"Schools of Strategy" is an excellent book written by a specialist for specialists. It will not seem simple to an ordinary strategic leader of a corporation (director). At the same time, the book is the best publication, which not only examines almost all areas of strategic management, but also provides a synthesis. The book is a wonderful help for undergraduates, graduate students and others who want to write a modern work on strategic management. It is very useful for strategic management teachers (helps develop an understanding of strategic management beyond SWOT analysis and mission). Most standard Russian consulting companies may need to buy it in large quantities (and read it, of course) to understand the differences between strategic management and what they sell to clients.
Chapter 1. SO, LADIES AND GENTLEMEN, STRATEGIC MANAGEMENT ENTERS THE ARENA
ELEPHANT STUDY
from John Godfrey Sachs
Free translation by Valery Zemskikh
Let's imagine that we are the same blind people, and building a strategy is our elephant. Not being able to see the “beast” in its entirety, we grab the ear, trunk, leg of the “elephant” and hold on to it, being “blissfully unaware” of the object as a whole. But even when we gradually learn that our “experimental subject” consists of separate parts, and we try to “put” them together, we will not get an elephant. The whole is by no means the simple sum of its parts. But knowledge of the whole one way or another presupposes analysis, comprehension of the interactions of all its elements.
The next ten chapters describe the ten parts of the beast called "strategy formation", each of which represents one of the "schools of thought." The main chapters are preceded by the first, in which you will get acquainted with all the schools and the very concept of strategy, and the final one returns us to the object of study as a whole.
In the article "The Magical Seven, Plus or Minus Two: Some Limits on Our Capacity to Process Information," psychologist George Miller asks why we like to group things in sevens: the seven wonders of the world, the seven deadly sins, the seven days of the week (Miller, 1956 ). According to the author, this reflects the structure of our cognition: seven is the number of “portions” of information that a person can easily retain in short-term, “operative” memory. Three wonders of the world will be forgotten faster than they will be remembered, and the need to keep in mind, for example, eighteen wonders is depressing. But those who are interested in strategy, of course, are not mere mortals - at least in their cognitive abilities, and therefore must be able to comprehend more ideas than, say, the magical seven plus two. Accordingly, our book presents ten schools of strategy formation.
Leaving aside cognitive abilities and looking at the body of scientific literature, we find ten different points of view, most of which are reflected in practical management. Proponents of each hold unique views on the same basic aspect of the strategy process. But in a certain sense all these theories are limited and distorted. On the other hand, the views of each of the representatives of the various schools of strategy are very interesting. The elephant is not only composed of a trunk, but it certainly has a trunk, and it would be very difficult to describe the animal as a whole without mentioning such an essential part of it. Typically, one of the consequences of blindness is the enhancement of other senses to such an extent that a person is able to live without the help of a sighted person.
SCHOOLS. Each of the following chapters presents - from their own perspective - one school of strategy. We then provide a critical assessment of the views under consideration, emphasizing their limitations and value. Listed below are the scientific schools offered to your attention and the definitions that best describe the vision of their supporters of the strategic process:
1. School of Design comprehension 2. School of Planning: strategy formation as formal process 3. Positioning School: strategy formation as analytical process 4. School of Entrepreneurship: strategy formation as a process foresight 5.Cognitive school: strategy formation as mental process 6. School of Training: strategy formation as developing process 7. School of Power: strategy formation as a process negotiations 8. School of Culture: strategy formation as collective process 9. School of external environment: formation of strategy as reactive process 10. School configuration: strategy formation as a process transformation
Our ten schools can in turn be divided into three groups. The first three schools are prescriptive in nature - their adherents are more interested in how strategies should be formed, rather than how they are actually developed. Attention of supporters of the first of the schools, on the basis of which in the 1960s. two others were formed, concentrates on building a strategy as a process of informal design (in the sense of construction, design, modeling), and in essence - a process of comprehension and elaboration. The second school, which flourished (in the form of a wave of publications and practitioners turning to it) in the 1970s, formalized the first theoretical “escapes.” It views strategy creation as a relatively isolated, systematic process of formal planning. Supporters of the third perspective school, which joined the first two in the 1980s, are concerned not so much with the process of forming strategies as with their actual content. The school is called the school of positioning, since the attention of its teachers and students is concentrated on choosing the strategic market positions of the company.
The following six schools examine specific aspects of the strategy formulation process. Their proponents are not so much interested in prescribing ideal strategic behavior as in describing the actual processes of strategy development.
In an effort to connect strategy with entrepreneurship, some well-known authors have viewed the process of strategy creation as an attempt to penetrate the future, an insight that visited an outstanding manager, and his taking of risks. But if strategy is presented as an individualized vision, then its formation should also be considered as a process of comprehending ideas and principles taking place in the human head. Accordingly, although not the largest, but a very important cognitive school has arisen, which, based on the logic of cognitive psychology, is trying to penetrate the consciousness of the strategist.
The following four schools, in explaining the principles of strategy, have tried to rise above the individual level; they turn to other forces and actors. According to supporters of the learning school, the world is too complex, so building a strategy from the first step to the end is pointless, unlike, for example, plans. Strategies should be developed gradually, step by step, as the organization develops and “learns.” In the same vein, but from a different angle, the school of power views the formation of strategy. Its representatives view strategy as a process of negotiations between conflicting groups within an organization or between an organization and its opposing environment. According to another scientific school, the principles of strategy formation are determined by the culture of the organization and, therefore, the strategic process is a collective process. Finally, environmental school theorists believe that strategy formation is a reactive process, initiated not from within the organization, but under the influence of external circumstances. Accordingly, they try to comprehend the external pressure experienced by the organization.
There is only one school in the last group, but it actually absorbs all the other approaches. We call this school the school of configuration. Its representatives strive to combine the disparate elements of our “elephant” - the process of building a strategy, the content of the strategy, the organizational structure and its environment - into separate, sequential stages of the organization’s life cycle, for example, growth or stable maturity. But if an organization enters, for example, a state of stability, then developing a strategy involves analyzing the transition from one state to another. This means, on the other hand, this school, drawing on the rich literature and practice of “strategic change,” describes strategy formation as a process of transformation.
The emergence of schools of strategies is largely associated with various stages of development of strategic management. Some have survived their heyday and are in decline, others are only “gaining momentum”, others are “making their way to the surface” in the form of thin but important “trickles” of publications and reports on the practical application of the proposed concepts. We will talk about the views of supporters of each school and offer our own view of their development, strengths and weaknesses. In the final chapter you will be introduced to summary comments.
You can get additional information about each of the schools we mentioned in specialized literature: academic collections, magazines for practical managers, monographs. In addition, most of the methods proposed in publications are used in practice by organizations and consulting firms. Practitioners read literature on management, authors of scientific articles analyze practical experience. Therefore, our description of strategy schools is based both on theoretical publications and on a generalization of practical experience.
The extensive literature on strategic management (the number of works that the authors of this book studied is close to two thousand) is growing “day and night.” Of course, not all new publications are directly related to strategic management. On the other hand, understanding the strategy development process is unthinkable without studying books and articles devoted to various areas of scientific knowledge.
William Starbuck wrote that discussing “all aspects of an organization in need of change means considering everything that has ever been written about organizations” (Starbuck, 1965:468). Moreover, this is even an understatement, because the last word in the quotation should be read as “collective systems of all types.”
If you are interested in strategy as a search for an organization's possible market position ("niche"), you will be very interested in the work of biologists on the adaptation of species (for example, on "periodically disturbed equilibrium"). Historians' reflections on various periods of social development (say, revolutions) help explain the various stages of formation of organizational strategies (for example, “transforming a struggling company” as a form of “cultural revolution”). Developments in quantum mechanics and mathematical theories of chaos may provide clues to understanding changes in organizations. And there are many such examples. Add to this all the literature that is usually classified as organizational studies - psychological (on the process of cognition and leadership charisma), anthropological (on cultural diversity), economics (on industrial organizations), urban planning (on formal planning processes), scientific-political (about the principles of public policy), military-historical (strategies in conflict conditions), etc. - and we will receive extensive material that reflects all existing points of view. Strategy formation is not limited to foresight, prioritization and alignment of forces. In this process, it is important to take into account crisis situations, political preferences, the principle of periodically disrupted equilibrium, and social revolutions.
We review this kind of literature using its own terms. However, we did not set out to give a comprehensive overview of it. (Our desire to write “extra” thousands of pages is no more than your desire to read them.) In other words, we offer to your attention not a review of the literature, but a review of the topic. We have made an attempt to highlight the most important scientific sources and practice - in order to clearly highlight different points of view, directions, trends. Therefore, the quotes that we provide serve either as a key to understanding an idea or as an illustration of a set of sources. We apologize to all those authors and consultants who were not mentioned in our book; For our part, we hope that we have not missed any significant directions.
We consider it our duty to note the following. We are depressing by the tendency in modern management literature towards popular, latest fashion trends. This not only disadvantages wonderful old authors, but, even sadder, it does a disservice to readers, who are often offered worthless new ones instead of worthwhile old sources. In the book brought to your attention, the authors tried to maintain a balance, to combine a review of the evolution of views on the problem and an analysis of the latest scientific and practical trends. We are convinced that ignoring an organization's past can cause irreparable damage to its strategic development in the future. The same is true for the topic of strategic management in general. Those who neglect past experience, classical works, take risks, as it seems to us, completely unreasonably. Time has the same effect on strategic management literature (and management practice) as it does on wine in a barrel: it puts everything in its place and shows what is worth what.
The word “strategy” has long gained popularity; modern managers use it freely and with visible pleasure. Among other things, for them it denotes the highest manifestation of management activity. Over the past two decades, the topic of strategy has been widely developed in scientific research, and lectures on strategic management usually crown courses in business schools. The word "strategy" is a very important word. But what does it really mean?
It is human nature to define ourselves in terms of concepts. The introductory chapters of most standard textbooks provide a definition of strategy that goes something like this: “Top management's plans for achieving long-term results consistent with the goals and objectives of the organization” (Wright et al., 1992:3). Generations of students dutifully memorized such definitions and then used them to write thousands of reports for their companies. We do not propose one simple definition, but we do argue that strategy (not to mention the ten schools of thought on strategy) requires several—namely five—definitions (Mintzberg, 1987).
Ask someone to explain what strategy is, and you will almost certainly hear in response that strategy is a plan, or something like that - a guide, a guideline or direction for development, a road from the present to the future. Then ask the same person to describe the strategy that his or her organization or major competitor has actually pursued for the past five years—not stated strategic principles, but actual behavior. Most people will readily answer your question, completely oblivious to the fact that their answer differs significantly from their definition of strategy.
It turns out that “strategy” belongs to those words into which we, when defining them, put one meaning, and when using them, another. Strategy is a principle of behavior or following a certain model of behavior. A company that consistently delivers the most expensive products in an industry is pursuing what is generally called a high-performance strategy, just as a person who takes on the most difficult tasks is said to be pursuing a high-risk strategy. In Fig. 1.1 compares strategy as a plan (preliminary forecasting) and strategy as a principle of behavior (taking into account past behavior).
So, both formulations are completely equal: organizations develop plans for the future and derive principles of behavior from their past. We will call one the planned (predetermined, pre-planned) strategy, and the other the implemented one. An important question arises: does the implemented strategy always “grow” beyond the intended one? (It is obvious from experience that pre-developed strategies do not always turn into implementable ones.)
The answer to this question is simple. Just ask your interlocutors, who enthusiastically describe their (implemented) strategies, what happened to the strategies they planned five years ago. Some will argue that the planned plans were not only fully implemented, but also exceeded. Let us doubt the sincerity of such an answer. Others will report that the actual strategic actions had nothing to do with the intended goals. This means that their actions were contrary to the adopted strategy. As our experience shows, the overwhelming majority of respondents give an intermediate answer - some things came true, but some did not. They did not deviate from their goals, but they did not go out of their way to achieve them. Among other things, flawless execution requires brilliant foresight, not to mention not being subject to unforeseen circumstances, although in any case there are rough edges. In the real world, both forecasting and the need to adapt are inevitable.
As Fig. 1.2, fully realized intentions can be called well-thought-out strategies. Those that were not implemented at all will be called unrealized strategies. For example, the planning school recognizes both of these categories, naturally giving preference to the first. But there is a third case - the emergence and development of a new strategy, when an unplanned model of behavior is implemented. The steps taken, one after another, eventually line up into a certain sequence or principle. For example, instead of sticking to a (planned) diversification strategy, the company simply makes isolated decisions, moving forward step by step, “testing” the market. First, it acquires a city hotel, then a restaurant, then a hotel in a resort area, then another city hotel with a restaurant, then a third, etc. until a new diversification strategy is built - city hotels with restaurants.
So, few, if any, strategies turn out to be perfectly thought out. No less rare are exclusively new strategies. In the former there is no room for learning, in the latter there is no control. Any real-world strategy must include both: control and opportunities for learning. In other words, it is necessary not only to formulate strategies, but also to form them. For example, building an “umbrella” strategy implies developing a global plan (to become a market leader), and the details (when, where, how) are supposed to be dealt with “in the process.” Thus, new strategies are not necessarily bad, and well-thought-out ones are not always good. Visionary strategists skillfully combine both types of strategies. In such people, the combination of the ability to foresee with the ability to respond to unexpected circumstances is especially valuable.
To “plan” and “principle of behavior” you can add two more words starting with the letter “p”. Several years ago, the McDonald's restaurant chain introduced a new product called Egg McMuffin - a traditional American breakfast. It was assumed that the new offer would attract visitors to McDonald's restaurants in the morning. When asking people whether the Egg McMuffin is a strategic change for McDonald's, we will get two possible answers: “Yes, absolutely; the new product gave the company access to the breakfast market" and "Come on, it's still the same junk - McDonald's style, only in new packaging." In our opinion, the differences in answers are caused by the way these people define the content of the strategy for themselves.
There is a view that strategy is a position, namely the placement of certain products in specific markets, such as the Egg McMuffin product in the breakfast market. As Michael Porter reiterated recently, “strategy is the creation, through a variety of actions, of a unique and valuable position” (Porter, 1996:68). There is also an opinion that strategy is a perspective, i.e. the main way of operating of an organization (for example, McDonald's), or, in the unforgettable expression of Peter Drucker, it is the “theory of business” of a given organization (Druker, 1970:5; 1994) As can be seen from Fig. 1.3, strategy as a position is a look down at the "x" mark indicating the place where the product meets the buyer, and outward - at the external market. On the other hand, as a perspective, strategy is turned inward - inside the organization, more precisely, in the thoughts of strategists, but at the same time upward - into the great future of the enterprise.
Again, we cannot reject either of the two definitions. The success of Egg McMuffin depends on the extent to which the new position fits with McDonald's existing perspective. Apparently, the company's leaders are well aware that they cannot simply ignore the prospect. Changing the position within a given perspective is quite easy; but changing the perspective, even while maintaining the position , is another matter (Swiss watchmakers, who had to master the technology of producing quartz watches, will confirm this to you.)
Thus, we have four different definitions of strategy. The fifth is also quite common: strategy is a deft technique, a special “maneuver” undertaken with the aim of outwitting an opponent or competitor. Imagine how a boy jumps over the fence, wanting to lure another - a terrible bully - into his yard, where a Doberman is strolling, always ready to rush to protect its owner. In the same way, a corporation, in pursuit of the impression of its grandiose plans, announces the acquisition of a number of land plots, but in fact it seeks to force a competitor to abandon the construction of a new plant. The strategy it implements (as a plan, that is, as an implemented intention) involves exclusively putting pressure on a competitor, and not real expansion, and therefore is considered as a technique.
Five definitions and ten schools. As we see, the connections between them are not constant, although some schools have their own preferences: for example, plan - from the planning school, market position - from the positioning school, perspective - from the entrepreneurship school, the principle of behavior - from the teaching school, reception - partly - at the school of power.
There is no simple definition of strategy, yet we need to develop common ground on a number of fundamental issues (see Strategy: Areas of Agreement).
Any discussion about strategy inevitably ends in a draw, because for every strategic advantage there is a weakness or disadvantage:
1. "Strategy sets direction."
Advantage. The main point of strategy is to show the organization a reliable course of development in existing conditions.
Flaw. A strategic course can, like blinders, cover up potential dangers. Following a predetermined course in unfamiliar waters is a sure way to “encounter” an iceberg. Direction is of great importance, but sometimes it is more advisable to slow down, look carefully, but not very far ahead, paying attention to what is happening to the sides in order to change behavior at the right moment.
2. "Strategy coordinates efforts."
Advantage. Strategy promotes coordination of activities. In the absence of a strategy, chaos reigns in the organization when management “pulls the cart” in different directions.
Flaw. Excessive coordination of efforts leads to the reign of "group think" and the loss of peripheral vision, through which we often notice new opportunities. The adopted strategy dominates the organization, permeating its every cell.
3. "Strategy characterizes the organization."
Advantage. Strategy outlines the nature of the organization and demonstrates its distinctive features. Strategy provides not only a key to the overall understanding of the organization, but also a convenient opportunity to understand how it “does business.”
Flaw. Defining an organization in terms of its strategy can be overly simplistic, even to the point of using stereotypes, thereby overlooking the scope and complexity of the system.
4. "Strategy provides logic."
Advantage. Strategy eliminates uncertainty and provides order. In this sense, it is akin to a theory that simplifies and explains the world and facilitates the operation of the cognitive structure.
Flaw. Ralph Waldo Emerson said that “foolish logic is a ghost that haunts narrow-minded people.” Creativity does not tolerate consistency - the creator finds new combinations of phenomena hitherto considered incompatible. Any strategy, like any theory, is a simplification that inevitably distorts reality.
When we have strong confidence in our actions, we tend to achieve very good results. This is precisely the role of strategy for an organization: with its adoption, the main problems are removed and people, having decided on the main thing, instead of discussing the choice of the best market, pay attention to the details - the choice of specific goals or areas of customer service. Even senior managers must devote a significant portion of their working time to managing the organization in this context; they cannot, they simply do not have the right to constantly doubt.
Often from the pages of books we see the image of a manager-strategist, a kind of thinker who harbors grandiose plans, while taking care of the small details is entrusted to someone else. But the responsibilities of a manager for the most part consist of working with details, although, of course, at a high level. He is obliged to use all means available to him as the head of the organization to strengthen the existing perspective (and “culture”), develop contacts in order to obtain important information, negotiate and conclude agreements to strengthen the gained positions, etc.
In this case, the problem lies in changes in surrounding circumstances over time - the external environment is destabilized, familiar niches disappear, and new opportunities open up. Everything that was constructive and effective in the adopted strategy turns over time almost into its opposite. This is why, despite the fact that the concept of strategy is associated with stability, a lot of research focuses on change. But while formulas for strategic change are easy to come by, managing them, especially when change involves new perspectives, is very difficult. The very promotion of strategy implementation and its main function - protecting the organization's employees from strife - presupposes their ability to respond to changes in the external environment. In other words, transformation is very expensive, especially when it is not just about upgrading outdated equipment, but about changes in the usual way of thinking. As intellectual constructs, strategies sometimes make it very difficult for the management of an organization to realize the fact that its views and plans have lost relevance. In our opinion, strategies serve the same function for an organization as blinders do for horses: they prevent them from going astray, but they hardly allow them to see what is going on around them.
All of the above finally convinces us of the vital importance for an organization of both the presence of a strategy (and strategic management) and its absence (see the box “The absence of a strategy is a good thing”).
Strategic management, like marketing and finance, has rightly received the status of an independent scientific discipline. Academic journals on strategic management are published, “clubs” of strategists operate, and scientific conferences are held. The beginning of research on this topic is usually attributed to the mid-1960s, but sometimes it is also referred to as 1951, the year William Newman’s book was published. But much earlier, works on military strategic construction appeared (for example, the “out of print” of the famous treatise on the art of war by Sun Tzu dates back to the 5th century BC). Since the early 1980s. The range of literature on strategic processes began to expand rapidly.
Strategic management courses typically focus on the rational and directive sides of the process (schools of design, planning, and positioning). Strategic management is presented as a cyclical process consisting of three distinct but sequential phases - formulation, implementation and control. This theoretical approach is also reflected in the practice of planning departments of commercial and government organizations and consulting firms.
The authors of the book brought to your attention, deviating from the traditional approach, strive to “write” a more balanced picture of strategic management, but reflecting all the significant contradictions and disagreements. It devotes significant space to non-rational/non-prescriptive schools. Representatives of some of them are very pessimistic about the possibility of formal strategic intervention. We have upset the balance only in one thing - in the critical assessment of various schools. The dominant position in the literature and practice of strategic management completely undeservedly belongs to promising schools, and therefore we consider it appropriate to dwell in more detail on the ideas they propose, often accepted as immutable truths. Of course, we give a critical review of all ten areas, since each of them has its own weaknesses. But when a person is at one end of a see-saw board, it is useless to try to balance it by sitting in the middle. In other words, balance in critical commentary will contribute to maintaining the overall imbalance in the literature and practice of strategic management.
The strategic failures of the largest corporations are largely due to the actions of “hordes” of business school graduates who took a rather superficial course in strategic management. The authors of this book want to show their readers - students and managers - the full range of existing points of view. As S. Hart noted, “the most successful companies use various, even directly competing, theories in shaping their strategy. Such companies can at the same time adhere to a rigid plan and act according to circumstances, regulate, control the actions of employees and allow their participation in management, empower them, make long-range plans and pay attention to detail" (Hart, 1991:121). F. Scott Fitzgerald put it even more bluntly: “Intelligence is tested by the ability to hold two opposing ideas in the mind at the same time and still act effectively.” Of course, in order to be a true strategist, the ability to take into account opposing views is not enough; one must, as J.C. Spender argues, be able to synthesize them (Spender, 1992). So, dear reader, you will have to manage all ten points of view at the same time!
In the field of strategic management, such a synthesis is already overdue. As we will see later, in some cases the latest experience contradicts all existing schools. It would seem that this could bring confusion into our thinking. In fact, the schools we are considering will help to see how all the most important aspects of strategy formation are combined in recent practice. We admire the achievements of many modern managers and illustrate our narrative, where possible, with relevant examples. Well, it seems that strategic management is coming of age.
But synthesis is “in general” impossible. The “reaction” must take place in the head, your head, reader. For our part, we promise all possible assistance. Everyone knows what an elephant looks like, but how often do we describe it in parts? The same is true for verbal description: words form lines, chapters form a book.
So here we go!
Students, graduate students, young scientists who use the knowledge base in their studies and work will be very grateful to you.
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MINISTRY OF EDUCATION AND SCIENCE OF THE RF
Federal State Budgetary Educational Institution
higher professional education
"MOSCOW STATE UNIVERSITY OF INSTRUMENT ENGINEERING AND INFORMATION SCIENCE"
Discipline: Strategic management.
Home independent work on the topic:
"Main schools of strategic management"
Performed:
3rd year student
Faculty of Economics
Direction: 080200.62
Group: CHFEF3-1102. D
Frolkina E.V.
Checked by: Zhulikov P.P.
Moscow 2014
Plan
Strategic management is a recent concept that has emerged in the practice of general management. One of the main problems that strategic management solves is the problems of growth and survival of enterprises and organizations of any size and form of ownership, and today, when small businesses play such a significant role, their need for strategic management cannot be neglected. In strategic management, the main task is characterized by two main principles: the formation of an enterprise development strategy and its application in real market conditions. As in any scientific discipline, there are various areas in strategic management that, although they share the general basic principles of the discipline given above, nevertheless place research emphasis differently, highlighting certain methodological priorities. Such directions are called scientific schools, in the case of strategic management theory - schools of strategic management.
attributing
describing
2. School of Planning (Ansoff, Lorange). This school views strategy as a conscious planning process, formally reflected in appropriate diagrams, tables and supported by appropriate methods, which is developed by specially trained people. The school's approach is based on the methodology of using the "balanced scorecard" (BSC)
3. School of positioning (Porter). The basic position of this school is that strategies are generic, specifically general, market positions that are both economic and competitive. The main task of management is to correctly position the position of the company or business, which automatically leads to the emergence of a “ready-to-use strategy.” One of the main models of this school is Porter’s competition model, a typical tool is the BCG matrix (Boston Advisory Group).
1. School of Entrepreneurship (Schumpeter) - considers the process of developing and implementing strategy as a vision or vision that is forward-looking (future); back (past); into the internal environment of the organization; to the external environment, etc. Moreover, this vision is based on intuition, entrepreneurial ingenuity and is expressed in goals that are intuitive to the manager.
3. School of learning (Lindblom) - considers the strategic process as an adaptation to unpredictable changing environmental conditions. Ideas that contribute to this can arise from any individual, regardless of his place in the organizational hierarchy. Consequently, the manager’s task is to create an organizational culture that promotes the selection and promotion of ideas that contribute to the adaptation of the organization.
4. School of power (Kayert, March) - strategy is seen as the result of the interaction of people pursuing their own selfish interests. For this purpose, formal and informal alliances are created, groups seeking to gain control over as many resources as possible. The strategy in this case is the resultant between the interests and actions of various groups.
5. The school of external environment (Meskon) takes the ideas of the positioning school to logical absurdity, considering strategy as the result of the influence of external forces on the organization. According to this theory, organizations exist in certain limited, relatively stable conditions - economic niches. When a niche ceases to exist, organizations die or are transformed beyond recognition.
Each political system, as a rule, is characterized by a certain ideology (capitalism, socialism, etc.). Each society and ethnic group is characterized by a unique culture (Japanese, Californian, etc.). Thus, both industries and individual companies can have their own culture. Culture within an industry is the unique way in which organizations produce their products, what distinguishes one organization from another, one industry from another. It becomes, so to speak, the “opinion of the organization,” general beliefs that are reflected in traditions and habits, as well as, more tangibly, in the organization’s lore, its symbols, even its buildings and products. In a sense, culture represents the life force of an organization, the soul of its physical body. The pervasiveness and uniqueness of a given organization's culture can also be found in relation to its unique management strategy.
As a consequence, strategy takes the form primarily of a perspective and only secondarily of a position, rooted in collective aspirations (not necessarily expressed) and reflected in models that protect the deep resources and capabilities of the organization that form the basis of its competitive advantage. Thus, the main characteristic of strategy is predestination (even if it is not fully conscious).
1. Decision-making style. Culture acts as an eternal filter, consistently filtering out premises for decision-making. In other words, organizations with different cultures, but operating in the same environment, perceive the external environment in their own way and see only what they want and are ready to see: the organization develops a “dominant logic” that acts as an information filter, which emphasizes in the process of creating strategy some data and ignores others.
Now let us turn to the material side of culture: its economic problems. The idea that production systems, rather than products, compete in the market is not new. Economists have long understood that the efficiency of the production system plays a major role in competition. But they never realized the importance of the characteristics of competitive advantage - that uniqueness becomes the defining aspect of strategic superiority.
A unique product occurs when “man-made objects reflect, consciously and unconsciously, directly or indirectly, the beliefs of the people who order, make, buy or use those objects and, more generally, the beliefs of the communities to which those people belong.” Consequently, deep cultural differences among competitors may give one firm a competitive advantage based on the culture of that firm. For example: early automobile production. The car was invented by Europeans as a luxury item available only to the rich. They set up almost serial production of the car, while depriving a large number of people of the opportunity to buy it. The Americans managed to standardize the car and make it available for mass production, i.e. made it accessible not only to rich people. Many European firms tried to get around the Americans by adopting their methods, but even after copying one or another fragment of the mosaic, they were unable to put them together into a “harmonious picture.” Thus, we can see that the concept of competitive advantage is to some extent based on essentially cultural concepts.
Based on the foregoing, it can be argued that a unique culture is an inimitable resource of an organization. There are two reasons why this resource is unique and why it is the most effective barrier to imitators. First, culture produces unique results. Secondly, culture is characterized by causal uncertainty, which makes it difficult to understand, let alone reproduce - even by its representatives themselves. So, for example, it is far from a fact that a “child” who has left the bosom of organizational culture will be able to accurately copy some of its resources for a competitor, which makes culture a kind of guarantee of strategic superiority.
The school of culture offers a common, agreed-upon ideology. In contrast to the individualism of the schools of design, cognition and entrepreneurship, it introduces an important collective dimension to social process, considering both individual and organizational styles and challenging the popular tendency to fragment everything into separate parts - "agents" as part of "portfolios" - in favor of building a common prospects.
school of strategic management
From the point of view of the cultural school, strategy is the result of social interaction. It is based on shared principles among members of the organization, beliefs and "understandings". At the same time, in assessing development options and methods for achieving goals, it is not so much formal efficiency that is important as the often unconscious ideas of members and the team about the correct actions. The role of management in this case is predominantly passive; it does not consist in developing a strategy as such, but in creating a certain microclimate in the team, which, as a rule, contributes to the conservation of existing strategies. It is worth noting that the disadvantage of the cultural school, like all other schools of strategic management of the describing group, is the impossibility or difficulty of using the results and recommendations obtained as a result of research in management practice directly, as well as paying too much attention to intuition and chance.
All schools of strategic management have gone through their own original paths of development. Therefore, each of them offers its own unique approach to developing a company development strategy. To achieve the best result in this matter, it is necessary to use as many methods offered by schools as possible, without understating or exaggerating the importance of any one of them.
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The history of the origin and development of management, its strategic component, is the history of the formulation and formulation of management problems and entire paradigms, the construction of management innovations, research methods and management impacts. It has its roots deep in antiquity and is primarily associated with politics and military affairs, production and economics. Therefore, the main strategists were state rulers, military leaders and clergy who controlled large groups of people and society as a whole. Strategy as a management thought and practical method developed simultaneously with management practice. And later - as part of the sociological section of philosophy and political economics.
The whole variety of approaches, ideas, schools in management practice and theory of different periods of time can be divided into three stages - pre-cybernetic, cybernetic and post-cybernetic. As noted by A.V. Tikhonov, this classification of the development of scientific management thought is connected, firstly, with the unique role of cybernetics in the creation of a “general scientific management paradigm” and, secondly, all three stages correspond to changes in methodological approaches.
The first, pre-cybernetic, is sometimes divided in the literature into two periods - pre-scientific and scientific. Pre-scientific - lasted approximately from the 7th century BC. to the 18th century. The second, scientific, continues to this day and, as already noted, is divided into cybernetic and post-cybernetic.
The rudimentary forms of management as its component, the ordering and organization of joint labor already existed in primitive society with the appropriating nature of farming (hunting, fishing, collecting fruits and berries). The transition to a sedentary lifestyle, a productive economy in conditions of human dependence on climatic conditions, the need to stock up and preserve food, ensure the safety of fellow tribesmen from hunger, disease, from external and internal enemies, stimulated the emergence of economic, political and military management. The thinkers of Ancient Greece made their contribution to the development of strategic management - Socrates (469-399 BC), Plato (428-348 BC), Alexander the Great (356-323 BC). BC), ancient Roman emperor Diocletian, Persian king Cyrus II (reigned from 558 BC). In China, San Tsu (500 BC) in his work “The Art of War” recognized the need for a hierarchical organization, the presence of inter-organizational connections and personnel planning. In the book of the Chinese politician and military leader Sun Tzu (400 BC) “The Art of War,” describing the maxims (principles, rules), the author outlined the types of strategies that dictated their choice depending on the ratio of external conditions (enemy strength and type of terrain) and their own potential and capabilities.
The medieval period (I-XI centuries) was characterized by developing philosophy based on religious postulates. Problems of management were considered within the framework of the Bible, in particular, as the relationship between personal free will and divine necessity. In accordance with religious teachings, the Creator was called the wisest strategist. The Renaissance (Rebirth) era was characterized by a period of flourishing of science, art, and culture. Western European philosophical thought developed, resulting in achievements in the field of management. Niccolò Machiavelli (1469-1527), in his works “The Prince” and “Discourses,” explored the reasons for the rise and fall of the state, the motives of human actions, and the influence of the individual on the course of certain social processes and phenomena. T. More (1478-1535) developed the idea of Plato's state. He believed that a person is the highest value and that the state should be organized on the principles of democracy, election of authorities, and the absence of religious persecution. Tommaso Campanella (1568-1639) - creator of the communist utopia "City of the Sun". He designed a society without private property, and therefore no contradictions between the interests of the individual and the state. The functions of social management and organization of the production and economic sphere, in his opinion, should be carried out by scientist-priests, and the strategic potential of the state is the new young generation, raised and trained according to a specially developed system.
The end of the 17th - beginning of the 18th century, the period of bourgeois revolutions and the emergence of a new worldview, which was subjected to philosophical comprehension. Management thought was developed within the framework of scientific economics and developed within it until the end of the 19th century. The industrialization of production (1776-1856) marked the beginning of a scientifically based management system. Capitalist production arose and developed, and an objective need arose to organize scientific management to solve production and economic problems. As production and economics developed in society, management became more complex, which remained universal until the era of imperialism. Scientific ideas about management were laid down by A. Smith (1723-1790), R. Owen (1771-1858). The formation of management theory was greatly influenced by the works of K. Marx (1818-1883) and F. Engels (1820-1895).
From a scientific and educational point of view, the period 1866-1960 remains interesting. A period of comprehension and systematization of accumulated experience and knowledge, during which new directions, schools, various trends and theories of management emerged. In the 19th century In the USA and Western Europe, favorable conditions have developed for the formation of a scientific approach to management. The concentration of production determined the development of new technology. Factories grew, the number of workers increased. Due to prevailing factors and the inability of individual owners to independently manage a large number of workers, the best began to be selected from among them and taught them the principles and rules of management. This is how a corps of administrators (managers) was formed, and the school created in this way began to be called classical. F. Taylor, A. Fayol, M. Weber are rightfully considered its creators. Scientists and practitioners belonging to this school viewed the managed sphere as an impersonal organization consisting of individuals. The theoretical basis for applied research was M. Weber’s concept of an ideal bureaucratic organization, according to which a purely bureaucratic type of administrative organization is superior to any other in its accuracy, stability, rigor of discipline, reliability and is capable of achieving the highest efficiency. If we analyze his theory in comparison with A. Fayol’s 14 principles, we can come to the conclusion that they are quite consistent with the characteristics of the ideal type of bureaucratic organization. Thus, the pre-cybernetic period was characterized by empirical research and applied development of individual management problems, and the dissemination of research results to a wider range of management phenomena. The main scientific achievement of this stage is the creation of a classical management theory at the managerial and technical level.
New directions were born in the criticism of the postulates of the classical school of management. One of them was the creator of the theory of human relations, Elton Mayo (1880-1949), as well as Abraham Maslow (1908-1970), who developed the doctrine of human needs in the development of the theory of human relations. Frederick Herzberg (1923-2000), the author of the theory of motivation in production activities, also belonged to the school of human relations. The emergence of a “non-classical” approach to organization meant the end of strictly determined ideas about the nature of management and the recognition of the “human factor” of the organization as a decisive condition in achieving organizational effectiveness. The “economic man” of the “classical school” had to give way to a “social” man, for whom the authority of the informal leader and the sanctions of the social group are no less important than the requirements of formal rules and instructions. The positive significance of the human relations doctrine is that it has identified informal organization as a necessary subject of study.
The cybernetic stage (60s of the XX century) is characterized by consideration of the organization from the perspective of “social” and cybernetic approaches, which are closely intertwined. At this stage, the development of theoretical thought in management science at the managerial level moved along the path of merging the scientific ideas of the classical school and the school of human relations, i.e. taking into account the characteristics of formal and informal organizations. This was largely facilitated by the emergence of outstanding scientific concepts - general systems theory (L. von Bertalanffy, A. Rapoport) and cybernetic control theory (N. Wiener, A. Rosenblum).
In sociology, the systemic concept of structural-functional analysis was developed by T. Parsons, R. Merton and their successors G. Simon, J. March, A. Etzioni, and in domestic science by I.V. Blauberg, V.N. Sadovsky, E.G. Yudin, as well as sociologists V.A. Yadov, A.G. Zdravomyslov, N.I. Lapin, T.P. Zaslavskaya, A.I. Prigozhin, N.F. Naumova, V.G. Afanasyev, D.M. Gvishiani, management theorists - S.E. Kamenitser, Yu.A. Lavrikov, I.I. Sigov, B.R. Ryashchenko. In accordance with these theories, any collection of interacting people was considered as an organizational system. From these positions, it represented a complex consisting of a number of subsystems - formal and informal organizations and corresponding structures, statuses and roles, internal and external conditions.
A significant contribution to the development of cybernetics as a general science of management was made by U.R. Ashby, L. Grinevsky, S. Beer. N. Wiener always referred to Russian scientists academicians A.N. Krylova, N.N. Bogomolova, A.N. Kolmogorov, and in the system part of cybernetics, among the pioneers was the author of the universal organizational science of “tectology” A.A. Bogdanov. However, the desire to present cybernetics as a general theory of control in social systems was not crowned with success. The starting point for the creation of a generalized management theory was the methodological limitations of the systems approach itself. Therefore, the way out of the impasse is to revise the methodological position on the basis of the emerging modern (post-cybernetic) paradigm. Within its framework, a person not only complements a real organization, but also creates, designs it, influencing the relationships that develop in it.
By the middle of the 20th century. The business environment in the socio-economic sphere of the West has proven to be insufficiently stable. The producer market appeared as a theater of military operations with its constant components - situationality and uncertainty, which directly influenced the results of activity. Victory depended not so much on the available arsenal of forces and means, but on their correct placement, skillful maneuvering, based on the principles of strategic planning of real actions, allowing to take into account random changes (fluctuations), unpredictable consequences, non-linear development of situations and the absence of a single universal logic. Increased competition and the struggle for consumers have required a revision of conceptual provisions in the field of strategic management and enterprise planning. Therefore, it is logical that management, in conditions of high dynamics of the external environment, began to search for adequate forms and methods of organizing the activities of enterprises, turning to the idea of strategic management. At that time, the basis for the further advancement of management thought remained the scientific developments of the classics of management theory and the ideas contained in the works of military and political strategists. Strategic management was a natural result of the development of management theory and practice in general.
In 1973, the first international conference on strategic management was held in the USA (Nashville). This date is considered the official birth of strategic management as an independent direction. By this time, books on this section of management had been published, and the strategic method itself began to be introduced into the practice of the world economic system. At the conference, the concept of strategic management prepared by I. Ansoff was publicly presented for the first time. The legislators in this area of knowledge were F. Abrams, I. Ansoff, P. Drucker, G. Mintzberg, A. Chandler, K. Andrews. All problems considered in the actively developing branch of science can, with a certain degree of convention, be divided into three areas.
First involved the study and development of proposals for practice related to the strategy of behavior and development of the organization in the external environment. Second- was associated with the problems of developing and implementing strategy within the organization. Problems third the directions were correlated with the methodology for developing and implementing a strategy in relation to the organization’s personnel. These problems outlined the subject of the new scientific discipline. Today, the science of strategic management is represented by many schools, a variety of different concepts and ideas. The most complete analysis and classification of the entire variety of scientific schools is given in the book by G. Mintzberg, B. Ahlstrand, J. Lampel School of Strategies.
First group They called prescriptive schools, whose developers studied the problems of strategy formation. These include schools of design, strategic planning and positioning. The design school explored the problems of strategy construction as a process of conscious modeling (A. Chandler), the planning school considered strategy formation as a formalized process (I. Ansoff), the positioning school reduced strategy construction to an analytical process (M. Porter).
Second group researchers, according to the classification of the authors, were united into schools of strategy formulation. The entrepreneurial school analyzed strategies from the perspective of the foresight process (K. Marx, J. Schumpeter). The cognitive school saw strategy as a mental process associated with information processing, penetrating the patterns of mental activity of the strategist (G. Simon). Adherents of the learning school believed that it was first necessary to develop a strategy, “prepare” it, and then act in accordance with it (J. Quinn). The school of power took shape as a direction in strategy formation from the perspective of the negotiation process (G. Allison). The cultural school explored strategy as a collective process (T. Peters, R. Waterman). Theorists of the school of external environment studied the stages of strategy formation as a reactive process (M. Hannan, J. Freeman).
Summarizing the main provisions of the schools listed above, it should be noted that most of them focused on the methodology for forming strategies, trying to answer the question of how strategies should ideally be formed, as well as on describing the actual processes of developing strategies. Most often, it was about the set of principles of the organization’s activities, the behavior of leaders, teams, and individuals when developing strategies.
Strategy in the scientific developments of schools was presented as a certain position, perspective, and understanding of the organization’s line of behavior when interacting with other management subjects. It, in their opinion, could be considered as a principle or method of management, as a really existing model of leader behavior. Strategy can be understood as one or another technique implemented in competition. Strategy in their works was also analyzed as an action plan designed for a long period of time, taking into account the future. Often this phenomenon was understood by school representatives as the art of maneuvering, resolving conflicts and reaching compromises. As a function, strategy determined the need to set the direction of the organization and provided the philosophy and logic of their activities in achieving efficiency. In some works, strategy was characterized as a subject of relations with external factors and components of the internal environment.
Analysis of theoretical positions, conclusions and research results of “schools of strategies” shows that modern strategic management theory extremely diverse, has many directions, mutually exclusive views and concepts. Such diversity and inconsistency, contained in the endless stream of monographs and textbooks, articles and various other information, does not allow us to build a logical chain of concepts in this “hodgepodge of different opinions.” Based on this circumstance, back in the 60s of the XX century. emphasized G. Kunz in the article “The Jungle of Management Theory”, published in the Journal of the American Academy of Management.
Due to such difficulties, E. Rogers and R. Agarwala-Rogers, enlarging the problems of strategic management, identified three schools of management development: (1) the school of scientific management; (2) the school of “human relations”; (3) school of social systems.
The authors of the textbook for bachelors “Fundamentals of Management” identified five schools of management. These are: (1) the school of scientific management; (2) classical or administrative school; (3) school of human relations; (4) School of Behavioral Sciences; (5) school of management science. At the same time, they substantiate three approaches to strategic management: process, system, situational.
Thus, all attempts to break through the “jungle” of numerous schools and approaches remain futile, since they suffer from arbitrariness, which, by the way, is not denied by the authors themselves.
At the present stage of social development, domestic management thought is faced with theoretical and methodological problems and is persistently looking for a way out of the one-sided interpretation of management that has developed in American literature. The one-sidedness of the approach lies in considering management only from the position of an instrumental function (managerial-technical level). However, it seems that the American interpretation of management as management cannot be complete and final. Because in the USA, pragmatism is not only a national character trait, but also a socially approved standard of behavior, a worldview principle, an element of national culture, reflected in the scientific works of Peirce, Dewey, Mead and others. See: Modern management: Encyclopedic reference book of the American Management Association. T. 1. M., 1997. S. 1 - 10.
Plan
Introduction
Schools of Strategic Management
School of culture and its features
Toyota's experience in applying the ideas of the cultural school
Conclusion
List of used literature
Introduction
Strategic management is a recent concept that has emerged in the practice of general management. One of the main problems that strategic management solves is the problems of growth and survival of enterprises and organizations of any size and form of ownership, and today, when small businesses play such a significant role, their need for strategic management cannot be neglected. In strategic management, the main task is characterized by two main principles: the formation of an enterprise development strategy and its application in real market conditions. As in any scientific discipline, there are various areas in strategic management that, although they share the general basic principles of the discipline given above, nevertheless place research emphasis differently, highlighting certain methodological priorities. Such directions are called scientific schools, in the case of strategic management theory - schools of strategic management.
Schools of Strategic Management
Before focusing on any one school of strategic management, it is worth considering all existing ones.
Schools of strategic management, according to the classification proposed in the work of G. Mintzberg, with some degree of convention, can be combined into two groups:
attributing
describing
The main tasks of prescriptive schools are to substantiate methods for developing strategies that ensure an increase in the competitive status of the organization. Within the framework of these schools, strategies act as something logically explicable, dependent on the will of the leader and, if applied correctly, unambiguously guaranteeing the success of the organization.
Describing schools set as their main task the most reliable description of the process of developing and implementing strategy as it is. Any recommendatory conclusions can be made only on the basis of an analysis of actually existing models.
Let's look at the main features of each school.
PRESCRIBING SCHOOLS:
1. School of Design (Andrews, Chandler). In general terms, the design school proposes a model of strategy as an attempt to achieve a match or correspondence between internal and external opportunities, i.e., according to this school, economic strategy should be understood as a match between the characteristics of the company and those opportunities that determine its position in the external environment. A typical example of a tool used within a design school is the SWOT analysis.
2. School of Planning (Ansoff, Lorange). This school views strategy as a conscious planning process, formally reflected in appropriate diagrams, tables and supported by appropriate methods, which is developed by specially trained people. The school's approach is based on the methodology of using the “balanced scorecard” (BSC)
3. School of positioning (Porter). The basic position of this school is that strategies are generic, specifically general, market positions that are both economic and competitive. The main task of management is to correctly position the position of the company or business, which automatically leads to the emergence of a “ready-to-use strategy.” One of the main models of this school is Porter’s competition model, a typical tool is the BCG matrix (Boston Advisory Group).
DESCRIBING SCHOOLS:
1. School of Entrepreneurship (Schumpeter) - considers the process of developing and implementing strategy as a vision or vision that is forward-looking (future); back (past); into the internal environment of the organization; into the external environment, etc. Moreover, this vision is based on intuition, entrepreneurial ingenuity and is expressed in goals that are intuitive to the manager.
2. The cognitive school (Simon) considers the process of developing and implementing a strategy as a thinking process that takes place in the mind of the strategist, which means that strategies originate as perspectives and their basis is information that is appropriately encoded and circulates between team members according to certain laws
3. School of learning (Lindblom) - considers the strategic process as an adaptation to unpredictable changing environmental conditions. Ideas that contribute to this can arise from any individual, regardless of his place in the organizational hierarchy. Consequently, the manager’s task is to create an organizational culture that promotes the selection and promotion of ideas that contribute to the adaptation of the organization.
4. School of power (Kayert, March) - strategy is seen as the result of the interaction of people pursuing their own selfish interests. For this purpose, formal and informal alliances are created, groups seeking to gain control over as many resources as possible. The strategy in this case is the resultant between the interests and actions of various groups.
5. The school of external environment (Meskon) takes the ideas of the positioning school to logical absurdity, considering strategy as the result of the influence of external forces on the organization. According to this theory, organizations exist in certain limited, relatively stable conditions - economic niches. When a niche ceases to exist, organizations die or are transformed beyond recognition.
6. School of configuration (Miller) - largely generalizes the developments of previous schools and considers organizations as objects in whose existence periods of stability are replaced by periods of major changes. This allows us to formulate a certain eco-cycle of the organization, at different stages of which different strategies are effective.
School of culture and its features
In this report we will take a closer look at the school of culture (Pettigrew).
Each political system, as a rule, is characterized by a certain ideology (capitalism, socialism, etc.). Each society and ethnic group is characterized by a unique culture (Japanese, Californian, etc.). Thus, both industries and individual companies can have their own culture. Culture within an industry is the unique way in which organizations produce their products, what distinguishes one organization from another, one industry from another. It becomes, so to speak, the “opinion of the organization,” general beliefs that are reflected in traditions and habits, as well as, more tangibly, in the organization’s lore, its symbols, even its buildings and products. In a sense, culture represents the life force of an organization, the soul of its physical body. The pervasiveness and uniqueness of a given organization's culture can also be found in relation to its unique management strategy.
The main premises of the school of culture:
Strategy formation is a process of social interaction based on shared beliefs and understanding among organizational members.
An individual's beliefs are the result of processes of familiarization with a particular culture or socialization, usually not explicitly expressed and non-verbal, although sometimes reinforced by more formal education.
Consequently, organizational members are only able to partially characterize the beliefs on which their culture is based, while its sources and explanations may remain obscure to them.
As a consequence, strategy takes the form primarily of a perspective and only secondarily of a position, rooted in collective aspirations (not necessarily expressed) and reflected in models that protect the deep resources and capabilities of the organization that form the basis of its competitive advantage. Thus, the main characteristic of strategy is predestination (even if it is not fully conscious).
Culture and especially ideology promote, rather than strategic change, the preservation of the current strategy; at best, they allow for adjustments within the overall strategic perspective of the organization.
Of course, the ability of corporate cultures to be a source of resistance to strategic change has long been known. Consequently, culture influences the choice of economic strategy of an enterprise. This demonstrates the connections between these concepts:
1. Decision-making style. Culture acts as an eternal filter, consistently filtering out premises for decision-making. In other words, organizations with different cultures, but operating in the same environment, perceive the external environment in their own way and see only what they want and are ready to see: the organization develops a “dominant logic” that acts as an information filter, which emphasizes in the process of creating strategy some data and ignores others.
2. Resistance to strategic change. General commitment to certain views promotes consistency in organizational behavior and, therefore, prevents changes in strategy. An organization's dominant deep beliefs and implicit assumptions (culture) are the most powerful internal barriers to fundamental change.
3. Overcoming resistance to strategic change. A radical change in strategy must be driven by fundamental changes in culture associated with the gap between the organization's belief system and the characteristics of the environment.
4. Dominant values. The central concepts of enterprise culture should be 7 core values: strategy, structure, system, style, employees and special knowledge/experience. According to scientists, the success of an organization is determined by the harmonious combination of all these values.
5. Cultural contradictions. The uniqueness of the culture of any and every organization makes it problematic to implement merger and acquisition strategies (“Merger Wave of the 1980s”).
Now let us turn to the material side of culture: its economic problems. The idea that production systems, rather than products, compete in the market is not new. Economists have long understood that the efficiency of the production system plays a major role in competition. But they never realized the importance of competitive advantage—that uniqueness becomes the defining aspect of strategic superiority. A unique product occurs when “man-made objects reflect, consciously and unconsciously, directly or indirectly, the beliefs of the people who order, make, buy or use those objects and, more generally, the beliefs of the communities to which those people belong.” Consequently, deep cultural differences among competitors may give one firm a competitive advantage based on the culture of that firm. For example: early automobile production. The car was invented by Europeans as a luxury item available only to the rich. They set up almost serial production of the car, while depriving a large number of people of the opportunity to buy it. The Americans managed to standardize the car and make it available for mass production, i.e. made it accessible not only to rich people. Many European firms tried to get around the Americans by adopting their methods, but even after copying one or another piece of the mosaic, they were unable to put them together into a “harmonious picture.” Thus, we can see that the concept of competitive advantage is to some extent based on essentially cultural concepts.
Based on the foregoing, it can be argued that a unique culture is an inimitable resource of an organization. There are two reasons why this resource is unique and why it is the most effective barrier to imitators. First, culture produces unique results. Second, culture is characterized by causal vagueness, which makes it difficult to understand, let alone reproduce—even by its representatives themselves. So, for example, it is far from a fact that a “child” who has left the bosom of organizational culture will be able to accurately copy some of its resources for a competitor, which makes culture a kind of guarantee of strategic superiority.
The school of culture offers a common, agreed-upon ideology. In contrast to the individualism of the schools of design, cognition, and entrepreneurship, it introduces an important collective dimension of social process, considering both individual and organizational styles and challenging the popular tendency to fragment everything into separate parts - "agents" as part of "portfolios" - in favor of building a common perspective.
It should be noted that the cultural school has a number of disadvantages:
1.Conceptual vagueness, i.e. the concepts and categories of a given school change with amazing speed, and they are not always significantly different from each other.
2. Denial of the need for change. Its representatives advocate constancy in management and sustainable movement along the planned course. Culture is strong, durable, formalized; resources are established and deep. By emphasizing the importance of tradition and unanimity, and characterizing change as very complex, the cultural school in a certain sense contributes to stagnation.
3. Strategic advantage is equated with organizational uniqueness. It's great to be different, but when being different becomes an end in itself, being different leads to overconfidence.
4. The problem of imbalance. The organization needs not just an adjustment, a calm that comes after an obsession with external competition and a shift in emphasis to internal resources, but a sense of balance between all the necessary factors.
Toyota's experience in applying the ideas of the cultural school
An example of the effective use of the school of culture is the Toyota company. Since the founding of Toyota, their guiding principle has been to benefit society by producing high quality products and services. Business practices based on this principle have shaped the values, beliefs, and practices that have enabled the firm to achieve competitive advantage. The combination of these working methods and value orientations of management represents the Toyota approach.
The conditions for Toyota's success in achieving its goals are management's commitment to certain principles that make up the Toyota approach, appropriate training and production culture. The principles can be grouped into four sections:
Section I: Long-Term Philosophy
Principle 1: Make management decisions with a long-term perspective, even if this is detrimental to short-term financial goals.
Section II. The right process produces the right results
Principle 2: A continuous flow process facilitates problem identification (for example, by creating a flow of products or information and creating connections between processes and people so that any problem is identified immediately).
Principle 3: Use a pull system to avoid overproduction. (a just-in-time system is used, inventory and work in progress are minimized).
Principle 4. Distribute the amount of work evenly: work like a tortoise, not like a hare. (eliminating overload of people and equipment and smoothing out uneven production schedules to avoid rush jobs and downtime).
Principle 5: Make stopping production to solve problems part of the production culture when quality requires it.
Principle 6. Standard tasks are the basis for continuous improvement and delegation of authority to employees (increases coherence of work, makes product output more uniform, accumulation of experience by employees).
Principle 7. Use visual inspection so that no problem goes unnoticed.
Principle 8: Use only reliable, proven technology (reject or change technology that goes against the culture and may undermine stability, reliability, or predictability).
Section III. Add value to the organization by developing your employees and partners
Principle 9. Develop leaders who thoroughly know their business, profess the company's philosophy and can teach it to others.
Principle 10: Develop exceptional people and teams that embrace the company philosophy (create a strong, sustainable culture with lasting values and beliefs that everyone shares and accepts).
Principle 11: Respect your partners and suppliers, challenge them and help them improve.
Section IV. Constantly solving fundamental problems stimulates lifelong learning
Principle 12. To understand the situation, you need to see everything with your own eyes (your thoughts and reasoning should be based on data that you have checked yourself).
Principle 13. Make a decision slowly, based on consensus, after weighing all possible options; when implementing it, do not hesitate.
Principle 14: Become a learning organization through relentless self-reflection and continuous improvement (protecting the knowledge base of your company's organization, preventing turnover, ensuring the gradual advancement of employees and preserving the accumulated experience).
A striking example of the effectiveness of Toyota principles is the history of the joint venture between Toyota and GM - the NUMMI company. This was Toyota's first plant abroad, and the company did not want to work without partners. Toyota agreed to teach GM the principles of its production system. Toyota proposed to organize production according to the principles of the Toyota approach at the old GM plant. At first, local workers were hostile to the Japanese ideas. They believed that the company's ideology was to force them to work their butts off, and that Japanese managers did not expect anything from them other than increasing production. In addition, the plant where the production was located was famous for its militant union, which could easily stall the work of the joint venture between Toyota and GM. GM management offered to “put the union in its place.” However, contrary to expectations, Toyota management did not intend to suppress the activities of the union. On the contrary, they decided to instill in the leaders of the trade union movement the cultural values of Toyota, changing their opinion of the company from negative to favorable. GM was surprised by this. Some of those involved in union relations advised against this. But the Toyota team decided to take a risk. They understood that former GM workers needed leaders, and the shop committee was made up of natural leaders. Managers had to change their minds and their attitude. They sent a shop committee to Japan for three weeks. Union representatives saw with their own eyes what the Toyota Production System is. They returned converted and convinced skeptical workers that the Toyota production system was not so bad. This is how the trust of the workers was won. Over time, the old plant, which reopened in 1984, outperformed all GM plants in North America in productivity, quality, floor space and inventory turnover. In 1987 and 1988, GM had problems selling the Nova model and orders to the plant were cut. The company had to cut production and use only about 75% of capacity, but no one was laid off. Toyota created groups that focused on skill development and found other rewarding jobs for people to do. Of all the things they did at NUMMI, this was the most important step to build trust. As GM became more familiar with Toyota's principles, they began to treat NUMMI more like a training laboratory. Hundreds of General Motors executives, managers and engineers came here in order to get acquainted with them and return to GM as new people. Thus, GM's "global production system" is an exact replica of Toyota's production system.
Unfortunately, it took GM about 15 years to fully learn the lessons of NUMMI. And when GM finally took them seriously, it took another five years to figure out what it meant to improve efficiency and quality companywide.
The question may arise: “Why would Toyota teach the coveted lean manufacturing system to its main competitor, GM?” Toyota had enough reasons to create this joint venture. And one of them was that Toyota understood the difficulties that GM faced in the production process. By helping GM take production to the next level, Toyota was helping communities and people and helping create good-paying jobs for Americans. Top Toyota executives say the United States helped Japan rebuild its industry after World War II and they want to return the favor. These are not empty words or naive idealism. They really mean it.
Is Toyota Conservative? Yes. Is it easy for her to make changes? Not always. Is her approach innovative? Undoubtedly. In this sense, Toyota itself operates on the principle of “ and wherein", which Suzuki spoke about: take your time, rely on the experience of the past, comprehensively weigh the consequences of your decisions and wherein act with energy and assertiveness to defeat competitors, offer the market exceptional products of the highest quality and break stereotypes. This is Toyota's approach. This is her culture.
Conclusion
From the point of view of the cultural school, strategy is the result of social interaction. It is based on shared principles among members of the organization, beliefs and "understandings". At the same time, in assessing development options and methods for achieving goals, it is not so much formal efficiency that is important as the often unconscious ideas of members and the team about the correct actions. The role of management in this case is predominantly passive; it does not consist in developing a strategy as such, but in creating a certain microclimate in the team, which, as a rule, contributes to the conservation of existing strategies. It is worth noting that the disadvantage of the cultural school, like all other schools of strategic management of the describing group, is the impossibility or difficulty of using the results and recommendations obtained as a result of research in management practice directly, as well as paying too much attention to intuition and chance.
All schools of strategic management have gone through their own original paths of development. Therefore, each of them offers its own unique approach to developing a company development strategy. To achieve the best result in this matter, it is necessary to use as many methods offered by schools as possible, without understating or exaggerating the importance of any one of them.
List of used literature
1. Jeffrey K. Liker “The Toyota Way: 14 Management Principles for the World’s Leading Company”
2. J. Barney (Barney, 1986) "Organizational culture: can it be a source of sustainable competitive advantage?"
3. Mintzberg G., Alstrand B “Schools of Strategy” St. Petersburg, 2001. 336 p.
Contents Introduction………………………………………………………………………………………. 3 Chapter I Concepts of strategic management in modern conditions Concept of strategic management…………………………………………………….. 3 Evolution of theories of strategic management…………………………………………………… ………………... 4 Advantages and limitations of strategic management in small and medium-sized enterprises………………………………………………………………………………………………… ……...6 The process of strategic management in small and medium-sized enterprises…………………………………………………………………………………………………………..8 Dynamic model of strategic management for small and medium-sized enterprises…………………………………………………………………………………...9 Chapter II Strategic management of small and medium-sized enterprises 2.1 The process of developing strategy in small and medium-sized enterprises…….……………….12 2.2 Strategic planning and business plan development……………………………...15 2.3 Implementation of strategy in small and medium-sized enterprises……………………………….20 2.4 Strategic control in small enterprises………………………………………………………30 Chapter III Strategic problems of small enterprises 3.1 Ignoring strategic management managers……………………….33 3.2 Strategic change management………………………………………………………….34 3.3 Approaches to strategic change management…………………… …………….36 3.4 SMEs in the process of globalization……………………………………………………………38 Chapter IV Introduction. LLC "UralItnvestTrade"………………………………………………………..40 1. Organization strategy of LLC "UralInvestTrade"...................................44 2. Strategic management of small and medium-sized enterprises…………………………….49 References……………………………………………………………….63
Introduction
Strategic management is a concept that has recently appeared in management practice. Strategic management primarily addresses the problems of growth and survival of large organizations, but at the present time, when small businesses play such a significant role, their needs for strategic management can no longer be ignored. Small business plays a very important role in ensuring economic prosperity, creating jobs, and developing technological innovation. Therefore, it is difficult to overestimate the importance of strategic management for the small business sector. Only recently have they begun to pay due attention to the study and analysis of this area of strategic management. Nowadays, many experts devote their research to the problems of forming and implementing strategies in small enterprises. Despite strong government support, many small businesses fail every year. And one of the primary reasons underlying the failure of SMEs is the widespread lack of strategic management skills and competence among SME managers. This, in turn, causes the inability to develop adequate control and business management systems. CHAPTER I Concepts of strategic management in modern conditions 1.1 Concepts of strategic management “Management of an organization” Rumyantseva Z.P., Salomatin N.A., Akberdin R.Z. et al., M.: INFRA-M, 1995, 103 pp. "Strategic Management" F. Analoui, A. Karami, M.: "Unity", 2005, 7 pp. So what is strategic management? What are its main components and is it different from other types of management? To answer these questions, various definitions of strategic management should be considered. In strategic management, the dominant paradigm is characterized by two main principles: strategy formation and its application. The main contribution to the development of these approaches was made by such outstanding scientists as Ansoff, Andrews, Porter. In general, the essence of strategic management is how strategies are developed and implemented. On the other hand, strategy formation is determined by how a company chooses to define its strategy and how it implements it through strategic management. Ultimately, it is the approach to strategy formation that determines the potential management style. On the other hand, management style and the degree of effectiveness of senior management can, in turn, influence the process of strategy formation in organizations. As a result, a specific approach to strategic management is adopted. Only after a company has determined how it intends to shape its strategy can the strategic management path be effectively pursued. Strategy development can be either formal or rational, emergent or sequentially developing along a logical trajectory. Strategic management is called upon to manage the strategy development process and how and where the external environment of the organization's activities is analyzed - this precedes the choice and implementation of strategy. Before considering the strategic management process, it is useful to give it a definition. What is strategic management? Thompson states that the area that strategic management addresses is "the management processes and decisions that determine the long-term structure and nature of the organization's activities." This definition includes five key concepts: management process, management decisions, time scale, structure of the organization, its business. Ansoff and McDonnel distinguish between goal setting (concerning ends) and strategy (concerning means). Within the subject of strategic management, they define the same process as a systematic approach to managing strategic change, including positioning the firm through strategy and planning for its capabilities, real-time strategic response through issue management, and systematically monitoring employee resistance as strategies are implemented. This definition rather reflects an adaptive approach to strategic management. According to Johnson and Scholes, it is not enough to say that strategic management is a strategic decision-making process, since strategic management is fundamentally different in nature from other aspects of management. Of course, these tasks are vital for the effective implementation of strategy, but they cannot be identified with strategic management. Johnson and Scholes believe that strategic management is not limited to making decisions on the major problems facing the organization, but also ensures the implementation of the developed strategy. They identify three main elements of strategic management: strategic analysis, strategic selection and strategy implementation. In contrast to this view, Stacey defines strategic management as the process of setting the fundamental goals or objectives of an organization, directed by top management. Within the framework of strategic management, senior management develops a series of decisions that allow achieving goals or objectives in the long term, while at the same time providing responses to problems that arise in the short term. Goldsmith argues that a new emerging subfield (strategic management) is beginning to view the implementation and evaluation of strategies as critical components of organizational success rather than as an analysis of the firm, its operating environment, and strategy formation. These are the stages of action and their evaluation within the strategic management process. He further concedes that “strategic management as a whole is a broad field of activity that involves planning strategy, implementing it, and adjusting or applying strategy to achieve desired results.” It is believed that the essence of strategic management lies in the setting of the fundamental goals of the organization, the selection of tasks that most contribute to the achievement of these goals, and the constant implementation of both of these functions. David believes that strategic management can be defined as the art and science of developing, implementing and evaluating cross-functional solutions that enable an organization to achieve its goals. This definition implies that strategic management focuses attention on the integration of management capabilities and techniques such as marketing, financial accounting, human resource management, production management and R&D in order to achieve organizational success. Thus, strategic management is a set of management decisions and actions that determine the long-term functioning of a corporation. Wheelen and Hunger argue that strategic management includes "scanning" the operating environment (both internal and external), strategy formation (strategic or long-term planning), strategy implementation, evaluation and control. The study of strategic management emphasizes monitoring and evaluating external opportunities and threats in light of the corporation's strengths and weaknesses. 1.2 Evolution of theories of strategic management “Strategic management” F. Analoui, A. Karami, M.: “Unity”, 2005, 57 pp. “Organization management” Rumyantseva Z.P., Salomatin N.A., Akberdin R.Z. et al., M.: INFRA-M, 1995, 19 pp. In order to understand strategic management, it is useful to briefly familiarize yourself with its history and consider key ideas. Strategic management developed from the teaching and study of business administration (business management). The roots of teaching strategic management can be traced to business policy, or general management, which by the 1960s had become a required course in business schools capping off business studies. Business policy teachers were faced with the need to systematically understand the strategies used by companies, which ultimately led to the independent study of strategic management. From a research and analytical perspective, four periods of evolution of strategic management theories can be distinguished (Fig. 1). From a theoretical perspective, recent theories of strategic management (such as the resource-based view of the firm) have shifted the focus toward the internal aspects of the firm, whose characteristics constituted a major area of research in the early stages of the development of strategic management. The very first strategy researchers, Andrews and Ansoff, paid more attention to the content of the concept of “best business practices” that ensure the success of the company. Adherents of this school of thought were mainly interested in understanding the internal mechanism of a firm's development, the so-called “black box,” and argued that the continued success of a firm is a function of its internal and unique competitive resources. External Economics of organization industrial factors Focus on Organizational economics of organizational factors Internal Early period Resource approach factors Earlier hour Time Last time Fig. 1. Evolution of theories of strategic management During the next period of development of strategic management, both theoretically and methodologically moved away from the features of the early stage and switched attention to the economics of the industry organization. Beginning in the 1970s, research focused on the economics of industry organization, the theoretical foundations of which were laid by the works of Mason (1939) and Bain (1968). Hoskisson (1999) argues that this very transition to a new object of study from factors internal to factors external to the firm, namely the structure of the industry and the maintenance of competitive positions within it. The economics of industry organization examines the structural aspects of an industry, while work on strategic groups focuses primarily on the grouping of firms within an industry. In modern strategic management, strategic groups and competitive dynamics are very popular areas of study. At the third stage of the evolutionary development of theories of strategic management, a return to the company as an object of study is clearly visible. The renewed interest in the internal characteristics of the firm is evident in the emphasis placed on competitive dynamics and the firm's boundary relations with the environment. Strategic management has moved significantly closer to the firm and direct competitive rivalry between competitive companies within a competitive external environment. Finally, in recent times, the popularity of the resource-based approach has brought renewed attention to the internal domain of the firm. From a theoretical perspective, the resource-based approach centers on fundamental questions about the reasons for differences between companies and how they achieve and maintain competitive advantage. 1.3 Advantages and limitations of strategic management in small and medium-sized enterprises "Strategic management" F. Analoui, A. Karami, M.: "Unity", 2005, 14 pp. According to experts (Goldsmith? 1995; Bowman and Kakabadse, 1997) , the doctrine of strategic management contains the following main elements. · Look into the future. You should be aware of which markets you are currently operating in and which ones you want to enter in the future. · Pay unflagging attention to external factors - technological, economic, political and social. · A balance should be established and maintained between these external factors and the internal performance of the organization. · It should always be remembered that strategic management is an interactive process. This is not something that can be done at the very beginning of work and then abandoned; strategic management involves feedback and constant accumulation of knowledge. These guidelines may seem like common sense, but that doesn't mean they're easy to follow. Strategy management is not a single event, but a process, and the successful implementation of this task requires actions with additional accompanying activities and subsequent refinement. Therefore, strategic management is concerned with those decisions that are related to the selection of a suitable market or product. It helps the firm's strategists better understand the current situation and develop the firm's goals and objectives. The question first becomes what the firm's current position is. The second question is what is her desired position. For example, in what market and within what characteristics of the external environment does the company operate? Then it is necessary to determine what its position will be after a certain period of time, for example, in a year, three years or five years. Finally, a set of tools should be prepared to carry out the intended tasks and achieve the goals of the organization. To be effective, especially in SMEs, the strategic management process does not always have to adhere to a strictly formal order. Research shows that firms that frequently use strategic management tend to be more successful than those that do not. Strategic management allows an organization to take preventative actions, not limited to just reactive steps, and increases its preparedness to confidently face both controllable and uncontrollable situations. Strategic management provides a clear strategic vision and gives meaning to the firm's mission. Having a clear vision creates synergy and brings all the energy of the organization into one flow. This helps to effectively communicate the organization's plans to all employees, thereby ensuring that they are prepared to solve organizational problems. Strategic management allows you to assess the strengths and weaknesses of an organization and focus on strategically important areas. By assessing the effectiveness of strategy implementation, the organization receives the necessary information about how well the strategy corresponds to external environmental conditions; this allows us to understand the nature of changes occurring in the external business environment and introduce ethical aspects and corporate social responsibility into the strategic process. As already noted, despite the many benefits of using strategic management in SMEs, there are still managers who, for one reason or another, avoid its use. These reasons are as follows. Some SME managers may simply not understand the importance of strategic management to their business. They may lack the necessary knowledge in this area and information about the strategic process and its benefits for them and their companies. Some of them are simply not familiar with strategic management techniques. They may believe that it is only useful for large organizations, or they may not believe in long-term planning. Some SME managers may not have the management skills needed to initiate and maintain the strategic process while running a business. They may recognize the benefits of long-term planning, but not know how to start the process. Finally, and quite importantly, many SME managers can be extremely busy with day-to-day activities. These routine duties can take up the hour needed for strategic long-term planning. A manager may be reluctant to spend time and money on strategic planning because he understands that it is still unknown what future developments will be. 1.4 The process of strategic management in small and medium-sized enterprises "Strategic management" F. Analoui, A. Karami, M.: "Unity", 2005, 57 pages. Does the process of strategic management in small and medium-sized enterprises differ from a similar process in large companies? What, in essence, is the process of forming and implementing strategy within a small business? According to Wheelen and Hunger, this same process does not fit into the framework of small business and new entrepreneurial ventures. Companies of this type must have a new mission, new objectives, new strategies and new policies, which must be the result of balancing external opportunities and threats with internal advantages and disadvantages. Therefore, these authors proposed a modified version of the strategic management model, which is more consistent with new entrepreneurial businesses. In Fig. 2 presents a strategic management model suitable for small businesses; it consists of the following interconnected steps (stages). · Development of the main business idea - a product and/or services that have a target consumer and/or target markets. Such a thought may arise from the experience of an entrepreneur or be the result of a creative insight. · Thorough study and assessment of the external environment to identify factors in the social environment and the activity environment; this allows you to identify opportunities and threats. Market potential and resource availability should be at the center of the scanning process. · Thorough study and assessment of the internal factors of the new business. An entrepreneur should objectively evaluate personal assets, areas in which he is particularly competent, personal abilities and experience - all from the point of view of the organizational needs of the new business. · Analysis of strategic factors in light of the current situation using SWOT analysis. The potential strengths and weaknesses of the enterprise should be assessed in the light of opportunities and threats in the external environment. · Deciding whether or not to commit. If it seems that the main idea of a business can be implemented, you should continue to do it. Otherwise, it is necessary to abandon further development of the idea until the strategic factors change. No, return to stage 1 Yes Fig. 2 Strategic decision-making process in SMEs (new enterprises) · Creation of a business plan containing practical measures to turn the idea into reality. · Implementation of the business plan using action plans and practical measures. · Evaluation of the implemented business plan - comparison of actual performance results with planned ones. To the extent that actual results differ in one way or another from those planned, the entrepreneur should review the firm's mission, objectives, strategies, policies and programs and, if possible, incorporate changes into the original business plan. 1.5 Dynamic model of strategic management for small and medium-sized enterprises "Strategic management" F. Analoui, A. Karami, M.: "Unity", 2005, 78 pages. According to some experts, a number of models were specifically developed for strategic management in small businesses (Linneman, 1990; Green and Jones, 1982; Shuman and Seeger; 1986; Aram and Cowan; 1990; Foster, 1993; Berry, 1998, Beal, 2000). Strictly speaking, there is no fundamental difference between the models of strategic management for small businesses proposed by these authors. Everyone uses similar concepts as a basis. Many of the concepts and techniques related to strategic management have been developed and successfully applied in enterprises. As managers strive to adapt as best they can to the ever-changing conditions of the business world, their firms typically go through four stages of strategic management development, namely: financial planning, forecast-based planning, to the external environment (strategic planning) and, finally, strategic management. At its core, strategic management consists of four main elements: thorough research (scanning) of the environment, strategy formulation, strategy implementation, evaluation and control. Environmental scanning is a kind of monitoring, evaluation and dissemination of information obtained in the external and internal environment among key figures of the corporation. The purpose of this process is to identify strategic factors, those elements of the external and internal environment that determine the future of the corporation. The easiest way to scan a business environment is to apply a SWOT analysis. Strategy formation is the development of long-term plans for effectively managing the opportunities and threats of the external environment based on corporate advantages and disadvantages. Strategy formulation involves defining the corporate mission, setting achievable goals, developing strategy, and developing policy guidelines. Strategy implementation is the process by which strategies are put into action through program development, budget preparation and operating procedures. This process may involve changes in the overall culture, structure and leadership of the organization. Finally, evaluation and control is the process by which a corporation's performance and results are monitored to compare actual performance with desired performance. Although evaluation and control are the final elements of strategic management, they can also help identify weaknesses in already implemented strategic plans and encourage repetition of the entire process. The conceptual basis for developing a strategic management model for SMEs was the research of specialists in the field, the authors' own observations, as well as the results of the first empirical survey of the UK electronics industry. According to the authors of the book, this provided a completely realistic and structured format that determined the direction of the study of SME strategies in successive stages, starting with obtaining a complete picture of the general situation (awareness), then moving on to strategy formation and its implementation, and ending with control and improvement of the strategy. Traditionally, all strategic management process models seek to answer six basic questions: What would we like to do? What is our situation at the moment? What would we like to achieve? How do we intend to do this? Which way will be the best? And finally, should we bother with this at all? Most models of the strategic management process are based on a broad interpretation of the concept of "stakeholders, beneficiaries" and are driven by competitive considerations rather than customer-oriented. Dynamic strategic management for SMEs, as a variation of the more general model of basic strategic management, is represented by a model of strategic management based on customer value (Fig. 3). The dynamic model of strategic management of SMEs includes four stages: 1. awareness - understanding the strategic situation; 2. strategy formulation - developing suitable strategies; 3. strategy implementation - turning selected strategies into reality; 4. control and improvement of the strategy - review of results and conclusions for subsequent improvement of the strategy. The dynamic strategic management model for SMEs describes the process by which SMEs define their intentions, goals and desired level of achievement; decide what actions should be taken to achieve goals in a timely manner, often in a changing external environment; take these actions and evaluate the rate of progress by evaluating the results. This creates a basis for learning from experience for further improvement. In accordance with the model, it can be assumed that the process of strategic management in SMEs constitutes a dynamic sequence: · analysis of the current situation of SMEs in the context of their products, markets, characteristic competitive advantages, personal goals of the owner-manager and, therefore, the definition of mission, goals and values to satisfy consumers; · analysis of the external environment - assessment of the opportunities and threats posed by competitors, suppliers, the socio-political influence of the economy, as well as the influence of technology, which will increase the value of SME products for consumers; · analysis of the internal environment - assessment of internal capabilities, advantages and weaknesses; Fig. 3 Dynamic model of strategic management for SMEs · identification of key factors contributing to increased efficiency and strategic issues of the company that may influence the direction of its future movement; · identification of strategic alternatives to goals and primary strategies; · implementing changes to improve the process (products and services) of increasing human capabilities; · monitoring improvements in customer value and business performance; · analyzing the results of applied strategies and drawing lessons in order to improve strategic management (i.e. the quality of decision making) in the future. The eight basic steps we just covered really help to prioritize the actions of a firm that wants to succeed by developing and executing a competitive strategy that consistently carries out the processes of forming, implementing and evaluating strategies - this will not only ensure customer satisfaction, but will also allow learning from its previous actions and will provide the basis for subsequent improvements in the firm's strategic capabilities. CHAPTER II Strategic management of small and medium-sized enterprises 2. 1 The process of developing a strategy for SMEs “Organization Management” Rumyantseva Z.P., Salomatin N.A., Akberdin R.Z. et al., M.: INFRA-M, 1995, 114 pp. “Strategic Management” F. Analoui , A. Karami, M.: "Unity", 2005, 146 pp. Development and formation of strategy, of course, represent one of the main tasks of managers. This is especially true in relation to small businesses, where the manager or owner-manager is initially responsible for the development business strategies: they are the ones who make strategic decisions. Thus, it is necessary to study how SME managers develop and implement business strategies. As a stage of strategic management, strategy development is often called strategic planning or long-term planning; this stage is associated with the development of the mission, goals and strategies A number of researchers suggest that the process of strategy formation in an organization includes three main elements: developing the strategic vision and mission of the business, developing the strategic goals of the organization, and developing business strategies (Fig. 4). Mission Goals Strategy formulation Strategy development Fig. 4 Strategy formation At the first stage of strategy development, the corporate mission is determined. A clearly stated mission promotes a sense of shared expectations among employees and serves to shape and disseminate the firm's image in the minds of important stakeholders who may influence the firm's goals in one way or another. Thompson believes that a strategic vision defines what a company should become in the future, while a mission reflects its main intention in the present and explains the reasons for its existence, the nature of the business in which it operates, and also indicates what kind of customers it seeks to attract. to serve and satisfy. Adopting this view, Scandura et al. argue that a mission is nothing more than a generalized statement of a firm's main purpose or intention, the fundamental reasons for its presence in a given business. The mission statement reveals the reasons for the organization's current existence, so it is not surprising that it is developed by senior management based on a common strategic vision shared by the entire management team. The mission must be comprehensive and clearly stated so that it is understandable to stakeholder groups both inside and outside the firm. Scandura and his colleagues argue that, from an external perspective, the mission should reflect a unifying principle, an inspiring idea for all stakeholders. These include the firm's shareholders, employees, suppliers and customers. From an internal, organizational point of view, the mission is very important because it helps employees understand and comprehend the intentions and goals of the company. Finally, an effective, successful mission serves to align strategy with the organization's established culture—a process Campbell and his colleagues describe as instilling a "spirit of mission" in the minds and hearts of employees, i.e. feeling that their whole business is of essential importance to society. Thus. An effective mission statement should clarify the firm's intentions and clearly define the business it intends to enter into. The mission statement should provide compelling, credible answers to the question of why the company exists at all. The mission should differentiate the company, indicate its personal characteristics that distinguish it from all existing and potential competitors. Mission statements should give the firm the ability to articulate its goals, including long-term ones. It is even more important that the mission has an inspiring, stimulating effect on all its employees and generates motivation and healthy business activity. Increasing employee motivation, participation and personal contribution to decision making can help improve overall organizational effectiveness. It is believed that a well-defined mission statement usually contains and reflects a unique and lasting cause that inspires all stakeholders to achieve common goals. A good mission statement is also expected to promote a more focused allocation of organizational resources. Based on the research results of F. Analoui and A. Karami, I can conclude that a typical SME mission statement contains components such as long-term profit, survival and growth; customer satisfaction; key technologies; market, philosophy and company values; quality of products and services; image, geographical area, the company's image of itself, as well as care of suppliers - these are also the main concerns of the manager, ranked in order of importance. At the second stage of strategy formation, achievable goals are determined. The owner-manager of a small business is expected to set his firm's goals based on current and projected opportunities (Shuman and Seeger; Hodgetts and Kuratko). These goals should provide SMEs with direction for future activities and investments. These researchers also argue that strategies should be formulated, procedures should be defined, and budgets should be set, all of which should be aimed at supporting the achievement of the firm's stated goals. Without established goals, SME strategists will be unable to steer themselves in the right direction. In this sense, goals can be considered as the end result of planned activities. It is the business goals that bring the mission statement into the plane of specific tasks that determine the direction and essence of the company’s activities. In almost all cases, goals turn commonplace mission statements into specific commitments of the company. In general, business goals can be achieved both in the long term and in the medium and short term. Goals include profitability, employee job satisfaction, labor productivity, organizational effectiveness, customer satisfaction, social responsibility, and technology development. Some focus on creating a list of quantitative and measurable goals, while others prefer to record a combination of quantitative and qualitative indicators. It should be emphasized that there are currently some goals that are difficult to quantify; These include employee job satisfaction and organizational effectiveness. However, regardless of the nature of the goals, it is very important for SMEs to develop a mission statement and define a list of goals in accordance with it. The company's goals should reflect its mission. The mission and strategic vision must take into account the firm's strengths, weaknesses, opportunities, and actual or potential threats it faces. A firm's strategic goals must include answers to four basic questions: what? Who? When? And how much exactly? In other words, goals must include outputs and results (what?), clearly indicate target groups or markets (who?), meet conditions and time constraints (when?) and, finally, establish standards and criteria for assessing the effectiveness of actions (how many? ). Let's look at an example of an SME's goal. Let's say we run a restaurant business in West Yorkshire. Our stated problem might look like this: Customers (who?) have a positive restaurant food and service experience (what?) every time (when?) they visit our restaurant (how?). The goal must be appropriate for the SME, it must be measurable, achievable, realistic, clearly expressed, internally consistent and logical among other goals, and it must be easy to communicate to others. In an SME, the owner-manager must develop goals that meet SMART requirements. Thus, effective goals must contain a number of relevant characteristics: · Specificity; · Measurable; · Achievable; · Realistic; · Time bound. In a small business, goals should be focused on business priorities (Fig. 5) So, the third period of the strategy formulation process is the development of the strategy itself. Once a firm's strategists have been able to develop a mission statement and set strategic goals in light of their analysis of the business environment, they can begin to develop business strategies. Strategy development typically involves determining how a company fits into its business environment. This process involves identifying the company's capabilities and, at the same time, the needs of the industry, so that the company can satisfy them while fitting well into the business environment. Developing a strategy is quite a difficult task. Its solution requires awareness and comprehension of the business environment and a detailed analysis of the current state of the business environment and a detailed analysis of the current state of the company itself, especially by the manager (manager); although in general, like all other management skills, this one develops with the acquisition of practical experience. For SMEs, the final decision on strategies rests with the owner-manager or manager. It has been found that SME managers' strategic thinking about the business environment can be essential to the development of a successful strategy. Researchers found that when SME leaders lacked the ability to think strategically about the business environment, their company tended to perform poorly. Figure 5 Developing Objectives To develop an effective strategy, a strategist must answer a number of basic questions. Roth and Washburn argue that the strategy development process involves answering ten basic questions that go beyond a SWOT analysis: 1) What product does your firm offer to sell? 2) What consumers and what market are your products intended for? 3) Why do customers need the service you offer? 4) Who are your main competitors? What is their market share? 5) What are the main strengths of your competitors? 6) What are the main weaknesses of your competitors? 7) What are the technical alternatives to your product (service)? 8) What is the strength of your company? 9) What is her weakness? 10) In light of the answers to the previous questions, what strategies should you employ to make the most of your strengths and take advantage of your competitors' weaknesses? So, in order to develop an adequate strategy, the SME strategist must find answers to these questions, taking into account the results of industry analysis, the firm's resources, and also taking into account the strategic goals of the SME. Roth and Washburn add that the answers to these questions can provide strategists with guidance to aid their practice. 2.2 Strategic planning and development of a business plan “Fundamentals of Management” M. Mescon, M. Albert, F. Khedouri, M.: “Delo”, 2004, 281 pp. “Strategic Management” F. Analoui, A. Karami, M. : "Unity", 2005, 199 pp. Strategic planning is essential for the long-term growth of small high-tech companies. Firms using formal and informal strategic planning processes experience improvements in key performance indicators compared to firms that do not carry out strategic planning. This concerns turnover, growth rate, success in achieving target profits and corporate goals. Planning helps the SME strategist identify strengths and competencies and create a competitive advantage for his firm. Identifying the strengths and weaknesses of the business helps the owner-manager develop alternative strategies to compete within his industry In addition, planning also creates operational tools designed to achieve the organizational and financial goals of a small business. For example, using one of the planning tools, you can predict the future of a small business based on sales or production volume. Another example of a planning tool is forecasting through scenario development, which involves considering a set of possible future development plans designed for different forecast situations. The business planning process determines how business owners and managers transform their personal goals into business goals and then try to achieve them, following a logical process. Figure 6 shows a typical business planning process for SMEs. The first step of business planning shows how the personal goals of the owner-manager or manager of the SME, along with corporate goals, are identified through a process of discussion and evaluation. Small business managers then analyze the external and internal environment of the firm's activities to identify the firm's strengths, weaknesses, opportunities and threats in the external environment (i.e., conduct a SWOT analysis). Its results help determine the company's place in the market, as well as the strengths and weaknesses of its competitors. In light of the findings, SME strategists can identify the competencies and competitive advantages of their businesses. The next step is a consumer analysis to determine the company's target markets and target consumer groups. In accordance with this, the company must develop its marketing strategy and draw up a set of marketing activities. The marketing mix shows what a firm's product and/or service is. What are the pricing methods and promotion tactics? Where does the company intend to transact and how does it intend to sell its products and services? The next step is to develop an operational marketing plan and finally identify the operational needs, a business plan is like a road map and a tool, it shows the path from the starting point to the final destination. Thus, Burns believes that the process of business planning can be likened to reading a map: first determine your coordinates, then the place where you want to be, and then start plotting a route. The business planning process is associated with solving three main problems: · Understand where you are at the moment (i.e., what is the current position of the company); · Decide where to be (i.e. what position it is desirable for the company to occupy in the future); · Plan how to get to your destination (i.e., draw up a plan of activities aimed at achieving the desired position). Whenever we refer to long-term business planning, it means that we are engaged in strategic planning. Strategic planning is the ongoing process through which small business leaders develop business strategies and maintain their firm's competitiveness in the marketplace. According to Kuratko and Hodgetts, strategic management in entrepreneurial firms is the development of long-term plans for effectively using the opportunities of the external business environment and avoiding the threats arising from it based on taking into account the strengths and weaknesses of the company. In principle, the use of strategic planning in small businesses is more or less limited. Despite this, a number of experts argue that small business leaders and managers have a responsibility to carry out the strategic planning process. One important reason for this is that, as a rule, the owner-manager of an SME is considered the chief strategist of his company and has the final say in making important decisions. Although many employees at different levels of the company should be involved in the process of preparing a business plan, only the owner-manager of the SME clearly understands the prospects of his business, is responsible for setting goals, has full information from external and internal sources, and finally, it is the same person makes the final selection of the company's business strategy. Feedback cycle Fig. 6 Business plan development process The application of strategic management in small businesses can be determined by the influence of both organizational factors and factors of the external business environment. Kuratko and Hodgetts argue that the strategic management of a developing firm is determined by the influence of five main factors: · The time that a strategic manager can devote to this process; · Decision making needs; · Directions of the company's internal policy; · Uncertainties in the external business environment; · Visions of the entrepreneur-manager of the company. Some scientists even suggest that it is careful consideration of these factors that ensures the effectiveness of strategic management in small businesses. In general, despite criticism by a number of specialists of this approach, all strategic planning models intended for small businesses can be divided into two main theoretical directions: rational models and models of intuitive strategy development. Let us consider the theoretical foundations of both directions. The rational strategy model views the strategy development process as a formal activity that focuses on the relationship between the external environment of the business and the organization. This model considers achieving the so-called “strategic fit” (conditions of the external and internal business environment) as one of the important tasks that the strategist is called upon to solve. The second model is the intuitive strategy development model. It is best examined in the work of McCarthy and Leavy, who compared both models (Table 1). The intuitive strategy development model focuses on the internal parameters of the organization, such as culture, leadership style, and human resource policies. According to this model, formal strategic planning loses its importance over time, mainly due to the dynamism of the external environment, when the ability to be innovative and flexible becomes key conditions for the survival of the company. Table 1 Comparison of rational planning and intuitive strategy development models
Founders: M. Lyles, R.K. Reger, E. Huff, G. Thomas, G. Simon
Cognitiveness (Latin cognitio, “cognition, study, awareness”) - denoting the ability to mentally perceive and process external information. In psychology, this concept refers to the mental processes of the individual and especially to the study and understanding of so-called "mental states" (i.e. beliefs, desires and intentions). The term "cognition" is also used in a broader sense, referring to the "act" of knowing or knowledge itself. In this context, it can be interpreted in a cultural-social sense as denoting the emergence and “becoming” of knowledge and the concepts associated with that knowledge, expressing themselves in both thought and action.
The cognitive school (school of knowledge) considers strategy building as a mental process. Representatives of this school, relying on cognitive psychology, analyze the strategic process from the point of view of human cognitive abilities. Cognitive school strategic management gained particular popularity abroad in the 1980s.
Within the framework of this school, two completely independent directions can be quite clearly distinguished. The first direction interprets strategy formation as an attempt to create some kind of objective picture of the world. The second direction, based on the subjectivity of the cognition process, considers strategy as an interpretation of the world.
Most representatives of the cognitive school believe that each strategist has his own individual cognitive style, which is significantly influenced by the collective information processing system called the organization. They propose a certain model of parallel information processing in the process of making strategic decisions
According to the theoretical views of representatives of the cognitive school, any experienced leader is guided by certain causal maps or mental models that influence his behavior.
This kind of map, according to representatives of the cognitive school, is a kind of key to understanding the process of strategy formation. In other words, since strategy is understanding, building a strategy is seen as “achieving understanding.”
The second direction of the cognitive school considers strategy as the construction of interpretations. The main principles of the cognitive school are as follows:
1. The process of strategy formation is considered as a process of cognition taking place in the mind of the strategist.
2. Strategy is a perspective that reveals how to obtain information from the environment.
3. Information from the environment is an interpretation of the world, which exists only as it is perceived. According to representatives of the cognitive school, the mutual world can be modeled, structured and constructed.
4. The cognitive school pays considerable attention to specific stages of the strategy formation process, especially the period of initial understanding of the strategy and the period of rethinking the adopted strategy.
5. Understanding the strategic process contributes to further knowledge of the laws of thinking.
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