PLANNING VS. ENTREPRENEURIAL SCHOOLS OF STRATEGY

Planning vs. Entrepreneurial Schools Of Strategy



Planning vs. Entrepreneurial Schools Of Strategy

Introduction

Strategic planning is a process by which an organization makes decisions and takes actions that affect it s long-run performance. Strategic planning also focuses on enhancing the competitive position and overall performance of the organization in the long term. The purpose of strategic planning is to move the organization from where it is to where it wants to be and, in the process to develop and maintain a competitive advantages within the industries in which it competes. In most companies, strategic planning isn't about making decisions. It's about documenting choices that have already been made. Leading firms are rethinking their approach to strategy development so they can make more, better, and faster decisions (Mankins & Steele). In this paper we analysed the two concept of Strategic planning that is Planning And Entrepreneurial Schools of Strategy.

The Planning School vs. the Entrepreneurial School

According to the planning school, with its roots in systems thinking and cybernetics, strategy systems are prescribed to be the controlled, conscious processes of formal planning, decomposed into distinct steps, each delineated by checklists and supported by techniques. Responsibility for the overall process typically rests with the chief executive in principle; however responsibility for its execution rests with staff planners in practice. In comparison with the design school, resulting strategies appear from this process much more full blown and detailed. Strategies are made explicit so that they can be implemented through detailed attention to objectives, budgets, programs and operating plans of various kinds. The thinking of the planning school has led organisations, mainly in the seventies and early eighties, to build up significant staff departments of analysers and planners. This has broad with it an amount of disadvantages in practice, such as [according to Mintzberg, 1998]: staff departments taking over the process; the process being dominated by the staff; planning systems being virtually designed to produce no results; planning focussing on the more exciting game of mergers, acquisitions and divestitures at the expense of core business development; planning processes failing to develop true strategic choices; planning neglecting the accompanying organisational and cultural requirements of strategy; single-point forecasting as an inappropriate basis for planning in an area of restructuring and uncertainty.

Johnson, Melin and Whittington (2003) argue that there are mainly three different theoretical orientations towards micro strategy; The resource based view of the firm, institutionalist theories and activity based views of the firm. They are all important to explain one or several facets of how strategy is actually formed, and are therefore useful to enrich our insights. The institutionalist orientation involves both an orientation towards macro and micro at the same time, on formation of institutional practices and a central role for the human actor to make sense and construct new orientations. A resource based perspective is most helpful to get a grasp on our complex reality of strategy formation, micro strategy and strategizing. Both these theoretical orientations have their strengths and weaknesses, and ...