Environmental School (Strategy) - Explained
What is the Environmental School of Strategy?
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What is the Environmental School of Strategy?
The environmental school of strategy views the environment as the main factor influencing the strategy process. It sets the direction for an otherwise passive organization. Strategic choice is limited by the environment.
The environment of an organization can vary on its degree of stability, complexity, diversity, and hostility, given rise to a variety of combinations.
Strategies – as an answer to the acting forces in order to adjust properly – will vary according to the characteristics of the environment (combinations).
Back to: STRATEGY & PLANNING
What are the Premises of the Environmental School?
The premises of the environmental school entail four basic assumptions:
- The environment, a set of general forces, is the central actor in the strategy-making process
- The organization must respond (react) to this forces or else be ―selected off
- In this perspective, leadership becomes passive and its main role is to identifying the acting forces, assessing their impact, and preparing an adequate adaptation of the organization
- Finally, organizations group together into different niches or positions, where they remain until resources decrease, or competition becomes too hostile. Then the organizations die.
What is Contingency Theory?
Contingency theory is a behavioral theory suggesting that there is no best way to organize a corporation, to lead a company, or to a make decision.
The optimal strategic approach is contingent, or dependent upon the balance of internal and external situations.
The more stable an environment remains, the more formalized the internal structure of the organization becomes.
The Environmental School derives from contingency theory.
Types of Environmental Resources?
The Environment gives rise to two types of resources:
- Economic - Economic resources are tangibles such as money, land and machinery.
- Symbolic - Symbolic resources are intangibles like for example prestige and fame.
Strategy in here focuses on finding the best way to acquire economic resources and to transform them into symbolic ones, and the other way around.
How Do Norms Affect Strategic Formation?
The environment becomes more complex because the increasing number (and power) of norms regulating the practice.
All organizations in the environment will adopt similar structures and practices due to the normative pressure.
What is Institutional Isomorphism?
The convergence of institutional strategy is driven by imitation of practice and behavior based upon the effects of norms (driven by the environment).
Accordingly, there are three main forms of isomorphism:
- Coercive - Organization evolve because of cultural expectations and pressure from other organizations in which they are dependent
- Mimetic - Companies imitate and borrow procedures from successful benchmark companies
- Normative - Companies are influences by the professional expertise of its members.
How do Organizations Respond to Environmental Pressures?
Organizations may response to environmental pressures in a number of manners:
- Acquiescence (fully accepting the pressure)
- Acquiesce Habit
- Following taken-for-granted norms
- Imitating institutional models
- Obeying rules and norms
- Compromise (partially acceding to the pressure)
- Balancing expectations of various stakeholders
- Conciliating institutional elements
- Negotiating with stakeholders
- Avoidance (avoiding the need to accept the pressure)
- Disguising inconformity
- Relaxing institutional attachment
- Changing goals, activities or domains
- Defiance (actively resisting the pressure), and
- Ignoring norms and values
- Challenging rules and requirements
- Attacking the sources of pressure
- Manipulation (attempt to change the pressure)
- Importing influential elements
- Shaping values and criteria
- Controlling elements and processes
- How Strategies Arise
- Intended, Deliberate, Realized, and Emergent Strategies
- Management and Strategic Planning
- Mintzberg's Schools of Strategic Development
- Design School
- Planning School
- Positioning School
- Entrepreneurial School
- Cognitive School
- Learning School
- Power School
- Culture School
- Environmental School
- Configuration School
- Mintzberg's 5Ps of Strategy
- McKinseys 7s Model
- ***Industry Analysis to Build a Strategy***
- Strategic Analysis
- SWOT Analysis
- SPACE Analysis
- Situational Analysis - 7C
- Competition Profile Matrix
- Stakeholder Analysis
- Stakeholder Mapping
- Resources and Capabilities
- Core Competency
- VRIO Analysis
- Value Chain Analysis
- Internal Factor Analysis
- Value Creation Index
- Minimum Efficient Scale
- PEST(LE) Analysis
- Industry Lifecycle Analysis
- Company Lifecycle - Definition
- Porter's Five Forces
- Modes of Management
- External Factor Evaluation
- Business Performance Measurement
- Balanced Scorecard
- Economic Value Added
- Activity-Based Management
- Quality Management
- Action Profit Linkage Model
- Business Activity Monitoring
- Gap Analysis
- Strategy Diamond
- BCG Growth-Share Matrix
- GE McKinsey Matrix
- Value Reporting Framework
- Pyrrhic Victory