The Concept of Strategy and Strategic Management

Schools of Strategic Management

Henry Mintzberg and colleagues identified 10 schools of thought on strategy, each offering a different lens. Metaphor: strategy is an elephant, and each school is a blindfolded observer touching only one part – different schools describe different aspects.

Three Broad Categories

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Prescriptive Schools

These offer step‑by‑step frameworks and tools for deliberate planning.

Design School

• Core idea: Strategy as a process of conception – matching internal strengths/weaknesses with external opportunities/threats to achieve fit.
• How strategy is formed: Through informal, reflective judgment of top management – a conscious act of designing a unique fit.
• Who shapes: CEO or a small leadership team (architects).
• What matters: Achieving alignment between organisation and environment.
• Analogy: A master architect studying the land, environment, and client needs before drawing a blueprint.
• Example: Amul – leaders like Verghese Kurien designed a cooperative model that fit India’s rural milk producers with urban demand.
• Limitation: Works best in stable, clear environments; too slow/rigid in turbulence.

Exam tip: The design school is the classic “SWOT” approach – strengths, weaknesses, opportunities, threats – but it assumes the environment is predictable.

Planning School

• Core idea: Strategy as a formal, systematic process with explicit steps, objectives, forecasts, and detailed plans.
• How strategy is formed: Through analysis, forecasting, and checklists – a rational, structured procedure.
• Who shapes: Strategic planners / specialised planning departments.
• What matters: Rigorous analysis, documentation, and control.
• Analogy: An engineer planning a bridge with every detail mapped in advance.
• Example: ISRO – each mission meticulously planned (objectives, timelines, resources, risks) years ahead.
• Limitation: Unforeseen challenges (e.g., rocket failure, regulation) still require flexibility.

Positioning School

• Core idea: Strategy as analytical positioning within an industry – popularised by Michael Porter. The firm seeks a defensible position via generic strategies (cost leadership, differentiation, or focus).
• How strategy is formed: Through external analysis of industry structure and competitive forces.
• Who shapes: Analysts and managers using models (e.g., Five Forces) to identify the best market position.
• What matters: Achieving a defensible position that yields competitive advantage.
• Analogy: A chess grandmaster placing pieces optimally to control the board.
• Example: IndiGo Airlines – chose the low‑cost, on‑time, no‑frills segment and dominated Indian aviation through operational efficiency.
• Note: Changing positions (e.g., Air India repositioning as a premium carrier) requires major investment and cultural change.

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Descriptive Schools

These explore how strategy really emerges in organisations – messy, unpredictable, shaped by people and context.

Entrepreneurial School

• Core idea: Strategy as a visionary process driven by a charismatic leader’s intuition, boldness, and risk‑taking.
• How strategy is formed: Through the founder’s personal vision and dreams.
• Who shapes: The visionary leader (often founder/CEO).
• What matters: Vision, risk‑taking, personal drive.
• Analogy: A daring explorer charting new territory by instinct.
• Example: OYO – Ritesh Agarwal’s bold vision to standardise budget accommodation drove rapid growth, often ahead of traditional analysis.
• Risk: Over‑reliance on one person can cause blind spots or overreach (e.g., later operational/financial challenges).

Cognitive School

• Core idea: Strategy is shaped by mental models, perceptions, heuristics, and biases of managers. How we think influences what we do.
• How strategy is formed: Through mental processes – interpretation, learning, and perception.
• Who shapes: Individual managers, influenced by their own cognitive frameworks.
• What matters: Perception, interpretation, learning from experience.
• Analogy: Wearing coloured glasses – two managers see different threats/opportunities from the same data.
• Example: Infosys – founders’ engineering mindset led to early focus on global delivery, process quality (CMM certifications), and systems thinking.
• Risk: Cognitive biases (overconfidence, anchoring, groupthink) can cause poor decisions – e.g., Indian retailers underestimating e‑commerce threat due to outdated mental models.

Learning School

• Core idea: Strategy emerges from trial‑and‑error, feedback, and adaptation. The environment is too complex for perfect planning.
• How strategy is formed: As an emergent process – evolves step by step through experimentation.
• Who shapes: The entire organisation, learning from actions and environment.
• What matters: Flexibility, adaptation, continuous improvement.
• Analogy: A river finding its path around obstacles, constantly adjusting.
• Example: Meesho – started as a fashion platform, learned from difficulties and customer feedback, and gradually evolved into a business‑to‑business‑to‑consumer (B2B2C) model.
• Risk: Can become too reactive; but in fast‑changing markets learning often beats rigid plans.

Power School

• Core idea: Strategy is shaped by power and politics – both internal (coalitions, turf wars) and external (lobbying, alliances, regulatory influence).
• How strategy is formed: Through negotiation, persuasion, and sometimes conflict.
• Who shapes: Coalitions, interest groups, powerful individuals.
• What matters: Influence, alliances, political manoeuvring.
• Analogy: A tug‑of‑war – outcome depends on who pulls hardest.
• Example: Jio’s entry into Indian telecom – navigating regulations, negotiating with global tech partners, leveraging Reliance group’s economic power.
• Ethical note: Power is a reality; understanding and managing it ethically is key – not all political behaviour is “dirty.”

Cultural School

• Core idea: Strategy is rooted in organisational culture – shared values, beliefs, traditions. Culture defines what is possible and acceptable.
• How strategy is formed: As a collective process shaped by shared understanding and socialisation.
• Who shapes: The broader organisational community (employees, leaders, sometimes customers/stakeholders).
• What matters: Cultural alignment, shared understanding, socialisation.
• Analogy: Culture is like soil – determines what kind of plant (strategy) can thrive. Also like a family recipe passed down with individual twists.
• Example: Tata Group – strategy inseparable from its culture of trust, ethics, and nation‑building, guiding philanthropy and diversification.
• Constraint: Strong cultures can resist necessary change – e.g., traditional family firms struggling to adopt professional management.

Environmental School

• Core idea: Strategy is a passive response to external forces (economic, social, technological, regulatory). The environment “selects” the fittest organisations.
• How strategy is formed: By adapting to external pressures – managers have limited control.
• Who shapes: The environment itself; managers adapt as best they can.
• What matters: Adaptation to external changes, survival.
• Analogy: Evolution – the best‑adapted species survive; the rest fade away (“survival of the fittest”).
• Example: Automakers (Tata Motors, Mahindra) shifting to electric vehicles due to government incentives, emissions concerns, changing customer preferences.
• Implication: Emphasises scanning and adapting – but does not mean firms have zero control.

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Integrative School

Configurational School

• Core idea: Organisations move through distinct stages/configurations (startup, growth, maturity, renewal, decline). Each stage demands a different strategic approach. Transformations are not gradual but occur as quantum leaps.
• How strategy is formed: Through periodic reconfiguration – shifting gears to fit new realities.
• Who shapes: Leadership teams and the organisation as a whole, especially during major change.
• What matters: Right configuration for the current context; ability to shift gears when needed.
• Analogy: Shifting gears in a car – you need the right gear for the speed and terrain; sometimes you must change suddenly.
• Example: HDFC Bank – started as a nimble tech‑driven challenger, then matured into India’s largest private bank; strategy shifted from aggressive growth to consolidation, digital transformation, and risk management.
• Note: Organisations rarely skip stages; they must adapt strategy as they grow.

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Summary: Comparison of the Three Categories

Exam tip: The three categories (prescriptive, descriptive, integrative) are a common framework for classifying Mintzberg’s 10 schools. Be able to list which schools fall under each category and give an example.

Key Takeaways

• Strategy is multifaceted – no single school captures the whole picture. Mintzberg’s metaphor of the blind men and the elephant is essential.
• Prescriptive schools (design, planning, positioning) offer structured, rational tools; they assume predictability.
• Descriptive schools (entrepreneurial, cognitive, learning, power, cultural, environmental) capture real‑world complexity: vision, mental models, adaptation, politics, culture, and external forces.
• The integrative (configurational) school emphasises that organisations evolve through stages and must reconfigure – often through quantum leaps.
• Real‑world strategists blend schools. Analysing a company’s journey (e.g., OYO, Infosys, Jio, Tata, HDFC Bank) reveals multiple schools at work. Flexibility and context awareness are critical.

Strategic Management Process

The strategic management process is a structured, cyclical approach organizations use to set direction, analyse their environment, make choices, execute plans, and monitor results. It turns abstract strategy into repeatable action. Rather than a one‑off event, it is a continuous loop that keeps the firm proactive and responsive to change.

Definition: A systematic series of steps that enables companies to achieve superior performance, adapt to change, and sustain competitive advantage in a dynamic environment.

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1. Defining Vision, Mission & Goals

The starting point establishes why the organisation exists and where it wants to go.

Example (Infosys)

• Vision: To be a globally respected corporation; the first‑ or second‑choice partner for clients.
• Mission: Navigate our clients’ digital transformation.
• Goals: Expand digital services, increase global market share, invest in talent and sustainability.

Why both vision and mission?

• Vision inspires and directs long‑term aspirations.
• Mission grounds the organisation in its core purpose.

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2. External & Internal Analysis

Organisations must systematically scan the environment to identify opportunities & threats (external) and strengths & weaknesses (internal).

External Analysis

Tools

• PESTEL Framework – Political, Economic, Social, Technological, Environmental, Legal.
• Porter’s Five Forces – industry rivalry, threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes.
• Competitor Analysis – identify rivals, their strengths and strategies.

Example: PESTEL for the Indian EV industry

Example: Porter’s Five Forces for Indian e‑commerce

Exam tip: External analysis should be thorough but focused on factors most relevant to the strategic choices facing the company.

Internal Analysis

Tools

• Resource‑Based View – What unique assets, capabilities, core competencies do we have?
• Value Chain Analysis – Where does the company add the most value?
• SWOT Analysis – Strengths, Weaknesses, Opportunities, Threats.

Example: SWOT for Amul

Example: SWOT for a hypothetical SaaS startup in Bangalore

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3. Strategy Formulation

Based on the analysis, organisations develop and select strategies at three levels.

How are alternative strategies chosen?
Firms evaluate each option against:

• Fit with vision, mission, and goals
• Resources and capabilities (existing or acquirable)
• External environment
• Potential for a sustainable competitive advantage

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4. Strategy Implementation

A strategy is only as good as its execution. Key elements:

• Structure – e.g., creating new business units for digital ventures
• Culture – supporting innovation, customer centricity (e.g., R&D investment without a culture that fosters innovation is insufficient)
• Resources – allocating capital, people, technology to priority areas
• Processes – establishing systems for effective execution

Examples

Most common reason strategies fail: Poor execution – plans are not translated into action due to misalignment of vision, mission, goals, resources, or stakeholder buy‑in.

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5. Evaluation & Control

Strategy is a living process. To stay on track:

• KPIs (Key Performance Indicators) – e.g., market share, customer satisfaction, profit margins
• Feedback loops – regular review meetings, dashboards, progress reports
• Adaptation – adjust strategy when environment shifts or results fall short

Examples

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End‑to‑End Example: Indian D2C Health Food Brand

Take‑home activity: Pick any Indian company, write its vision/mission, list two external opportunities & threats, two internal strengths & weaknesses, and suggest 1–2 strategic moves.

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Key takeaways

• The strategic management process is a cycle: vision → analysis → formulation → implementation → evaluation.
• Vision inspires long‑term direction; mission grounds the organisation in its core purpose.
• External analysis uses PESTEL, Porter’s Five Forces, and competitor analysis; internal analysis uses RBV, value chain, and SWOT.
• Strategy operates at three levels: corporate, business, and functional.
• Success depends on both rigorous analysis and disciplined execution – poor execution is the most common cause of failure.
• Continuous evaluation and control via KPIs and feedback loops allows adaptation to changing conditions.