A Critical Analysis of Various Schools of Thought in Strategy Theory

Strategy theory is a multi-disciplinary academic line of products with competing schools of thought based on often-incompatible assumptions, including even the basic definition of the stadium of study. This is highlighted by the many attempts in the last decade to identify master(prenominal) paradigms, and search for new climb upes.Mintzberg (1990 1998) has put forward a taxonomy of assumptions and get alonges, identifying ten of import schools of thought, of which three are normative and together constitute the classical approach to business strategy. The other seven are descriptive in nature. Mintzberg named these schools the instauration, planning, determine, entrepreneurial, cognition, learning, power, cultural, environmental, and abidance schools (Haugstad, 1999).This paper will evaluate the purport, planning, and position schools (the classical view) as a single approach, contrasting it with a hybrid of the learning and the cultural schools (the resource-based view, fit to Mintzbergs classification).1.0 The Classical Approach to StrategyThe 2nd Industrial Revolution motto the emergence of mass national markets as developments in technology provided agency to production hereto unavailable. Economies of scale and scope provided the rationale for enormous-scale investment, and consequently the emergence of strategic investment, and competitive strategy, as a means to ascertain market forces and affect the competitive environment.Subsequently, World War II supplied a vital stimulus to strategic persuasion in business as well as military domains, because it highlighted the problem of allocating scarce resources across absolute economies (Ghemawat, 1999).The work of Andrews, Christensen, Smith, Selznik, and Learned et al in the 1950s form the design school (in Mintzbergs taxonomy), while Ansoff through his work on bodily strategy is seen as the founder of the planning school (Haugstad, 1999).The original design school outlook was that of essen tial fit between a fellowships internal resources and capabilities (strengths and weaknesses) against an external environment (possibly hostile, providing threats as well as opportunities).This gave rise to a simulation that came to be referred to as SWOT, representing a major(ip) step forward in bringing explicitly competitive thinking to bear on questions of strategy (Ghemawat, 1999 pg 6).The SWOT gained quick acceptance as management practice, but did not provide satisfactory closure to the problems of very defining a firms distinctive competence, and resource parceling for long-term development versus short-term gain.Igor Ansoffs book, Corporate Strategy, was germinal in establishing the planning schools approach. Ansoff subscribed to the fit approach of the design school, but stress resource allocation in proportion to a common thread that he defined as a firms mission or its commitment to exploit an existent need in the marketplace (Ghemawat, 1999).The planning school al so emphasized a formal planning process resulting in detailed computer programming of the organization (Haugstad, 1999). Ansoff and others also worked to translate the logic built into the SWOT framework into complex sequences of questions that needed to be answered in the development of strategies.Adam Marshall have the sentiments of supply and demand analysis in 1890 into the Marshallian scissors, which featured a downward-sloping demand curve and upward-sloping supply curve. He also introduced the concept of price elasticity of demand.Supply-demand analysis was quickly incorporated into economics and merchandise courses at business schools, though it seems to have had less impact on the teaching and practice of business strategy. Other economists of what became known as the Harvard initiate argued that the grammatical construction of some industries might permit incumbent firms to earn electropositive economic profits over long periods of time.Thus an industrys structure w ould determine the conduct of buyers and sellers and, by implication, the industrys performance in terms of profitability, efficiency, and innovation.Michael Porter, in his framework for industry analysis, generalized the supply-demand analysis of person markets in several important respectsrelaxation of the assumptions of homogeneity (of product) and large numbers (of competing sellers)shifting attention from 2-stage vertical chains, each consisting of a provider and a buyer, to 3-stage chains made p of suppliers, rivals, and buyerscatering for potential entrants and replace products.Porters work formed the basis of what became known as the position school of business strategy. This school recognizes only three generic strategies woo leadership, differentiation, and focusing. Thus, the school sees strategy as the selection of an attractive industry (Porter, 1980), and ingenuous positioning within this industry (Porter, 1985).