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Level 7 Diploma in Management Studies
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Strategic Planning and Implementation
Contents
Introduction
Module Objectives 0.1
Summary of learning outcomes 0.1
Unit 1
Management Strategy
Management strategy 1.3
Summary 1.39
Unit 2
Vision, mission, objectives and measures
Vision and mission 2.1
Objectives and measures 2.13
Summary 2.30
Unit 3
Implementation of the strategy
Planning 3.1
Summary 3.37
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concepts and theories and apply them to the business and management
environment. Try to use your own background knowledge when
completing the activities and draw the best ideas and solutions you can
from your work experience. If possible, discuss your ideas with other
students or your colleagues; this will make learning much more
stimulating. Remember, if in doubt, or you need answers to any
questions about this workbook or how to study, ask your tutor.
Introduction
Module Objectives
This module recognises the importance of effective forecasting and
planning in the current global economy. Organisations need to be
proactive, with their direction determined by logical analysis. It is not
always possible to calculate accurately future events but without any
sense of progression it is easy to lose competitiveness, market position
and customer loyalty.
Management Strategy
Unit Objectives
This unit concentrates on the involvement of those in the management of
strategic planning and implementation. The relevance of stakeholders to the
proposed strategy and the way in which they are able to determine the
feasibility and risks associated are discussed.
In addition, the unit examines issues related to costs and other resources. It
also looks at different techniques used to model the proposed changes and
their sensitivity to variations.
The potential opportunities brought about through globalisation and the use of
the Internet are also included.
Management strategy
Reviewing options
There is no fundamental agreement upon an accepted definition of the
term strategy, and different approaches by a wide variety of managers,
writers, etc. have been offered. However, what seems clear is that
strategic management involves diverse and often creative processes in
an attempt to address the increasing complexities facing organisations.
Norton & Irving (1999) also relate the origins of business strategy to a
military analogy:
From this starting point, you should already be able to appreciate that
strategy can be both developed and delivered in a variety of ways, and
that there is a clear role for strategy in determining the future of
organisations. It is this role of strategy to which we will turn to first.
In this section, we will consider the broad role of strategy and the
common terminology that is attached to this organisational approach to
business. A later section of this first unit will, then, consider the
different approaches that can be taken to strategy – both in terms of an
organisation’s context and in terms of the type of organisation being
considered.
Firstly though, we must examine in some detail what the role of strategy
is in a business organisation.
A tendency to ‘just get things done’ in a firm can mean that the company
forgets what it is trying to achieve and where it is trying to go. Along the way
it can further mean that opportunities that arise in the company’s markets
are missed – with the competitive advantage going to a rival company.
Having a strategy means that a company can ensure that its day-to-day
decisions and actions fit within the long-term ambitions and interests of
the organisation.
In turn, having a clear strategy means that the management and staff of
an organisation can appreciate where the company is heading, and the
role they have in ensuring that the firm arrives at the desired destination.
A strategy comprises the objectives that are sought for the business and
the strategic ideas that are required to accomplish the objectives. This
can be summarised as:
ACTIVITY
Read the extract entitled ‘Approaches to Strategic Management’ from
Thompson J L, Strategic Management and Awareness. Make notes as to whether
you recognise either of the approaches to strategic management in your own
organisation. Can you identify the reasons for this? Who is involved in these
approaches?
Start with the entire world – scan it for opportunities to seize upon, trying to
make the best of what you find.
You will resemble a bird, searching for a branch to land on in a large tree. You
will see more opportunities than you can think of. You will have an almost
unlimited choice. But your decision, because you cannot stay up in the air
forever, is likely to be arbitrary, and because arbitrary, it will be risky.
Start with yourself and your company – where you are at with the skills and
experience that you have – and what you can do best. In this approach you will
resemble a squirrel climbing that same large tree. But this time you are starting
from the trunk, from familiar territory, working your way cautiously, tree fork
by tree fork, deciding at each fork the branch that suits you best.
You will only have one or two alternatives to choose from at a time – but your
decision, because it is made on a limited number of options, is likely to be more
informed and less risky.
In contrast with the bird who makes single big decisions, the squirrel makes
many small ones. The squirrel may never become aware of some of the
opportunities the bird sees, but he is more likely to know where he is going.
ACTIVITY
Research the history and development of IKEA, or another well known
multinational retailer, and write a brief report detailing the strategic direction
adopted by the organisation.
ACTIVITY FEEDBACK
A summary of the key characteristics should read;
Purpose:
Notes:
Suggested content:
Source information:
· Blueprint.
· Programme Plan.
· Organisational structures of organisations involved in the
programme.
ACTIVITY
Using the stakeholder map concept described here, what does your own
organisation offer its stakeholders?
What aspects of the stakeholder map might a stakeholder look for in your
organisation?
ACTIVITY
Read the following brief case study and answer the questions that follow it.
Spedan Lewis, the son of the founder of the John Lewis Partnership,
drew up a futuristic constitution which contained mission statements
such as, ‘The Partnership’s ultimate aim shall be the happiness in every
way of its members’ and ‘ The Partnership shall recognise that only
fools put business too far before pleasure, especially health and
happiness, and that there is almost infinite scope for imagination and
energy in the promotion of happiness in the more important sense of
that word.’
To what extent do you think the management of the first organisation should
consider the comments of Spedan Lewis?
Shareholders Customers
· Growth in dividend payments · Price always competitive
· Growth in share price · Emphasis on product/service quality
· Consistent dividend payments · Return and replacement policies
· Growth in net asset value · Product reliability
Suppliers Employees
· Timely payment of debt by company · Good compensation and benefits
· Adequate liquidity · Job security
· Integrity/public standing of directors · Sense of meeting or purpose in the job
· Negotiating ability of managers · Opportunities for staff development
· Amount of interesting work
Government Lenders
· Efficient use of energy and resources · Liquidity of company
· Adhering to country’s laws · Character and standing of management
· Paying taxes · Quality of assets available for security
· Provision of employment · Potential to repay interest and capital on due date
· Value for money in use of public funds
ACTIVITY
Consider an important strategic decision made by your organisation or one
that you are familiar with. By discussing it with the decision-makers involved at
the time, find out what other options were discussed and the means by which
the final decision was made.
Why carry out strategic planning in the first place? This question brings
us back to our opening thoughts at the beginning of the module.
The business strategy must concur with the overall corporate objectives
and strategy so that the organisation is truly pointing in the same
direction.
The needs of the customer and the market must be fulfilled and
satisfied.
The strategy must achieve its objective in a simple and clear manner.
Unnecessary complexity will only increase the likelihood of strategic
failure.
Feasibility studies
A feasibility study is the term used to describe the initial piece of work
to recommend whether the organisation should invest resources to
carry out further procurement activity in a category of spend.
Depending on the size and complexity of the category, the study might
take the form of:
· A detailed report.
· A short study.
· Other forms.
Review
report with
sponsor
KEY POINT
The following documents will support this approach to a feasibility study:
· A resource plan.
Risk assessment
In a perfect world, all managers would have all the necessary
information which, when combined with their own business ability,
would be sufficient to make perfect decisions at all times. Not only is
this truly unrealistic, it is also impossible. (Many managers would also
argue that the elements of challenge and expectation that would be
eliminated in such a situation would result in a very dull predictable
business world, where everything was predictable and the consequence
would be lower returns for those taking higher risks.)
Risk means that a decision has clear targets and that good information
is available to support it. However, the future outcomes of each option
are subject to a degree of chance. The degree of risk is usually the key
point in discussions, and it will be upon this that the final decision is
made. Statistical data will be sought to enable an optimum probability
of a successful outcome. In strategic planning, risk might be considered
to be the probability of a recipient honouring the terms of a financial
agreement, for example.
ACTIVITY
Risks are an important input to the investment decision. Read the following
case study on how the BG group evaluated risks in its investment analysis.
http://www.thetimes100.co.uk/case_study.php?cID=51&csID=218&pID=1
The strategy defines how risks will be managed during the lifecycle of
the programme and is used to plan the way risks are handled within the
programme.
The risk strategy and supporting plan must acknowledge actual and
potential threats to the successful delivery of a project and determines
the activities required to minimise or eliminate them. The risk plan
needs to be capable of integration into or co-ordination with the project
plan.
Probability
Very high
High
Medium Risk
tolerance line
Low
Very low
Impact
= Risk
Suggested content:
It addresses how:
KEY POINT
There are three broad types of risk -
Business Risk
This covers the threats associated with a project not delivering products that
can achieve the expected benefits. It is the responsibility of the Project Owner
to manage business risks.
This is the collection of threats to the management of the project and hence to
the achievement of the project’s end results within cost and time. The Project
Sponsor/Project Manager may manage these on a day-to-day basis.
Operational risk
This covers ongoing risk to service delivery, which could include anything from
major disaster to minor technical breakdown. These risks are managed in a
day-to-day basis by the organisation’s service manager and the service
provider. Note that although the client may not have hands-on responsibility
they must have the capability to understand what is being done on their behalf
and to take appropriate action if required.
Case study
Consider a typical risk management policy, which might state the
following points:
ACTIVITY
How might this risk management policy be adapted for use in your
organisation?
ACTIVITY
Have you observed any changes in the approach to recent strategic planning
within your own organisation or one with which you are familiar?
Mention plans in many companies and you get one of the following
responses. The first response is that they are intending to work on a plan
when the immediate business pressures come off. Translation: they are
never going to do it because they don’t understand the value. The
second type of response is a smug, knowing smile followed by a
statement about how long they have spent crafting their plan. When the
forklift truck delivers the plan and the desk groans under the weight
you can see why it took so long to write. Unfortunately, the end result is
that no one is ever going to read it, let alone act upon it.
The best results come when people work together with whoever in the
organisation can help them meet their goals. Making the majority of
goals public inside the organisation really helps and a further boost is
delivered by linking goals to the compensation and appraisal systems.
There are other essential steps to join up the plans but a key factor is
getting people talking.
being made before the plans are even completed. That is the power of
people working together. In many cases significant cost reductions are
achieved by relatively minor actions. This method works.
Case study
A good example is provided by the Lanarkshire health care trust. The
following extract from their website shows this:
The context for the influence of values is complex and challenging. NHS
Lanarkshire will manage the balance between public and staff
aspirations for the NHS with our responsibility and accountability for
the proper stewardship of resources.
Let us unpack the model a bit and interpret some of the implications of
positions in each of the boxes.
Current New
products products
Market penetration
This strategy involves the firm looking to increase its products’ share of
the markets currently served by the company. Various methods are
available to the firm under this broad market penetration strategy:
More purchasing and usage from existing customers – new products are
added to the existing product line; for example, Coca Cola and cherry
coke, Kellogg’s crunchy nut cornflakes, Virgin bank and Virgin trains.
Convert non-users into users – special offers for people to try Health
Club membership serves as a good example of this.
Market development
Product development
New products – the home bread maker, DVD technology and vehicle
telematics could all be considered to be new products.
Market leadership
· Economies of scale.
· Research and development costs.
· Recruitment of the ‘best’ employees.
· Advertising and promotional spending capabilities.
· Access to market research.
· Brand management and brand proliferation.
Diversification
The Ansoff matrix is a very clear and easily understood model, widely
known and widely used.
Survival
Survival may be for the short or the long term. In the short term, it could
be a strategy that is pursued because of difficult market conditions. In
the long term, the company may well have curtailed profits as they
innovate and grow. The intention being that they actually begin to
achieve profitability further ‘down the road’.
Marks and Spencer is a company that has had to put survival on the
agenda in recent years. Though still profitable through its ‘difficult
years’ it did have to go back to basics in order to ride the wave of bad
fortune. Even though there are still some issues, the company is
beginning to see sales growth again – even if profits are not yet back to
their previous level.
One area that you possibly didn’t consider though, was the strategy
defined as ‘business redefinition strategy’.
Using the Ansoff matrix in conjunction with the BCG matrix, described
in the next section of this unit, the organisation can conduct a useful
strategic review of production/market strategy and what that implies
for achieving the organisation’s vision. In this way we are able to make a
seamless transition towards techniques that are more directly
concerned with strategic evaluation.
For each of the types make some brief notes to explain what each type covers.
ACTIVITY FEEDBACK
Diversification involves a company entering a new line of business outside their
normal scope of operations.
You should have been able to find information covering the different types of
diversification. These include:
· Forward integration.
· Backward integration.
· Vertical integration.
· Horizontal integration.
· Total diversification.
Costs will include all the expenses that must be met in the process of
completing an organisation’s activities. These will be either fixed (costs
which stay the same at all levels of output) or variable (costs which are
directly related to the output).
ACTIVITY
The student is recommended to research the topic of costs for him/herself. It
is advisable to spend some time gaining a more thorough understanding of this
area of financial management, which will be dealt with in a later module.
Investment refers to the purchase of capital goods. These are used in the
production of other goods, directly or indirectly. For example, a
building contractor who buys a cement mixer, some scaffolding, a lorry
and five shovels has invested. These goods are used directly in his
production process. If the contractor then buys a computer and printer
for the company’s office, this is considered an indirect investment.
Although these items will not be used in production, the organisation
would not run as efficiently without them.
Opportunity costs
In the context of making financial decisions, opportunity costs refer to
the value of an alternative decision that has been sacrificed in order to
pursue a particular course of action.
ACTIVITY
From a business perspective, consider the following examples:
b) If the owner decides to honour the booking but hire a car from
another company.
ACTIVITY FEEDBACK
1a) If the owner decides to cancel the booking, the opportunity cost is the
total fee of
£ 250.00
b) If the owner decides to honour the booking but hire a car from
another company, the opportunity cost will be £ 250.00 - £ 150.00 for
car hire = £ 100.00
A development during the late 1970s and early 1980s by Bain and Co
was the Opportunity/vulnerability matrix. This was later refined by the
LEK Partnership to provide a means of describing the profitability of an
average business segment in a particular industry. Whereas the BCG
matrix had shown that high relative market share led to high
profitability, the opportunity/vulnerability matrix set out to prove that
it should be possible to produce a ‘normative curve’ to investigate
average segment profitability.
100
Vulnerability
Return on
capital
employed
(%)
Normative
band
Opportunity
0
10X Relative market share 0.1X
Scenario planning
Scenario planning is a technique that allows practitioners to prepare for
the future by looking at trends in the present and mapping how these
interrelate with each other. From this, a number of scenarios picturing
possible future worlds are drafted, along with a description of how
these futures could arise. Businesses then plan around these - with
contingency plans for undesirable elements. Key change indicators are
monitored and used to gauge how events are turning out. Companies
using the technique have reported remarkable successes - the oil
company Shell, for example, predicted the Oil Crisis of the 1970s, and
the changes that took place prior and immediately after the fall of the
Soviet Union in the early 1990s.
KEY POINT
“A scenario is an internally consistent view of what the future might turn out
to be - not a forecast, but one possible future."
Michael Porter
“Scenario planning is that part of strategic planning which relates to the tools
and technologies for managing the uncertainties of the future."
Gill Ringland
Well-known examples include the end of the Berlin Wall, OPEC oil
price rises, bombs and terrorist attacks.
Simulation modelling
Simulation modelling allows managers to investigate the behaviour of a
situation so that they can gain a clear understanding of the
“cause-and-effect” relationships that underpin the operations in any
organisation.
Sensitivity analysis
Once a situation has been suitably modelled and simulated, a further
exercise that is useful for decision-making is to attempt to find out what
differences in output there will be for a selection of minor conditional
changes. It might be important to know, for example, what change in
costs might be observed if a supplier is changed. By inserting different
quoted prices from a number of alternative suppliers into the model, it
will become apparent if there are any advantages (and, equally, any
serious disadvantages) to be found.
KEY POINT
The basic assumption here is that the estimates made for future revenues and
costs for a particular project are valid and that there are is no uncertainty
involved.
ACTIVITY
Seek out the finance director/manager of your organisation. Ask if it is possible
for you see how sensitivity analysis (or the ‘what if?’ method) is used in the
decision-making process.
Try to obtain a sample document and describe the process used. Can you
describe one actual decision that has been made as a result of the use of this
method?
Objectives
Initiatives
Financial
Measures
Targets
“To succeed
financially, how
should we
appear to our
customers?”
Objectives
Objectives
Initiatives
Initiatives
Customer Internal
Measures
Measures
Targets
Targets
Business
“To achieve our Vision Processes
vision, how should and “To satisfy our
we appear to our shareholders and
customers?” Strategy customers, what
business processes
must we excel at?”
Objectives
Initiatives
Learning
Measures
Targets
and Growth
“To achieve our
vision, how will
we sustain our
ability to
change and
improve?”
The balanced scorecard can play a key role in achieving real change in
organisational teamwork. Although team/organisational performance
is dependent on many things, a major part is played by:
These principles makes it easier, for example, for sports teams to build a
performance culture than many businesses because:
· The goals of sports teams are very clear (e.g. to win the
league).
In reality, few global products truly exist, but it can be said that through
many organisations globalisation has enabled the distribution and
subsequent success of many products. The global perspective on
customers, technology, costs, sourcing, strategic alliances and
competitors allows organisations to think in terms of a worldwide
audience. The market for these organisations’ products is wherever
there are affluent consumers or significant industrial customers. These
organisations must appeal to their customers wherever they are
(regardless of borders), the organisation’s nationality or where its
factories are.
ACTIVITY
Visit amazon.com and investigate the wealth of books (and other products)
available from the website.
If you are able, select a book from the website and make a purchase. Follow the
stages from the visit to the website through to the delivery of the book.
Describe the stages of the process, including a diagram to show them.
REVIEW ACTIVITY
Select a product of your choice that is in common use.
For this product, attempt to analyse any advantages that can be gained from a
hypothetical improved version of it. Consider the application of some of the
techniques described in this unit in the determination of its potential success
for its manufacturer.
What relevance could globalisation have on the future of the new product?
Summary
Management strategy is determined by a wide range of factors,
including stakeholder involvement and expectations. These determine
the support for proposed change and provide an indication of the likely
outcome. Such techniques as feasibility studies, cost benefit analysis
and sensitivity analysis enable management to make the correct
decisions for maximum growth and profit.
This unit has looked at these topics and related them to strategic
planning. It has also looked at the potential benefits of globalisation and
the advantages of developing strategy that uses the Internet’s
capabilities.
Further reading
Andrews, K. (1989) Concept of Corporate Strategy, Richard D. Irwin
Unit Objectives
When an organisation sets out to develop a new strategy, it must have clear
goals that are to be attained. In most cases these will evolve from corporate
vision and a corresponding mission statement. Both of these will, in one way or
another, state the aim and intent of the organisation’s activities themselves. In
this unit, we shall look at the purpose of these public statements.
The key strategic objectives of an organisation then become the focus of the
organisation’s efforts and need to relate to a range of secondary issues. These
are discussed in the second part of the unit.
Johnson & Scholes (1998) identify three key steps in understanding the
nature of core organisational values. These relate to:
Socio-cultural Technological
· Demographics (population and household numbers) · New product potential, creating new competition
· Values in society · Alternative means of providing services
· Changing lifestyles (family composition, changing · New discoveries
attitudes to work and leisure)
· Rates of government and industry expenditure on
· Changes in consumer tastes and preferences research and development
· Levels of education · Changing communications technology
· New product technology
· Rate of technological transfer
ACTIVITY
Carry out a PESTLE analysis for your own or a similar organisation.
What do you consider the key influences on your organisation core values?
Growth
There are numerous examples of markets that have shown considerable
growth in recent years, usually due to developments in the technologies
used. Perhaps one of the best examples comes from the world of
telecommunications. Some fifty years ago, the telephone provided a
means for people to communicate in real time with many other parts of
the world with a fairly satisfactory degree of success. Today, we can use
a wide range of methods for such communication: cordless telephone,
mobile phone, VoIP internet telephony, text messaging, and so on.
Many organisations involved in this market have seen substantial
potential for growth. Those who have established themselves as serious
contenders in this market have been rewarded with enormous
organisational growth. The market is already huge and is getting bigger
all the time. The range of services, as we have identified, has grown to
such an extent that patterns of use are rapidly changing. The UK
communications sector, alone, was worth over £50 billion in 2005 (a 5%
growth from the previous year), with households spending an average
£87.67 per month, which includes £30.50 on mobile phones. With such a
growth market, organisations have the opportunity for significant
growth.
Case study
Organisations that aim to grow can do this in a number of ways. They
can sell more of what they produce; they can move into other markets;
or they can move into other products. If they move into other products,
this is known as diversification.
ACTIVITY
Find three other examples of significant growth into new markets for
well-known organisations.
If you decide that your priority is growth then you need to plan
carefully if it is to succeed. It can be risky, but the right strategy can
deliver stability, security and long-term profits. Once you’ve assessed
the current strengths, weaknesses, opportunities and threats to your
business and how well it’s equipped to handle them, you can move on
to the next stage - building a strategy for growth.
This section describes how to choose the right strategy for your
business, when to launch it and what finance options suit which
businesses. It looks at the pros and cons of diversifying and what other
considerations you must think of to ensure development is smooth, on
time and on target.
· Turnover.
· Market share.
· Profits.
· Sales.
· Staff numbers.
For example, a retail business may have a high sales volume, but narrow
margins on stock. These could mean low profits that undermine the
business viability.
Profit
The prime aim of almost any business is to make profits if they intend to
grow. However, an organisation has responsibilities that extend
beyond its accepted commercial intentions. It should, therefore,
construct its activities in such a way that it can meet all these
responsibilities and still enjoy some level of profitability.
In the Practice of Management (1995), Drucker states, ‘It is the first duty
of a business to survive. The guiding principle of business economics, in
other words, is not the maximisation of profits; it is the avoidance of
loss.’
KEY POINT
Profit can be found from the following relationship:
ACTIVITY
What is the difference between an organisation achieving maximum profits and
satisfactory profits? Give examples of organisations for each extreme.
Customer orientation
Customer orientation means focusing on meeting the needs of one’s
customers; both internal or external. This service establishes specific
customer satisfaction standards and actively monitors client
satisfaction, taking steps to clarify and meet customer needs and
expectations (both expressed and unexpressed). At lower levels the
service involves courteous and timely responsiveness to the requests of
customers, while at the higher levels, it involves developing the
relationship of partner and trusted advisor.
For example:
ACTIVITY
What might customer orientation mean when related to the operation of a
public library? Describe the key factors that you have considered.
ACTIVITY FEEDBACK
Getting the right book, the right service, the right piece of information or
multimedia item to the right person at the right time - this is the idea of
customer orientation. Public library customers expect attractive offerings and
information services for education and training, leisure and entertainment.
Libraries have to develop effective strategies in order to contend with today’s
and tomorrow’s demands. Marketing, strategic management, customer
retention, personalised and value-added services are just some of the
challenges public libraries have to face.
Workforce expectation
During the process of change there will inevitably be many concerns
expressed by the employees of the organisation. These are likely to be
centred around doubts and uncertainties that the forthcoming change
presents.
ACTIVITY
Read the following extract from a key note speech entitled ‘Work life balance:
Managing changing workforce expectations in today’s environment.’
www.acwa.asn.au/Conf2006/Wed_Barnes.doc
Management style
Within any organisation someone has to make the decisions about what
the business will produce, whom it will employ, what markets it will
target, and so on. Making these decisions and, just as importantly,
communicating them to people further down the organisation is the job
of managers. The style that they choose to use will have considerable
impact on how efficiently the business operates and how the staff reacts
to their decisions.
KEY POINT
Managers make decisions, set targets and check progress.
Autocratic – managers make decisions on their own and tell others what
to do. This has the advantage of showing clear leadership but may upset
other people.
The style adopted may depend on the situation and the type of decision
being made. For example, to meet an order, a manager may have to
enforce the method that he feels is most appropriate at the time. On the
other hand, if the decision involves deciding between a number of
different new products, a manager might do better asking a group to
make their own selection based on their experience and knowledge. The
first would be autocratic, whilst the second is laissez-faire.
KEY POINT
Successful managers adopt different styles of management to suit different
situations.
Styles Decisions
Autocratic Strategic
Democratic
MANAGEMENT Tactical
Laissez-faire
Operational
Bureaucratic
ACTIVITY
Considers some managers within your own organisation. Using examples of
situations that you have been involved in, decide what style of management
they have used.
Can you give an example of a situation that you feel could have been handled
more effectively by using a different style? Describe the situation, what style
was chosen, and how you might have used a different style to achieve better
results.
SMART(ER) objectives
SMARTER is an acronym; that is, a word composed by joining letters
from different words in a phrase or set of words. In this case, a
SMARTER goal or objective is:
Specific:
Measurable:
It’s difficult to know what the scope of “writing a paper” really is. It’s
easier to appreciate that effort if the goal is “write a 30-page paper”.
Acceptable:
Realistic:
Time frame:
Extending:
I’m more inclined to write the paper if the paper will contribute to an
effort in such a way that I might be rewarded for my effort.
ACTIVITY
What are the key objectives of your organisation for the next year?
See if you can find out sufficient information to carry out your own SMARTER
assessment.
Business ethics
Business ethics examine the ethical rules and principles within a
commercial context, the various moral or ethical problems that can arise
in a business setting, and any special duties or obligations that apply to
persons who are engaged in commerce.
Professional ethics
Ethics of production
This area of business ethics deals with the duties of a company to ensure
that products and production processes do not cause harm. Some of the
more acute dilemmas in this area arise out of the fact that there is
usually a degree of danger in any product or production process and it
is difficult to define a degree of permissibility, or the degree of
permissibility may depend on the changing state of preventative
technologies or changing social perceptions of acceptable risk.
Knowledge and skills are valuable but not easily “ownable” objects.
Nor is it obvious who has the greater rights to an idea: the company who
trained the employee or the employee themselves? The country in
which the plant grew, or the company which discovered and developed
the plant’s medicinal potential? As a result, attempts to assert
ownership and ethical disputes over ownership arise.
Raising awareness
The development of a strategic plan needs a high level of awareness
amongst those stakeholders likely to be affected by the proposed
changes. Steps must be taken to ensure that this awareness is achieved.
The following extract is taken from the Cox Review, which looked at the
benefits of creativity in organisations undergoing change:
‘Lack of awareness of the role that greater creativity might play in the
business was identified as one of the key barriers to SMEs making
greater use of creative skills. Research for the review by Durham
University Business School showed that creativity and design are
mostly seen as optional extras – ‘add ons’ to products or services being
developed or marketed for other reasons. It is also important to
recognise that creativity is not the sole province of the specialist.
Creative businesses are creative throughout. Executives who think
imaginatively are those who also understand when to call upon the
specialists and how to work with them. Creativity needs to be skilfully
managed, not simply embraced. What is required isn’t just a readiness
to consider new ideas but the ability to recognise and assess their
potential, to decide which to back and to put them into effect.
Piloted with over 150 companies, the results have been impressive. Of
the 118 that have been through the initial workshop stage, 97 per cent
rated the experience highly and found it of value. Of more importance,
the majority of the 61 companies that have so far gone through the full
two-year programme have already reported significant improvements
in performance, with several showing the high degree of
transformation that can be achieved.
Aga Rayburn developed several new ranges of product, and its sales of
kitchen utensils rose from £1.5 million to £5 million per annum. This
reinforces the point that it is companies with unrecognised potential
that should be targeted, not just those with problems. As Geoff Harrop,
Aga Rayburn’s Managing Director, said, “When you’re successful, it is
easy to become complacent and this has helped us to renew our focus”.
Applying best practice means learning from and through the experience
of others. One way of doing this is through benchmarking, which allows
you to compare your business with other successful businesses to
highlight areas where your business could improve.
ACTIVITY
As an example of good practice, view the list provided of aspects of good race
relations practice. The points shown form the starting points for some more
thorough research of the subject.
Select a number of these points and find out more for yourself.
Criminal justice: the Stephen Lawrence Inquiry and the CRE’s formal
investigation into the prison service.
Education; two codes of practice, Learning for all: standards for racial equality
in schools, and a report on OFSTED.
Health and social care: codes of practice for primary health care and maternity
services.
Housing: the CRE’s new statutory code of practice, which took effect in
Ocsetober 2006.
ACTIVITY
Visit the website shown and read the article about diversity and equal
opportunities in the voluntary sector.
http://www.volunteering.org.uk/managingvolunteers/goodpracticebank/Core
+Themes/equalopportunitiesdiversity/diversity-overview.htm
Role modelling
There is undoubtedly some benefit to be gained in organisations for the
provision of role models. This might be for management or for members
of the workforce. If a person can command respect from others then it is
worth dwelling on that respect and attempting to recreate it in other
related areas of the organisation amongst other groups.
Stakeholder involvement
An organisation’s relationship with its stakeholders is clearly
influenced by two fundamental issues:
ACTIVITY
Look at an organisation well known to you, and take a view over as long a
period of time as possible. Estimate the impact of the environmental changes
listed in terms of their impact on this organisation. Have these triggers for
change been for the better or for the worse?
From where the organisation is now, what adjustment to these should now be
made?
Is a social construction to create a fairer society, where Is a natural tendency – think of biodiversity, everyone
all people can contribute and participate. is different.
Is something that we strive for continuously. Diversity alone does not ensure equality of
opportunity.
Figure 2.3. The relationship between equal opportunities and diversity. (D Wood 2006)
ACTIVITY
Identify any measures that your organisation takes to accommodate equality
and diversity in its practices.
Increased Efficiency
Increased Profitability
and Effectiveness
Greater end-user
Increased revenue satisfaction
There is a saying that “some minds are like concrete - all mixed up and
set.” When interacting across cultures, it is important to keep an open
mind to other possibilities so that your mind doesn’t become set in only
one way of seeing things. With the diversity found in the world
workplace, there are often opportunities to view a project, idea or
proposal from a different point of view. The next time an idea comes up
that is different from yours - pause and ask yourself “what can I learn
from this” before responding. One excellent response would be to say “I
hadn’t thought about it that way, can you tell me more?” This
demonstrates to others that you are willing to listen and to be open to
their way of viewing the world.
Gift Giving - recommended gifts, gifts to avoid, good and bad colours
for wrapping paper, how to present a gift to individuals and groups,
guidelines for receiving gifts, and more on business etiquette info. . .
Environmental considerations
As globalisation increases its hold on modern business, its effects on
society and the environment are constantly being challenged. There are
deep environmental consequences from operating in a global context,
and every modern and forward-thinking organisation must be sensitive
to these issues and promote responsible policies.
‘Be aware of the environmental issues that may affect your business.
Consult:
If so, collect some of these policies and determine how much of each policy is
designed for the employees and how much is there to impress an outside
audience.
REVIEW ACTIVITY
Select a well-known organisation.
Carry out a PEST (or PESTLE) analysis of the organisations principle activities.
VIRTUAL CAMPUS
Post your answers to the review activity and compare them with those of
other students.
Summary
This unit has examined the development of the initial organisational
vision into a formal mission statement, and the relationship between
these and its key objectives.
Further reading
Drucker, P. (1995) The Practice of Management,
Butterworth-Heinemann
Unit Objectives
The implementation stage of a new strategy is the point in the strategic
planning where action occurs. Up until now, the development of the strategy
has involved discussion and decision-making: now the first steps are taken to
apply the chosen strategy to the organisation in order to obtain the desired
results.
Working alongside all the stakeholders makes the process much easier and,
with their collaboration, more likely to produce a successful outcome. Careful
timetabling enables a smooth transition from old to new methods, and
organised and structured channels of communication allow an effective
monitoring and evaluation control system to operate.
This unit shows the importance of all these factors and how they fit into the
overall picture of strategy implementation.
Planning
Management Structure
Think about who you want to involve in the project, who will manage
the process, what skills and qualities are needed for the role, who needs
to be involved in each stage of decision-making. Managers not used to
joint decision-making may find the process time consuming and
counter-cultural. The key is to discuss and agree roles and
responsibilities.
Also think about how you are going to lead and manage your joint
project. Many partnerships are led by a project co-ordinator from the
accountable body, with a joint steering group overseeing the work.
Funding and finances organisations vary in the funding mix they rely
on to support their work, so a funding plan is needed for any joint work.
This should clarify whether you aim to support the work with funding
secured for that particular project and how much you intend to draw on
each organisation’s existing funds or unrestricted income. It is
important to decide in advance who will be responsible for
co-ordinating fundraising and which partner will act as the accountable
body for the receipt of funding.
Potential risks:
Potential benefits:
Practical hints:
Organisational development
Organisational development (OD) is concerned with an organisation’s:
· Health.
· Effectiveness.
· Capacity to solve problems.
· Ability to adapt and change.
· Ability to create a high quality of life for its employees.
1. Needs assessment
2. Diagnosis
3. Design
4. Implementation
5. Evaluation
· Interviews.
· Focus Groups.
· Questionnaire.
· ‘360’ Assessment.
· Teambuilding.
· Strategic planning.
· Intergroup problem solving.
· Confrontation meeting.
· Goal setting.
· Alignment of systems (i.e. performance management,
human resources, communication, leadership, etc.).
Incremental improvement
ACTIVITY
What details of organisational development are you familiar with through your
own organisation?
KEY POINT
Strategic implementation is the stage of strategic management that involves the
use of managerial and organisational tools and techniques to direct resources
toward achieving strategic outcomes.
http://www.scotland.gov.uk/Publications/2005/05/12141846/19026
http://www.cio.gov.uk/transformational_government/implplan/
KEY POINT
Business process re-engineering (BPR) attempts to remove obstacles placed in
the way of satisfying customer needs by traditional, hierarchical management.
ACTIVITY
Research the topic of business process re-engineering.
Find evidence from at least one major company. Use this to produce a brief
report describing its benefits to your chosen organisation.
Management by objectives
Management by Objectives (MBO) is a process in which a manager and
an employee agree upon a set of specific performance goals, or
objectives, and jointly develop a plan for reaching them. The objectives
must be clear and achievable, and the plan must include a time frame
and evaluation criteria. For example, a salesperson might set a goal of
increasing customer orders by 15 percent in money terms over the
course of a year.
KEY POINT
Management by Objectives (MBO) is a system in which specific performance
objectives are jointly determined by subordinates and their superiors,
progress toward objectives is periodically reviewed, and rewards are allocated
on the basis of this progress.
MBO principles:
· Participative decision-making.
Formulating goals is not an easy task for employees, and most people
do not master it immediately. Small business owners may find it helpful
to begin the process by asking employees and managers to define their
jobs and list their major responsibilities. Then the employees and
managers can create a goal, or goals, based upon each responsibility and
decide how to measure their own performance in terms of results. In the
Small Business Administration publication Planning and Goal Setting
for Small Business, Raymond F. Pelissier recommended having
employees create a miniature work plan for each goal. A work plan
would include the goal itself, the measurement terms, any major
problems anticipated in meeting the goal, a series of work steps toward
meeting the goal (with completion dates), and the company goal to
which the personal goal relates.
Small business owners may also find it helpful to break down employee
goal setting into categories. The first category, regular goals, would
include objectives related to the activities that make up an employee’s
major responsibilities. Examples of regular goals might include
improving efficiency or the amount and quality of work produced. The
second category, problem solving goals, should define and eliminate
any major problems the employee encounters in performing his or her
job. Another category is innovation, which should include goals that
apply original ideas to company problems. The final category is
development goals, which should include those goals related to
personal growth or the development of employees. Dividing goal
setting into categories often helps employees think about their jobs in
new ways and acts to release them from the tendency to create
activity-based goals.
VIRTUAL CAMPUS
What is your opinion on Management by Objectives?
Action planning
Action planning is a process which will help you to focus your ideas and
to decide what steps you need to take to achieve particular goals. It is a
statement on paper of what you want to achieve over a given period of
time. Preparing an action plan is a good way to help you to reach your
objectives in life.
An effective action plan should give you a concrete timetable and set of
clearly defined steps to help you to reach your objective, rather than
aimlessly wondering what to do next. It helps you to focus your ideas
and provides you with an answer to the question ‘‘What do I do to
achieve my objective?’’.
It’s OK to have several objectives, but you will need to make a separate
action plan for each, otherwise things get confused.
· WHERE AM I NOW?
ACTIVITY
Detailed examples of personal development action plans can be found at:
http://www.aber.ac.uk/careers/cdp/skillanal&ap.html
or
http://www.careers.ed.ac.uk/CPP/Making_Plans/action_plan.htm
Performance appraisal
ACTIVITY
Read the following extract from the CV Centre Consultancy website. It
provides a further description of the performance appraisal process.
You should be given plenty of time to prepare for your performance appraisal
and you should use this time constructively rather than just anxiously waiting
for the day to come. Remember also that your manager should try to make the
experience as relaxed and positive as possible by choosing a suitable venue and
arranging the layout of the room in a way that is informal and
non-confrontational.
By reading through the report from your previous performance appraisal, you
will be able to assess whether or not you have achieved the specific targets and
objectives set for you by your manager. Your level of performance will be used
as a benchmark in your next appraisal to enable your manager to discuss with
you what your future expectations and objectives should be. It is to the
advantage of yourself and your manager that the targets you agree are realistic
otherwise you can become de-motivated, resulting in an overall decline in your
performance. The specific targets and objectives that are set for you will be
used to form the basis of your overall action plan. This should also take into
account your long term career aspirations which you should discuss with your
manager to help you decide the most appropriate course of action to enable
you to effectively develop your career in the appropriate direction. Your
manager may be able to provide you with company literature and information
that will help you and should also be able to advise you on appropriate training.
Your finalised action plan from your annual performance appraisal is a very
important document and you should refer back to it on a regular basis in order
to monitor your performance and ongoing development.
· What they most enjoy about the job and how they might
want to develop the role.
Self-assessment
Appraisal skills
The two main issues are to ensure that appraisers ask open and probing
questions.
Open questions are general rather than specific; they enable people to
decide how they should be answered and encourage them to talk freely.
Examples include:
Good listeners:
Giving feedback
Feedback will work best when the following conditions are met:
http://www.cipd.co.uk/subjects/perfmangmt/appfdbck/perfapp.htm
ACTIVITY
Using the notes in this section and in the previous activity, compile your own
description of the performance appraisal process. Include information about
the process from your own experiences.
Case study
An interesting case study is provided be the LSE and can be found at
http://www.lse.ac.uk/collections/decisionConferencing/caseStudies
/decisionAnalysisSoftware/headOfficeCosts.htm
· It must be fair for all the employees, who will feel that
management listens to their ideas and concerns.
The Strategy Unit works closely, and often jointly, with other
government departments and external stakeholders on a broad range of
domestic policy issues, published through a range of outputs including
Green and White Papers. The Unit puts strong emphasis on analytical
rigour and an evidence based approach to developing strategy, looking
at issues from first principles. While some of its work is one-off, other
work on issues such as public service reform and home affairs tends to
be ongoing.
ACTIVITY
By discussion with senior management, try to establish your own
organisation's ideas on policy development.
ACTIVITY
Provide three examples of the type of problems that can arise as a result of
inadequate communications.
ACTIVITY FEEDBACK
Good communication is essential for the efficient running of any organisation.
There are countless examples that you might have thought of. Here are three
simple cases which are useful starting points for discussion:
ACTIVITY
Think of an example where communication between two people failed. Note
down why you think that happened. Can you identify the key reasons for the
failure?
FEEDBACK
Board of directors
Lateral communication
Marketing employees
ACTIVITY
Within your own organisation, examine the value of both formal and informal
communications channels.
Provide a summary of your findings, and make any suggestions that you feel
might lead the way to future improvements.
Guidelines
The delivery of implementation guidelines will reflect the goals and
plans of the strategy. These will be broken down into strategic and
tactical elements as follows:
Tactical plans are those planes designed to help execute major strategic
plans and to accomplish a specific part of the organisation’s strategy.
Case study
The following details of strategic realignment show how one particular
organisation has approached the process. Europ Assistance is a
continent-wide supplier of vehicle recovery and other related travel
services.
Issued on 28/02/2006
http://csrc.lse.ac.uk/asp/aspecis/20020049.pdf
Contingency planning
Most organisations operate in markets where there will be some degree
of uncertainty. This will vary considerably between different markets,
ACTIVITY
Consider the possible threats facing your own organisation that could have
serious impact on its success in the next two to three years. List these and
briefly described the possible effect on the organisation.
Now add to this list four more serious (albeit less likely) risks, such as large
increase in interest rates, political instability or loss of consumer confidence,
that would pose a major threat.
For each of the risks identified suggest a contingency plan to deal with it.
Describe what measures you feel would be necessary to ensure the continued
operation of the organisation.
Figure 3.4 shows examples of types of analysis that are used and the
areas for which they can help strategic control.
Financial analysis
Ratio analysis Aspects of profitability
Variance analysis Costs or revenues
Cash budgeting Cash flow
Capital budgeting Investment
Market analysis
Demand analysis Competitive position
Market share analysis Competitive position
Sales analysis
Sales budgets Effectiveness of selling
ACTIVITY
Consider the figures published for a large retail organisation shown here:
Annual dividend
per share 22.3p 21.9p
ACTIVITY FEEDBACK
You might have spotted, amongst other things, that despite a drop in turnover
of 4.2%, annual dividends dropped by only 1.8%.
Similarly, profit before tax was down by 6.25%, yet earnings per share was only
2.8% lower.
KEY POINT
The creation of objectives, systematic appraisal and measures of performance
enable the general aims of the organisation to be translated into operational
programmes and activities which can be controlled by individuals at all levels
within the organisation.
Needham (2001)
What are the main ways that each organisation measures its performance in
different parts of the business?
To whom are the measures that you have considered likely to be of most
interest?
Having made strategic decisions, the organisation must use its channels
of communication to disseminate the information necessary to those
departments and their managers who need to receive it. This must be
done in such a way that it is distributed rapidly and to the right people.
There have been many occasions where information has not been
current because of delays and this has led to wastage in terms of both
cost and labour. Also, information falling into the wrong hands can lead
to confusion and cause dispute, as well as undermining the positions of
responsibility of those managers who failed to receive it. Dissemination
of information must, therefore, be considered as an important business
function.
company, the school and any later clients. For this to happen, it will be
useful for a cascade to be established which will identify specific people
who will be responsible for keeping others further down the cascade up
to date with developments and subsequent delays.
Leaving both school and other clients uninformed will ruin customer
relations and probably risk the loss of any future custom.
Publication formats
The NPSA has developed the following three formats to disseminate its
advice and solutions to NHS staff:
The NPSA has consistent criteria in place for determining the subject
matter appropriate for each format and a process for handling
dissemination. In each case, a lay version is developed summarising the
issue and action taken to enable the NPSA to respond to any enquiries
from patients and the public. Where an issue is likely to be high profile
or to cause anxiety, NHS Direct and relevant patient groups are notified
in advance.
Distribution methods
The formats are distributed electronically to the NHS via the Safety
Alert Broadcast System in England, and emailed directly to NHS
organisations in Wales (normally via a director who covers the relevant
area). An entry is always included in the chief executives’ bulletin in
England, and chief executives are notified directly in Wales.
Information is submitted to other relevant government and royal
college bulletins, and a press release is issued to the media.
ACTIVITY
Describe the process of information dissemination in your own organisation
or one with which you are familiar.
REVIEW ACTIVITY
If an organisation has decided to implement a new strategic plan, how would
you describe the importance of effective communication to ensure the smooth
running of the project?
For each step that you have identified, explain its significance and what advice
you would give to the strategic planner.
Summary
In this unit, we have looked at some of the elements of the strategic
implementation process. The importance of working with the support
and agreement of stakeholders to an accepted timetable is an important
initial step. Business Process Re-engineering and Management by
Objectives have been identified as two key methods.
Care taken over planning is time well spent and will allow the
implementation to proceed. The relationship between the existing
policies and methods and those proposed should be analysed to ensure
that the strategic focus and alignment is attainable and realistic.
Despite all the time spent planning, unexpected things can crop up, and
contingency planning is essential if these are not to pose a problem.
Further reading
Drucker, P. (1995) The Practice of Management,
Butterworth-Heinemann