Eddielogic

– Thoughts on Strategy and Management

Do companies have a strategy?

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Do companies always have a strategy? This is a difficult question, since a variety of definitions for the term strategy exist. Hence I would like to present some major and important definitions for this term:

  • CHANDLER (1962) and ANDREWS (1971) define strategy in terms of intentions.
  • ANDREWS (1987) defines strategy as an artful alignment of environmental opportunities and threats, internal strengths and weaknesses, and managerial values.
  • PORTER (1996, page 68) describes strategy as “the creation of a unique and valuable position, involving a different set of activities”; “Strategy is creating a fit among a company’s activities.”
  • MINTZBERG et al. (1998) argue that the term strategy requires a number of definitions, five in particular.
  • STAEHLE (1999, page 603) defines two major aspects: the consideration of relevant players in company’s environment and the dimension of resource engagement as well as the long term focus of strategic action. (cCompare also Macharzina (1999), page 197 ff..)
  • HINTERHUBER (2004, page 17 ff.) explains strategy as path to solve problems in complex situations;
  • DOWLING (2004) argues that strategy is a plan of action that deals with changes in the firm’s environment and decisions of human as well as financial resources in order to improve performance and to achieve long term objectives.
  • BEA and HAAS (2005, page 51) define strategy as all measures to ensure the long term success of a firm.

To answer our key question I would like to describe strategy as a bridge between corporate policy on one hand and tactics or specific measures on the other. A long time it was well accepted that strategies would (always) exist; hence the research interest only focused on the way to formulate and to implement them. The general question, whether strategies do exist at all and the option, that an entire organization does not have a strategy, was not an object for research.

A couple of years ago the scientific research started to discuss the non-existence of strategies. INKPEN and CHOUDHURY (1995) require discussing the phenomenon absence of strategies. They accept situations, in which organizations does not have a strategy. To interpret this option three different management ideas are used. In the “negative concept” the management team neglected some of their management tasks; hence the management team is responsible that a strategy does not exist. In the “transitional concept” a strategy can not exist, since the organization stands in a transition period. The “positive concept” describes a management way to increase innovation and flexibility; hence the management team has decided not to have a strategy.
KIRSCH (1997) sees the existence of strategies as a specific phenomenon that has a need for explanation. If the top manager embarks on a strategy, it can not be assumed, that other managers or even the entire organization embarks on the same strategy. Hence it is possible that a strategy does not exist or that a number of strategies exist. Since a general statement about the situation in an organization is not possible, KIRSCH recommends to address this issue with an empirical analysis.

Taking into account these research results it is possible that an organization does not have a specific strategy or that top management has different understandings of the existing strategy. Hence it not recommended criticizing in general if a strategy is not in place. Instead is it crucial to identify the reasons (one of three) that might be responsible for such situation. Just in the case of the negative concept I have some serious doubts, whether the management team does understand its position and responsibility.

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