Strategic Management and Total Quality Management PDF

**STRATEGIC MANAGEMENT AND TOTAL QUALITY MANAGEMENT** **READING MATERIALS FOR MIDTERM EXAMINATION** **Introduction to Strategy Formation** Strategy formation is a critical process in strategic management, encompassing both the development of strategic plans and their implementation. It is essenti...

**STRATEGIC MANAGEMENT AND TOTAL QUALITY MANAGEMENT** **READING MATERIALS FOR MIDTERM EXAMINATION** **Introduction to Strategy Formation** Strategy formation is a critical process in strategic management, encompassing both the development of strategic plans and their implementation. It is essential for organizations to adapt and thrive in dynamic environments. This reviewer will cover key concepts, theories, and approaches to strategy formation that will assist students in preparing for their examinations. **Key Components of Strategy** 1. **Strategy Formulation and Implementation**\ These two components are vital in developing effective strategies. **Formulation** involves crafting the strategic vision, objectives, and plans, while **implementation** focuses on executing those plans effectively. 2. **Learning Approach**\ Unlike traditional methods, the learning approach views strategy **as an emergent process, emphasizing trial-and-error learning, adaptability, and continuous improvement.** 3. **Contingency Approach**\ This approach asserts that strategies must be **tailored to specific situational factors, highlighting that there is no one-size-fits-all solution in strategic management.** 4. **Complexity Approach**\ This perspective sees organizations **as adaptive systems influenced by various factors, indicating that small changes may have substantial effects,** often referred to as the **\"butterfly effect.\"** 5. **Configurational Approach**\ This approach integrates **multiple schools of thought, focusing on the holistic interaction of elements influencing strategy and avoiding rigid adherence to any single theory.** **Various Schools of Thought in Strategy Formation** - **Planning School**: **Characterized by a structured, top-down approach that focuses on detailed planning and execution.** It emphasizes strategic analysis and aims for predictable outcomes. - **Learning School**: **Advocates for strategies that evolve through experience and adaptability,** relying on incremental changes and the role of middle management in shaping strategy. - **Contingency School**: **Emphasizes the importance of context and situational variables in developing strategies** that can respond to changing conditions. - **Configurational School**: This comprehensive approach **combines insights from various schools, recognizing that different situations may require different strategic frameworks.** - **Complexity School**: This school reframes strategy development **as an ongoing process influenced by complexities, uncertainties, and the interconnectedness of various elements.** **International Strategy** The formation of strategy in an international context **presents unique challenges, including cultural diversity and differing market conditions.** It is crucial for organizations to understand both universal principles of strategy and the nuances introduced by operating in varied environments. **Summary of Key Concepts** - **Strategy Formation**: **Crafting and executing strategic plans.** - **Implementation vs. Formulation**: **Understanding the difference between creating plans (formulation)** and **putting them into action (implementation).** - **Emergent Strategies**: The significance of emergent strategies **developed through adaptive learning.** - **Context-Sensitivity**: Strategies **dependent on situational contexts and factors.** - **Feedback Loops**: The **impact of ongoing feedback in shaping organizational strategy.** - **Cultural Factors**: **Acknowledgment of how cultural differences influence strategy in international markets.** Full Definition with EXAMPLES: 1. **Strategy Formulation and Implementation** - **Definition**: **Strategy formulation** involves defining the organization's vision and objectives and developing plans to achieve them. **Implementation** is the execution of those plans. - **Example**: A tech company introduces a new software product. During formulation, it defines market goals and identifies target customers. In the implementation phase, it launches marketing campaigns and trains sales teams. 2. **Learning Approach** - **Definition**: This approach suggests that strategies **emerge over time through experience, trial-and-error, and adaptation to changes in the environment.** - **Example**: **Southwest Airlines** uses a learning approach where it frequently collects passenger feedback to refine its service and improve customer satisfaction. 3. **Contingency Approach** - **Definition**: This approach posits that effective strategies **depend on situational factors and that managers must adapt strategies to fit each unique context.** - **Example**: An automotive company may adopt different strategies for launching vehicles in emerging markets compared to established markets, tailoring its approach based on local consumer preferences and regulatory environments. 4. **Complexity Approach** - **Definition**: The complexity approach views organizations **as adaptive systems influenced by numerous external and internal factors, where small changes can lead to unexpected outcomes.** - **Example**: A multinational corporation faces a slight regulatory change in one country affecting its supply chain. The resulting adaptations may lead to a larger reorganization that affects operations globally. 5. **Configurational Approach** - **Definition**: This approach integrates **multiple perspectives from different schools of thought, considering various factors that influence strategic decisions.** - **Example**: A company combines analysis from contingency theory and the learning school, adapting its strategy based on both historical performance and emerging market trends. **Various Schools of Thought in Strategy Formation** 1. **Planning School** - **Definition**: **Focused on formalized procedures for planning and executing strategies through systematic analysis and control.** - **Example**: A retail chain develops a detailed annual strategic plan that outlines specific sales targets, store openings, and marketing strategies based on market research data. 2. **Learning School** - **Definition**: Emphasizes **the adaptive and emergent nature of strategy, allowing for evolution based on internal and external feedback.** - **Example**: A software development firm uses agile methodology, adapting its product features based on user testing and feedback during the development process. 3. **Contingency School** - **Definition**: **Argues that there is no universal approach to strategy; effectiveness is contingent on situational factors.** - **Example**: A pharmaceutical companytailors its market entry strategies based on country-specific regulations, cultural attitudes towards healthcare, and competitive landscapes. 4. **Configurational School** - **Definition**: Focuses on a **holistic perspective, emphasizing the integration of diverse elements in strategy formulation.** - **Example**: A technology firm evaluates its market position, organizational culture, and operational capabilities together to develop a unified strategy that reflects all aspects of its business. 5. **Complexity School** - **Definition**: Views organizations as complex adaptive systems where strategies **emerge based on nonlinear interactions between elements in the system.** - **Example**: An automobile manufacturer reacts to a sudden change in consumer preferences due to environmental concerns by shifting to electric vehicle production, resulting in a larger strategic transformation influenced by market feedback. **International Strategy Formation** - **Definition**: Involves understanding that international strategy formation includes **similar principles as domestic strategy but with added complexities due to cultural, legal, and operational differences.** - **Example**: A fast-food franchise adopts different menu items and marketing strategies in different countries to accommodate local tastes and cultural preferences, such as offering rice dishes in Asia.