Identification and Development of Strategy at Subsidiary Level

The general strategic management literature is far from unanimous on whether the strategy-making process is (or should be) rational, partly rational, or unable to be anything but non-rational (Hofer and Schendel, 1978; Porter, 1980; Quinn, 1980; Johnson, 1988). Conceptual and practical considerations suggest that the middle course is not only that of least resistance, but also the one that gives practitioners the best chance of evolving a practical strategy using some form of incremental-ism coupled with a rational analysis that identifies major sources of internal and environmental risk. This is particularly important when a firm moves from one strategy to another, whether to move away from poor positioning within its industry or to avoid the lifecycle risk by moving on from a successful strategy before it hits the decline stage. Evidence suggests that there is a dynamic involved in the strategy process that gravitates towards the evolutionary rather than the incremental, whether it be at functional (Ronstadt, 1978), subsidiary (White and Poynter, 1984; Taggart, 1996c) or corporate level (Morrison, 1990). Thus, whether the study is based on organisational design (Mintz-berg, 1980), control mechanisms (Doz and Prahalad, 1981), contingency theory (Ginsberg and Venkatraman, 1985), the strategy-structure interface (Amburgey and Dacin, 1994), or biology modelling (Taggart, 1995), sensitivity to the firm’s operating environment is the central issue in strategy change.