The Three Schools of Thought on Corporate Strategy Formation

The subject of strategic management is in the midst of an evolutionary process. In this regard, several strands of thinking are emerging. They can be classified under the following groups:

  1. The Prescriptive Schools 
  2. The Descriptive Schools
  3. The Integrative Schools

Strategic Management: Creating Competitive AdvantagesThe prescriptive schools:- Under this category, three variations are found. The brief description about them are as follows: 

  1. The design school:- (Selzniek and Andrews) – Strategy is seen as something unique. The process of strategy formation is based on judgment and thinking. 
  2. The planning school:- (Ansoff) – Under this school, the strategy is seen as a plan divided into sub-strategies and programmes. The lead role in strategy formation is played by the planners. 
  3. The positioning school:- (Schendel-Hatten & Porter) – The process of strategy formation is analytical, systematic and deliberate. Under this school, strategy is seen as a set of planned generic positions chosen by a firm on the basis of an analysis of the competition and the industry in which they operate.

The Austrian School: Market Order and Entrepreneurial CreativityThe Descriptive Schools:- In this category, six schools of thought are existing. Their brief description is as follows:

  1. Entrepreneurial School (Schumpeter & Cole):–The process of strategy formation is intuitive, visionary and largely deliberate. Strategy is seen asthe outcome of a personal and unique perspective often aimed at thecreation of a niche.
  2. Cognitive School (Simon and March):– This school perceives strategy formation as a mental process. The lead role is played by the thinker philosopher.
  3. Learning School (Weick, Quinn, Senge and Lindblom) – This school perceives strategy formation as an emergent process. The process is informal and messy and the lead role is played by the learner.
  4. Power School (Allison & Astley):– Under this school, strategy is seen as political and cooperative process or pattern. The process of stategy formation is messy, emergent and deliberate. This school perceives strategy formation as a negotiation process.
  5. Cultural School (Rhenman and Normann):– Under this school, strategy is seen as a collective perspective. The process of strategy formation is ideological, constrained and deliberate.
  6. Environmental School (Hanan, Freeman and Pugh):– The lead role in strategy formation is played by the environment as an entity. This reactive process of strategy formation is passive and imposed and hence emergent.

The Integrative School:– The major contributions to the configuration school are by Chandler, Miles and Snow. Under this school, strategy is viewed in relation to a specific context and thus could be in a form that corresponds to any process visualized by above nine schools. The strategy formation process is integrative, episodic and sequential.