Schools of thought on Strategy formulation

Unit VI: Strategic Management

Core Idea: Strategy is a process of conception.
Key Features:
- The design school of strategy formulation emphasizes the concept of “fit” between an organization’s internal capabilities and the external environment.
- This school views strategy as a deliberate, conscious process where top management matches internal strengths and weaknesses with external opportunities and threats (commonly using tools like SWOT analysis).
- The goal is to design a strategy that fits well with both the organization’s characteristics and its environment.
Key Contributor: Kenneth Andrews.
Criticism: Too simplistic, assumes a stable environment.

Core Idea: Strategy is a formal process.
Key Features:
- Relies heavily on structured planning techniques.
- Involves checklists, schedules, and budgets.
Key Contributor: Igor Ansoff.
Criticism: Rigid; fails in dynamic environments.

Core Idea: Strategy is a process of analytical positioning in the market.
Key Features:
- Based on economic and industry structure analysis (Porter’s Five Forces).
- Focus on competitive advantage.
Key Contributor: Michael Porter.
Criticism: Overlooks internal capabilities and innovation.

Core Idea: Strategy is formed based on how individuals perceive and interpret the world.
Key Features:
- Focus on mental models and biases in decision-making.
Criticism: Hard to apply broadly across organizations.

School	Strategy As…	Key Contributor	Type
Design	Fit between internal & external	Kenneth Andrews	Prescriptive
Planning	Formal process	Igor Ansoff	Prescriptive
Positioning	Market positioning	Michael Porter	Prescriptive
Entrepreneurial	Leader’s vision	–	Descriptive
Cognitive	Mental process	–	Descriptive
Learning	Emergent from learning	Peter Senge (inspired)	Descriptive
Power	Political process	–	Descriptive
Cultural	Collective beliefs	–	Descriptive
Environmental	Environmental reaction	–	Descriptive
Configuration	Transformation process	Mintzberg	Integrative