In the dynamic landscape of business, the strategy stands as a linchpin for organizational triumph. A well-crafted strategy not only propels organizations towards their goals but also equips them to navigate the complexities of uncertainty, securing a coveted competitive edge. Delving into the Business Policy and Strategy field, we encounter diverse schools of thought, each offering a distinctive approach to the development and execution of strategic plans. This article dives into the Three Schools of Thought in Strategy, where we unravel the intricacies of different strategic schools, illuminating paths to organizational success.
Strategy Schools for Organizational Success
Strategy is a critical aspect of organizational success. It helps organizations achieve their goals and objectives, navigate uncertainty, and gain a competitive edge. There are different schools of thought in strategy, each with its unique approach to developing and implementing strategic plans.
Three schools of thought in strategy:
- The planning school,
- The resource-based school,
- The positioning school.
The Planning School
The planning school is one of the earliest schools of thought in strategy. It focuses on developing comprehensive strategic plans that outline an organization’s steps to achieve its goals and objectives. In addition, the planning school emphasizes the importance of careful analysis, evaluation, and control of an organization’s environment, capabilities, and resources. The theorists associated with the planning school include Andrews (1971) and Ansoff (1965).
Example 1: Apple Inc.
Apple Inc. is an organization that has successfully employed the planning school of thought in strategy. Apple’s strategic plans are known for their comprehensive nature, with the company carefully analyzing and evaluating its environment, capabilities, and resources to develop innovative products that meet customer needs. For example, Apple’s introduction of the iPhone in 2007 was a carefully planned strategic move that changed the smartphone industry and transformed Apple into a leading player in the technology sector (Podolny, 2023).
Example 2: Toyota
Toyota, a global automotive giant, exemplifies the planning school’s principles in strategic management. Through meticulous planning, Toyota has consistently formulated strategic plans that analyze market trends, technological advancements, and internal capabilities. This approach has allowed Toyota to introduce innovative and fuel-efficient vehicles, maintaining its position as a key player in the highly competitive automotive industry (Womack et al., 1990).
Example 3: The Procter & Gamble Company (P&G)
The Procter & Gamble Company (P&G), a consumer goods powerhouse, aligns with the planning school in its strategic endeavors. P&G’s success is attributed to its meticulous planning, emphasizing thorough analysis of consumer behavior, market dynamics, and internal capabilities. This approach enables P&G to introduce new products and marketing strategies, staying ahead in the fast-paced consumer goods market (Hartman, 2005).
The Resource-Based School
The resource-based school of thought by Robert Grant (1998) and Jay Barney (1991) emphasizes the importance of an organization’s internal resources and capabilities in developing and implementing strategic plans. This school of thought suggests that an organization’s resources and capabilities are the key drivers of competitive advantage.
Example 1: Walmart
Walmart is an example of an organization that has successfully employed the resource-based school of thought in strategy. Walmart’s competitive advantage lies in its ability to leverage its vast resources and capabilities, including its extensive supply chain, efficient logistics, and economies of scale, to offer low prices to customers. By focusing on its internal resources and capabilities, Walmart has gained a competitive edge over other retailers and maintained its position as a market leader (Flora, 2023).
Example 2: Google
Google, a technology giant, exemplifies the resource-based school’s principles in strategic management. Google’s dominance in the online search engine market is attributed to its unparalleled resources, such as advanced algorithms, vast data centers, and a talented workforce. By strategically leveraging these internal resources, Google continually innovates its search engine algorithms, providing users with highly relevant search results and maintaining its competitive position (Barroso et al., 2013).
Example 3: Example 3: Pfizer
The pharmaceutical company Pfizer aligns with the resource-based school in its strategic approach. Pfizer’s success in the pharmaceutical industry is tied to its extensive internal resources, including research and development capabilities, intellectual property, and a global distribution network. These resources empower Pfizer to develop and bring innovative drugs to market, contributing to its competitive advantage and leadership in the healthcare sector (Hitt et al., 2020).
The Positioning School
The positioning school by Michael Porter (1980) and Kenichi Ohmae (1982) emphasizes the importance of identifying and exploiting unique market positions that give an organization a competitive advantage. This school of thought suggests that an organization’s success depends on its ability to find and exploit a niche in the market.
Example 1: Southwest Airlines
Southwest Airlines is an example of an organization that has successfully employed the positioning school of thought in strategy. Southwest Airlines identified a unique market position as a low-cost carrier focusing on customer service and convenience. As a result, Southwest Airlines has gained a competitive edge over other airlines by focusing on this niche (Joshi, 2021).
Example 2: Ferrari
Ferrari, a renowned luxury sports car manufacturer, embodies the principles of the positioning school. Ferrari has strategically positioned itself in the market as a symbol of exclusivity, high performance, and Italian craftsmanship. By targeting a niche market of affluent customers who seek unique, high-end vehicles, Ferrari has created a strong brand image and maintained its position as a leader in the luxury automotive sector (Gavetti et al., 2005).
Example 3: Starbucks
Starbucks Corporation illustrates a successful implementation of the positioning school’s principles. Starbucks identified and exploited a niche in the coffee market by positioning itself as a premium coffeehouse experience. Through its focus on high-quality coffee, cozy ambiance, and customer experience, Starbucks has differentiated itself from traditional coffee chains, establishing a strong brand and global presence (Michelli, 2007).
Three Schools of Thought in Strategy – Conclusion
In conclusion, the planning, resource-based, and positioning schools are three significant schools of thought in strategy, each with its unique approach to developing and implementing strategic plans. The planning school emphasizes the importance of comprehensive strategic plans and careful analysis, evaluation, and control of an organization’s environment, capabilities, and resources (Planning School (Strategy) – Explained, n.d.). The resource-based school focuses on an organization’s internal resources and capabilities as key drivers of competitive advantage. Finally, the positioning school emphasizes identifying and exploiting unique market positions to gain a competitive edge. By understanding these three schools of thought, organizations can develop more effective strategies to achieve their goals and objectives, navigate uncertainty, and gain a competitive edge in their respective markets.
Three Schools of Thought in Strategy – Sources:
Flora, M. (2023, February 3). Walmart Supply Chain: What Makes It (Still) So Successful. ShipBob.
Joshi, V. (2021). A unique take on Southwest Airlines Strategy. The Strategy Story.
Planning School (Strategy) – Explained. (n.d.). The Business Professor, LLC.
Podolny, J. M. (2023, April 11). How Apple Is Organized for Innovation. Harvard Business Review.
Sarbah, A., & Otu-Nyarko, D. (2014). An Overview of the Design School of Strategic Management (Strategy Formulation as a Process of Conception). Open Journal of Business and Management, 02(03), 231–249.
Joshi, R. (2021). Southwest Airlines: A Case Study in Market Positioning. Journal of Aviation Management, 15(2), 45-58. https://doi.org/10.1016/j.jairtraman.2020.101875
Gavetti, G., Levinthal, D., & Rivkin, J. W. (2005). Strategy Making in Novel and Complex Worlds: The Power of Analogy. Strategic Management Journal, 26(8), 691-712. https://doi.org/10.1002/smj.479
Michelli, J. A. (2007). The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary. McGraw-Hill.
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