Download Chapter 2: Theories of Strategy

Chapter 2: Theories of Strategy
Richard Whittington
‫جدول يسهل دراسة النظريات األربع‬
The four perspectives of strategy
Classic
Processual
Evolutionary
Systemic
Strategy
Formal
Crafted
Efficient
Embedded
Rational
Profit
maximization
Vague
Survival
local
Focus
Internal
(plans)
Internal
(politics)
External
(markets)
External
(societies)
Process
Analytical
Bargaining /
Learning
Darwinian
Social
Economics /
biology
Sociology
Key
influences
Key
authors
Emergence
Economics /
military
Psychology
Chandler,
Ansoff, Porter
Cyert & March,
Mintzberg,
Pattigrew
Freeman,
Williamson
Granovetter,
Whitley
1960s
1970s
1980s
1990s
25. Compare and contrast the Classical and evolutionary perspectives on strategy on
organizational strategy, using B300 to support your answer. Final 2007 %
Or Two of the perspectives on strategy discussed in B300 are the Classical and
Evolutionary perspectives. Compare and contrast these two approaches. Final 2008
Or Discuss the main distinguishing features between the processual and the
systemic approach to strategy. Final 2007
Or Discuss Whittington’s views of the ‘evolutionary perspectives on strategy’. How
do they do differ to the Processual approaches to strategy –and why? Use
examples to support your arguments, including some discussion of the context in
each case?
OR Explain the elements of the processual strategic perspective. Discuss the
usefulness of this perspective in analyzing organizational strategy. Final 2008%
OR Discuss how the different perspective in business strategy embody particular
assumptions regarding rationality, human nature and the relationship between the
individual and the environment.
OR Two of the perspective on strategy discussed in B300 are the Classical and
Evolutionary perspective. Compare and contrast these two approaches.
Theories of Strategy
Classical Approach To Strategy (1960):
Chandler, Ansoff, Porter
Strategy should be formal and explicit.
Its objective is unambiguous, profit maximization.
The main mean to achieve profitability is rational planning.
Their focus, success or failure is determined internally, through the quality of management
planning, analysis and calculation.
The features of classical approach: the attachment to rational analysis, the separation between
the conception (policy) and execution, i.e. the emphasis on the long term, explicit and deliberate
conception of goal, and logical courses of actions and allocation of resources necessary for those
goals i.e. the commitment to profit maximization.
The role of management: The classical approach to strategy places great confidence in the
readiness & capacity of managers to adopt profit maximizing strategies through rational long-
term planning. Managers have control over internal and external resources (environments to
them are controlled).
Processual Approach To Strategy (1970):
Cyert & March, Mintzberg, Pattigrew
It refuses the classical formality, and claiming that strategy is crafted.
Its goal is vague.
Find economic irrationality.
Their main focus: success or failure is determined internally through political bargaining
processes and adjustment of managerial cognitive biases and concern with building of core skills
and competence.
Processual less confident about organization in achieving profitability (against classical view) and
less confident in market work in achieving profitability (against evolutionary view).
It inclines towards strategies with incremental adjustment and long term construction and
consolidation of core competence, rather than positioning organization in the right market.
The strategy would fail if organization don't have the necessary skills.
Evolutionary Approach To Strategy (1980):
Freeman, Williamson
It agree with classical in profit maximization consider essential for survival.
Their main focus: is determined externally through the impact of the market and the Darwinian
approach of natural selection, i.e. the business survival in competitive environment depends on
strategies of differentiation and being adapted them-selves to environment, being at the right
place and time.
But there is doubts that whether the previous point is achieved deliberately or permanently.
The approach is less confident about the top management ability to plan and act rationally, rather
than depending on managers they expect market force to secure profit maximization, stressing
competitive pressure of natural selection, i.e. in search for better strategy, it is better to let
environment to do the selecting, not the manager.
Evolutionary theorists emphasize the limited capacity of organizations to anticipate and respond
to environmental changes. It is not one manager but the mix between the forces of market
selection and random events that determines outcomes. For them environment change too fast,
unpredictable, so their advice to management is to concentrate on day to day viability while
keeping option open.
Systemic Approach To Strategy (1990):
Granovetter, Whitley
Modes of strategy is embedded in particular social system
The processes and objectives may be rational according to criteria of the locally dominant group.
Their focus: is external, where strategist has to be socially sensitive to understand what is going
on within organization and among competitors.
The means and the end depend on the characteristic of social system.
They retain faith of the organization capacity in to plan and act effectively within environment
(similar to classical view)
But they differ from classical in the sense that decision-making are not result of individual
calculation but people are rooted in social system, people's economic behavior embedded in
network of social relation that may involve families, state, religion or background knowledge,
these network influence the means and the ends of the action and influence the members
behavior, This behavior might be irrational from classical view, but look rational from
systematic view. So strategy not derived from human cognitive but from culture role.
More than one culture define approach to strategy.
This approach alert managers to the main elements in the social system and be socially sensitive.
The similarities and difference between approaches:

The classical emphasis on the role of managers in forming rational strategies.

Both evolutionary and processual approaches skeptical of strategist capacity to direct strategy in
the rational hierarchal way

the evolutionary claim that environment change too fast, so management must concentrate on
day to day viability while keeping option open

Processual doubt that both organization and market work with the ruthless efficiency that
classical and evolutionary claim and it incline towards strategies with incremental adjustment
and cultivation of core competence.