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SWP 37/92 AN INTEGRATED EXPLORATION OF

STRATEGIC DECISION-MAKING

ANDY BAILEY and PROFESSOR GERRY JOHNSON Cranfield School of Management Cranfield Institute of Technology Cranfield Bedford MK43 OAL United Kingdom (Tel: 0234-751122) (Fax: 0234-751806)

This paper was presented to the Strategic Management Society Conference, London, October 1992 Copyright: Bailey & Johnson 1992

AN INTEGRATED EXPLORATION OF STRATEGIC DECISIONI

Andy Bailey & Gerry Johnson

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This paper reports on the preliminary findings of a major research programme being undertaken at Cranfield School of Management which explores the nature of strategy formulation and development in organisations. The overall aims of this research programme are to discover the patterns of strategy development within organisations, to explore the managerial implications of these patterns, and to relate these to the contextual of variables of organisations. This paper first presents a number of explanations‘ strategy development. The research framework is briefly discussedand illustrations of -managerial views of strategy formulation and their implications are examined. The early works of writers such as Ansoff (1965) and Andrews (1971) and the books of the 197Os,in particular on corporate planning, emphasisedthe importance of strategy and guided thinking in the area; thinking which has been dominated by the view that strategies are formulated through an essentially analytical and intentional process. This rational view - here termed the planning perspective and described in more detail below - has become deeply entrenched within strategic thinking, while the prescriptive and normative modes so generated have substantially influenced the approach to strategy formulation in practice, in education, and in research. However, other explanationsof strategy development have also been advanced.

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The Planning Permective The archetypal planning perspective suggests that strategy formulation is a distinctly intentional process involving a logical, rational, planned approach to the organisation and its environment. The basic framework which this ration& planned view offers indicates that through the application of appropriate analytical and systematic techniques and checklists, optimal decisions can be taken. Moreover such an approach allows forecasts and predictions to be made about the future, assists in the reduction of uncertainty and facilitates the systematicdevelopment of both a written and real strategy. The strategies which develop are the outcome of sequential, planned and deliberate procedures and are often the responsibility of specialised departments. Clear and well defined strategic goals and objectives are set by the senior members of an organisation

(Chaffee, 1985). These goals and objectives, which can be quantified and measured, may be a reflection of shareholder values or reflect potential threats and opportunities which the organisation becomes aware of through its constant monitoring of the business environment. As a goal or strategic issue is defined, the organisation and its environment (both internal and external to the organisation) are systematically analysed. The information collected is assessedand strategic options capable of attaining the goal or resolving the strategic issue are generated. These strategic options, or courses of action, are systematically assessedagainst the objectives to be achieved. The option which is judged to maximise the value of outcomes, best fits the selection criterion and presents advantage is chosen. The selected option is subsequentlydetailed in the form of precise plans and programmes and is passed from the top downwards within the organisation. Throughout this process strategiesare determined and guided by those decision makers in senior managementpositions and are implemented by those below (h$ntzberg, 1978) who implement but are unlikely...
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