The implications for strategic management of the four loops
Category : Strategic Management Essay Samples
The implications for strategic management of the four loops
There are four loops that is part of integrated model of decision-making and control. The four loops include the rational; the overt politics; the covert politics; and the culture and cognition. The rational loop helps in making sure that strategic management would be based on rational thoughts and ideas. The rational loop focuses on the use of rationality in making decisions and controlling the use of strategies. The rational loop makes sure that all implications of any decision or strategies would be carefully analyzed before anything would be done. The overt politics loop creates a more open or divulge influence in strategic management. Overt politics are used by some to add their ideas to strategic management without being discreet about it. Overt politics focuses on the use of influence and connections to assert a strategic idea that one believe is the best thing for the company. Covert politics loop create a more secretive means to influence strategic management. This involves a member of an organization secretly influencing strategic management decisions in his/her favor. Covert politics loop is a more secretive way to influence decisions and strategies and this usually creates decisions that may be beneficial to one but not necessarily good for the company.
The culture and cognition loop makes use of culture and tradition to influence strategic management decision and to make strategies based on the culture of a place or a country. The culture and cognition loop makes use of ideas to change strategic management decision so that the firm will act according to the needs and demands of the environment. In culture and cognition loop, culture and cognition would serve as an important part in making decisions that will affect the firm and it would serve as a basis for the strategies the firm would use. The processual approach helps the firm maintain its goal of a simple strategy based on the four loops. The loops can affect but should not totally change the strategic management process of the firm. Through the processual approach companies can gradually use each of the four loops to make proper decisions for the firm. The first loop that should be used under the processual approach would be the culture and cognition loop. This loop would serve as an ethical foundation for the decision and strategy. The second loop would be the overt politics loop this would give some initial feedbacks and opinions about a decision or strategy; the covert politics would then come next to provide more ideas and opinions. The last loop would be the rational loop wherein everything would be combined to form the best strategy and decision. Strategic management is a process geared at detecting environmental threats and turning them into opportunities. Scenario-driven planning has evolved from humble beginnings and specific disciplines, such as strategic management and operational research, into a bandwagon that is attracting numerous researchers and practitioners (Kay 1995).
The demand for scenario-driven planning in business has been increasing for two reasons: first, there is abundant evidence that the strength of an economy can be declining or at least stagnating. Second, using scenarios as a strategic tool provides a handsome return on the investment it requires. The demand for strategic planning with scenarios is beginning to outstrip the supply of scenario analysts. To continue the introduction of scenario-driven strategies into the increasingly turbulent business environment, firms need more people capable of generating strategic change scenarios. Scenario-driven planning is a systematic approach to an increasingly important responsibility of general management: positioning today's business firm in a rapidly changing and complex global environment (Acar & Georgantzas 1995).Predicting a world in which technology and competitive patterns change at an unprecedented rate is hard enough. Moving ahead of it is simply larger than the extended talents and resources that are now available in any of the world's leading firms. The technology of scenario-driven planning constitutes a superior approach designing corporate and business strategies (Donaldson & O'Toole 2002).Firms can use it in formulating and analyzing strategic situations productively. Scenario-driven planning is not a panacea but can be very successful. Because of its multidisciplinary nature, it can help professionals and managers in a variety of applications, namely career planning, competitive analysis, crisis management, decision support systems (DSS), macroeconomic analysis, marketing, portfolio management, and product development. Although scenarios have been used mostly to forecast future corporate environments, scenario-driven planning is increasingly of interest to functional managers in diverse business areas. Managers should incorporate both in their mental models and in their plans, the same way that their competitors might move or respond to tactical moves. Their analysts should sit with them, encouraging them to articulate and to analyze the relationships among these important issues. In sessions with managers, analysts need to become good sparring partners. Attaining greater specificity will empower the managers for better insights. Then, the meaning of combined changes in the environment and in strategy will be understood. At implementation time, this will result in better communication and in a more analytically bent leadership style (Drejer 2002).
Acar, W & Georgantzas, NC 1995, Scenario-driven planning:
Learning to manage strategic uncertainty, Quorum Books,
Donaldson, B & O'Toole, T 2002, Strategic market relationships:
From strategy to implementation, John Wiley & Sons, New York
Drejer, A 2002, Strategic management and core competencies:
Theory and application, Quorum Books, Westport, CT.
Kay, JA 1995, Foundations of corporate success: How business
strategies add value. Oxford: Oxford University Press