General Approaches to Strategy Management

Strategy Management can be approached in two different ways, yet the two complement despite being the opposite.

The Industrial Organization Approach:

This is based more on economics.  This approach deals with competitive rivalry, resource, allocation, economics of scale assumption, rationality, self-discipline behavior, profit maximization.

The Socialogical Approach: 

This approach deals mainly with human interactions, assumptions, bounded rationality, satisfying behavior, profits sub-optimality.

Strategy Management is also divided into 'efficiency' and 'effectiveness'.

Efficiency is doing things the right way.  Here you do-away with waste and optimize processes.

Effectiveness is doing the right things.  There is no point in doing things efficiently or the right way, if  what you are doing is not going to yield results.

 A good strategy is to blend both efficiency and effectiveness.  This is what strategy formulation and strategy implementation doing together means.

Also, the General Strategy Management can be either bottom-up or top-down or collaborative approach.

Bottom-up means that the employees submit their proposals to the managers,  who in turn pass on the best ideas to the top management.  The proposals are assessed for fiscal criteria, viz. return on investment (ROI), or cost-benefit analysis.  Once the proposals are approved they form part of the new strategy.

Top-down  approach is more common in most of the companies.  The CEO, with his strategic planning team, decides the direction the company should take.

 Some companies are experimenting with Collaborative strategic planning approach techniques that recognize the emergent nature of strategic decisions.

In other words, the general approach to strategy management is combining strategy and implementation effectively to achieve the company objectives.

Questions:

•  Explain the two approaches to strategy management and what they mean?
• What bottom-up and top-down mean?