Rational Vs Irrational School of Thought Approach Toward Strategic Management

Rational Vs Irrational School of Thought Approach Toward Strategic Management

Introduction

Managers face no greater challenge than that of strategic management, guiding a complex organisation through a dynamic; rapidly changing environment requires the best judgment.

Strategic management are invariably ambiguous and unstructured, and the way in which management respond to them determines whether the organisation will succeed or fail.

What is a Strategy?

Strategy refers to top management’s plan to obtain outcome consistent with the organisation mission and goals.

Strategic Management is a broader term that encompasses managing not only the stages already identified but also the earlier stages of determining the mission and goals of an organisation within the context of external and internal environment, hence strategic management can be viewed as series of steps in which top management should accomplish.

Analysis

This report will evaluate the practice of strategic management in organisation, in view of different nature of organisational forces that influence strategic decision process.

Case studies will be used to weigh up the strength, limitations and implication of strategic management in organisational setting.

Analysis of the strategic management role will be conducted in views of arguments of rational school of Thought as opposed by irrational school of thought advocated by different authors and practitioners.

Schools of Thought

Rational school of thought advocates the strategic management in organisation is conduct in a formal process, it is linear process and efficient.

Irrational school of thought advocates that organisation are not rational, there are a lot of dynamic factors that affect the strategic management processes like chaos, politics, culture, psychology, etc.

(Cyert and March, 1963) tried to counter more rational models depicting organisations as profit entities operating under perfect knowledge. Instead organisation is constructed as coalition of participants, with differing motives who choose organisational goals through a process of continual bargaining.

Several arguments have highlighted the inherent limitations of rational model and support political view of strategic change, cultural view, psychological view, etc.

The rational school of thought appreciates the need of cultural change in organisation when desired, and prescribe that step by step approach toward cultural change.

The approach is explained by the Dynamic of Paradigm change in Jenson and Scholes literature. The Paradigm comprises of stories, symbols, rituals, control system, organisational strategies, etc.

It starts with a given organisational paradigm, where it has to develop deliberate strategies and implement. Implementation will result in to a certain corporate performance that can be measured by various techniques like Returns on capital employed or Returns on investment.