InternationalBusiness StrategyCriticismFall, 2017H.Mintzberg and J.A.
Waters (1985) ‘Of strategies, deliberate and emergent’Strategic Management Journal, vol. 6. No 3. pp. 257-72 DrGabor Lukacs Sevinj Ahmadova Overviewand criticismIn 1994, H. Mintzberg questioned the role ofstrategic planning. According to Mintzberg, the strategy development process isa model emerging from a series of decisions and activities. Without any formalplanning, strategy can develop.
This strategy comes out of the past without anyprior intention. Mintzberg argues that the intended strategy cannot be fullyrealized. The dimension of the strategy should be considered and planned accordingly.This is called a deliberate strategy. At the same time, however, a strategicdirection determined by the organization’s current activities and behaviors mayemerge. This is called the current situation or the emergency strategy. As aresult, the strategies to be implemented by the business are made up of themodels by designed strategy and the existing organizational behaviors.
Withthis perception, Mintzberg defines strategic thinking as an adventure comingfrom within the practice and considered together with practice. According to myprevious readings written by Mintzberg, I can state that core concepts that Iunderstood while reading are the five basic characteristics of strategy which,Mintzberg argues, are: 1. The strategy is a blend of future plans andexperience from the past.
2. Strategies arise not only from the plans but alsofrom the emergent developments.3.
Effective strategies can be developed in avariety of ways.4. Strategic directions take place with small jumps.5. Strategy evolves as an obsession of thinking andaction, learning with control, treating stagnation and change together.
Alternative models are based on the idea that thecompany’s strategic management is built not only on the basis of carefullyworked out strategic plans. Thus, H. Mintzberg and J. Waters in their articlepoint to the existence of two types of strategies:The first type includes well-considered strategies -strategies based on the results of strategic analysis and planning, so that theresults of applying a rational model.
Keeping this in mind, prospectivestrategies are formed, but later some of them are implemented in practice,while others for various reasons remain unrealized.The second type includes immediate strategies -unplanned strategies that arise as a result of responding to changes andunforeseen circumstances. Often such strategies do not result from thedirectives of the top management, but from the behavior patterns that emergedat the lower levels of management, in some or other elements of theorganizational structure of the company. As a result, those are called emergentstrategies, because intended strategies that are really being implemented areshaped by thoughtful and urgent strategies. At the same time, the implementedstrategy is almost never completely considered or completely urgent. Eachimplemented strategy contains “thoughtful” and “urgent”elements, the ratio of which is determined by both external circumstances andinternal factors, including the structure of the company and corporate culture.Mintzberg and Waters presented 5 types of differentstrategy models that come up as one realized strategy in the end.
Those areemergent strategy, intended strategy, deliberate strategy, realized strategy,unrealized strategy1.Those strategies are differing from each other by their place of occurring andimplementation levels. Emergent strategies are implemented by headquarters,because they are business level strategies that are playing role of response toincidents. Realized strategies are the response to the environment, so that, toexternal issues. Intended strategy is the main strategy that is implementeddirectly by high-management level in order to define main purpose and patternof the firm.
It is formalizing by the result of negotiations between members,but still is limited only by opinion of defined number of people. Deliberateand emergent strategies are very rare, because they are pretty straightforwardand are based on pure intentions without detailed attention. They are staticand not changing according to situations. Mintzberg and Waters introduce 8 types of strategiesthat are adopted by firms. The first one is planned strategy. According to them, planned strategy is more aboutautocracy and formality. In this type, leaders or high-level management are inthe middle of company and they are people who decide in which pattern companywill move.
In this form of strategy,there is no way for distortion, so that company moves directly by patternwithout changing its core values.2According to Jay Barney3 ,strategy and plans are no longer related unless they are based on the competentresources that firm has. Author argues that, firm should have such goods andservices that are valuable, rare, non-imitable and non-substitutable. Thosegoods and services can adapt to any condition until they are meeting abovementioned criteria.
Firm should plan their strategy on the view that thosegoods are still meeting these criteria. For example, we can see the Coca ColaCompany and the most famous good-Cola drink which is non-imitable and nonsubstitutable, only accessible via company itself and valuable because thereare specific group of people who are “cola lovers”. That is the reason why the Coca Cola Companycan still survive among its competitors. If we compare it with Porter’s view4,we can see that Porter stands for some payoffs in order to keep main strategy,while Barney stands for payoffs in order to keeping goods relevant to VRIOcriteria. The second one is also planned, but less thanstrategic planning.
It is called entrepreneurialstrategy. The owner of the firm controls it and can make changes anytime.The success of that kind of strategy depends on the how much the employees ofthis company agree with this type of strategy and ruler’s ideas. If they agree,then company will succeed.
It is more coordinated to small firms and it isharder to find their core ideas and the way that the firm want to becompetitive. Nevertheless, in this type of strategy, there can be immediatechanges supported by the ruler. This type of strategy is quite changeable, so thatit is more deliberate than strategically planned one, however, the decisionsare only taken by one brain, which constraints the ratio of chooses and vision.5From my point of view, it is not a reliable strategy in the world of technologyand financial advancement, in which range of goods and preferences can changeimmediately. But in terms of decision making it is quite flexible andnegotiable, so that it the con of this type.Third one is ideologicalstrategy6which includes all the members of the company. Those members share their ideasabout future plans and vision about which strategy company should acquire inorder to be competitive.
Because of the fact that all members are included,decision turns into an ideology, which is accepted by everyone and notchangeable. In this case, if market modifications happen, all members ofcompany should have been convinced in order to change the strategy which ishardly happening and time consuming. Despite the fact that it is decentralized,this leads to monotonous actions and less entrepreneurial spirit of employees.
Fourth one is umbrellastrategy7in which top management defines a comprehensive plan of actions to implementthe developed strategies in the form of boundaries, within which managers fromlower levels of the hierarchy of management have the freedom of action. Controlis carried out by comparing achievements with the plan and the capabilities ofmanagers within the boundaries.From my point of view, although bureaucraticfeatures of such structures are important, there is important shortcoming ofsuch structures as they are subject to decentralization. The method howinternational businesses solve the issue is centering of responsibilitiesaccording to some basic distinctions (based on product and region) due to sizeof the organization.
That is the positive side that every responsibility centercan be formalized. It turns to be the reason why international businessesgenerally prefer this type of configuration. Unit sizes in the centers of responsibilityare at the bottom wide and narrow at other places.
Fifth one is processstrategy.8The main approach in this case is the emphasis on procedural aspects of thestrategy development and implementation: staffing, job descriptions, plannedschedule, job descriptions of management. The process strategy can bebeneficial for investors who are intended to enter market with lower initialcost. They can focus on wide range of products as there many opportunities. Butstill, in this type of strategy more skilled labour and production control areneeded.Sixth one is unconnectedstrategy9.This style of management is the opposite of any form of organization of theprocess. There is no single global development goal, a group of people whodevelop a certain strategy or principles for its formation.
The basic strategyis thus created as a set of strategic alternatives not connected among it anddeveloped by different managers.Seventh is consensusstrategy10.In this case, the principle strategy is being built in absolute, stating thatonly the strategy that is approved by all performers is implemented inpractice. Managers define a common strategy through agreements among themselveswithout the administrative pressure of higher management. From my point ofview, this type should be the most widespread one today, because all workers can participate in consensus and allprofit and looses are divided among everybody. It divides the voting power ofeverybody equally and shows the voices of all community members. The onlyproblem here can be a lot of different standpoints that can make decisionmaking process slower and complicated.Eighth strategy is imposed strategy11.
This means that the external environment dictates the principles of formationof the enterprise development strategy. Thus, the firm is not in a position toprovide directed offensive actions.ComparisonMintzberg and Waters article differ from Porter’sview of strategy in different terms. Authors argue that leaders who areplanning to take the responsibility of strategic management should planeffectively company’s strategy, taking into consideration the interruptions andchanging circumstances in market, which can lead to pressures. Those leadersshould have the skills of problem solving, which they will imply in suchcircumstances to manage company further. They should have instincts to feel whichside company should go in order to save its competitiveness. Meanwhile, MichaelPorter, in his article called “What is Strategy?” argues that managers shouldhave a clear overview of a company’s perspective and they should plan allactions of company towards the future market.
They should the clear idea ofposition and competitive advantage and sustainability goals. Company leadersshould be engaged in differentiating goals from issues and changes in market.However, in Mintzberg and Waters article called “Of Strategies, Deliberate andEmergent”, authors argue that leaders should have a set of strategies wherethey can harmonize according to the position that market takes. Thosestrategies have to be either changed or mixed depending on situation. Againstit, Porter argues that, firm should have strategic position and competitiveadvantage in which firm is forced to go with and be so strong that its competitorscannot have same advantages. Competitors should not be able to imitate firm’sactivities, so that firm can be sustainable in market.
In this occasion,managers are responsible in negotiating about unique position which is firmmain advantage. Mintzberg’s strategy definition is differing fromPorter’s by their way of thinking. For Mintzberg, strategy is about learningand observing, while for Porter it is just an analytical process. From my pointof view, Mintzberg’s definition is more profound as he describes the wholestrategy, including Porter’s view. Mintzberg analyses strategy as observing,planning and developing, depicting it as a harmony of successful businessstrategy. Mintzberg emphasizes that if company only plans its actions, it willnever take an action forward and it will make company be back of itscompetitors. In order to push company to take actions, company should observeits profit and losses of taking urgent and late action. Taking slow actioninstead of immediate one can end up with ultimate losses.
Meanwhile, Porter’s main argument is that thestrategy is formulating from three different sources. The first one is therange of goods and services presented by firms. This position makes firmcompetitive by its range of chooses. Second one is covering the needs of oneparticular group which is big. It is called need based positioning. Third oneis accesses that firm can reach its consumers. It can be different methods ofaccess; in this case range of products does not make sense.Mintzberg emphasizes that strategic planning isdangerous for firms, because the world of business is changing a lot andcompanies should accompany with this changes.
However, Porter argues that firmsshould stick to strategic planning and when changes are coming companies shoulddecide to move on or not. Companies will have some trade offs during thechanged situations. But sticking to strategic planning prevents the rivalhomogeneity by putting productivity frontier. In order to keep this frontiercompanies should consider the tradeoff between rival homogeneity and changingsituations.
The process how this trade off happens is simply by putting lossand profit options on certain area and making decisions. For example, if thecompany’s strategy is being innovative then this company makes the trade off ofbeing low cost. Or if a company decided to be low cost, then quality will berelative to its cost and better quality will be the trade off of particularcompany. However, Mintzberg argues that by making trade off, companies aregoing into risk of being non-competitive in long term, which is true. Becauseif a company has great market shares and playing major role in market for longterm, then this company will face more updates in the market and should makemore tradeoffs.
If this company does not make correct trade off, it can simplylose all its market power. According to Mintzberg, companies don’t have to beconservative in terms of updates and should take more risks. For example, thenew technological advancements in financial markets made it necessary todevelop financial technology of banking industry. The banks which could notacquire those financial technologies have been less competitive than the bankswhich were up to date.
Customers were open to changes in financial industrybecause it was easy for them to control their banks accounts or make bankingactivities from their devices. Another key issue that Mintzberg argues againstPorter is that planning is “killing” the employees’ innovation motivation. Accordingto him, if a company makes a path of development then high level managementshas more control over company and the strategic planning has been done only bythose people, so that it is limited by the arguments of the high management. Inthis case, employees thoughts are not taken into consideration, which makes wayto dictating over employees regarding the job which they are doing and notintroducing them opportunity to develop something that they are good at. Inlonger term, company loses all its good employees and motivation, losingcompetitiveness simultaneously.
MystandpointI think, Porter’s view is outdated and Mintzbergwins this “competition” because of flexibility reason. Flexibility is in needin globalized world. Company with the same competitive advantages and payoffscannot survive. Especially, in the world of Big Data where everything will beshared and transparent, companies should be innovative. We can see thisinnovation s in the biggest companies like Google, Apple, Samsung, etc.
Forexample, nowadays, one of the major attractive companies is Tesla which testselectric cars. Even though Tesla cars’ prices are much higher than average car,Tesla will be the biggest winner after 2030, especially when European countriessuch as Germany12and Norway13will restrict all petroleum cars. I like the approach of Toyota to this trend,as Toyota has some hybrid models where it combines petrol and electricity carsin one model. Toyota aims directly today’s and tomorrow’s trend not losing competitionagainst innovation. The Toyota Prius,developed in 199714,is a serial production of Toyota that has succeeded in selling over 9 millionhybrid cars in the last 19 years. Although Toyota hybrid cars were introducedto the world automobile industry with the Prius model, they began to use hybridtechnology in vehicles of similar segments. The hybrid version of the Yarismodel, which hit the market in 2012, reached a sales figure of over 50,000across in Europe, indicating a significant success.
In addition to Toyota,Honda is also achieving significant sales figures in the hybrid car market,especially with the Civic model, while other major car brands are expected tomake significant leaps in the coming years. References1) H.Mintzberg and J.A. Waters (1985) ‘Of strategies, deliberate and emergent’Strategic Management Journal, vol. 6. No. 3.
pp. 257-722) Porter,M.E. (1996), What is Strategy? Harvard Business Review 74(6). 61-783) JayBarney (1991) Firm Resources and Sustained Competitive Advantage, Journal ofManagement, Vol. 17., No. 1.
, 99-1204) http://www.independent.co.
html6) http://www.hybridcars.com/history-of-hybrid-vehicles/ 1Mintzberg & Waters, 1985, p 2532Mintzberg & Waters, 1985, p 2593Jay Barney Firm Resources and SustainedCompetitive Advantage, Journal of Management, Vol. 17., No. 1.
, 99-1204Porter, M.E. What is Strategy? Harvard Business Review 74(6). 61-785Mintzberg & Waters , 1985, p 2606Mintzberg & Waters, 1985, p 2627Mintzberg & Waters, 1985, p 263 8Mintzberg & Waters, 1985, p 2649Mintzberg & Waters, 1985, p 26510Mintzberg & Waters, 1985, p 26711Mintzberg & Waters, 1985, p 268 12http://www.independent.co.uk/news/world/europe/germany-petrol-car-ban-no-combustion-diesel-vehicles-2030-a7354281.html13http://www.independent.co.uk/environment/climate-change/norway-to-ban-the-sale-of-all-fossil-fuel-based-cars-by-2025-and-replace-with-electric-vehicles-a7065616.html14http://www.hybridcars.com/history-of-hybrid-vehicles/