Tim Moran

P & E strategies overview

Page 1 of 2

Critical review of prescriptive and emergent strategies

Critique of prescriptive strategies - the objective is defined in advance and the main elements developed before the strategy begins:

Presceptive strategies state

1.The future can be predicted accurately enough to make rational decisions. 2. Better to forego short term benefit in order to obtain long term good

Critique in the real world

A competitor or Govt does something unexpected and the strategy become invalid People are not willing to make sacrifices such as loosing jobs or investment for long term good & how do you predict long term good? 3. Prescriptive strategies are logical & Internal politics/rivalries in organisations capable of being managed prevents clear management of strategies Simplistic viewpoint. In many 4. CEO has the power to choose between organisations culture and leadership seek options, does not need to convince others discussion and agreement as part of normal or compromise his/her decisions practice 5.Strategy can be clearly specified and does May be true but now always valid not need changing because of external events Very simplistic given many complex 6. Implementation follows agreement of strategic decisions strategy e.g. decision to close factory only requires management decision and then it happens Critique of emergent strategies final objective is unclear and elements are developed during the course of its life as strategy proceeds.

Critique in the real world

1. Unrealistic to expect board members at corporate level to sit back and let operating companies do as they wish 2. Central strategic overview is needed in order to allocate resources between competing operating companies 3. Whilst awareness of internal politics is important it should not form part of corporate strategy 4. In organisations with long time horizons e.g. civil engineering, decisions have to be taken and kept to otherwise chaos would ensue. Early experimentation may be appropriate but beyond this strategy has to be fixed for lengthy projects 5. Rational decision making based on evidence has a better chance of success than simple hunches and personal whims. 6. Management control will be simpler and clearer when it is based upon actions planned in advance

Tim Moran

P & E strategies overview

Page 2 of 2

Prescriptive strategy theories:

Industry environment-based theories of strategy profitability is the clear goal and overrides all other goals. The environment means all external factors acting on the organisation markets, competitors, governments etc. The organisation is rational, logical and driven by the need to make a profit Resource based theories of strategy concentrate on the chief resources of the organisation as the principle source of successful corporate strategy. The source of sustainable competitive advantage lies in the organisations resources. Game based theories of strategy - attempt to explore the interaction between an organisation and others as the decision is made. It is based upon the mathematical models of options and choice coupled with the theory of chance. Co-operation and network theories of strategy is where at least two companies work together to achieve an agreed objective e.g. strategic alliances & joint ventures.

Emergent strategy theories:

Survival based theories of strategy regard the survival of the fittest company in the marketplace as being the prime determinant of corporate strategy in an environment which is shifting and changing. It is much better to dodge and weave as the market changes letting the strategy emerge in the process. Uncertainty based theories of strategy use mathematical probability to show that corporate strategy is complex, unstable and subject to major fluctuations making it impossible to make useful advance predictions. Human resource based theories of strategy emphasise the people element in strategy development and highlight the motivation, politics and cultures of organisations and the desires of individuals. Innovation and knowledge based theories of strategy state that generation of new ideas and sharing of those ideas through knowledge is the most important aspect of strategy development.