Assumptions and Contribution of the Strategic Choice Theory - Essay Example

Critical evaluation of the assumptions and contribution that Strategic Choice theory has made to Management and Organisation Studies Table of Contents Table of Contents 1 Introduction 2 The Strategic Choice Theory 2 Assumptions of the Strategic Choice Theory 4 Contribution of Strategic Choice Theory to Management and Organisation Studies 5 Conclusion 7 Reference List 8 Introduction The Strategic Choice Theory dominated the managerial and organisational thought process during the 1960 period. The design, organisational structure and performance parameters of the organisation related to the strategic choice analysis were observed to be potentially influenced by alterations and emerging issues of the business and organisational environment. Moreover, the use of the strategic choice analysis also contributes in helping the organisation and its management in optimally utilising the existing resource base to gain needed competitive advantage. The organisation would thus become ready to potentially adapt to the external changes in the technological, social and politico-economic environment. Further the aspect of strategic choice also highlighted the need for generating an effective interrelationship between the organisation and the managerial framework. It aims to effectively integrate the organisations and its individuals in that the same contributes in generation of the right strategic choice to exploit the existing resource base in generation of needed competitive potential. It thus endeavours to reduce the aspect of tension both relating to the internal and external organisational framework which in turn enhances its efficiency to counter changes in the external environment (Child 1972). The paper would reflect on the assumptions and the contributions of the strategic choice theory on the organisation and the management framework. It would tend to highlight on specific examples relating to the use of strategic choice. The Strategic Choice Theory Strategic Choice Theory relates to the actions or roles played by organisational leaders in making concerned choices to enhance the competitive advantage of the business organization against external political, demographic, social, economic and technological changes. Further the strategic choice theory is also observed to generate tension relating to agency and structural elements. The relation of agency to structure and further to the external environment makes the theory of strategic choice more dynamic and applicable to different settings. This reflects that the strategic choice theory not only serves the competing needs of the organization but also tend to depict an evolutionary approach based on external needs and changes. Strategic Choice Theory also reflects on the manner in which the business organisations gradually adapt to the changing needs to help gain needed competitive advantage. The concept of ‘Strategic Choice’ relates to the process through which the authoritative bodies in an organization tend to incorporate to help in taking of strategic actions (Child 1972). Further the concept of strategic choice also tends to take into account the external business environment, the performance standards to help evaluate the performance of the business organisation and also the internal structure of the firm. From the above discussion the strategic choice analysis is identified as a concept that contributes in the gaining and analysing of information from the external environment to help in the identification of effective opportunities and business problems. The theory of strategic choice based on the above process endeavours to help in the designing of a learning environment in the organization. The learning environment is created and fostered in that the strategic choice is developed based on the use of debating, negotiation and other types of choice making tools. Actions taken based on the above processes contribute in generation of specific outcomes (Child 1997). The dynamic process of strategic choice can be effectively depicted and elucidated through the use of the following diagram. (Child 1997) The above diagram reflects the strategic choice process as a continuous one that reflects the combination of two different structures like the internal structure that contributes in the generation of an action while the external structure reflects of extending the action or the outcome generated to the external environment. Generation of the effects of the outcome to the external environment contributes in the bringing out of effective feedbacks that are needed to be incorporated by the organisational managers to help in the development of organizational potential. Interactivity between the two cycles is developed through the mode of social interaction to help in the bringing out of effective solutions to external issues and problems. The continuous change or flux among the two cycles ideally contributes in generation of needed dynamism and evolution to the organization. The definition of strategic choice relates to the effective planning of the capacity and resources to help in the achieving of organizational objectives. The strategic choice theory also reiterates that the business strategy of an organization with the other administrative and business directions are identified and chosen by the people of higher authority in the business concern. The people of higher authorities are concerned with designing the organizational system and are also concerned with assigning specific roles, objectives and other activities to help in the achievement of strategic needs of the business organization. The strategic choice theory gives power in the hands of the authorities to stand outside and control the actions of others in the organization to contribute in the fulfilment of stated business and organizational objectives (Donaldson 1987). Assumptions of the Strategic Choice Theory The strategic choice theory is held to be based on certain specific assumptions that can be underlined as follows. The first assumption is observed to be based upon the issue of Agency and Choice. This assumption takes into account that managers have effective authority or discretion over their own actions in the absence of any potential external constraint. The managers are observed to generate effective strategic choices in the designing of employment practices in business organizations. Thus in the absence of potential business or external obstacles the agents or the managers are taken to make effective decisions based on the availability of concerned choices. This assumption relates that the age and the educational qualification of the members in the organization account to be effective factors that contribute in the taking of effective decisions in a business organization. Three factors like action determinism of the organizational agents, political process in the organization and finally the situation of imperfect information are held to mutually react to considerably influence the agents in the generation of effective business decisions. Divergent beliefs or thoughts between the agents inside the organization are taken to affect the decisions making pursuits of the managers inside the organization in the fulfilment of stated objectives (Crowell 2010). The second assumption relating to Strategic Choice Theory throws light on the fact that the agents or the organizational managers need to rightly understand the changes in the external environment in the taking of key business decisions. Changes observed in the external business environment like alterations in the telecommunication regulations largely affect the business decisions of the managers in the telecommunication organizations. Similarly the growth of competition in the external business environment is observed to considerably affect the business decisions of the organizational managers of key business organizations like IBM. The analysis of strategic choice relating to the second assumption endeavours to understand and evaluate in whether the external environment tends to act as a constraint or as an enabler in the generation of right kind of business and strategic decisions. The third assumption relates to the issue that the decisions pertaining to the aspect of industrial relations tends to affect the formulation of policy directives and regulations concerning collective bargaining and also relating to workplace levels in the organization. The incorporation of the Strategic Choice Theory relates to the employment of a set of strategic tools like the SWOT Analysis which endeavours to identify the strengths, weakness, opportunity and threats of the business organisation. It also focuses on the use of Management by Objectives (MBO) where the organisation tends to function based on a set of objectives. Other types of strategic tools that are employed by the business organisation are like the Cost-Benefit Analysis and also the evaluation of the Product Life Cycle. The use of the above tools rightly contributes in the generation of strategic frameworks and also the designing of effective policies and decisions along different levels in the organization. It thus does not take into account the cultural ramifications, political status of the company, motivational, leadership skills in the organization. Use of the above tools and decision making approaches is observed to be highly effective in the generation of the right kind of business and organizational decisions related to healthcare organisations. It is assumed that the agents or the managers through the use of the above tools can rightly resolve the issues and problems that tend to act as potential constraints in the generation of decisions related to business. It is thus taken to help in the generation of needed harmony in the decision making activities related to different organizational levels and thus minimises the impact of issues concerning industrial relations. The organizational leaders are considered to be mere observers that contribute in the generation of needed efficiency in the organisational system (Blyton et al. 2008). Contribution of Strategic Choice Theory to Management and Organisation Studies The contribution of strategic choice theory to management can be observed pertaining to the procurement and purchasing activities of the business organisations. Strategic Choice Theory is observed to help in the development of effective contacts and networks with strategic alliances and key partners in the external business environment (Kaufman 2004). The incorporation of strategic choice rightly contributes in the selection of the right supplier base that is selected based on the potential and stability of the supplier unit. Suppliers that qualify based on experiences and that which tend to generate effective information are needed to be strategically chosen for the fulfilment of business objectives. Use of the strategic choice theory also relates to the designing of the procurement strategy of the organisation in which the organisational managers can take resort to the incorporation of the vertical integration strategy. This would contribute in the selection of a specific supplier base which can be effectively controlled and managed by the organizational managers to generate needed efficiency (Kaufman 2004). Further making the right amount of strategic choices is also taken to help in the integration of the needs of the customers to the potential of the suppliers. This relates to the generation of needed innovation to rightly generate an effective system that helps in the tracking of consumer needs which in turn makes the managers to potentially monitor the sourcing activities of the suppliers. Finally the use of the strategic choice is also observed to rightly contribute in the generation of an effective negotiation strategy on the part of the managers. The selection of the right kind of negotiation strategy contributes in the generation of an effective contract on the part of the managers with the suppliers. Development of a potential contract helps the firm in gaining the needed competitive advantage and profitability over other competitor organisations (Rohof 2013). The analysis of strategic choice reflects that the business organisations to gain competitive advantage need to design effective strategies to monitor and govern the external environment. The ability of the organisation to adapt to the changes in the external environment is observed to largely depend on the capability of the managers in the firm (Poole & Ven 2004). The variations in the level of managerial expertise reflect different type of interpretations of the external environment that in turn requires the development of effective strategies. Choice of the right strategic framework contributes in helping the managers gain the right amount of control on the external factors in the business environment. The organisations need to be effectively structured in terms of incorporation of needed innovation in the operational framework, specialised workforce and also in development of key potentials to explore new opportunities (Poole & Ven 2004). Structuring of the organisation based on the above factors would rightly contribute in generation of needed strength to counter the changes in the external framework. The business organisations are also required to conduct effective planning to rightly adapt to the changes in the external environment. An example of Microsoft Inc. can be taken that tends to act as an open system in the gaining and processing of information to generate effective strategies relating to product development and marketing and distribution. The strategic choice theory requires the use of different types of financial and strategic indicators to help assess the performance of the organization. The results of the financial and other strategic analysis indicate the potential and effectiveness of the organisation. This fact contributes in attracting the investors and other stakeholders to the organisation and thereby helps in generating greater opportunity for growth in the long run (Vibert 2004). Conclusion The above analysis reflects that the use of strategic choice theory contributes in enhancing the potential of both the organisation and the managerial body to optimally utilise the existing resource base which in turn contributes in generation of needed competitive advantage. The strategic choice theory reflects certain basic set of assumptions relating to the organisational and managerial framework. It contributes in helping the organisation to design the right set of policies and strategic frameworks that would contribute in countering the changes and challenges in the external paradigm. The paper reflects on effective examples like the use of strategic choice relating to the purchase department of an organisation. Incorporation of the strategic choice is observed to enhance the capability of the organisation to setup an effective network with the supplier community in gaining the right quality and quantity of merchandise to meet up the consumer demands. Similarly the use of the strategic choice theory is observed to require the existing organisational setup to rightly incorporate effective technological and structural changes. This would contribute in making the organisation capable of adapting the external changes to generate greater profitability and efficiency in the long run. It also helps in reducing the chances of growth of internal tensions relating to policy changes in the paradigm of industrial relations and also along other internal departments in the organisation. Reference List Blyton, P, Heery, E, Bacon, N and Fiorito, J., 2008. The SAGE Handbook of Industrial Relations, SAGE, United Kingdom. Child, J., 1972. Organisation Structure And Strategies Of Control: A Replication Of The Aston Programme', Administrative Science Quartely, 17, pp. 163-177. Child, J., 1972. Organisation Structure, Environment and Performance: the role of strategic choice', Sociology, 6(1), pp. 1-22. Child, J., 1997, Strategic Choice in the Analysis of Action, Structure, Organizations and Environment: Retrospect and Prospect', Organization Studies, 18(1), pp. 43-76. Crowell, D.M., 2010. Complexity Leadership: Nursing's Role in Health Care Delivery, F.A. Davis, United States. Donaldson, L., 1987. Strategy and structural adjustment to regain fit and performance: in defence of contingency theory', Journal of Management Studies, 24(1), pp. 1-24. Kaufman, B.E., 2004. Theoretical Perspectives on Work and the Employment Relationship, Cornell University Press, United Kingdom. Poole, M.S. and Ven, AHVD 2004. Handbook of Organizational Change and Innovation. United Kingdom: Oxford University Press, Rohof, J.W., 2013. Strategic Choice Theory in Purchasing, 1st IBA Bachelor Thesis Conference, University of Twente, Faculty of Management and Governance, Enschede. Vibert, C., 2004. Theories of Macro Organizational Behaviour: A Handbook of Ideas and Explanations. United States: M.E. Sharpe. Read More