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The positioning school is an analytical process.

In the positioning school, like the other prescriptive schools, all the processes are
developed far away from where they will actually be implemented, like a general
surveying the battlefield. The battle, so to speak, is reviewed after the fact, and
managers then make adjustments for future battles. While the positioning school
puts its focus on analysis, these analyses don’t necessarily produce strategies. Like
the other prescriptive schools, positioning lacks a strategy for coming up with a
strategy! Placing your focus on analysis isn’t wrong per se, but it is too narrow.
Calculation is important, but a good strategy is only as good as the people behind it.
Inevitably, good strategies can fail without the right people to implement them. Most
notable in this school has been one simple and revolutionary idea, for better and for
worse. Both the planning and design schools put no limits on the strategies that were
possible in any given situation. The positioning school, in contrast, argued that only a
few key strategies—as positions in the economic marketplace—are desirable in any
given industry: ones that can be defended against existing and future competitors.
Ease of defense means that firms which occupy these positions enjoy higher profits
than other firms in the industry. And that, in turn, provides a reservoir of resources
with which to expand, and so to enlarge as well as consolidate position. Cumulating
that logic across industries, the positioning school ended up with a limited number of
basic strategies overall, or at least categories of strategies—for example, product
differentiation and focused market scope. These were called generic. dispensing with
one key premise of the design school— that strategies have to be unique, tailor-made
for each organization— the positioning school was able to create and hone a set of
analytical tools dedicated to matching the right strategy to the conditions at hand
(themselves also viewed as generic, such as maturity or fragmentation in an
industry). So the key to the new strategic management layin the use of analysis to
identify the right relationships.

As in the other two prescriptive schools, strategy formation continued to be


perceived as a controlled, conscious process that produced full-blown deliberate
strategies, to be made explicit before being formally implemented. But here the
process focused more narrowly on calculation—to be specific, on the close-ended
selection of generic strategic positions rather than on the development of integrated
and unusual strategic perspectives (as in the design school) or on the specification of
coordinated sets of plans (as in the planning school). The notion that strategy
precedes structure was also retained in this school. But another form of "structure,"
that of the industry, was added on top, so that industry structure drove strategic
position which drove organizational structure. The process continued to resemble
that of the planning school in its formality, particularly in the external appraisal
stages, with Porter (1980) being especially detailed about the steps by which to do
competitive and industry analysis.

Again, as in planning, the chief executive remained the strategist in principle, while
the planner retained the power behind the throne. Except that the positioning school
elevated the planner's importance another notch. Here that person became an
analyst (often on contract from a consulting firm), a studious calculator who amassed
and studied reams of hard data to recommend optimal generic strategies. But, to
repeat an important point, that analyst did not design strategies (indeed, did not
even formulate them) so much as select them
Prescriptive schools are great at theoretical analysis, but descriptive schools bring
things closer to reality. But are they any better at explaining and defining the
formation of management strategies? welcomed by businesspeople in the 1980s as
the planning school waned, looks directly at the content of strategies rather than
studying mechanisms that influence strategy making. This enables practitioners to
evaluate and develop the school’s principles rather than accepting its precepts on
faith. Positioning-school practitioners reject the design-school tenet that you must
build each strategy to fit a company’s situation. They study the results of positioning
strategies to determine which ones work best in particular situations. This school’s
adherents tend to quote Sun Tzu, Carl von Clausewitz and other military thinkers.
They view a firm metaphorically as an army that must organize to be effective in
battle against its competitors. Other positioning tools include the famous Boston
Consulting Group four-square grid, used to determine whether a product is a “star, a
problem child, a cash cow or a dog.” Later, this school also embraced Michael E.
Porter’s “five forces” and “value chain” as dominant ideas on corporate strategy.

o Approach: It places the business within the context its industry, and
looks at how the organization can improve its strategic positioning
within that industry.
o Basis: Industrial organization (economics) and military strategy.
o In short: Analyze! "Nothing but the facts, madam."
o Contributions: This school made Strategic Management into a science,
enabling future progress. Provides content in a systematic way to the
existing way of looking at strategy. Focus on hard (economic) facts.
Particularly useful in early stages of strategy development, when data
is analyzed.
o Limitations: See Planning School. Neglects power, politics, culture,
social elements. Is biased towards large firms. Number-oriented.

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