Topic 1: What is Strategy?

Semester 2, 2021
Lecture 1, Week 2
 Introduction
• In this lecture, we will define what strategy is.
Then we will briefly look at the ten (10) schools
of thought in brief. We will then discuss the
advantages and disadvantages of strategy. Finally
the conclusion of the lecture which will be a brief
summary of the lecture will be given.
Aims and Objectives of our lecture today:

• To define and understand the definition of

strategy.
• To briefly look at the overview of the 10 schools
of thought that contribute towards strategy
crafting.
• To understand the advantages and
disadvantages of strategy.
 What is a Strategy?
• Greek “strategos,” which means“ general.” Although
there are many definitions of strategy, we will mainly
look at the five (5) “Ps” for strategy given by Mintzberg,
Ahlstrand and Lampel (1998).

• Strategy is a ‘plan’ or a guide to deal with a situation.

This means strategy emerges out of rational planning and
is developed purposefully.
• This is done in advance of any action. Strategy is a guide
of how to get from here to there or into the future.
 Continuation….

• Strategy is a ‘ploy’ or a specific maneuver

intended to out with the competitor.

• Strategy is a ‘pattern’, that is, consistency in

behavior over time, e.g. a company that
consistently sells expensive products has an
high end strategy; a person who invests in
new stocks also as an high-risk strategy.
 Continuation…
• Strategy is a ‘position’ or a means of locating an
organization in an ‘environment’.
• Strategy then becomes the lynchpin of finding a
match between the organization and the evolving
environment.
• Strategy as a position also implies the locating of
particular products in particular markets, e.g. Egg
McMuffin for the breakfast market, or Cereal for
the snacks market.
• As Michael Port reiterated recently, “Strategy is
the creation of a unique and valuable position,
involving a different set of activities”, (1996:68).
 Continuation…
• Strategy is a ‘perspective’ or a ‘Weltanschauung’
(a way to view the world), or a cultures or driving
force. Strategy is to the organization what
personality is to the individual.
• Strategy as a perspective also implies and
organization’s fundamental way of doing things,
e.g. the McDonald way.
• In Peter Drucker’s memorable phrase, this is its
“theory of business”, (1970:05; 1994).
 Ten Schools of Thought
• Mintzberg et al. (1998:05) identifies 10 ‘schools of
thought’ on the ‘strategy process’:

• The design school: strategy formation as a process

of conception.
• The planning school: strategy as a formal process.
• The positioning school: strategy formation as an
analytical process.
• The entrepreneur school: strategy formation as a
visionary process.
 Continuation…

• The cognitive school: strategy formation as a

mental process.

• The learning school: strategy formation as an

emergent process.

• The power school: strategy as a process of

negotiation with emphasis on political skilling.
 Continuation…
• The cultural school: strategy formation as a
collective process.

• The environmental school: strategy formation

as a reactive process.

• The configuration school: strategy formation

as a process of transformation.
 Functions of a strategy
Strategy sets direction
• Advantage: The main role of the strategy is to charts
the course of an organization in order to sail cohesively in
its environment.
• Disadvantage: Strategic direction can also serve as a
set of blinders to hide potential dangers.
• ‘Setting out in unknown water is the perfect way to sink
the titanic’.
• While direction is important, sometimes it is better to
move slowly, a little bit at a time, looking carefully but not
too far ahead, as well as to each side, so that behavior
can be shifted as a moment’s notice.
 Functions of a Strategy (Conti…)
 Strategy focuses effort

• Advantage: Promotes coordination of activity.

Without strategy, chaos can ensure as people pull
in a variety of different directions.

Disadvantage: ‘Groupthink’ arises when effort is too

carefully focused. There may be no peripheral vision, to
open other possibilities. A given strategy can become too
heavily embedded in the fabric of the organization.
 Functions of Strategy (Conti…)
Strategy defines the organization
• Advantage: Strategy provides people with a shorthand
way to understand their organization and to distinguish it
from others.
• Strategy provides meaning, plus a convenient way to
comprehend what the organization does.

• Disadvantage: Defining an organization too

sharply may also mean defining it too simply so
that the rich complexity of the system is lost.
 Functions of Strategy (Conti…)
Strategy provides consistency
• Advantage: Strategy is needed to reduce ambiguity and
provide order.
• In this sense strategy is like a theory: a cognitive structure
to simplify and explain the world, and thereby facilitate
action.

• Disadvantage: Strategy may distort reality. Strategies

and theories are not realities themselves, only
representations (or abstractions) of reality in the minds of
people.
 So what then can we say about
strategy?
• Strategy (and strategic management process)
can be vital to organizations by their absence
as well as their presence.
 Conclusion
• Strategy is a plan, ploy, pattern, position & or
perspective.
• There are ten (10) schools of thought on strategy
each contributing towards strategy making as
well as its definition.
• There are advantages as well as disadvantages of
strategy in an organization. Thus strategy (and
strategic management process) can be vital to an
org by its presence and absence.
The End!
Thank You