The Prescriptive and Emergent Approaches to Strategic Management
Various definitions, approaches and theories have been put forward by scholars to explain strategic management, all looking at the process of strategy at different angles, from two approaches, the emergent and the Prescriptive approaches, trying to propose superiority on either approaches. Some scholars like Porter even advocate other alternative to strategic management. The truth is that, there is no best approaches just a management effort to seek out the best way for survival in this changing and dynamic business world and now in this period of economic turbulence.
What is Strategy? From the Greek word ‘strategos’ which means ‘what the general do’, the word strategy dates back to the 1960s where scholars differentiated the schools of thought which has been influencing business life since then. Various definitions have been given to the term ‘Strategy’, according to Johnson and Scholes, strategy is the direction and scope of an organization over the long-term which achieves advantages for the firm through its manipulation of resources within a changing business environment to satisfy stakeholders.
James Quinn (1998) saw strategy as the pattern or plan that integrates a firm’s major goal, policies and action sequences into a cohesive whole. To organize and allocate the firm’s resources efficiently based on its internal strengths and weaknesses, predictive environmental changes and competitors. Kenneth Andrews (1998) explains corporate strategy as the pattern of decisions in a company that determines and reveals its objective, purpose or goal, produces the principal policies and plans to achieve those goals, and defines the range of business to be pursued…..
Lynch (2009), believes it’s the identification of the purpose of an organisation and the plans and actions to achieve that purpose. Porter (1996) says it’s about achieving competitive advantage through being different. Rowe et al. (1986) says it is the decision process that conjoins the internal capacity of the organization and the opportunities and threats from its business environment.
And so on, the list of definitions is endless, but I believe that however strategic management is defined, the major issue is using available company resources to compliment the firm’s external business environment i. e. PESTLEC Model. Methods of approach may differ, but the end result for any firm should be same, to satisfy its stakeholders. The essence of strategic management is to address the over-all long term directions of the company, using SWOT analysis to create the appropriate strategy to cushion changes in the future of the business.
Stoner identifies 5 stages of a logical decision making process; the investigative stages (gathering all relevant information on the situation of the business environment factors), alternative decision development stage, evaluation stage, selection stage, and implementation and follow-up stage. The whole framework of strategy management is integrating corporate objectives with management activities supported by efficient operation functions to achieve effective organizational growth and development at all times especially in these present tough turbulent economy.
The corporate management is involved in strategic management; they set the goals and objectives of the firm, stipulate the business culture of the organization, leadership style, agree on the business motives and define the stakeholders of the business. The middle management is then responsible for strategic planning, interpreting the corporate objectives and putting in place strategies to meet these objectives and coordinating operations management to implement it. It’s also used for budgeting and control, long ange planning, future strategic planning and management.
According to Aaker (1984), it can also lead to market orientation; understanding, forecasting, and provision of customer’s needs especially in times of market turbulence like we have today, feeds information back to the firm, allow for better knowledge of factors, exposure to opportunities in international markets, improve decision making, help take advantage of available opportunities with company resources at less risks, improves operational process and development, bases for long term planning, and internal efficiencies.
All these can also be seen as the advantages of strategic management planning to include managerial value, appraisal of present status, competitive advantage, encourage logical thinking in environmental turbulence, creates alternative approach to business and objectives achievement, allows for continuity, efficiency, growth and development of the firm and finally cushions effect from unforeseen events in the business arena.
Strategy may be distinguished in content (what is involved), process (how it is done) and context (where it is done: the business environment). There are two schools of thought on how strategic management can be developed, the emergent and prescriptive approach, anchored by the works of Michael Porter (prescriptive) and Henry Mintzberg (emergent).
Mintzberg and Waters(1985) also acknowledged various other types of strategies, but for this paper we’ll consider only the emergent and Prescriptive Approach: this is from the view of long term monitoring and control of business plans for the future, this approach analyses the resources available to the organisation internally (McKenzie’s 7s) and the external environment (Porter’s 5 forces and the Factors), using the mission and objectives of the firm to formulate various strategies that can support the business in future, from which the most suitable is picked and implemented.
It takes into account the organisations position for the future using SWOT analysis, strategic planning, environmental scanning and scenario playing. It is a top-to-bottom management process. Prescriptive approach uses market intelligence, classified objectives, well chosen enemy in this case a dynamic environment, to create an attack strategy and innovates the strategy to predict and cushion the effects of the changes in its business environment. It identifies the purpose of the organization and plans to achieve them. This approach can be likened to a football match, were the coach knows his opponents and forms a strategy to win the match.
Prescriptive approach is pre-planned and set in motion to achieve its objectives. The approach also borrows theories from economists like Adam Smith in suggesting that the rationality of man and profit maximization were capable by management. It uses the BCG matrix to allocate resources to its SBUs. Singapore airlines, Spiller foods and Google are firms that engaged in prescriptive approach, unforeseen environmental activities like Sept. 11 and the SARS virus affected the airline, the Spillers was acquired but the approach didn’t fail and Google had to switch to the emergent approach to battle fast growing changes in its industry.
Emergent Approach: this approach is constantly active, continuously learning, adapting and adjusting to changes as they come along with the aim of gaining competitive advantage in its industry. It combines recent environmental analysis with available capacity, innovations and technology, to achieve its goal using trials of strategic options to controls changes in its business environment. The approach follows an incremental process reviewing the patterns of the organization and learning from combined experiences from many sources. Mintzberg et al. 1998, argues for emergent rather than planned strategic approach.
This approach combines new ways of thinking with available resource and technology to innovate various designs which can be implemented to create competitive advantage. It seeks new market opportunities, experiment and develops market share and growth. The fast changing environment calls for faster updatable changes in strategic management, emergent approach proposes continual revisit to strategy, changing company objectives and enemies and adapting to present consumer needs using technology and innovations. Prescriptive Vs. Emergent There is no 100% emergent approach, there has to be a plan which the emergent approach is built on.
The prescriptive approach is based on long term management, has a quick over view of the company making managers plan ahead, it plans ahead, allows for market leading, reduces risks and prepares for setbacks which allows the firm to react quickly to the changes it has planned for. While the Emergent approach is on short term bases, can be costly if failing strategies are always picked, has no fixed time length and definite plan, its ongoing until the need for change arises, not immediately useable by large capital intensive organizations or financial investments, and it’s still based on initial prescriptive approach.
On the other hand, the emergent approach is flexible, quick to adapt to market changes, short termed so it can be easily modified, it’s not over dependent on environmental changes but market, uses innovation and technology, managers who uses this approach are quick thinking and create competitive advantage, it is quick and simple to revert when risks occurs, takes immediate actions, create room for market growth and development and finally the approach is not over dependent on its old strategies.
While the prescriptive is rigid, uses old thinking, analysis rather than synthesis, the approach may create wrong strategies which are slow to revert, it has no short term plan, the anticipated environmental change are really not predictable, seeks to influence change rather than react to them and office politics may lead to wrong choice of strategic plan. The emergent dynamics has two approaches, nature and intensity of industry competition. The prescriptive uses the “3S” framework of dynamic development or the aggressive planning competitive strategic management approach.
The prescriptive looks at the purpose of the business, the unstable environment, the moving market and the firm’s resources to plan ahead. The emergent seeks new competitive advantages, creates aggressive competing and cooperative strategies to move with change. The content of emergent is trials and experimentation to arrive at different strategic plans which are selected using past learning and technical innovations to gain competitive advantage in a turbulent market with optimal solution and continuity.
Changes in the present situation of the market environment is its context, and it follows the process of identifying the problem, proposing strategic plans, picking a suitable plan which will be continued based of success or failure of the plan. The prescriptive involves planning for the future using available resources and analysis of the business environment to achieve corporate objectives. Its context is the firm’s internal resources (7s theory), micro (Porter’s 5 forces) and macro- economic environment.