Towards a model of strategic management incorporating fuzzy logic

Chao-Chin, Kan

Abstract

Success in strategic management is not only based on the planning view for strategy formulation but also the need to consider strategy implementation. From a strategic planning view, this thesis identifies the six insufficiencies of strategic management: (a) strategy is implemented by means of people, whose behaviour cannot be determined by a plan; (b) strategy needs wide communication in an organization; (c) strategy formulation is separated from implementation; (d) the strategic planning process may contribute to only part of the organization; (e) planning neglects the dynamic environment and interactive influence of relationships; (f) performance measurement neglects qualitative data such as employee satisfaction, customer satisfaction and stakeholders’ performance (Kaplan and Norton, 2004).

This research proposes a pluralistic approach –a six-view model consists of roots, stem, and flowers and fruits - the six-views, including logic and language, learning, cultural, political, ethical and planning views as the roots of critical systems thinking for promoting strategic management, which combines formulation and implementation with fuzzy logic by a robust planning, leadership style, participation
of organizational members, and stakeholders’ cooperation to overcome the current deficiencies of the planning view particularly in line with the Taiwanese background. This six-views model is also called the “roots theory”, because the source of these views are organizational roots which range from leadership, a company culture built to cohere employees’ beliefs, engages wide communication in different departments, encourages team learning and innovative ideas, and has mutual trust with suppliers and customers, even stakeholders. The stems of the roots theory offers the foresight of a competitive environment with Five-forces analysis to identify the stage of the product life cycle in strategic business units (SBUs) for promoting supply chain operation. Performance evaluation identifies the results of strategy implementation, which includes employee satisfaction, customer satisfaction, and stakeholders’ performance as flowers and fruits of a tree. Effective strategic management results from combining the six-views because strategies fail when strategy is not implemented well (Bossidy and Charan, 2002; Joyce et al., 2003; Kim and Mauborgne, 2005; Kaplan and Norton, 2008). Neilson et al. (2008) point out that enterprises fail at execution because they go straight to structure reorganization and neglect the most powerful drivers of effectiveness - decision rights and information flow.

The research was conducted in three interrelated phases. First, the nature of strategic management and different views of strategic management were identified by means of a literature review. Each view of strategic management was shown to be insufficient by Mintzberg’s (1987a) five Ps; and another P (partners’ expectations) came from this research for strategy formulation, so that an integrated thinking
approach (Cummings and Daellenbach, 2009) incorporating six-views was needed for effective strategic management. Moreover, two tools of management such as critical systems thinking and fuzzy logic approaches were examined to assess how well they can promote strategic management in organizations. Second, a questionnaire was developed to unveil the current situations of strategic management and confirm the six-views model in Taiwanese companies. The questionnaire was sent to two hundred Taiwanese companies and produced sixty-three usable responses. The SAS package was employed to analyse the data. Simultaneously, senior managers were interviewed from seven manufacturing industries and eight service firms to discover the deeper concerns of strategic management in Taiwanese companies. Finally, four companies were selected as case studies to practically research, to support the interpretation of the results and to induct a novel model of strategic management.

Some of the significant findings of the data analysis were that: factor analysis determined that the list of the six-views naturally separated into six distinct groups with Eigenvalue more than one; Duncan’s test showed that the overall companies in the learning, planning and six-views belonged to “Ranking A”. The six-views and the logic and language view were positioned in “Ranking B”. The logic language,
cultural and ethical views belonged to “Ranking C”. The political view, however, was placed in “Ranking D” and it had a significantly lower rating compared with the other views. From multiple linear regression analysis, this research revealed that the priority order of significant influence variables were the cultural view, learning view, planning view, and logic and language view to promote strategic management and multi-collinearity was not severe. In fact, descriptive statistics and Eastern and Western management literature disclosed that the political and ethical views can contribute to effective strategic management. Therefore, this thesis applied six-views to promote strategy formulation and implementation. The multiple linear regression analysis of the six-views model disclosed that the six-views can be used as roots to enhance supply chain operation further to achieve better organizational performance in Taiwanese companies.

The audit of the six-views by fuzzy logic found that the planning view is perceived as promoting the most effective strategy formulation; however, the integrated five-views for implementation is not strong enough to improve strategic management. Companies A1, A2, A3, and A4 possess strong six-views; they should adopt development strategy. The results of the test showed employee satisfaction,
customer satisfaction, and stakeholders’ performancewhere employee satisfaction and customer satisfaction were directly correlated for four companies. In terms of characteristics of industry, the result of strategic management with the six-views linked to stakeholders’ performance with stakeholders’expectations and corporate social issues was consistent with a positive tendency as manufacturing industries, companies A1-A2, and service firms, companies A3-A4. In addition, it is worth mentioning that companies A1, A2 and A4 did not conduct an ideal social political arena of stakeholders’ groups when compared with company A3.

In conclusion, the planning view has gained wide acceptance for Taiwanese companies wishing to successfully achieve strategy formulation, but implementation shows insufficiencies. Therefore, this research proposes the six-views model for complementing the lack of a planning view and expands existent theory of the planning view, highlighting the “people” for implementing strategy, especially as
related to Taiwanese companies. The roots theory is based on both the theoretical reasoning and empirical evidence, that the analysis of the six-views should play a major role in promoting effective strategic management. The research findings are discussed and recommendations for further research are also proposed.

Citation

Chao-Chin, K. (2010). Towards a model of strategic management incorporating fuzzy logic. (Thesis). University of Hull. Retrieved from https://hull-repository.worktribe.com/output/4209414

• Thesis Type: Thesis
• Deposit Date: Aug 15, 2011
• Publicly Available Date: Feb 22, 2023
• Keywords: Business
• Public URL: https://hull-repository.worktribe.com/output/4209414
• Additional Information: Business School, The University of Hull
• Award Date: Apr 1, 2010