Intended versus Realized Strategies
Henry Mintzberg, a management scholar at McGill University, argues that viewing the
strategic management process as one in which analysis is followed by optimal decisions and
their subsequent meticulous implementation neither describes the strategic management
process accurately nor prescribes ideal practice.27 He sees the business environment as far
from predictable, thus limiting our ability for analysis. Further, decisions are seldom based
on optimal rationality alone, given the political processes that occur in all organizations.28
Taking into consideration the limitations discussed above, Mintzberg proposed an alternative model. As depicted in Exhibit 1.2, decisions following from analysis, in this model,
constitute the intended strategy of the firm. For a variety of reasons, the intended strategy
rarely survives in its original form. Unforeseen environmental developments, unanticipated
resource constraints, or changes in managerial preferences may result in at least some parts
of the intended strategy remaining unrealized.
Consider an important trend affecting law firms:
Many of the leading corporations have reduced their need for outside legal services by
increasingly expanding their in-house legal departments.29 For example, companies and
financial institutions spent an estimated $41 billion on their internal lawyers in 2014,
a 22 percent increase since 2011. And a survey of 1,200 chief legal officers found that
63 percent of respondents are now “in-sourcing” legal work they used to send out to law
firms or other service providers. In response, many large law firms have been forced to move
away from commodity practices such as basic commercial contracts to more specialized
areas like cross-border transactions and global regulatory issues.
Thus, the final realized strategy of any firm is a combination of deliberate and emergent
strategies.
Next, we will address each of the three key strategic management processes—strategy
analysis, strategy formulation, and strategy implementation—and provide a brief overview
of the chapters.
Exhibit 1.3 depicts the strategic management process and indicates how it ties into the
chapters in the book. Consistent with our discussion above, we use two-way arrows to convey the interactive nature of the processes.
Strategy Analysis
Strategy analysis may be looked upon as the starting point of the strategic management process. It consists of the “advance work” that must be done in order to effectively formulate
and implement strategies. Many strategies fail because managers may want to formulate and
implement strategies without a careful analysis of the overarching goals of the organization
and without a thorough analysis of its external and internal environments.
Analyzing Organizational Goals and Objectives (Chapter 1) A firm’s vision, mission, and
strategic objectives form a hierarchy of goals that range from broad statements of intent and
bases for competitive advantage to specific, measurable strategic objectives.
Analyzing the External Environment of the Firm (Chapter 2) Managers must monitor and
scan the environment as well as analyze competitors. Two frameworks are provided: (1) The
general environment consists of several elements, such as demographic and economic segments, and (2) the industry environment consists of competitors and other organizations
that may threaten the success of a firm’s products and services.
Assessing the Internal Environment of the Firm (Chapter 3) Analyzing the strengths and
relationships among the activities that constitute a firm’s value chain (e.g., operations, marketing and sales, and human resource management) can be a means of uncovering potential
sources of competitive advantage for the firm.32
Assessing a Firm’s Intellectual Assets (Chapter 4) The knowledge worker and a firm’s
other intellectual assets (e.g., patents) are important drivers of competitive advantages and
wealth creation. We also assess how well the organization creates networks and relationships as well as how technology can enhance collaboration among employees and provide a
means of accumulating and storing knowledge.
SUMMARY REVIEW QUESTIONS
- How is “strategic management” defined in the text,
and what are its four key attributes? - Briefly discuss the three key activities in the strategic
management process. Why is it important for
managers to recognize the interdependent nature of
these activities? - Explain the concept of “stakeholder management.”
Why shouldn’t managers be solely interested in
stockholder management, that is, maximizing the
returns for owners of the firm—its shareholders?
- What is “corporate governance”? What are its three
key elements, and how can it be improved? - How can “symbiosis” (interdependence, mutual
benefit) be achieved among a firm’s stakeholders? - Why do firms need to have a greater strategic
management perspective and empowerment in
the strategic management process throughout the
organization? - What is meant by a “hierarchy of goals”? What are
the main components of it, and why must consistency
be achieved among them?
APPLICATION QUESTIONS & EXERCISES
- Go to the Internet and look up one of these company
sites: www.walmart.com, www.ge.com, or www.fordmotor.
com. What are some of the key events that would
represent the “romantic” perspective of leadership?
What are some of the key events that depict the
“external control” perspective of leadership? - Select a company that competes in an industry in
which you are interested. What are some of the
recent demands that stakeholders have placed on this
company? Can you find examples of how the company
is trying to develop “symbiosis” (interdependence
and mutual benefit) among its stakeholders? (Use the
Internet and library resources.) - Provide examples of companies that are actively
trying to increase the amount of empowerment in
the strategic management process throughout the
organization. Do these companies seem to be having
positive outcomes? Why? Why not? - Look up the vision statements and/or mission
statements for a few companies. Do you feel that they
are constructive and useful as a means of motivating
employees and providing a strong strategic direction?
Why? Why not? (Note: Annual reports, along with the
Internet, may be good sources of information.)
ETHICS QUESTIONS
- A company focuses solely on short-term profits to provide the greatest return to the owners of the business (i.e., the
shareholders in a publicly held firm). What ethical issues could this raise? - A firm has spent some time—with input from managers at all levels—on developing a vision statement and a mission
statement. Over time, however, the behavior of some executives is contrary to these statements. Could this raise some
ethical issues?
