PRESCRIPTIVE APPROACHES TO STRATEGY



Stable Environments Favors Prescriptive Approaches to Strategy

Stable Environments Favors Prescriptive Approaches to Strategy

I do agree with the statement that stable environments favors prescriptive approaches to strategy whereas turbulent environments demand emergent strategies. Following lines support this statement in the light of my study of the literature mentioned in the list of references.

First of all let me mention that large, diversified companies are often organized according to product. All the activities necessary to produce and market a product or group of similar products are grouped together. In such an arrangement, the top manager of the product group typically has considerable autonomy over the operation. The advantage of this type of structure is that the personnel in the group can focus on the particular needs of their product line and become experts in its development, production, and distribution. A disadvantage, at least in terms of larger organizations, is the duplication of resources. Each product group requires most of the functional areas such as finance, marketing, production, and other functions. The top leadership of the organization must decide how much redundancy it can afford.

Industry consolidation—creating huge global corporations through joint ventures, mergers, alliances, and other kinds of interorganizational cooperative efforts—has become increasingly important in the twenty-first century. Among organizations of all sizes, concepts such as agile manufacturing, just-in-time inventory management, and ambidextrous organizations are impacting managers' thinking about their organizational structure. Indeed, few leaders were likely to blindly implement the traditional hierarchical structure common in the first half of the century. The first half of the twentieth century was dominated by the one-size-fits-all traditional structure. The early twenty-first century has been dominated by the thinking that changing organizational structures, while still a monumental managerial challenge, can be a necessary condition for competitive success.

Recently, Haier integrates the purchase functions, storage functions and transportation functions of every product division into a new division namely physical distribution boost headquarters that performs the said three functions of every product division, in accordance with the principle of economies of scale and specialized division of labor; integrates the functions of the domestic marketing into a new department namely business distribution boost headquarters; integrates the functions of the overseas marketing divisions into overseas boost headquarters; and integrates the functions of the finance divisions into fund flow boost headquarters. Therefore, the original product divisions become independent production and R & D departments without any other functions.

To minimize the divisions' competing for corporate resources, expansion of resources may be a good conflict-resolution technique. When a conflict is caused by the scarcity of a resource, say, money, promotion opportunities, expansion of the resource can create a win-win solution (Robbins 2005). To support divisions more money, the company can finance by reducing the dividend. When a company earns a profit, that money can either be re-invested in the business or paid to the shareholders of the company as a dividend (Gallagher & Andrew, 2003). To solve the more competitive promotion problems, the company could focus more on salary increase instead ...