems which can be accessed anywhere in the world.
However Haji-Ioannou took a risk when he launched EasyJet, he had previously founded Stelmar Tankers, a shipping company which listed on the New York Stock Exchange in 001, maybe it was this success which spurred him onto to pastures new. McClelland (161) states that 'the entrepreneur is not a gambler or a speculator, not essentially a man who chooses to bear risks, but a calculator'
However not everyone agrees that entrepreneurs have vision and are innovative, Peter Drucker (170) sees entrepreneurship as synonymous with heavy risk and the handling of uncertainty. However of Richard Branson or Haji-Ioannou hadn't taken risks they would not have amassed the fortunes they have today.
Easyjet also encourages an informal culture with a very flat management structure, which eliminates unnecessary wasteful layers of management. Ties are banned except for pilots and 'hot-desking' and remote working have been practiced since the organisation started. Staff are encourage to put ideas and suggestions forward and are classed as a valuable asset. Stacey (1) says that an Entrepreneurial approach always has to incorporate learning; this is evident in the EasyJet chain from the managing directors to the workforce, who are all encouraged to learn and grow.
Easyjet are very forward thinking and visionary, continually looking for a gap in the market and expanding on this. When logging onto their site to book flight tickets, there are links to car hire, insurance and hotels no opportunity is missed Mintzberg describes the Entrepreneurial school as a vision which is exactly what the founder of EasyJet has.
Haji-Ioannou entered the Guinness Book of records by establishing himself as the world's youngest international scheduled airline chairman when he launched EasyJet in 15 at aged 8. He has also been named Entrepreneur of the year on many occasions and EasyJet have won many awards for the best travel site and best online retailer. Perhaps the most appropriate award he could have won was the one he won in March 00, EasyJet named as 'Top Management Team' in annual British Telecom awards recognising the UK's most visionary company.
Richard Branson is another example of an Entrepreneur, who has branched into other areas, very successfully. His train service is not doing too well at the minute, as they are not reliable, but Branson has the vision to make this work. His Virgin airline can be compared to EasyJet in that they are both successful, although directed at different markets. Richard Branson sees himself as very much the leader of the business, the entrepreneur, he states 'I have not depended on others to do surveys or market research or to develop grand strategies. I have taken the view that the risk to the company is best reduced by my own involvement in the nitty gritty of the new business'
Richard Branson didn't want to compete on price, but instead offered quality at a price. Easyjet offer value for money and enable more people to travel by air, Ioannou explains his strategy as ' based on the belief that demand for short-haul air transport is elastic in simple English, if you reduce your price more people will fly'. Both entrepreneurs have vision and have looked at using this to benefit different parts of the market. Schumpeter (147) clarifies this 'New combinations including the doing of new things that are already done in a new way' This is a way of saying that they have not invented the wheel, but have merely found better more efficient ways of doing things.
The next school is the Cognitive School, which describes strategy as a mental process.
Clear vision, effective thinking, skilled project management and action planning are essential in meeting the increasingly fast paced design and development needs of today.
Strategists are largely self-taught, developing their knowledge and thinking structure though direct experience, shaping what they do.
'The cognitive school is at best an evolving school of thought on strategy information.'( Mintzberg et al 18)
There are two wings of the school, one that shapes what it knows, which then shapes what it does. One more positive wing sees the objective, while the other looks at the subjective, the events, behaviours of the customers etc.
The Co-operative Group (Co-op) has a cognitive strategy, as they have built on years of experience to change with inputs from the environment. The Co-op came about in 1844 in Rochdale, Lancashire, where 8 workers sick of seeing people in their community exploited, not only as workers, but also as consumers, decided to set up a co-operatively owned and run shop that would treat customers fairly and trade honestly.
It was also decided that customers who became members would also have a say in how the shop was run. Customers now earn a dividend for money spent in the store, which is calculated electronically with a swipe card, quite different to the number that shoppers used to have to remember at the till to get their dividend.
The Co-op employs over 70,00 people in their various businesses ranging from retail to Banking. They use the staff and managers experience to know what customers they are targeting and value their input.
Younger people, both customers and staff (who are potential customers) are more aware of the environment, recycling, animal testing and food and Genetic Modification and the co-op have tried to move with the times and to introduce this way of thinking into their strategy.
The Co-op have tried to target a market of environmentally aware people and have banned suppliers from using genetically modified ingredients in their products and have also banned testing on animals. With more awareness being put on environmental friendly lifestyles, companies have to deal with threats that cheap goods could do to their company. For example a company, which brings in food cheaply, irrespective of where it comes from or the ingredients that go into it are putting their businesses at risk. Any health scare and the company would be the first to be highlighted. As in the recent beef scare. Companies need to 'rethink constraints, threats and opportunities. Managers face a tidal wave of situations, events, pressures and uncertainties they must first look to themselves and their actions and not to the environment for explanations of their situations' (Smircich and Stubbart 158)
The co-op has the following commitment
·To serve everyone Young, old, those with disabilities, people with families etc.
·To provide quality and value for money
·To provide a high quality service
·To provide accurate information and to respect customers rights
·To the environment recognising that all commercial activity has an impact on the environment, but they strive to measure and minimise the effects
·To their employees Offering good terms and conditions
·To the community contributing to the well being
The cognitive school recognises that 'there is an interesting environment out there and that strategists don't just pick strategies from trees of environmental opportunity'. (Mintzberg et al 18) Although the Co-op have followed this path and take environmental issue seriously it is still not a leading supermarket and no matter how hard they try will never compete with the giants such as Tesco or Asda.
The Co-op is very old fashioned in its lay out of stores and tend to be focussing now on the smaller community stores. Although the managers have a wealth of experience and have attempted to build their strategies around caring for the environment, it has not had such a big impact as they had hoped. Many people will still go to the bargain supermarkets such as Aldi where they pay less for their goods and are not really bothered whether or not they are environmentally friendly.
The Co-op tends to rely on its other businesses such as its funeral homes, bank, insurance, garages, milk business (they are the UK's largest farmer) and engineering branches to keep the retail side of the business afloat
This is an example of a company which belongs to the cognitive school of strategy and is well experienced and established for this, but because of its old fashioned approach and style never quite accomplishes excellence in its field. This is an example of experienced staff thinking they know what the market wants, but falling short of actually delivering it. The Co-op would be better to carry out market research and give their customers what they want modern stores, moving away from the corner shop image. Although managers may be experienced, they do not necessarily have the best strategic view, the Co-op need to break the mould, change the culture and employ dynamic young people who will change the face of the organisation.
Mintzberg states that there are particular stages in the strategy formation process, periods of the original conception, periods of reconception of existing strategies and periods of clinging to existing strategies. The Co-op is continually in the reconception and clinging period as they find it difficult to let go of the past.
The next school is the Learning School, this is the sixth of Mintzbergs ten schools and to demonstrate it I will look again at Gateshead Primary Care Trust (GPCT) and a project, which they undertook relating to Home visiting in the Community.
The Home Visiting Procedure came about because of a report from a Health & Safety visit, which highlighted a gap in the system. Staff have been visiting patients in their homes for years, Health Visitors and District Nurses do it as a matter of course. Although staff had been given an instruction card to follow, telling them the basic things, such as never to block your exit, always park your car so that you can exit quickly from the street, there was no procedure in place that would act as a safety net if they were in a dangerous situation.
I have worked with the District Nurses for many years and also took it for granted that they visited patients at home and that there was no need for concern. As the manager who took the lead in the formulation of this policy, I had to undergo a learning curve as I spoke to staff who regularly carried out visits and discovered the problems they face and learnt from them. The organisation also underwent a learning curve 'Organisational learning is the process of change in individual and shared thought and action, which is affected by and embedded in the institutions of the organisation' Crossan et al (17)
The first procedure I wrote was a very deliberate strategy focused on control, it was very prescriptive and left no room for deviation. However after talking to the staff concerned and getting a broader picture of their needs I developed an emergent strategy and re-wrote the policy. I also ensured there was back up from Administrative staff at a fixed point, who would raise the alarm if staff did not return from a visit. I also gave the staff logs of visits to complete and leave on their desk to enable us to trace their movements should they go missing, this was a new way of working and as Mintzberg states 'The concept of emergent strategy, opens the door to strategic learning, because it acknowledges the organisations capacity to experiment.'
The policy was piloted at some of the larger staff bases and feedback received; again the organisation went through the learning stage, until it was happy with the end result, which became its strategy.
The following statement from Lindblom sums this up 'Organisations need not nibble haphazardly. Each nibble can influence the next, leading eventually to a rather well defined set of recipes, so that it all ends up one big feast' Braybrooke and Lindblom (16)
In the above example managers and staff all learnt a new way of working and had the opportunity to discuss steps and to amend things that didn't work. The manager championed the cause, with the staff joining in an interactive process involving discussions and work groups. '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 organisations (Mintzberg et al 18)
I have learnt something from my experience working on this policy, whereas the task seemed quite prescriptive, on looking at it more closely and involving others an emergent strategy emerged. The learning school should be followed when a project needs the support of the users, when staff learn together and put their experiences and views into practice the strategy is more likely to work as the staff take ownership of it. Although he procedure is now up and running, it is regularly monitored and audited and may need adjusting in the future according to what we learn about its effectiveness.
Another school included in Mintzbergs School of 10 is the Power School, strategy as a process of negotiation. Here strategy development is seen to be a process of negotiation between power holders within the company, and/or between the company and external stakeholders.
I will evaluate GatDoc as although not a large company, due to political events it has become powerful.
GatDoc is a local co-op of GP's in Gateshead, who came together to cover out-of-hours rotas for medical care. GP's working independently in a practice, covering their own out of hours would definitely be required to work one if not more nights a week, plus weekends. By getting together a co-op the GP's share the work between all GP's in the scheme over a month.
GP's pay to be part of the scheme and are also charged for each patient who receives advice or a call during out-of-hours. The GP's who work are then paid to do so, depending on how many shifts they work, they could end up being owed money from GatDoc rather than paying to be a member.
A non-medical person, who has been with them since the co-op started 10 years ago, manages the Co-op. The Co-op is made up of GP's who initially struggled to lord power over one another - micro power, particularly in relation to strategic management and the direction in which the co-op wanted to go. Some GP's held a higher seat in local politics, for example they were members of the Local Medical Council (LMC) and as such thought they had a right to decide the future strategy of the organisation.
However over the years the GP's have settled into a way of working which is equitable to all, mainly because they have a good manager who steers them towards goals, which are beneficial to their organisation and enable them to hit Local Health Authority standards. He does this by bargaining and negotiating with them, taking into account different values and interests and working through the steps one by one to reach best fit.
The Co-op have just been accredited and for this purpose the members had to work together to ensure all standards were met, if politics were allowed to get in the way this could jeopardise the smooth running and the future of the organisation.
Micro power is about individuals and groups within the organisation, Macro Power reflects the Interdependence between an organisation and its environment (Mintzberg et al 18)
Pfeffer and Salancik (178) describe Macro Power as the 'External Control by Organisations'. To gain power and control. GatDoc Co-op has worked independently of the Primary Care Trust (PCT) since it formed, however now due to Government legislation it has to change. The PCT now have responsibility for providing out-of-hours covers for GP patients in Gateshead from April 004. However the PCT have no experience of providing this cover and more importantly haven't the infrastructure in place or the resources to acquire it. They are going to have to contract out the service to GatDoc, currently known as Strategic Sourcing or a cop-operative agreement.
The Government is encouraging PCTs to work with Co-ops in providing the cover and for this purpose are allowing them to become Public Interest Companies (PIC) which will be able to contract to the PCT.
The Co-op now realise they are in a position of power and have changed their strategy from planning for the cover of the GP's who are members of their organisation to providing cover for every GP in Gateshead. This will give them much more power, as they will be sub contracting to other organisations such as North East Ambulance for call handling.
The PCT are already feeling the change in their management style as the Co-op has approached them for financial help to pay existing contracts. The Co-op have always managed their own affairs in the past, usually by increasing the members fees, however, now they know they can influence power over the PCT who are dependant upon them it is interesting to see their strategy changing.
Most importantly the PCT do want to work with them and it can only do this by being open and honest, Cyert and March (16) states that by with holding information a group can manipulate expectations and shape outcomes. The PCT intend to work with the Co-op to come up with a 'collective strategy', a term coined by Graham Astley and Charles Fombrun (18) to describe the 'joint' nature of strategy formation among the members of a network.
The strategy formation which comes out of the above will be emergent as the two organisations work together trying different ways of working and overcoming the Micro powers within.
Strategy is about power, which is especially true during times of change, as illustrated in the previous example, first the Micro power when the co-op was first formed, and now the Macro power as it expands.
The Culture School strategy as a collective process is Mintzbergs 8th School. Mintzberg says 'the literature that we are calling the cultural school strategy formation as a process rooted in the social force of culture, mirrors the power school'
While power deals with the internal politics in promoting strategic change, the other concerns itself with the influence of culture in maintaining strategic stability in an organisation.
Culture is what is unique about the way we do things and what differentiates one organisation from another. Culture was 'discovered' in management circles in the 180's due to the Japanese corporations who copied what the big American Companies did, but somehow did it differently.
Advantage in the market place is gained by an organisation being different a cultural system, an organisation that can illustrate this is Walt Disney World.
There are many Theme parks, Light Water Valley and Alton Towers to name but two, but none are as special as Disneyland in America. This is because it has something different which is hard to copy, a culture, which the company is proud of, and go to great lengths to maintain.
'We take pride in our ability to continually surpass even our own expectations'. (Chairman Disney)
Disney has their own trade mark Mickey Mouse - and this is displayed in all their theme parks and on merchandise. The staff in the parks wear a uniform, unless they are in character and the thing that is most noticeable is the fact that they are so meticulously clean. The costumes are in pristine condition and staff spend time with the children in the parks making the whole experience for them memorable.
The dominant values of Disney are service, quality and innovation, which in turn provide competitive advantage this was talked about by Peter and Waterman in their book, Search of Excellence (18)
The culture of Disney is precise timing and precision together with fun, the whole workforce or cast are caught up in this culture and strive to make the Park first class.
Pettigrew (185) stated that 'organisational culture can be seen as expressive social tissues much like tissue in the human body it binds to bones of organisational structure to the muscles of organisational processes'. Disney in this way tend to work as a family for the good of all,
Disney Parks also have their own culture throughout the world, the Florida Park, Californian Park and Disney Land Paris all have the same theme and the same culture.
There are more than 100,000 employees at The Walt Disney Company through out the world, in more than ,700 different year round full and part time jobs. The Corporation advertise for staff for the summer season by calling it a Summer College Programme with students being awarded credits towards their studies for working there. They advertise their jobs in a unique way, which make it seem almost a privilege to work for them
They set the environment and culture from the beginning
'We are the dreamers and doers; a cast of thousands committed to making magic and making dreams a reality. Our people represent a broad spectrum of experience and cultural heritage and we want to add to this diverse wealth of talent.
So come along and take a look at the jobs we have to offer. This is your invitation to explore who we are and start on the road to making your own dreams a reality at Disney.' (Disney Careers 00)
Even the initial advertisement is a whole different culture to other organisations that advertise for staff.
Disney aim to keep themselves fore runners in the world of theme parks and state their objective 'as sustaining the worlds premier entertainment company, to accomplish this we value diversity of personality, experience and cultural heritage in our employees'
Disney take care of their staff offering them excellent packages both in remuneration and in Health benefits, they are all well trained and receive regular updates.
Culture can cause resistance to strategic change the way things are done around here- a company such as Disney have no desire to change things, as they are very successful with operations the way they are. They may update rides and open new attractions, but this is usually well thought out and is timed to coincide with the latest Disney Film and the hype which goes with it. Halberstam et al (168) says that some companies may benchmark themselves against other companies, leading them to disregard them as a threat. Who knows in the future Disney may be forced to look at its culture and to make changes if its popularity wanes.
Conversely Alton Towers are continually changing their rides and layout to attract new guests. They do not have the same cultural values as Disney, with staff treating the work very much as a job or summer work, with little interest in the park, this is evident when visiting the park. The park is not kept clean and the food available to buy is poor quality and expensive. They also forbid the taking of food into the park, which shows the culture of the park as being one of making money at all costs rather than a family day out.
Disney also charge a high fee to get into the park, but their prices for food and drinks are not high once in the Parks and also the quality is high, they also do not object to guests taking in their own food. This all adds to the enjoyment of the day and emphasises the special culture afforded by culture.
Mintzberg argues that culture is a key resource and as such should be protected from other organisation, however rather than trademarks and patents, the resources in this case are relationships, systems, skills and knowledge.
Culture produces unique outcomes as can be seen in the example of the Theme parks; one has a strong culture, which makes it difficult to reproduce, while the other does not put so much importance on this.
Kogut and Zander (16) say that organisations cannot be imitated because they have a common identity; they are 'bounded by what they know and what they value'
The Cultural School is an emergent school as there is always room to learn and to continually improves and appraise things. Even Disney have room for improvement, this was seen recently when they introduced their new 'fast pass' system to cut down waiting times for rides. Because people are treat as 'people' and not machines the culture must always be emergent as different characters and personalities come into the organisation.
Mintzberg states that Strategy is in the rich tapestry of an organisations history; maybe this is why Disney had remained at the top for so long because it has such a rich culture which is still evident today.
Mintzberg et al (18) terms the Environmental School as a reactive process, which allows the organisation to respond to the challenges imposed by the external organisation.
The Environment School describes the relationship between particular dimensions of the environment and specifics attributes of the organisation. Organisations tend to settle into Niches- taking away from them their strategic choice.
Mintzberg summarises four main groups looking at the differences we observe in organisations
Stability An organisations environment can range from stable to dynamic, depending on their line of work. A company who produce the same item year after year will be said to have a stable environment, where by an organisation who is constantly changing to meet customer demand, or working with the weather as in the case of open air shows will have a dynamic environment as they are unable to prepare.
Complexity An organisations environment can also range from simple to complex depending on the amount of knowledge it needs to keep about their products or customers.
Market Diversity The markets of an organisation can range form integrated to diversified from a manufacturer who sells a single item to a National company that does business on a Global scale.
Hostility An organisation's environment can range form liberal to hostile, hostility is influenced by competition and the organisations relationship with Unions and Government groups.
Miller in a paper with Droge and Toulouse (188) argued that the environmental school was based on contingency theory; this is to say the resources, both economic and human and also the outside influences on the organisation.
A company to illustrate this school is The Body Shop, which was founded in 176 by Anita Roddick who created a niche in the market place selling hand mixed natural cosmetics from a small shop in Brighton. The Body Shop now has 000 franchised and company owned stores in 51 countries throughout the world. The body shop has a stable environment as it has a regular stream of customers and although it brings out new products it doesn't have to change its products solely to keep up with customer demand.
The Environmental School is emergent as in the example of the Body Shop, ingredients, products, packaging is all decided according to the natural supply chains. Strategy is planned according to the links with the producers around the world, if these failed for any reason there would need to be emergent strategies.
The Body Shop developed a Community Trade programme that created trading relationships with disadvantaged communities throughout the world, allowing thousands of people to build lives for their families. They believe that big businesses have a huge responsibility to use trade not just to make money, but also to have a positive influence on the world.
The Body Shops Mission Statement is
·To dedicate our business to the pursuit of social and environmental change
·To creatively balance the financial and human needs of our stakeholders employees, customers, franchisees, suppliers and shareholders
·To courageously ensure that our business is ecologically sustainable meeting the needs of the present without compromising the future
·To meaningfully contribute to local, national, international communities in which we trade, by adopting a code of conduct which ensures care, honesty, fairness and respect
·To passionately campaign for the protection of the environment, human and civil rights and against animal testing within the cosmetics and toiletries industry
·To tirelessly work to narrow the gap between principle and practice, whilst making fun, passion and care part of our daily lives.
The Body Shop has an environment al policy to protect the environment throughout their Global business. They also put effort into improving customer and employee awareness of Global issues, by setting internal targets in Head and Regional offices around environmental efficiency targets.
They have also won the support of many customers because of their campaigns against testing beauty products on animals.
The Body Shop has one of the most recognised brands in the world and an established reputation as a socially and environmentally responsible company. They also know that they must also continue to meet the expectations of their customers in providing innovative products, which meet their needs, yet promote sound environmental management in the workplace.
Over recent years Body Shop saw a decline in their sales as more natural beauty companies compete for business. They have a new Chief Executive who has the job of increasing sales by introducing some new brands and investing in employee development and customer service. Body Shop has very strong views, which are reflected in their mission statement, but they must also look after their shareholders if they want to survive in business.
Their long-term strategy in a challenging marketplace is to deliver profits with principles; this requires them to be creative, flexible, efficient and focused.
The last school is the Configuration School, which is the process of changing the organisation from one thing to another strategy making becomes a process of leaping from one state to another.
An organisation to demonstrate this would be the Fire Service who deals with fires and other emergencies on a daily basis as well as enforcing safety laws, giving advice about fire safety and carry out various emergency planning operations.
On a daily basis, fire fighters check equipment, attend training session, keep fit, visit community buildings, schools and local businesses as well as dealing with any calls which come in. Calls can be anything from a car on fire, to house fire, where there may be casualties. The night shift tend to concentrate on thorough checking and cleaning of appliances and equipment, as well as keeping fit and organising drills and training events; they also respond to any calls. The night shift can be busy, depending on the area the station is situated in and also the time of year.
Life is hectic in the Fire Service, with detailed planning required in order to ensure equipment is well maintained, staff are trained and that all shifts are covered.
However should a major incident occur, such as September 11th, Fire fighters all over the world respond and change into a focussed team, working together to save lives and to attempt to bring normality back to lives.
This transformation takes place because of detailed planning and communication between Fire Service primarily throughout our country and then throughout the world. Kotter (15) stated that this could only be done by discussing crises and establishing a sense of urgency.
Miller and Friesen (180) describe these changes in organisations as 'quantum, an idea that goes to the very heart of the configuration school, changing many elements concurrently'. This is how the Fire Service reacts to a major emergency shifts are pulled in form leave and days off and staff volunteer to work round the clock with very few breaks. Miller also elaborated on the advantages of configuration, one being that it makes imitation more difficult, it is often said that we have the finest trained services in the world and this is evident by the speed in which they react.
The Fire service also falls into the Planning school, as the training etc is very formal and prescriptive. However when they respond to an emergency strategy becomes emergent and they belong in the Configuration School
Conclusion
Looking at Mintzbergs ten schools, the first three are prescriptive, which could be seen as being the implementation of strategy, planning for the future, having a goal and knowing exactly where and how you will get there.
The next schools are the emergent schools where the outcome changes as the strategy unfold, almost every organisation will have emergent strategies as plans take so long to come to fruition, they probably will need to be amended several times on the way.
However as Mintzberg (18) states it is necessary to understand all parts of the beast, strategy, in order to appreciate the whole, 'without these parts, all elephants would be dead elephants and all strategies dead strategies.
That is to say, that most organisations would fit into many of the ten schools, for example The Body Shop could fit into the Environmental School. The Positioning School and the Design School. It is pointless an organisation trying to stay in one school, as the business grows and develops it becomes more complex and will undoubtedly move between several.
As Mintzberg (18) states 'The field of strategic management has come a long way since the early 160's' as technology advances to even greater things, businesses will need to be more astute to compete and strategy will become even more complex. 'Managers will need to look at the entire beast of strategy formation, not only to keep it alive, but also to help sustain its real-life energy' (Mintzberg 18)
References
Mintzberg et al (18) Strategy Safari, Prentice Hall
Johnson et al (1) Exploring Corporate Strategy, Prentice Hall
Bibliography
Grant et al (00) Contemporary Strategic Analysis, Blackwell Publishers
Chaffey et al (00) Internet Marketing, Strategy, Implementation and Practice, Prentice Hall
Electronic References
www.easyjet.co.uk
www.examstutor.com/business/resources/companyprofiles
www.disney.go.com
www.co-op.uk
www.bbc.co.uk
www.thebodyshop.co.uk
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