Strategic Management: Formulation and Implementation

The Functional Model

In the functional approach an organization's effectiveness is determined by the social consequences of its activities.

The crucial question to be answered is: how well do the organization's activities serve the needs of its client groups?

The appraisal of an organization's effectiveness should consider whether these activities are function or dysfunctions in fulling the organization's goals.

These seven models have their strengths and shortcomings depending upon the organizational situation being evaluated. The choice of evaluation approach usually hinges on the organizational situation that needs to be addressed.

Anthony's Perspective

Until 1965, and not uncommonly even today, conventional wisdom held that planning and control in organizations should be separated: "... control must reflect plans; and planning must precede control". In 1965, Robert Anthony of the Harvard Business School put forward a novel framework for the analysis of planning and control systems.

Anthony's basic thesis is that planning and control are so closely interlinked in organizations as to make their separation meaningless and undesirable. He suggests, it makes much more conceptual and practical sense to link together similar and interwind planning and control activities into systems of homogeneous characteristics.

Instead of two categories of planning and control (a practice still supported by certain authorities), Anthony suggests that organizational planning and control be segmented into three categories:

  1. strategic planning
  2. management control
  3. task (operational) control

It is important to note that Anthony's terminology, is somewhat misleading. When Anthony says "strategic planning" he means "strategic planning and control." Similarly "management control" embraces both planning and control activities.