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strategic choice typology

 
 
model's image

characteristics

author:
Miles, Raymond E. and Snow, Charles C.
country:
United States
period:
1978
type:
model
role:
consultant and manager
activity:
analyse
topic:
strategic management and org. design & development
abstr. level:
environment
perspective:
learning
status:
for review
module:
strategic management
comments:
0
 

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description:

In 1978, the American academics Miles and Snow developed their strategic choice typology and helped launch the configurational branch of business strategy. Their study brought together the situationalist and the universalist camps who were disputing how companies should compete in a given market. For situationalists, generic strategies were intrinsically flawed because no two strategic settings were ever the same. For universalists, general laws existed that made rules applicable irrespective of circumstance. Miles and Snow claimed that four fundamental strategy types exist in any given business environment so that companies could do well in an industry in more than one way, but not in a multitude of ways.

 

Miles and Snow based their findings on a study of 84 firms in four industries:

  1. college text book publishing
  2. electronics
  3. food processing
  4. hospitals

They examined how these organisations adapted over time to changes in their environment. They defined strategy as a consistent pattern of decision making, and regarded the organisation’s behaviour as the best identifier of its strategy. Firms not only respond to changes in the environment. They also act to influence and co-create them, but are limited in making changes by the constraints from top management’s attitudes, beliefs and access to information. Managerial choice defines and polishes an organisation’s structure and process. A developed strategy-structure configuration limits the organisational capacity to set-up activities outside the normal realm of operations. The cost of deploying non-routine activities becomes too high to sustain over a longer period of time.

 

The adaptive cycle is the core model of the Miles and Snow strategic choice typology and defines the dynamic process in which organisations continually adjust internal interdependencies to environmental opportunities and risks. They defined three key problems that organisations must solve in order to effectively position themselves:

 

1. entrepreneurial problem

Top-management needs to select the domain in which the company will compete, and allocate appropriate resources to the identified product-market combinations.

 

2. engineering problem

Once the products or services are identified, a technical system must be developed that can produce and deliver these goods. The production system itself needs to be controlled and requires the installment of proper information and communication flows.

 

3. administrative problem

The administrative aspect focuses on rationalising those activities that “successfully solved problems faced by the organisation during the entrepreneurial and engineering phases” (the lagging aspect), as well as on formulating processes that allow the organisation to innovate (the leading aspect).

 

Adaptation often occurs by moving sequentially through the entrepreneurial, engineering and administrative phases, but can start at any of these three. The three adaptive problems are closely related whereas the other two factors constrain the third factor.

 

In a single industry, organisations can be categorised according to a limited number of organisational forms, each with its own specific adaptation pattern:

 

DEFENDERS

Organisations that have a narrow product-market focus to secure a stable market niche. The main entrepreneurial task is to aggressively defend its prominent position in the chosen niche. Its main engineering challenge is to achieve technological efficiency. The defender appears “lean & hungry” since few resources are under-utilised. Planning is centralised and follows the classical sequence of plan, act and evaluate. The main risk is technological obsolescence.

 

PROSPECTORS

Organisations that continually search for new market opportunities. Their domain is broad and in a constant state of development. The main tasks are maintaining flexibility in technological and administrative components. Technologies are less formalised and more embedded in the minds of the organisation’s personnel. Planning is based on incremental adjustments based on feedback from experiments. The main risk is overextending into too many product-markets.

 

ANALYZERS

Organisations that operate in two types of product-market domains, one that is relatively stable and the other in flux. The aim of these organisations is to minimise risk and maximise profit opportunities. Marketing is seen as the crucial department that balances the existing and the new. The major drawback of this organisation type is the higher cost of running two parallel technical systems making the organisation incapable of being 100% efficient or 100% effective.

 

REACTORS

Organisations that lack an effective response to changes in the organisational environment. Reactors do not have a distinct strategy, but react on an ad hoc basis. The structure-process configuration is not aligned with the desired strategy and creates organisational instability that can result in its collapse over time.

assets:

.ppt file
adaptation cycle
  • ProvenModels
  • editor PM
  • version 0.1
  • 35 KB
 
.ppt file
environmental uncertainty scan
  • ProvenModels
  • editor PM
  • version 0.1
  • 140 KB
 
.ppt file
strategic type characteristics
  • ProvenModels
  • editor PM
  • version 0.1
  • 135 KB
 
.ppt file
strategic type survey
  • ProvenModels
  • editor PM
  • version 0.1
  • 107 KB
 

pros:

 

 

 

The framework of Miles and Snow strongly emphasised the great influence of top-management in the adaptation processes. Top-management drives change. At the same time they limit the range of strategic options under consideration by their personal preferences and other cognitive limitations. In other words, managerial choice greatly matters.

 

cons:

 

 

Their typology should not be applied to conglomerates that span multiple industries. It focused on the ways an organisation can best position itself within a given industry.

 

 

references:

Fit, Failure & the Hall of Fame
  • Raymond E. Miles and Charles C. Snow
  • 2001
  • Free Press
  • United States
  • ISBN 978-0743233224
 
Organizational Strategy, Structure and Process
  • Raymond E. Miles and Charles C. Snow
  • 1978
  • McGraw Hill
  • United States
  • ISBN 978-0804748407
 
Strategic Management and Business Policy
  • Thomas L. Wheelen and J. David Hunger
  • 2007
  • Prentice Hall
  • United States
  • ISBN 978-0132323468
 
Strategy Safari: a Guided Tour through the Wilds of Strategic Management
  • Henry Mintzberg, Joseph Lampel and Bruce Ahlstrand
  • 1998
  • Free Press
  • United States
  • ISBN 978-0684847436