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They are four perspectives main perspectives on strategy and they include the classical approach to strategy, evolutionary perspective on strategy, processual to strategy and systematic perspective on strategy. Their features are as described below.
In the classical approach to strategy perspective, profit is seen as the ultimate objective of the firm and profit targets can only be attainable through rational planning by the firm’s management. This perspective was designed by a businessman and historian Alfred Chandler, a theorist Igor Ansoff and a businessman Alfred Sloan. The perspective is based on three assumptions and they include; rational analysis, distinguishing conception from execution and the commitment of firms to maximize their profits. The major question is to position a business in markets where profits are likely to be maximized. The aim of the perspective is to ensure that there are returns on capital, and in this case, a focus on the long run is done where the business is evaluated on the long-run returns and if the long-run returns are not satisfactory, then the deficit should be corrected or otherwise stop the business in good time. The major problem in companies is not attaining their goal of profit maximization but it is the inability to put in place an organizational structure that is likely to allow the top management of the company to foresee the strategic responsibilities, where the best structure involves the removal of executive responsibilities and giving them to time, information and psychological commitment in the process of long-run planning. The formulation of strategies should be done by the top management and the operational managers are expected to implement the strategies as given by the top management, where all strategies that are to be implemented should have to be confirmed by the top management (VanDen, 1997).
The classical perspective on strategy was build from the military experience and it advocates for a military kind of organizational structure where the chief commanders are equated to top managers in a company, and it is interpreted that the chief commander’s directives are not to be argued on by the junior commanders or the soldiers as their duty is to execute the directives in attempt to get the victory. Therefore, the top managers are expected to give directives on which neither the operational managers nor workers should not complain as what is expected from them is victory despite the risks involved in attaining the victory, wherein this case victory means maximizing the profits of the company.
According to the Evolutionary perspective on strategy, the kind of organizational structure does not determine the performance of the company and the issue of rational planning is never an issue to consider as per to their stand, but rather they expect markets to enable the realization of the profit maximization objectives. This perspective doubts the ability of the top management with their rational planning in commanding maximum profits and what matters is the best performance despite the source. The revolutionaries believe in the idea of natural selection, where the companies which are best competitors are the ones to survive and this is based on the market conditions, and they distinguish between economic competition and the natural law of the jungle. They pose an argument against the classics that their analysis of so simplistic in the sense that their contribution is less to understanding than obstacles because they only look at rational planning and the egoistic behaviours of individuals. They argue that the issue of competition can not be explained by mere calculations but rather it can be explained as a constant struggle to survive in a situation characterized by a lot of competitors. This perspective is built on the theory of Darwin theory of evolution where human beings are seen as members of the ecological community, although being at the top of the ecological chain.
From the same perspective as the one of Darwin, there is also an evolutionary theory of the firm in which a firm is believed to struggle to survive so as to fit in the environment that its operationalizing, where the better competitors in the market are expected to champion and flourish against their weak competitors thus undermining the effort of the management with their rational planning. Therefore the survival of some firms in an industry just follows the law of survival for the fittest through its revolutionary stages and is likely to stop being operational if there happens an unfavourable market condition that will not allow it to survive. When there are more entrants into the industry there are possibilities of their being an overcrowded industry which means that there will be straining in an attempt to command some reasonable market so as to survive in the market, and during this struggle weak competitors are likely to drop from the market, leaving only the best competitors in the market, thus rational planning is never a factor as the process itself seem to be some kind of natural. Competition is seen as a way of getting rid of inefficient firms from the industry as they will be unable to meet their costs and at the same time making some profits to sustain them in the market.
The revolutionaries argue that strategic planning is expensive and the long term planning is likely to be cut short by the short term inflexibilities, therefore strategic planning even worsens the company’s competitiveness due to rigidities that arise from the predetermined plans and also increased costs of strategic planning itself which carry an economic burden to the Company. The abundance of surviving tactics is what determines the performance of the company.
The processual approaches to strategy take the same ground as the revolutionaries on rational strategy making but rather conflict with the revolutionaries over the issue of markets ensuring profit-maximizing outcomes. They do not believe in either markets or organizational structure as a means of maximizing profits. They rather argue that companies should not struggle in attaining their set goals in either designing some organizational structures or monitoring market changes, they should take it as it comes as its this adjustment that makes the situation difficult to comprehend, thus to accept and operate in the situation where one finds himself without alterations. Their argument is reinforced by the fact that human cognition is limited, and that rational economic decisions made by man are all fiction.
Systematic Perspectives on Strategy economists advocates for the ability of the organization to plan in realizing its objectives which are directly conflicting with the revolutionaries and the Processualists and confirm the argument of the classics. Planning by the organization is necessary so as to ensure that the organization is acting effectively given the environment in which they are operating. They differ with the classics on them calling the classical rational planning as just historical and cultural phenomena, meaning that this rationale normally defers from one sociological context to another. They argue that planning is important by it should be done by persons who really understands the social context in which they are operating as there occurs social difference depending on where a company is located. The firm always differs depending on the social and economic system in which they are operating.
Reference
VanDen A., 1997,Perspectives on Strategy: Contribution of Michael E.,Springer Publishers, pp44.
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