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Karl R. Knapp
Anderson University
Key Ethical Issues 2
Abstract
Strategy has existed for several thousand years in the form of military strategy. The
adaptation of strategy to the business realm did not occur until the mid-1960’s. Since that time
several schools of thought have evolved and a general process for strategic management has been
developed. A historical ethical issue for strategic management is the environmental review
intelligence (CI).
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This paper evaluates the purpose and process of strategic management in order to identify
a historical ethical issue at the core of the discipline and trace this historical issue forward into its
current context.
Strategy has been around for millennia. One of the earliest written works on strategy was
developed by Sun Tzu during the fourth century BC. In The Art of War, Sun Tzu wrote that
“what is of supreme importance in war is to attack the enemy’s strategy; next best is to disrupt
his alliances; the next best is to attack his army” (1963). Military strategy has existed for
thousands of years. It was not until the mid-1960’s that military strategy was applied to business.
One of the earliest authors on business strategy was Alfred Chandler. Chandler defined strategy
as “the determination of the long-term goals and objectives of an enterprise, and the adoption of
courses of action and the allocation of resources necessary for carrying out these goals” (1962).
Following Chandler’s work business thinkers began to consider the discipline of strategic
management. Foundational elements were added by Peter Drucker, Bruce Henderson, H. Igor
Ansoff, Henry Mintzberg, Michael Porter, Ohmae, Gary Hamel, C.K. Prahalad, Andrew
formula for how a business is going to compete, what its goals should be, and what policies will
be needed to carry out those goals” (1980). According to Strickland & Thompson, the five tasks
of strategic management are “(1) Forming a strategic vision; (2) Setting objectives; (3) Crafting a
strategy; (4) Implementing and executing the strategy; and (5) Evaluating performance” (1999).
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Within the process of crafting a strategy Henry Mintzberg has identified three groups
encompassing ten different schools of thought (1998). The prescriptive group includes the design
school, the planning school and the positioning school. The descriptive group includes the
entrepreneurial school, the cognitive school, the learning school, the power school, the culture
school and the environmental school. The integrative group includes the configuration school.
The strategic management process and the ten different schools of thought on crafting
Set
SetObjectives
Objectives
Craft
CraftStrategy
Strategy
Review Internal Review External
Review Internal Review External
Environment Environment
Environment Environment
Set Appropriate Strategy
Set Appropriate Strategy
(based on school of thought)
(based on school of thought)
Implement
ImplementStrategy
Strategy
The first foundational principle is that strategy is based on setting specific objectives.
The second foundational principle is that the internal environment must be reviewed
when crafting strategy. This review usually includes at least two questions: 1) How well is the
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company’s present strategy working? 2) What are the company’s resource strengths and
The third foundational principle is that the external environment must be reviewed when
crafting strategy. The external review can be much more substantial than the internal review. The
external review usually includes industry economic information; competitive forces information
such as Porters Five Forces model (Porter, 1980); industry driving forces (Porter, 1980);
competitive positions of rival firms using a strategic group map (Porter, 1980); strategic moves
The fourth foundational principle is that strategy must be implemented to obtain the
objectives set forth. Organizational behavior and change management disciplines are crucial in
The fifth foundational principle is that the environment is constantly changing and the
“Business ethics concentrates on the moral standards as they apply to business policies,
institutions, and behavior.” (Velasquez, 2002). Any attempt to analyze ethical issues in strategic
management requires a specific focus. If the analysis were to extend to all possible strategic
choices and courses of action, it would be without end. In order to obtain focus, this analysis will
only evaluate ethical issues inherent in the strategic management process, not with specific
strategic choices.
The key historical ethical issue in strategy is environmental review. This issue includes
privacy. The internal review can also be colored by politics and power. An analysis of a
company’s weaknesses may not be favorable to parts of the organization and may be difficult to
address objectively.
A review of the external environment also presents challenges. In fact, this issue has
existed in strategy formulation for thousands of years. The prehistory of business strategy,
“What is called foreknowledge cannot be elicited from spirits, nor from gods, nor by
analogy with past events, nor from calculations. It must be obtained from men who know
the enemy situation. An army without secret agents is exactly like a man without eyes or
The historical ethical issue for competitive strategy, the environmental review, has been a
key ethical issue for as long as strategy has been formulated. This issue continues to be a
The key current ethical issue in strategic management, competitive intelligence, flows
from the historical ethical issue. The review of the external environment, and more specifically,
the gathering of information on specific competitors has created the need for what is termed in
Competitive Intelligence
Most of the environmental and competitive analysis tools for strategic management rely
on competitive intelligence. Information about the environment and competitors is critical to the
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use of tools such as: The Five Forces Model (Porter, 1980), Driving Forces Analysis (Porter,
is a continuous process involving the legal and ethical collection of information, analysis
required in order for strategy formulation to be successful. Performing successful and ethical
References
Chandler, A. (1962). Strategy and structure, chapters in the history of the industrial enterprise.
Strickland, A. J., & Thompson, A. (1999). Strategic management: concepts and cases. New
York: Irwin/McGraw-Hill.
Tzu, S. (1963). The art of war. London: The Oxford University Press.
Velasquez, M. (2002). Business ethics; concepts and cases. New Jersey: Prentice Hall.
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Author Note
University, 1100 East Fifth Street, Anderson, Indiana 46012 or via email to
karlknapp@karlknapp.com.