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Strategic Management - The Competitive Edge Prof. R. Srinivasan Department of Management Studies Indian Institution of Science, Bangalore Module No. # 01 Lecture No. # 04 Strategic Management Process - 02 We looked at the learning organization and what are the four main activities of the learning organization. Just to have a recap, the four main activities of the learning organization are: to solve the problem systematically, experimenting with new approaches, learning from their own past experiences and past history as well as from the experiences of others, then transferring knowledge quickly and efficiently throughout the organization. Now, we go further; we go to what is called the strategic decision-making modes given by this gentleman Mintzberg who is considered to be one of the important persons in strategic management; he gave these four modes of decision-making. (Refer Slide Time: 01:05)
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The first mode which he gave is what is called the entrepreneurial mode. What is the explanation for this entrepreneurial mode? This strategic decision is taken in the entrepreneurial mode by one powerful individual. The focus is on opportunities; problems are secondary; it is guided by the founder’s own vision of direction; it is exemplified by large bold decisions. The example that Mintzberg is referring to is the America online, the founder is Steve Case. One of the points which are brought out to you in the brackets was, though there was a clear growth strategy, that is, though clear growth strategy is an advantage of the entrepreneurial mode, tendency to market products before being able to support them is certainly a disadvantage, this was what was found in fact in America online. So, Steve Case opened the internet services of America online to its customers, but the customers found that they were not really able to access the web. So before really creating the infrastructure that is required to support its decision, America online wanted to implement this decision which back fired. The second mode is what is called adaptive mode. The adaptive mode is referred to as muddling through; what is this muddling through mean? It is characterized by reactive solutions to existing problems; much bargaining goes on concerning priorities of objectives; strategy is fragmented and is developed to move the company forward incrementally. This is typical of our university systems or the education system. You may say this is what the democracy has got to do; that is, a democratic way of decision-making has got to do with. In other words, you consult everyone; when you consult everyone, you find that agreements are not forthcoming from everyone. In order to make this agreement come through, you go through a lot of exercises. Result is, the movement forward is typically very slow - it goes at its snail’s pace; it does not move fast because you have to carry along the whole this thing. Similarly, with respect to government organizations, no need to really give examples. Suppose you have a file in a government organization, a typical government organization in the country, whether it is a state government or even the central government it does
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not matter. Unless and until you follow up this file, you may find that this file itself may become nonexistent; unfortunate but, true. So in other words, it is not enough for you just if you shootout a letter to a particular person. In the typical Indian context, you have to follow it up by repeated queries or reminders or telephone calls or whatever. To see what is the type of action that has been initiated by the organization concerned. It is not greatly different in the other developed countries but, the only difference that you find in the developed countries is you do not have to remind them so often as you would do in the Indian context; one reminder is quite enough for them to act. So, here instead of one you may have to remind them many times to act. (Refer Slide Time: 06:37) The example that is given here in brackets is, Encyclopedia Britannica Inc has moved away from this approach to television advertising and internet marketing from 1996 after acquisition by the dual career couples. In other words, what does this person Mintzberg say is, adaptive mode or muddling through may not always be the right type of strategic decision-making. Okay for a short term existence but, not very good for the long term existence of the organization. So you should not always be characterized as a reactive, you should be characterized also as proactive; that is, you do not wait for things to happen in a market, then after things
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have happened in a market you react - that is the organization reacts; no, not really the way. Why cannot you be the leader and you come out with something of your own in a market place, so that the others could follow? You do not always have to be a follower; so this is adaptive. (Refer Slide Time: 08:02) The next mode of decision-making which
หน้า 1การจัดการเชิงกลยุทธ์ - แข่งขันขอบศาสตราจารย์ R. Srinivasan แผนกของจัดการศึกษาอินเดียสถาบันวิทยาศาสตร์ บังกาลอร์โมดูลหมายเลข#01 บรรยายหมายเลข#04 กลยุทธ์กระบวนการจัดการ - 02 เรามององค์กรเรียนรู้และกิจกรรมหลักที่ 4 ขององค์กรเรียนรู้คืออะไร เพิ่งจะมีการปะยางรถ มีกิจกรรมหลัก 4 องค์กรเรียนรู้: การแก้ปัญหาอย่างเป็นระบบ ทดลอง ด้วยแนวทางใหม่ เรียนรู้ จากประสบการณ์ที่ผ่านมาของตนเอง และประวัติศาสตร์ที่ผ่านมา และ จากประสบการณ์ของผู้อื่น แล้วการถ่ายโอนความรู้ได้อย่างรวดเร็ว และมีประสิทธิภาพทั่วทั้งองค์กร ตอนนี้ เราไปต่อ เราไปอะไรคือวิธีการตัดสินใจเชิงกลยุทธ์โดยนี้สุภาพบุรุษ Mintzberg ที่ถือเป็นหนึ่งในบุคคลสำคัญในการจัดการเชิงกลยุทธ์ เขาให้วิธีการสี่เหล่านี้ของตัดสินใจ (อ้างอิงภาพนิ่งเวลา: 01:05)หน้า 2The first mode which he gave is what is called the entrepreneurial mode. What is the explanation for this entrepreneurial mode? This strategic decision is taken in the entrepreneurial mode by one powerful individual. The focus is on opportunities; problems are secondary; it is guided by the founder’s own vision of direction; it is exemplified by large bold decisions. The example that Mintzberg is referring to is the America online, the founder is Steve Case. One of the points which are brought out to you in the brackets was, though there was a clear growth strategy, that is, though clear growth strategy is an advantage of the entrepreneurial mode, tendency to market products before being able to support them is certainly a disadvantage, this was what was found in fact in America online. So, Steve Case opened the internet services of America online to its customers, but the customers found that they were not really able to access the web. So before really creating the infrastructure that is required to support its decision, America online wanted to implement this decision which back fired. The second mode is what is called adaptive mode. The adaptive mode is referred to as muddling through; what is this muddling through mean? It is characterized by reactive solutions to existing problems; much bargaining goes on concerning priorities of objectives; strategy is fragmented and is developed to move the company forward incrementally. This is typical of our university systems or the education system. You may say this is what the democracy has got to do; that is, a democratic way of decision-making has got to do with. In other words, you consult everyone; when you consult everyone, you find that agreements are not forthcoming from everyone. In order to make this agreement come through, you go through a lot of exercises. Result is, the movement forward is typically very slow - it goes at its snail’s pace; it does not move fast because you have to carry along the whole this thing. Similarly, with respect to government organizations, no need to really give examples. Suppose you have a file in a government organization, a typical government organization in the country, whether it is a state government or even the central government it doesPage 3not matter. Unless and until you follow up this file, you may find that this file itself may become nonexistent; unfortunate but, true. So in other words, it is not enough for you just if you shootout a letter to a particular person. In the typical Indian context, you have to follow it up by repeated queries or reminders or telephone calls or whatever. To see what is the type of action that has been initiated by the organization concerned. It is not greatly different in the other developed countries but, the only difference that you find in the developed countries is you do not have to remind them so often as you would do in the Indian context; one reminder is quite enough for them to act. So, here instead of one you may have to remind them many times to act. (Refer Slide Time: 06:37) The example that is given here in brackets is, Encyclopedia Britannica Inc has moved away from this approach to television advertising and internet marketing from 1996 after acquisition by the dual career couples. In other words, what does this person Mintzberg say is, adaptive mode or muddling through may not always be the right type of strategic decision-making. Okay for a short term existence but, not very good for the long term existence of the organization. So you should not always be characterized as a reactive, you should be characterized also as proactive; that is, you do not wait for things to happen in a market, then after thingsPage 4
have happened in a market you react - that is the organization reacts; no, not really the way. Why cannot you be the leader and you come out with something of your own in a market place, so that the others could follow? You do not always have to be a follower; so this is adaptive. (Refer Slide Time: 08:02) The next mode of decision-making which
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