Traditional strategy tools do not work in a more turbulent environment – An analysis

Résumé du document

In the context of the fast-moving environment in today's business world, the major part of firms use a strategy to approach the future, to ensure the continuation of the company, and anticipate factors associated with the external and internal environment. In this organizational thinking context, there exist different ways to get competitive advantages, depend on the environment and different levels of uncertainty. Each firm wants to reach purposes and essential policies to achieve these goals, but if the business world is viewed as being complex, because this edge is in a turbulent environment and in a knowledge economy organization, traditional strategy can't use the strategy tools efficiently. Turbulent environment is the fact that the environment is always fast-moving, because after industrial economy, the business world has known a lot of turbulences, in the first place, globalization is the main factor, but also introduction of new technologies, the 9/11/2001, the dot.com, people change from robots (Fordism) to individuals, etc.

Extraits

[...] As strategy tools don't work, for firms it's always the same problem: how to improve their profitability? They can analyze by themselves the industry context, and defines problems, but they have not enough knowledge to really succeed. Someone of bigger firms have their own consulting department; and some other use knowledge- intensive firms' services to improve their effectiveness and efficiency, and get competitive advantage. Knowledge-intensive firms have designed an adaptive model of Porter's five forces for the knowledge economy firms which take into account turbulent environment and therefore can find the success key for their clients. [...]

[...] The main knowledge-intensive firm is Boston Consulting Group. Porter's strategy tools were designed for industrial firms such as Ford Motor Company or Coca-Cola Company. But to be used in knowledge economy, they need to be honed and modified. Knowledge-Intensive firms' are specialized in consulting, auditing, legal, venture, capital and advertising. (Sheehan, 2005) Their work consist in analyzing industries with sharper lens and firms' context, defines problem to be solved and defines clients targeted by the firm to help them to adapt and get competitive advantage. [...]

[...] May 1984 p33-39) (JOHNSON, G., Whittington, R., and SCHOLES, K., (2005), Exploring Corporate Strategy. 7th ed. London: Prentice Hall) (Foucault, Michel. Power/Knowledge: Selected Interviews & Other Writings 1972-1977. Ed. Colin Gordon. New York: Pantheon Books purchase book (Norman T. Sheehan, Why old tools won't work in the knowledge economy, Journal of business strategy, VOL 26 NO Emerald publishing limited) (Anaxagore de Clazomènes 500 BC–428 BC. Exposed in Peri Physeos) BIBLIOGRAPHY (Kevin P.Coyne and Sumo Subramaniam, The McKinsey Quaterly. Bringing discipline to strategy number 4. p66. [...]

[...] This essay is critically analysis, to understand why traditional strategy tools does not work in this knowledge environment and why they do not work in today's business world, it is essential to understand the nature of traditional strategy tools and identify how to use them in the current economy, and why according to the degree of uncertainty, even in a complex world, some of these tools are used, and often adapted on post-modernism approach. Traditional approach emerged during 80's (Porter, 1979), based on competitive advantage needs, in aim to earn a return on investment and improve profitability, but based for industrial firms, in a stable environment. At the center of the traditional strategy structure locate a microeconomic model of industry. However traditional model stays static and doesn't take into account the time and his fast-moving environment. [...]

[...] Michael Porter is the author of several strategy tools, as generic strategies, value chain theory or the more common, the five forces. M. Porter uses his based-view of competitive advantage concept (Porter, 1979) to success in the rational approach to strategy with analytical process. This concept consists in separating the competitive environment in five factors: threat of new entrants, threat of substitutes, bargaining power of suppliers, bargaining power of buyers, competition within the sector, also called Porter's Forces”, in order to get a competitive advantage with the comparative analysis of human resources to have a better control than competitors about the competitive environment's forces. [...]