UGM June 2019 Q51
- Option : B
- Explanation : Some strategic decisions are made in a flash by one person (often an entrepreneur or a powerful chief executive officer) who has a
brilliant insight and is quickly able to convince others to adopt his or her idea. Other strategic decisions seem to develop
out of a series of small incremental choices that over time push the organization more in one direction than another. According to
Henry Mintzberg, the three most typical approaches, or modes, of strategic decision making, are entrepreneurial, adaptive, and
planning. A fourth mode, logical incrementalism, was added later by Quinn.
> Entrepreneurial Mode: Strategy is made by one powerful individual. The focus is on opportunities; problems are secondary. The strategy is guided by the founder’s own vision of direction and is exemplified by large, bold decisions. The dominant goal is the growth of the corporation. Satyam Computer Services Limited, founded by Ramalinga Raju, is an example of this mode of strategic decision making. The company reflects his vision of the computer services provider industry. > Adaptive Mode: Sometimes referred to as “muddling through,” this decision-making mode is characterized by reactive solutions to existing problem s, rather than a proactive search for new opportunities. Much bargaining goes on concerning priorities of objectives. The strategy is fragmented and is developed to move the corporation forward incrementally. This mode is typical of most universities, many large hospitals, a large number of governmental agencies, and a surprising number of large corporations. Encyclopedia Britannica, Inc., operated successfully for many years in this mode. It continued to rely on the door-to-door selling of its prestigious books long after dual-career couples made this marketing approach obsolete. Only after it was acquired in 1996 did the company change its marketing strategy to television advertising and Internet marketing. (See www.eb.com.) It now offers an online version of the encyclopedia in addition to the printed volumes. > Planning Mode: This decision-making mode involves the systematic gathering of appropriate information for the situation analysis, the generation of feasible alternative strategies, and the rational selection of the most appropriate strategy. It includes both the proactive search for new opportu cities and the reactive solution of existing problems. Hewlett- Packard (HP) is an example of the planning mode. After a careful study of trends in the computer and communication ns industries, management noted that the company needed to stop thinking of itself as a collection of stand-alone products with a primary focus on instrumentation and computer hardware. Led by its CEO, Carty Fiorina, top management felt that the company needed to become a customer-focused and integrated provider of information appliances, highly reliable information technology infrastructure, and electronic commerce services. Consequently, products were merged into packages for electronic services solutions, such as software for building internal company portals and “e-speak,” a software platform that can quickly create and combine different kinds of online services. HP also sold its venerable test and measurement unit—the business in which the company had begun. HP’s research labs also received significant support and were encouraged to quit focusing on incremental improvements so that they could develop “disruptive technologies”, such as molecular computing, technology to build integrated circuits using molecules. > Logical Incrementalism: A fourth decision-making mode, which can be viewed as a synthesis of the planning, adaptive, and to a lesser extent, the entrepreneurial modes, was proposed by Quinn. In this mode, top management has a reasonably clear idea of the corporation’s mission and objectives, but, in its development of strategies, it chooses to use “an interactive process in which the organization probes the future, experiments and learns from a series of partial (incremental) commitments rather than through global formulations of total strategies.” Thus, although the mission and objectives are set, the strategy is allowed to emerge out of the debate, discussion, and experimentation. This approach appears to be useful when the environment is changing rapidly and when it is important to build consensus and develop needed resources before committing the entire corporation to a specific strategy. The growth of Infosys in the IT industry may be attributed to this approach.
