Hope fully i will back with more solutions(MS 25 &26) very soon. In case of any requirement pls leave comments.
rgds
bil
Friday, April 18, 2008
MS01 Question 4
Explain characteristics of different types of organizational structures. Refer to your organization or any other organization you are familiar with and suggest the ways by which organizational structure can be improved for enhancing organizational effectiveness
Management Structure & OrganizationsOrganizational Structures
The aim of any business is to maximize profit. In order to do this there must bedivision and specialization of labour. This implies that different people come togetherin order to create a product that has value to consumers. Hence, the activities ofdifferent people involved in a business must be coordinated. So there is a need for anorganizational structure that brings this coordination about. People in an organizationmust know
(1) What their activity is and where it fits into the product as a whole;
(2) What their roles is, what responsibilities they have and to whom they areanswerable.The need to delegateAny organizational structure, which implies the combination of activities, isimpossible without delegation. It is especially necessary in a large organization todelegate decision-making. The obvious problem is that in opposition to thisimperative to delegate is the equally important need to coordinate all activities.Delegation does mean that the manager loses a measure of control. It is importantthat the overall shape of the organization is maintained. A great deal of managementtheory is focused on this issue – for example, the concept of a mission statement forthe company so that everyone knows where the company as a whole is heading andcan take responsible decisions accordingly.Delegation also means empowerment – it means that subordinates have a moreenriching work experience.
Structures
It is usual to distinguish between three types of role within an organization, and henceauthority.(1) LineThis is based on the analogy with an army. Each manager has authority overhis subordinates.
(2) StaffThis comprises a group of advisers who do not have authority to command thegeneral staff, but have the right and duty to advise managers.
(3) Functional authorityThis occurs when a manager or specialist is given authority to control theactivities of people in more than one department.
Companies have a choice between two types of organizational structure.
(1) lineonly, and (2) line and staff.
The line and staff organization obviously arises when companies recognize the needfor an advisory body. Clearly, since business is a dynamic process, there must bechanges and innovations. A company without staff may be uninventive. However,the obvious problem of the line and staff structure is that there can be clashes betweenline managers and staff advisors.Span of ControlSpan of control is the term for the number of subordinate employees directlyaccountable to a manager. The larger the number of employees a manager controlsthe wider is his span of control.Narrow spanThe manager controls six or fewer employees. There is close supervision of theemployees, tight control and fast communication. However, the supervision can betoo close, the narrow span means that there are many levels of management, resultingin a possibly excessive distance between the top and the bottom of an organisation.Wide spanThe manager controls more than six employees. Managers are forced to delegatework, and tasks may be less closely supervised. There are possible problems with theoverloading of work and with loss of control. However, there are fewer levels ofmanagement.The need for a line structureSpan of control means the number of people directly answerable to a manager. If amanager has to control too many subordinates then supervision becomes ineffective.Span of control should vary with level. Typically 4 to 8 for upper levels oforganization, and 8 to 15 for lower levels are recommended.Obviously, this depends on the nature of the task. Routine tasks require lessmanagement time to supervise. It is because of span of control that a line structurehas to develop. A company with 500 staff cannot have 1 manager and 500subordinates. There must be a line of authority.Flat or Tall?Hence, companies must have a line structure, but companies do have a choicebetween flat and tall organizational structures.
(1) In a tall structure each manager hasa small span of control and there are many ranks;
(2) in a flat structure, span-ofcontrolis greater and there are fewer levels of management.
Tall StructureFlat structure
There is a recent development in favour of flatter structures. It is argued that this kindof structure is leaner and fitter, more flexible and better able to cope with changes inthe external business environment.Tall structures are more “military” in style, and might have the advantages of a wellrunarmy. But being in a business is not quite like being in an army and people do notalways accept the same level of authority and coordination; they can resent themilitary style of administration. There has recently been a movement towards“flatter” organizations which can be more democratic and innovative.DepartmentalizationBusiness organisations are generally divided into specific departments – personnel,purchasing, production, sales, finance, distribution – are examples. None of thesedepartments can function properly without the other departments.In large companies there must be departmentalization. This means, activities must becoordinated by organizing them into departments. A company obviously faces theproblem of how best to organize its departments. The solution must depend on eachcompany, its market and also culture. Any departmental organization means thatthere can be conflict between departments and a loss of communication. It alsomeans that the company loses the benefit of organizing one way by organizing inanother.
Departments can be orgainised by
(1) function – for example, personnel, production, marketing;(2) product(3) territory (geographical region)(4) market segment or customer(5) time – for example, by shift(6) numbers – that is, to produce teams of a specific size(7) equipment
However, the usual choice facing a company is whether to organize by function, or byproduct.Organisation by function or product?When a business organisation is divided into specific departments each performing aspecific function – personnel, purchasing, production, sales, finance, distribution –this is known as a functional approach.
Managing Director*Purchasing *Sales *Production *Finance *Personnel *Distribution
The functional approach is used in large organisations.Another alternative is to organise the company according to products. That is, thecompany is divided into separate organisations, each of which is responsible for aseparate product. This is a product approach to organisation. In this case eachdivision within the company is a profit as well as a cost centre.
Managing Director**Purchasing *Sales *Production *Finance *Personnel *Distribution
Product A Product B Product C
Only large companies can effectively employ a product approach to organisation, andthe functions approach is suitable for small companies producing a limited range ofproducts in conditions of relative stability.Matrix structureDifferent structures can be combined together. When one has two parallelorganizational structures this is called a matrix structure. The idea is to combine theadvantages of two structures, but this has the obvious disadvantage of being harder tocoordinate and introducing more potential conflict.In the past most large companies were centralized – that is, involved structures inwhich decisions were taken at the centre or upper levels of organization. Just as therehas been a move to flatter organizations, so there has been a move to decentralizedones.Centralised/DecentralisedA centralised company is one where the decisions are taken at the centre of thecompany; a decentralised company is one where the decision-making is delegated tolower levels of management within the organisation.Modern theorists tend to argue in terms of adopting a contingency approach. Whatthis means is using the approach that is most appropriate in the circumstances, as wehave already seen that both a wide span and a narrow span have their attendantadvantages and disadvantages.Structures follows strategy in organizations. Strategy isthe determination of long-term goals and objectives, courses of action and allocationof resources, and structure is the way the organization is put together to administer thestrategy, with all the hierarchies and lines of authority that the strategy implies.Informal/formal organisationsWithin any company there are two types of organisation – the formal structure and theinformal structure. Both effect the organisation and relationships between staff.The formal organisation refers to the formal relationships of authority andsubordination within a company. The primary focus of the formal organisation is theposition the employee/manager holds. Power is delegated from the top levels of themanagement down the organisation. Each position has rules governing what can andcannot be done. There are rewards and penalties for complying with these rules andperforming duties well.The informal organisation refers to the network of personal and social relations thatdevelop spontaneously between people associated with each other. The primary focusof the informal organisation is the employee as an individual person. Power isderived from membership of informal groups within the organisation. The conduct ofindividuals within these groups is governed by norms – that is, social rules ofbehaviour. When individuals break these norms, other members of the group imposesanctions on them.Clearly, the informal structure can be either beneficial or detrimental to thefunctioning of the company or both.
=======================================
**FUNCTIONAL STRUCTUREReduces duplication of activitiesEncourages technical expertiseSometime Creates narrow perspectivesSometime Difficult to coordinate
----------------------------------------------
**DIVISIONAL STRUCTUREImproves decision makingFixes accountability for performanceIncreases coordination of functionsHard to allocate corporate staff support Loses some economies of scaleFosters rivalry among divisions
----------------------------------------------------------
**MATRIX STRUCTUREReinforces & broadens technical excellenceFacilitates efficient use of resourcesBalances conflicting objectives of the organizationIncreases power conflictsIncreases confusion & stress for 2-boss employeesImpedes decision making
--------------------------------------------------------
**LATERAL STRUCTUREDotted-line supervisionLiaison rolesTemporary task forcesPermanent teamsIntegrating managers
============================================
New Organizational Structures
Network Structure
This modern structure includes the linking of numerous, separate organizations to optimize their interaction in order to accomplish a common, overall goal. An example is a joint venture to build a complex, technical systems such as the space shuttle. Another example is a network of construction companies to build a large structure.
Virtual Organization
This emerging form is based on organization members interacting with each other completely, or almost completely, via telecommunications. Members may never actually meet each other. Self-Managed TeamsThese teams usually include from 5-15 people and are geared to produce a product or service. Members provide a range of the skills needed to produce the product. The team is granted sufficient authority and access to resources to produce their product in a timely fashion. The hallmark of a self-managed team is that members indeed manage their own group, i.e., they manage access to resources, scheduling, supervision, etc. Team members develop their own process for identifying and rotating members in managerial roles. Often, authority at any given time rests with whomever has the most expertise about the current activity or task in the overall project. Often members are trained in various problem-solving techniques and team-building techniques. These teams work best in environments where the technologies to deliver the product or service are highly complex and the marketplace and organization environments are continually changing. Self-managed teams pose a unique challenge for the traditional manager. It can be extremely difficult for him or her to support empowerment of the self-managed team, taking the risk of letting go of his or her own control.
Learning Organizations In an environment where environments are continually changing, it's critical that organizations detect and quickly correct its own errors. This requires continuous feedback to, and within, the organization. Continual feedback allows the organization to `unlearn' old beliefs and remain open to new feedback, uncolored by long-held beliefs. In a learning organization, managers don't direct as much as they facilitate the workers' applying new information and learning from that experience. Managers ensure time to exchange feedback, to inquire and reflect about the feedback, and then to gain consensus on direction. Peter Senge, noted systems theorist, points out in his book, The Fifth Discipline (Doubleday, 1990, p. 14), that the learning organization is "continually expanding its capacity to create its future ... for a learning organization, `adaptive learning' must be joined by `generative learning,' learning that enhances our capacity to create."Self-Organizing Systems Self-organizing systems have the ability to continually change their structure and internal processes to conform to feedback with the environment. Some writers use the analogy of biological systems as self-organizing systems. Their ultimate purpose is to stay alive and duplicate. They exist in increasing complexity and adapt their structures and forms to accommodate this complexity. Ultimately, they change structure dramatically to adjust to the outer environment. (Some assert that self-managed groups are self-organizing systems, although others assert that self-managed groups are not because an ultimate purpose is assigned to team members). A self-organizing system requires a strong current goal or purpose. It requires continual feedback with its surrounding environment. It requires continual reference to a common set of values and dialoguing around these values. It requires continued and shared reflection around the system's current processes. The manager of this type of organization requires high value on communication and a great deal of patience -- and the ability to focus on outcomes rather than outputs. Focus is more on learning than on method.
==================================================
THE ORGANIZATION , I REFER TO, FOLLOWS A COMBINATIONOF FUNCTIONAL AND DIVISIONAL STRUCTURES.FOR THE EFFECTIVENESS THE ORGANIZATION FOLLOWS:-PRINCIPLE OF SPECIALIZTION .
[ often testing its peculiarity]
-PRINCIPAL OF COORDINATION [keeping communication simple/short]
-PRINCIPAL OF KNOWLEDGE COMPETENCE [ removing unnecessary hierarchy]
-PRINCIPAL OF CONTROL/RESPONSIBLE [make accountability a key element]
-PRINCIPAL OF NEW INNOVATIONS/ADAPTABILITY [flexibility]
-PRINCIPAL OF LIMITATIONS [ always test feasibility]
-PRINCIPAL OF EMPLOYEE [ people training/development ]
-PRINCIPAL OF ENTREPRENEUR STRATEGY [departmental obligations for results]
-PRINCIPAL OF PRODUCT MARKETING STRATEGY [ client obligations]=================================================================================================================
Management Structure & OrganizationsOrganizational Structures
The aim of any business is to maximize profit. In order to do this there must bedivision and specialization of labour. This implies that different people come togetherin order to create a product that has value to consumers. Hence, the activities ofdifferent people involved in a business must be coordinated. So there is a need for anorganizational structure that brings this coordination about. People in an organizationmust know
(1) What their activity is and where it fits into the product as a whole;
(2) What their roles is, what responsibilities they have and to whom they areanswerable.The need to delegateAny organizational structure, which implies the combination of activities, isimpossible without delegation. It is especially necessary in a large organization todelegate decision-making. The obvious problem is that in opposition to thisimperative to delegate is the equally important need to coordinate all activities.Delegation does mean that the manager loses a measure of control. It is importantthat the overall shape of the organization is maintained. A great deal of managementtheory is focused on this issue – for example, the concept of a mission statement forthe company so that everyone knows where the company as a whole is heading andcan take responsible decisions accordingly.Delegation also means empowerment – it means that subordinates have a moreenriching work experience.
Structures
It is usual to distinguish between three types of role within an organization, and henceauthority.(1) LineThis is based on the analogy with an army. Each manager has authority overhis subordinates.
(2) StaffThis comprises a group of advisers who do not have authority to command thegeneral staff, but have the right and duty to advise managers.
(3) Functional authorityThis occurs when a manager or specialist is given authority to control theactivities of people in more than one department.
Companies have a choice between two types of organizational structure.
(1) lineonly, and (2) line and staff.
The line and staff organization obviously arises when companies recognize the needfor an advisory body. Clearly, since business is a dynamic process, there must bechanges and innovations. A company without staff may be uninventive. However,the obvious problem of the line and staff structure is that there can be clashes betweenline managers and staff advisors.Span of ControlSpan of control is the term for the number of subordinate employees directlyaccountable to a manager. The larger the number of employees a manager controlsthe wider is his span of control.Narrow spanThe manager controls six or fewer employees. There is close supervision of theemployees, tight control and fast communication. However, the supervision can betoo close, the narrow span means that there are many levels of management, resultingin a possibly excessive distance between the top and the bottom of an organisation.Wide spanThe manager controls more than six employees. Managers are forced to delegatework, and tasks may be less closely supervised. There are possible problems with theoverloading of work and with loss of control. However, there are fewer levels ofmanagement.The need for a line structureSpan of control means the number of people directly answerable to a manager. If amanager has to control too many subordinates then supervision becomes ineffective.Span of control should vary with level. Typically 4 to 8 for upper levels oforganization, and 8 to 15 for lower levels are recommended.Obviously, this depends on the nature of the task. Routine tasks require lessmanagement time to supervise. It is because of span of control that a line structurehas to develop. A company with 500 staff cannot have 1 manager and 500subordinates. There must be a line of authority.Flat or Tall?Hence, companies must have a line structure, but companies do have a choicebetween flat and tall organizational structures.
(1) In a tall structure each manager hasa small span of control and there are many ranks;
(2) in a flat structure, span-ofcontrolis greater and there are fewer levels of management.
Tall StructureFlat structure
There is a recent development in favour of flatter structures. It is argued that this kindof structure is leaner and fitter, more flexible and better able to cope with changes inthe external business environment.Tall structures are more “military” in style, and might have the advantages of a wellrunarmy. But being in a business is not quite like being in an army and people do notalways accept the same level of authority and coordination; they can resent themilitary style of administration. There has recently been a movement towards“flatter” organizations which can be more democratic and innovative.DepartmentalizationBusiness organisations are generally divided into specific departments – personnel,purchasing, production, sales, finance, distribution – are examples. None of thesedepartments can function properly without the other departments.In large companies there must be departmentalization. This means, activities must becoordinated by organizing them into departments. A company obviously faces theproblem of how best to organize its departments. The solution must depend on eachcompany, its market and also culture. Any departmental organization means thatthere can be conflict between departments and a loss of communication. It alsomeans that the company loses the benefit of organizing one way by organizing inanother.
Departments can be orgainised by
(1) function – for example, personnel, production, marketing;(2) product(3) territory (geographical region)(4) market segment or customer(5) time – for example, by shift(6) numbers – that is, to produce teams of a specific size(7) equipment
However, the usual choice facing a company is whether to organize by function, or byproduct.Organisation by function or product?When a business organisation is divided into specific departments each performing aspecific function – personnel, purchasing, production, sales, finance, distribution –this is known as a functional approach.
Managing Director*Purchasing *Sales *Production *Finance *Personnel *Distribution
The functional approach is used in large organisations.Another alternative is to organise the company according to products. That is, thecompany is divided into separate organisations, each of which is responsible for aseparate product. This is a product approach to organisation. In this case eachdivision within the company is a profit as well as a cost centre.
Managing Director**Purchasing *Sales *Production *Finance *Personnel *Distribution
Product A Product B Product C
Only large companies can effectively employ a product approach to organisation, andthe functions approach is suitable for small companies producing a limited range ofproducts in conditions of relative stability.Matrix structureDifferent structures can be combined together. When one has two parallelorganizational structures this is called a matrix structure. The idea is to combine theadvantages of two structures, but this has the obvious disadvantage of being harder tocoordinate and introducing more potential conflict.In the past most large companies were centralized – that is, involved structures inwhich decisions were taken at the centre or upper levels of organization. Just as therehas been a move to flatter organizations, so there has been a move to decentralizedones.Centralised/DecentralisedA centralised company is one where the decisions are taken at the centre of thecompany; a decentralised company is one where the decision-making is delegated tolower levels of management within the organisation.Modern theorists tend to argue in terms of adopting a contingency approach. Whatthis means is using the approach that is most appropriate in the circumstances, as wehave already seen that both a wide span and a narrow span have their attendantadvantages and disadvantages.Structures follows strategy in organizations. Strategy isthe determination of long-term goals and objectives, courses of action and allocationof resources, and structure is the way the organization is put together to administer thestrategy, with all the hierarchies and lines of authority that the strategy implies.Informal/formal organisationsWithin any company there are two types of organisation – the formal structure and theinformal structure. Both effect the organisation and relationships between staff.The formal organisation refers to the formal relationships of authority andsubordination within a company. The primary focus of the formal organisation is theposition the employee/manager holds. Power is delegated from the top levels of themanagement down the organisation. Each position has rules governing what can andcannot be done. There are rewards and penalties for complying with these rules andperforming duties well.The informal organisation refers to the network of personal and social relations thatdevelop spontaneously between people associated with each other. The primary focusof the informal organisation is the employee as an individual person. Power isderived from membership of informal groups within the organisation. The conduct ofindividuals within these groups is governed by norms – that is, social rules ofbehaviour. When individuals break these norms, other members of the group imposesanctions on them.Clearly, the informal structure can be either beneficial or detrimental to thefunctioning of the company or both.
=======================================
**FUNCTIONAL STRUCTUREReduces duplication of activitiesEncourages technical expertiseSometime Creates narrow perspectivesSometime Difficult to coordinate
----------------------------------------------
**DIVISIONAL STRUCTUREImproves decision makingFixes accountability for performanceIncreases coordination of functionsHard to allocate corporate staff support Loses some economies of scaleFosters rivalry among divisions
----------------------------------------------------------
**MATRIX STRUCTUREReinforces & broadens technical excellenceFacilitates efficient use of resourcesBalances conflicting objectives of the organizationIncreases power conflictsIncreases confusion & stress for 2-boss employeesImpedes decision making
--------------------------------------------------------
**LATERAL STRUCTUREDotted-line supervisionLiaison rolesTemporary task forcesPermanent teamsIntegrating managers
============================================
New Organizational Structures
Network Structure
This modern structure includes the linking of numerous, separate organizations to optimize their interaction in order to accomplish a common, overall goal. An example is a joint venture to build a complex, technical systems such as the space shuttle. Another example is a network of construction companies to build a large structure.
Virtual Organization
This emerging form is based on organization members interacting with each other completely, or almost completely, via telecommunications. Members may never actually meet each other. Self-Managed TeamsThese teams usually include from 5-15 people and are geared to produce a product or service. Members provide a range of the skills needed to produce the product. The team is granted sufficient authority and access to resources to produce their product in a timely fashion. The hallmark of a self-managed team is that members indeed manage their own group, i.e., they manage access to resources, scheduling, supervision, etc. Team members develop their own process for identifying and rotating members in managerial roles. Often, authority at any given time rests with whomever has the most expertise about the current activity or task in the overall project. Often members are trained in various problem-solving techniques and team-building techniques. These teams work best in environments where the technologies to deliver the product or service are highly complex and the marketplace and organization environments are continually changing. Self-managed teams pose a unique challenge for the traditional manager. It can be extremely difficult for him or her to support empowerment of the self-managed team, taking the risk of letting go of his or her own control.
Learning Organizations In an environment where environments are continually changing, it's critical that organizations detect and quickly correct its own errors. This requires continuous feedback to, and within, the organization. Continual feedback allows the organization to `unlearn' old beliefs and remain open to new feedback, uncolored by long-held beliefs. In a learning organization, managers don't direct as much as they facilitate the workers' applying new information and learning from that experience. Managers ensure time to exchange feedback, to inquire and reflect about the feedback, and then to gain consensus on direction. Peter Senge, noted systems theorist, points out in his book, The Fifth Discipline (Doubleday, 1990, p. 14), that the learning organization is "continually expanding its capacity to create its future ... for a learning organization, `adaptive learning' must be joined by `generative learning,' learning that enhances our capacity to create."Self-Organizing Systems Self-organizing systems have the ability to continually change their structure and internal processes to conform to feedback with the environment. Some writers use the analogy of biological systems as self-organizing systems. Their ultimate purpose is to stay alive and duplicate. They exist in increasing complexity and adapt their structures and forms to accommodate this complexity. Ultimately, they change structure dramatically to adjust to the outer environment. (Some assert that self-managed groups are self-organizing systems, although others assert that self-managed groups are not because an ultimate purpose is assigned to team members). A self-organizing system requires a strong current goal or purpose. It requires continual feedback with its surrounding environment. It requires continual reference to a common set of values and dialoguing around these values. It requires continued and shared reflection around the system's current processes. The manager of this type of organization requires high value on communication and a great deal of patience -- and the ability to focus on outcomes rather than outputs. Focus is more on learning than on method.
==================================================
THE ORGANIZATION , I REFER TO, FOLLOWS A COMBINATIONOF FUNCTIONAL AND DIVISIONAL STRUCTURES.FOR THE EFFECTIVENESS THE ORGANIZATION FOLLOWS:-PRINCIPLE OF SPECIALIZTION .
[ often testing its peculiarity]
-PRINCIPAL OF COORDINATION [keeping communication simple/short]
-PRINCIPAL OF KNOWLEDGE COMPETENCE [ removing unnecessary hierarchy]
-PRINCIPAL OF CONTROL/RESPONSIBLE [make accountability a key element]
-PRINCIPAL OF NEW INNOVATIONS/ADAPTABILITY [flexibility]
-PRINCIPAL OF LIMITATIONS [ always test feasibility]
-PRINCIPAL OF EMPLOYEE [ people training/development ]
-PRINCIPAL OF ENTREPRENEUR STRATEGY [departmental obligations for results]
-PRINCIPAL OF PRODUCT MARKETING STRATEGY [ client obligations]=================================================================================================================
MS-01 Question 2
Explain the concept of Management Information System. Describe various control processes being used in your organization or any organization you are familiar with. Assess the effectiveness of these controls and highlight critical deviations.
MANAGEMENT INFORMATION SYSTEMMIS is an integrated information system, which is used to providemanagement with needed information on a regular basis .The term system in MIS implies ORDER, ARRANGEMENT, and PURPOSE.The information can be used for various purposes,-strategic planning-delivering increased productivity-reducing service cycles-reducing product development cycles-reducing marketing life cycles-increasing the understanding of customers' needs-facilitating business and process re-engineering.MIS can also be used across the organization as an informationutility to-support policy making-meet regulatory and legislative requirements-support research and development-support consistent and rapid decision making-enable effective and efficient utilization of resources-provide evidence of business transactions-identify and manage risks-evaluate and document quality, performance and achievements.
MAKING INFORMATION AVAILABLE
The availability of information is fundamental to the decision makingprocess. Decisions are made within the organization at
-STRATEGIC-OPERATIONAL
-PROGRAMMES
-ACTIVITY LEVEL.
The information needs and decision making activities of the various levels of management
SENIOR MANAGEMENT
Strategic business direction-information for strategically positioning the organization-competitive analysis and performance evaluation,-strategic planning and policy,-external factors that influence the directionetc
MID LEVEL MANAGEMENT
Organizational and operational functions-information for coordination of work units-information for delivery programmes-evaluation of resources usage-budget control-problem solving-operational planningetc
MID LEVEL MANAGEMENT
Programme management within units-information for implementing programmes-information for managing programmes-management of resources usage-project scheduling-problem solving-operational planningetc
LINE MANAGEMENTActivity management -information for routine decision making-information for problem solving-information for service deliveryetc.
MANAGEMENT SUPPORT SYSTEMS
The management oriented support systems provide supportto various levels of management. Executive Information Systems allow executives to see where aproblem or opportunity exists.Decision Support Systems are used by mid-level management to support the solution of problems that require judgementby the problem solver.Line Managers use Management Reporting Systems for routine operational information.
FUNCTIONAL INFORMATION SYSTEMS
These include-Accounting Information Systems-Marketing Information Systems-Enterprise Information Systems-Decision Support Information Systems-Executive Information Systems-Quality Management Information Systems-Manufacturing Information Systems-Financial Information Systems-Human resource Information Systems=================================================
THE CONTROLS FOR MY ORGANIZATION ARE THE FOLLOWING-EFFECTIVE ORGANIZATION STRUCTURE-MANAGEMENT CONTROLS AT ALL LEVELS*MARKETING MANAGEMENT*SALES MANAGEMENT*SUPPLY MANAGEMENT*DISTRIBUTION MANAGEMENTETC ETC-BUDGETORY CONTROLS-AUTHORIZATIONS CONTROLS-INVENTORY CONTROLS--RAW MATERIALS-INVENTORY CONTROLS --FINISHED PRODUCTS-QUALITY CONTROLS-PROCUREMENT CONTROLS-DEBT CONTROLS-SALES/ MARKETING EXPENSES CONTROL-PERSONNEL CONTROL-MONTHLY PERFORMANCE REVIEW AGAINST BUDGET-HALF YEARLY BUSINESS AUDITING
--------------------------------------------------------------------------
IN THIS ORGANIZATION , WE HAVE INTEGRATED THE CONTROL SYSTEMS INTO PLANNING, SO THAT IT HELPS -TO MEASURE THE DEVIATIONS-TO STUDY THE VARIANCES-TO TAKE APPROPRIATE ACTIONS.
Management planning and control process"
P .PLANNING-----------------C.
CONTROL [ c1.establish standards]p1.establishing objectives.p2.determine detailed activities.p3.delegationp4.schedule tasksp5.allocate resourcesp6.communication and coordinationp7.provide incentivesc2.measure and compare.c3.evaluate results.c4.feedback and coachc5.take corrective action.The above schematic shows the important interrelationships between planning and control. As you can see, the control process does not begin after the entire planning process ends, as most managers believe.After objectives are set in the first step of the planning process, appropriate standards should be developed for them. Standards are units of measurement established to serve as a reference base and are useful in determining time lines, sequences of activities, scheduling, and allocation of resources.For example, if objectives are set and work is planned for 18 people on an assembly line, standards or reasonable expectations of performance from each person then need to be clearly established.The second significant interaction between planning and control occurs with the final step of the control process-taking corrective action. This can take several forms, but two of the most effective are to change the objectives or alter the plan.Managers dislike doing either; but if a positive motivational climate is to be established, these ought to be the first two corrective actions attempted. Objectives and standards are based on assumptions, but if these assumptions prove inaccurate, then objectives and standards require alteration. Thus sales quotas assigned on the premise of a booming economy can certainly be altered if, as is often the case, the economy turns sour.Likewise, if the assumptions are accurate and objectives and standards have not been met, then it is possible that the plan developed was inadequate and needs to be changed.
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Controls are to be an integral part of any organization's financial and business policies and procedures. Controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization. Controls are simply good business practices.1.Responsibility Everyone within the COMPANY has some role in controls. The roles vary depending upon the level of responsibility and the nature of involvement by the individual. The Board of President and senior executives establish the presence of integrity, ethics, competence and a positive control environment. The department heads have oversight responsibility for controls within their units. Managers and supervisory personnel are responsible for executing control policies and procedures at the detail level within their specific unit. Each individual within a unit is to be cognizant of proper internal control procedures associated with their specific job responsibilities. The Internal Audit role is to examine the adequacy and effectiveness of the company internal controls and make recommendations where control improvements are needed. Since Internal Auditing is to remain independent and objective, the Internal Audit Office does not have the primary responsibility for establishing or maintaining internal controls. However, the effectiveness of the internal controls are enhanced through the reviews performed and recommendations made by Internal Auditing.2.Elements of Internal Control Internal control systems operate at different levels of effectiveness. Determining whether a particular internal control system is effective is a judgement resulting from an assessment of whether the five components - Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring - are present and functioning. Effective controls provide reasonable assurance regarding the accomplishment of established objectives.A. Control Environment The control environment, as established by the organization's administration, sets the tone of THE COMPANY and influences the control consciousness of its people. MANAGERS of each department, area or activity establish a local control environment. This is the foundation for all other components of internal control, providing discipline and structure. Control environment factors include: Integrity and ethical values; The commitment to competence; Leadership philosophy and operating style; The way management assigns authority and responsibility, and organizes and develops its people; Policies and procedures. B. Risk Assessment Every entity faces a variety of risks from external and internal sources that must be assessed. A precondition to risk assessment is establishment of objectives, linked at different levels and internally consistent. Risk assessment is the identification and analysis of relevant risks to achievement of the objectives, forming a basis for determining how the risks should be managed. Because economics, regulatory and operating conditions will continue to change, mechanisms are needed to identify and deal with the special risks associated with change. Objectives must be established before MANAGERS can identify and take necessary steps to manage risks. Operations objectives relate to effectiveness and efficiency of the operations, including performance and financial goals and safeguarding resources against loss. Financial reporting objectives pertain to the preparation of reliable published financial statements, including prevention of fraudulent financial reporting. Compliance objectives pertain to laws and regulations which establish minimum standards of behavior.The process of identifying and analyzing risk is an ongoing process and is a critical component of an effective internal control system. Attention must be focused on risks at all levels and necessary actions must be taken to manage. Risks can pertain to internal and external factors. After risks have been identified they must be evaluated. Managing change requires a constant assessment of risk and the impact on internal controls. Economic, industry and regulatory environments change and entities' activities evolve. Mechanisms are needed to identify and react to changing conditions.C. Control Activities Control activities are the policies and procedures that help ensure management directives are carried out. They help ensure that necessary actions are taken to address risks to achievement of the entity's objectives. Control activities occur throughout the organization, at all levels, and in all functions. They include a range of activities as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets and segregation of duties.Control activities usually involve two elements: a policy establishing what should be done and procedures to effect the policy. All policies must be implemented thoughtfully, conscientiously and consistently.D.Information and Communication Pertinent information must be identified, captured and communicated in a form and time frame that enables people to carry out their responsibilities. Effective communication must occur in a broad sense, flowing down, across and up the organization. All personnel must receive a clear message from top management that control responsibilities must be taken seriously. They must understand their own role in the internal control system, as well as how individual activities relate to the work of others. They must have a means of communicating significant information upstream. E.Monitoring Control systems need to be monitored - a process that assesses the quality of the system's performance over time. Ongoing monitoring occurs in the ordinary course of operations, and includes regular management and supervisory activities, and other actions personnel take in performing their duties that assess the quality of internal control system performance.The scope and frequency of separate evaluations depend primarily on an assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies should be reported upstream, with serious matters reported immediately to top administration and governing boards.Control systems change over time. The way controls are applied may evolve. Once effective procedures can become less effective due to the arrival of new personnel, varying effectiveness of training and supervision, time and resources constraints, or additional pressures. Furthermore, circumstances for which the internal control system was originally designed also may change. Because of changing conditions, management needs to determine whether the internal control system continues to be relevant and able to address new risks.Components of the Control Activity 1.Internal controls rely on the principle of checks and balances in the workplace. The following components focus on the control activity:2.Personnel need to be competent and trustworthy, with clearly established lines of authority and responsibility documented in written job descriptions and procedures manuals. Organizational charts provide a visual presentation of lines of authority and periodic updates of job descriptions ensures that employees are aware of the duties they are expected to perform.3.Authorization Procedures need to include a thorough review of supporting information to verify the propriety and validity of transactions. Approval authority is to be commensurate with the nature and significance of the transactions and in compliance with COMPANY policy.4.Segregation of Duties reduce the likelihood of errors and irregularities. An individual is not to have responsibility for more than one of the three transaction components: authorization, custody, and record keeping. When the work of one employee is checked by another, and when the responsibility for custody for assets is separate from the responsibility for maintaining the records relating to those assets, there is appropriate segregation of duties. This helps detect errors in a timely manner and deter improper activities; and at the same time, it should be devised to prompt operational efficiency and allow for effective communications.5.Physical Restrictions are the most important type of protective measures for safeguarding COMPANY assets, processes and data.6.Documentation and Record Retention is to provide reasonable assurance that all information and transactions of value are accurately recorded and retained. Records are to be maintained and controlled in accordance with the established retention period and properly disposed of in accordance with established procedures.7.Monitoring Operations is essential to verify that controls are operating properly. Reconciliations, confirmations, and exception reports can provide this type of information.
=========================================================
MANAGEMENT INFORMATION SYSTEMMIS is an integrated information system, which is used to providemanagement with needed information on a regular basis .The term system in MIS implies ORDER, ARRANGEMENT, and PURPOSE.The information can be used for various purposes,-strategic planning-delivering increased productivity-reducing service cycles-reducing product development cycles-reducing marketing life cycles-increasing the understanding of customers' needs-facilitating business and process re-engineering.MIS can also be used across the organization as an informationutility to-support policy making-meet regulatory and legislative requirements-support research and development-support consistent and rapid decision making-enable effective and efficient utilization of resources-provide evidence of business transactions-identify and manage risks-evaluate and document quality, performance and achievements.
MAKING INFORMATION AVAILABLE
The availability of information is fundamental to the decision makingprocess. Decisions are made within the organization at
-STRATEGIC-OPERATIONAL
-PROGRAMMES
-ACTIVITY LEVEL.
The information needs and decision making activities of the various levels of management
SENIOR MANAGEMENT
Strategic business direction-information for strategically positioning the organization-competitive analysis and performance evaluation,-strategic planning and policy,-external factors that influence the directionetc
MID LEVEL MANAGEMENT
Organizational and operational functions-information for coordination of work units-information for delivery programmes-evaluation of resources usage-budget control-problem solving-operational planningetc
MID LEVEL MANAGEMENT
Programme management within units-information for implementing programmes-information for managing programmes-management of resources usage-project scheduling-problem solving-operational planningetc
LINE MANAGEMENTActivity management -information for routine decision making-information for problem solving-information for service deliveryetc.
MANAGEMENT SUPPORT SYSTEMS
The management oriented support systems provide supportto various levels of management. Executive Information Systems allow executives to see where aproblem or opportunity exists.Decision Support Systems are used by mid-level management to support the solution of problems that require judgementby the problem solver.Line Managers use Management Reporting Systems for routine operational information.
FUNCTIONAL INFORMATION SYSTEMS
These include-Accounting Information Systems-Marketing Information Systems-Enterprise Information Systems-Decision Support Information Systems-Executive Information Systems-Quality Management Information Systems-Manufacturing Information Systems-Financial Information Systems-Human resource Information Systems=================================================
THE CONTROLS FOR MY ORGANIZATION ARE THE FOLLOWING-EFFECTIVE ORGANIZATION STRUCTURE-MANAGEMENT CONTROLS AT ALL LEVELS*MARKETING MANAGEMENT*SALES MANAGEMENT*SUPPLY MANAGEMENT*DISTRIBUTION MANAGEMENTETC ETC-BUDGETORY CONTROLS-AUTHORIZATIONS CONTROLS-INVENTORY CONTROLS--RAW MATERIALS-INVENTORY CONTROLS --FINISHED PRODUCTS-QUALITY CONTROLS-PROCUREMENT CONTROLS-DEBT CONTROLS-SALES/ MARKETING EXPENSES CONTROL-PERSONNEL CONTROL-MONTHLY PERFORMANCE REVIEW AGAINST BUDGET-HALF YEARLY BUSINESS AUDITING
--------------------------------------------------------------------------
IN THIS ORGANIZATION , WE HAVE INTEGRATED THE CONTROL SYSTEMS INTO PLANNING, SO THAT IT HELPS -TO MEASURE THE DEVIATIONS-TO STUDY THE VARIANCES-TO TAKE APPROPRIATE ACTIONS.
Management planning and control process"
P .PLANNING-----------------C.
CONTROL [ c1.establish standards]p1.establishing objectives.p2.determine detailed activities.p3.delegationp4.schedule tasksp5.allocate resourcesp6.communication and coordinationp7.provide incentivesc2.measure and compare.c3.evaluate results.c4.feedback and coachc5.take corrective action.The above schematic shows the important interrelationships between planning and control. As you can see, the control process does not begin after the entire planning process ends, as most managers believe.After objectives are set in the first step of the planning process, appropriate standards should be developed for them. Standards are units of measurement established to serve as a reference base and are useful in determining time lines, sequences of activities, scheduling, and allocation of resources.For example, if objectives are set and work is planned for 18 people on an assembly line, standards or reasonable expectations of performance from each person then need to be clearly established.The second significant interaction between planning and control occurs with the final step of the control process-taking corrective action. This can take several forms, but two of the most effective are to change the objectives or alter the plan.Managers dislike doing either; but if a positive motivational climate is to be established, these ought to be the first two corrective actions attempted. Objectives and standards are based on assumptions, but if these assumptions prove inaccurate, then objectives and standards require alteration. Thus sales quotas assigned on the premise of a booming economy can certainly be altered if, as is often the case, the economy turns sour.Likewise, if the assumptions are accurate and objectives and standards have not been met, then it is possible that the plan developed was inadequate and needs to be changed.
--------------------------------------------------------------------------------
Controls are to be an integral part of any organization's financial and business policies and procedures. Controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization. Controls are simply good business practices.1.Responsibility Everyone within the COMPANY has some role in controls. The roles vary depending upon the level of responsibility and the nature of involvement by the individual. The Board of President and senior executives establish the presence of integrity, ethics, competence and a positive control environment. The department heads have oversight responsibility for controls within their units. Managers and supervisory personnel are responsible for executing control policies and procedures at the detail level within their specific unit. Each individual within a unit is to be cognizant of proper internal control procedures associated with their specific job responsibilities. The Internal Audit role is to examine the adequacy and effectiveness of the company internal controls and make recommendations where control improvements are needed. Since Internal Auditing is to remain independent and objective, the Internal Audit Office does not have the primary responsibility for establishing or maintaining internal controls. However, the effectiveness of the internal controls are enhanced through the reviews performed and recommendations made by Internal Auditing.2.Elements of Internal Control Internal control systems operate at different levels of effectiveness. Determining whether a particular internal control system is effective is a judgement resulting from an assessment of whether the five components - Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring - are present and functioning. Effective controls provide reasonable assurance regarding the accomplishment of established objectives.A. Control Environment The control environment, as established by the organization's administration, sets the tone of THE COMPANY and influences the control consciousness of its people. MANAGERS of each department, area or activity establish a local control environment. This is the foundation for all other components of internal control, providing discipline and structure. Control environment factors include: Integrity and ethical values; The commitment to competence; Leadership philosophy and operating style; The way management assigns authority and responsibility, and organizes and develops its people; Policies and procedures. B. Risk Assessment Every entity faces a variety of risks from external and internal sources that must be assessed. A precondition to risk assessment is establishment of objectives, linked at different levels and internally consistent. Risk assessment is the identification and analysis of relevant risks to achievement of the objectives, forming a basis for determining how the risks should be managed. Because economics, regulatory and operating conditions will continue to change, mechanisms are needed to identify and deal with the special risks associated with change. Objectives must be established before MANAGERS can identify and take necessary steps to manage risks. Operations objectives relate to effectiveness and efficiency of the operations, including performance and financial goals and safeguarding resources against loss. Financial reporting objectives pertain to the preparation of reliable published financial statements, including prevention of fraudulent financial reporting. Compliance objectives pertain to laws and regulations which establish minimum standards of behavior.The process of identifying and analyzing risk is an ongoing process and is a critical component of an effective internal control system. Attention must be focused on risks at all levels and necessary actions must be taken to manage. Risks can pertain to internal and external factors. After risks have been identified they must be evaluated. Managing change requires a constant assessment of risk and the impact on internal controls. Economic, industry and regulatory environments change and entities' activities evolve. Mechanisms are needed to identify and react to changing conditions.C. Control Activities Control activities are the policies and procedures that help ensure management directives are carried out. They help ensure that necessary actions are taken to address risks to achievement of the entity's objectives. Control activities occur throughout the organization, at all levels, and in all functions. They include a range of activities as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets and segregation of duties.Control activities usually involve two elements: a policy establishing what should be done and procedures to effect the policy. All policies must be implemented thoughtfully, conscientiously and consistently.D.Information and Communication Pertinent information must be identified, captured and communicated in a form and time frame that enables people to carry out their responsibilities. Effective communication must occur in a broad sense, flowing down, across and up the organization. All personnel must receive a clear message from top management that control responsibilities must be taken seriously. They must understand their own role in the internal control system, as well as how individual activities relate to the work of others. They must have a means of communicating significant information upstream. E.Monitoring Control systems need to be monitored - a process that assesses the quality of the system's performance over time. Ongoing monitoring occurs in the ordinary course of operations, and includes regular management and supervisory activities, and other actions personnel take in performing their duties that assess the quality of internal control system performance.The scope and frequency of separate evaluations depend primarily on an assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies should be reported upstream, with serious matters reported immediately to top administration and governing boards.Control systems change over time. The way controls are applied may evolve. Once effective procedures can become less effective due to the arrival of new personnel, varying effectiveness of training and supervision, time and resources constraints, or additional pressures. Furthermore, circumstances for which the internal control system was originally designed also may change. Because of changing conditions, management needs to determine whether the internal control system continues to be relevant and able to address new risks.Components of the Control Activity 1.Internal controls rely on the principle of checks and balances in the workplace. The following components focus on the control activity:2.Personnel need to be competent and trustworthy, with clearly established lines of authority and responsibility documented in written job descriptions and procedures manuals. Organizational charts provide a visual presentation of lines of authority and periodic updates of job descriptions ensures that employees are aware of the duties they are expected to perform.3.Authorization Procedures need to include a thorough review of supporting information to verify the propriety and validity of transactions. Approval authority is to be commensurate with the nature and significance of the transactions and in compliance with COMPANY policy.4.Segregation of Duties reduce the likelihood of errors and irregularities. An individual is not to have responsibility for more than one of the three transaction components: authorization, custody, and record keeping. When the work of one employee is checked by another, and when the responsibility for custody for assets is separate from the responsibility for maintaining the records relating to those assets, there is appropriate segregation of duties. This helps detect errors in a timely manner and deter improper activities; and at the same time, it should be devised to prompt operational efficiency and allow for effective communications.5.Physical Restrictions are the most important type of protective measures for safeguarding COMPANY assets, processes and data.6.Documentation and Record Retention is to provide reasonable assurance that all information and transactions of value are accurately recorded and retained. Records are to be maintained and controlled in accordance with the established retention period and properly disposed of in accordance with established procedures.7.Monitoring Operations is essential to verify that controls are operating properly. Reconciliations, confirmations, and exception reports can provide this type of information.
=========================================================
MS-11 Question 5
Explain how strategic control helps in balancing the interaction between the business’s internal and the external environment
Three fundamental perspectives
-strategic control,
-continuous improvement,
-balanced scoreboard
provide the basis for designing strategy control systems.
Strategic controls are intended to steer the company toward its long
-term strategic goals.
- Premise controls,
-implementation controls,
-strategic surveillance, and
-special alert controls are types of strategic control. All four types are designed to meet top management's needs to track the strategy as it is being implemented, to detect underlying problems, and to make necessary adjustments. These strategic controls are linked to the environmental assumptions and the key operating requirements necessary for successful strategy implementation. Ever-present forces of change fuel the need for and focus of strategic control. Operational control systems require systematic evaluation of performance against predetermined standards or targets. A critical concern here is identification and evaluation of performance deviations, with careful attention paid to determining the underlying reasons for and strategic implications of observed deviations before management reacts. Some firms use trigger points and contingency plans in this process. The "quality imperative" of the last 20 years has redefined global competitiveness to include reshaping the way many businesses approach strategic and operational control. What has emerged is a commitment to continuous improvement in which personnel across all levels in an organization define customer value, identify ways every process within the business influences customer value, and seek continuously to enhance the quality, efficiency, and responsiveness with which the processes, products, and services are created and supplied. This includes attending to internal as well as external customers. The "balanced scorecard" is a control system that integrates strategic goals, operating outcomes, customer satisfaction, and continuous improvement into an ongoing strategic management system.
THE FOLLOWING CONTROLS
- Premise controls,
-implementation controls,
TO TRACK /MONITOR/ ACTION PLANNINGBUSINESS INTERNALS.
1.HOW THE COMPANY MAXIMIZES THE STRENGTHSAS PART OF BUSINESS STRATEGYCriteria examples
Advantages of proposition? Capabilities? Competitive advantages? USP's (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution, awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioural? Management cover, succession?Philosophy and values?-------------------------------------------------------------------
2.HOW THE COMPANY OVERCOMES THE WEAKNESSESAS PART OF BUSINESS STRATEGY
Criteria examples
Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession---------------------------------------------------------------------------
3.HOW THE COMPANY TAKES ADVANTAGE OF THE OPPORTUNITIESAS PART OF BUSINESS STRATEGY
Criteria examples
Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's? Tactics: eg, surprise, major contracts? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?----------------------------------------------------------------
4. HOW THE COMPANY MANAGES THE THREATSAS PART OF BUSINESS STRATEGY
Criteria examples
Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners? Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects? -------------------------------------------------------------------------------THE FOLLOWING CONTROLS
-strategic surveillance, and -special alert controls TO TRACK /MONITOR/ ACTION PLANNINGBUSINESS EXTERNALS.
Political (incl. Legal)
-Environmental regulations and protection [what are the government regualtions/ protection laws that must be observed ]
-Tax policieswhat tax hinder the business and what taxes incentives are available]
-International trade regulations and restrictions[ does the government encourage exports / with high tariffs on imports]
-Contract enforcement law/Consumer protection[does the government enforce on consumer protection ]
-Employment laws][ is the government encouraging skilled immigrants with temp. permits]
-Government organization / attitude[ does the government have a very positive attitude towards this industry]
-Competition regulation[ are there regulation for limiting competition]
-Political Stability[ politically , does the government have a very stable government ]
-Safety regulations[ has the government adopted some of the modern safety regulations]================================================================= Economic
-Economic growth[ what is the economic growth rate / what are the reasons ]
-Interest rates & monetary policies[ are the interest rates under control / is there a sound monetary policies]
-Government spending[is government spending is significant and is it under control ]
-Unemployment policy[what is the employment / unemployment policies of the government ]
-Taxation[ has the taxation encouraged the industry ]
-Exchange rates[ is there well managed exchange controls and is it helping the industry]
-Inflation rates[ is the inflation well under control ]
-Stage of the business cycle[ is your industry is on the growth pattern]
-Consumer confidence[ is the consumer confidence is high/ strong and if not, why ]
==================================================
Social
-Income distribution[is there balanced income distribution policy ]
-Demographics, Population growth rates, Age distribution[ what is population growth and why ]
-Labor / social mobility[ what are the labor policies and is there labor mobility]
-Lifestyle changes[ are there significant lifestyle changes taking place--more modernization/ why ]
-Work/career and leisure attitudes[ are the population career minded and are seeking better lifestyle]
-Education[ what are the education policies / is it successful ]
-Fashion, hypes[are the people becoming fashion conscious ]
-Health consciousness & welfare, feelings on safety[ are the people becoming health consciousness]
-Living conditions[ is the living conditions improving fast and spreading rapidly]
=========================================================
Technological
Government research spending[is the government spending on research and development]
Industry focus on technological effort[are the industries focused on using improved technology]
New inventions and development[ are new inventions being encouraged for developments]
Rate of technology transfer[ is the rate of technology transfer is speeding up ]
(Changes in) Information Technology[ is the information technology rapidly moving and is there government support]
(Changes in) Internet[ is the internet usage rapidly increasing and why]
(Changes in) Mobile Technology[is the Mobile technology rapidly developing and is there government support]
Three fundamental perspectives
-strategic control,
-continuous improvement,
-balanced scoreboard
provide the basis for designing strategy control systems.
Strategic controls are intended to steer the company toward its long
-term strategic goals.
- Premise controls,
-implementation controls,
-strategic surveillance, and
-special alert controls are types of strategic control. All four types are designed to meet top management's needs to track the strategy as it is being implemented, to detect underlying problems, and to make necessary adjustments. These strategic controls are linked to the environmental assumptions and the key operating requirements necessary for successful strategy implementation. Ever-present forces of change fuel the need for and focus of strategic control. Operational control systems require systematic evaluation of performance against predetermined standards or targets. A critical concern here is identification and evaluation of performance deviations, with careful attention paid to determining the underlying reasons for and strategic implications of observed deviations before management reacts. Some firms use trigger points and contingency plans in this process. The "quality imperative" of the last 20 years has redefined global competitiveness to include reshaping the way many businesses approach strategic and operational control. What has emerged is a commitment to continuous improvement in which personnel across all levels in an organization define customer value, identify ways every process within the business influences customer value, and seek continuously to enhance the quality, efficiency, and responsiveness with which the processes, products, and services are created and supplied. This includes attending to internal as well as external customers. The "balanced scorecard" is a control system that integrates strategic goals, operating outcomes, customer satisfaction, and continuous improvement into an ongoing strategic management system.
THE FOLLOWING CONTROLS
- Premise controls,
-implementation controls,
TO TRACK /MONITOR/ ACTION PLANNINGBUSINESS INTERNALS.
1.HOW THE COMPANY MAXIMIZES THE STRENGTHSAS PART OF BUSINESS STRATEGYCriteria examples
Advantages of proposition? Capabilities? Competitive advantages? USP's (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution, awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioural? Management cover, succession?Philosophy and values?-------------------------------------------------------------------
2.HOW THE COMPANY OVERCOMES THE WEAKNESSESAS PART OF BUSINESS STRATEGY
Criteria examples
Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession---------------------------------------------------------------------------
3.HOW THE COMPANY TAKES ADVANTAGE OF THE OPPORTUNITIESAS PART OF BUSINESS STRATEGY
Criteria examples
Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's? Tactics: eg, surprise, major contracts? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?----------------------------------------------------------------
4. HOW THE COMPANY MANAGES THE THREATSAS PART OF BUSINESS STRATEGY
Criteria examples
Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners? Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects? -------------------------------------------------------------------------------THE FOLLOWING CONTROLS
-strategic surveillance, and -special alert controls TO TRACK /MONITOR/ ACTION PLANNINGBUSINESS EXTERNALS.
Political (incl. Legal)
-Environmental regulations and protection [what are the government regualtions/ protection laws that must be observed ]
-Tax policieswhat tax hinder the business and what taxes incentives are available]
-International trade regulations and restrictions[ does the government encourage exports / with high tariffs on imports]
-Contract enforcement law/Consumer protection[does the government enforce on consumer protection ]
-Employment laws][ is the government encouraging skilled immigrants with temp. permits]
-Government organization / attitude[ does the government have a very positive attitude towards this industry]
-Competition regulation[ are there regulation for limiting competition]
-Political Stability[ politically , does the government have a very stable government ]
-Safety regulations[ has the government adopted some of the modern safety regulations]================================================================= Economic
-Economic growth[ what is the economic growth rate / what are the reasons ]
-Interest rates & monetary policies[ are the interest rates under control / is there a sound monetary policies]
-Government spending[is government spending is significant and is it under control ]
-Unemployment policy[what is the employment / unemployment policies of the government ]
-Taxation[ has the taxation encouraged the industry ]
-Exchange rates[ is there well managed exchange controls and is it helping the industry]
-Inflation rates[ is the inflation well under control ]
-Stage of the business cycle[ is your industry is on the growth pattern]
-Consumer confidence[ is the consumer confidence is high/ strong and if not, why ]
==================================================
Social
-Income distribution[is there balanced income distribution policy ]
-Demographics, Population growth rates, Age distribution[ what is population growth and why ]
-Labor / social mobility[ what are the labor policies and is there labor mobility]
-Lifestyle changes[ are there significant lifestyle changes taking place--more modernization/ why ]
-Work/career and leisure attitudes[ are the population career minded and are seeking better lifestyle]
-Education[ what are the education policies / is it successful ]
-Fashion, hypes[are the people becoming fashion conscious ]
-Health consciousness & welfare, feelings on safety[ are the people becoming health consciousness]
-Living conditions[ is the living conditions improving fast and spreading rapidly]
=========================================================
Technological
Government research spending[is the government spending on research and development]
Industry focus on technological effort[are the industries focused on using improved technology]
New inventions and development[ are new inventions being encouraged for developments]
Rate of technology transfer[ is the rate of technology transfer is speeding up ]
(Changes in) Information Technology[ is the information technology rapidly moving and is there government support]
(Changes in) Internet[ is the internet usage rapidly increasing and why]
(Changes in) Mobile Technology[is the Mobile technology rapidly developing and is there government support]
MS-11 Question 4
Identify a company of your choice from automobile industry. Try to analyze the company’s industry environment from an international perspective.
THE CAR COMPANY, I HAVE SELECTED IS ''VOLVO''THE SWEDISH CAR MANUFACTURER FROM SWEDEN.
YOU MAY ASK ''WHY'', BECAUSE I WORKED WITH THE COMPANY FOR 6 YEARS.
THE VOLVO company manufactures passenger vehicles/ wagons/trucks/ heavy duty vehicles/BUSES/ penta marine engines/ construction machines.
HERE WE WILL FOCUS ONLY ON ''PASSENGER VEHICLES''.OF THE LUXURY SEGMENT.
-----------------------------------------------------------------------
A luxury vehicle is a relatively expensive vehicle that includes additional features designed to increase the comfort of the driver and passengers. Luxury vehicles usually place more emphasis on comfort, appearance, and amenities such as technological upgrades and higher quality materials than on performance, economy, or utility. Luxury vehicles are often built in smaller numbers than more affordable mass-market vehicles. Luxury vehicles are historically 5 or 6-passenger four-door sedans. Recently the term "luxury" has been stapled onto other vehicles, including coupés, hatchbacks, station wagons, roadsters, and even trucks, such as light pickup trucks or sport utility vehicles.General definition While defining what constitutes a "luxury car" is somewhat subjective, guidelines such as price, design, comfort, and prestige can be used to help define the term. Luxury cars also offer a higher degree of comfort than their mainstream counterparts as well as a highly sumptuous interior with a strong emphasis on design and beauty. Features such as interior leather and polished "woodgrain-look" dashboards are common amenities.Luxury cars typically carry prestige, which means the allure that the car carries. Some automakers develop luxury or halo vehicle from their mass production models by product differentiation, effective marketing mix modifications (particularly by charging a higher price for relatively minor changes and use of more up-market advertising), and buyer driven market segmentation through product placement. As a result, "luxury" is sometimes only in the perception of the consumers.As well, there are vehicles with luxury car-like prestige and/or pricing that do not offer the degree of comfort required for them to actually be considered luxury vehicles, such as the Hummer H1, the Chevrolet Corvette and the Dodge Viper.Many high priced prestige vehicles, such as the Porsche 911, Alfa Romeo GTV, most Ferraris and many Lamborghinis are classed as luxury vehicles, when they lack many of the amenities of typical luxury vehicles and are better fitted to be called exotic (with the exception of the Porsche).
--------------------------------------------------------------------------------ManufacturersManufacturers are classified in many groups, but they do not have specific names. Car fans argue on whether a certain brand can be compared with another one or not, even in the same country or region.Jaguar, Audi, BMW, and Mercedes-Benz are the traditional luxury manufacturers, but manufacturers such as Saab, and Volvo are now considered by many to fall into this category. Lexus has met with limited but growing success across Europe even though it is a top selling luxury carmaker in the United States.[1] At the top end of the spectrum, Bentley, Maybach, and Rolls Royce are generally considered more prestigious than any other luxury car brandsSports car manufacturers are usually considered apart (and distinguished by their exclusivity, mainly by their production numbers), although some of them produce luxury sports cars (mainly grand tourers), such as Aston Martin, Porsche, and Maserati). Such sports cars are also known as "performance cars" that are designed to emphasize performance before luxury.Kaiser Jeep created the luxury four-wheel drive category in 1966 Super Wagoneer (first SUV to offer a V8 engine, automatic transmission, as well as all the luxury features and appointments) continuing through the segment leading Wagoneer Limited models.
These are luxury car manufacturers whose models are currently on the market.• Acura • Alfa Romeo • Audi • Aston Martin • Bentley • BMW • Bugatti • Buick *Cadillac • Chrysler • Ferrari • Infiniti • Jaguar (includes Daimler) • Koenigsegg • Lamborghini • Lancia *Land Rover • Lexus • Lincoln • Maserati • Maybach • Mercedes-Benz • Mercury • Morgan *Pagani • Porsche • Rolls-Royce • Saab • Spyker Cars *Volvo Cars ======================================
Segments
ENTRY LEVEL
The entry-level luxury forms the beginning classification of the luxury vehicles; competition in this segment is typically fierce. It features vehicles with an MSRP approximately between $26,000 and $36,000 (though with options, particularly on the BMW 3 Series and Mercedes-Benz C-Class, they can creep well into the $40,000 to $60,000 range), a relatively high degree of comfort is manufactured by luxury brand. If the vehicle is manufactured by a non-luxury marque its base MSRP should exceed approximately $36k and it must place an emphasis on comfort. The equivalent classification in Britain is compact executive car.This segment mostly includes the bottom vehicles in the line-up of luxury brands as well as the top-of-the-line models of some non-luxury brands. Vehicles in this segment include the Acura TSX, Acura TL, Alfa Romeo 159, Buick Lucerne, BMW 3 Series, Cadillac CTS, Chrysler 300, Mercury Grand Marquis, Lexus IS, Lexus ES, Audi A4, Mercedes-Benz C-Class, Infiniti G35, Lincoln MKZ,Volvo S60, Volvo S40, Volvo V50, Saab 9-3, and the Jaguar X-Type
------------------------------------------------------
MID LUXURY
In order to be considered part of the middle-luxury segment, a vehicle should feature a base MSRP between approximately $36k and $60k[2], have a very high degree of comfort, and should have the latest or near latest technological and safety innovations. Customers in this segment also yield some priority to performance. Therefore, many car manufacturers produce these cars with V8s and some highly sophisticated 6-cylinder engines. In Britain, these models are commonly referred to as executive cars. Vehicles in this segment include the mid-range models of several luxury car manufacturers such as the Mercedes-Benz E-Class, BMW 5 Series, Holden Caprice, Holden Statesman, Audi A6, Saab 9-5, Lexus GS, and Jaguar S-Type/XF. There are also some flagship sedans in this segment. The Citroën C6, Alfa Romeo 166, Cadillac STS, Cadillac DTS, Chrysler 300C, Lincoln Town Car, Peugeot 607, Renault Vel Satis, Infiniti M35, Volvo S80, and Acura RL are all considered to be part of the mid-luxury segment due to their relatively low base MSRPs despite their rank as a "flagship sedan" and high-end like interiors.This market is operated under western nameplates with some Japanese representation. It is mainly controlled by Germans, Americans, and Japanese.
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HIGH END LUXURY
This category includes many flagship vehicles of luxury brands such as the BMW 7-Series, Mercedes-Benz S-Class, or Lexus LS. Currently, all vehicles priced between the range of $60k and $100k are a part of this exclusive club.[2] The vehicles in this segment offer extremely high levels of quality and latest technological developments, as well as degrees of comfort at least equal to those found in mid-level luxury vehicles. There is no precise term in the United Kingdom; such a car would be simply called a luxury car.Vehicles in this category include some of the models from the flagship lines of luxury car brands. Vehicles in this segment include the Cadillac STS-V, Lincoln Town Car L Series, Lexus LS, Mercedes-Benz S-Class, BMW 7 Series, Audi A8, Infiniti M45, and the Jaguar XJ. Mercedes' E-Class based Mercedes-Benz CLS-Class is also in this segment. The Volkswagen Phaeton is the only high-end luxury vehicle that is not sold under a luxury nameplate. The Phaeton is no longer sold in the United States due to low consumer demand, as many consumers were unwilling to spend upwards of US70,000 for a non-luxury nameplate.This segment is operated under various German and British marques, with some limited Japanese and American nameplates
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ULTRA LUXURY
Currently, all cars in the ultra-luxury segment are priced at approximately $100k or higher, however the category also contains lower-level luxury cars with optional engine choices. [5] They may or may not be better in quality and refinement than some of the more affordable luxury cars, but due to their high MSRP, they guarantee exclusivity and help to get their owners noticed. This segment includes the entire lineup of Rolls Royce, Bentley, Maserati, Aston Martin and Maybach. Many "flagship sedans" from car companies whose average car sells in a lower class are actually in this category. For example, vehicles such as the Mercedes-Benz S600, Cadillac XLR-V, BMW 760, Lexus LS 600h L[6][7], Volkswagen Phaeton W12 or the W12 version of the Audi A8 can be included in this category.This category is operated mostly by European nameplates and controlled mainly by British and German marques.
===================================================================
THE VOLVO PASSENGER VEHICLES ARE OF THE CATEGORY''SEMI LUXURY '' AND ''LUXURY '' MODELS.-it is one of the largest manufacturers of vehicles in the world.-it is one of the safest cars in the world.-its fuel injection system is unique in the world.-it is the original manufacturer of the ''ALUMINIUM ALLOY ENGINE''.-It has assembles cars in sweden / us/ thailand/china.
==================================================
* Economies of scale.[IN EUROPE/IN USA, IT HAS THE BENEFIT OF THE BIG VOLUMEAND IMAGE AND HENCE IT WILL BE DIFFICULT TO COMPETE.
----------------------------------------------------------------------------------------------- * Capital / investment requirements.[THE COMPANY HAS MADE HUGE INVESTMENTS IN EUROPE/UK/ US IN PARTS/ ASSEMBLING PLANT]
--------------------------------------------------------------------------------
* Customer switching .[CUSTOMER LOVE TO SWITCH FROM LESS EXPENSIVECARS TO VOLVO -- PRESTIGE / LUXURY/ SAFETY BEING THE REASONS.
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* Access to industry distribution channels.[THE VOLVO CAR COMPANY HAS ONE OF THE BEST DEALER NETWORK DISTRIBUTION IN THE WORLD,AS THE COMPANY SPENDS RESOURCES TO SELECTTHE BEST AGENT ]
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* Access to technology.[THE COMPANY HAS THE BETTER R&D RESOURCETO DEVELOP ITS OWN TECHNOLOGY ]
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* Brand loyalty. Are customers loyal?[WHEN IT COMES TO BRAND LOYALTY THERE ISNO ONE TO MATCH VOLVO OWNERS LOYALTYFOR THEIR CARS]
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* The likelihood of retaliation from existing industry players.[VOLVO'S PRODUCT IMAGE / REPUTATION WILL MAKEIT DIFFICULT FOR RETALIATION DIFFICULT. THERE IS COMPETITION , NO DOUBT, FROM BMW etc.
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* Quality. [volvo's quality is unique, unmatched by competition]
----------------------------------------------------------------------------
* The relative price and performance.[volvo's pricing in the market segment is value for money.]
------------------------------------------------------------------------------------------------- * Branding. [volvo has one of the best / strongest brand in the passengervehicle market ]------------------------------------------------------------------------------------------ ]
* Profitability of suppliers. [volvo company has been a very profitable companyamong the vehicle manufacturers.]
--------------------------------------------------------------------------
* Role of quality and service.[the quality and service plays a significant rolein the marketing of the volvo cars.
--------------------------------------------------------------------------------------------
* The structure of competition. [the market segment falls into categories like entry level, mid level,high end and ultra luxury ]
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* Degree of product differentiation. [products are differentiated through brand positioning .]------------------------------------------------------------------------------------------------- * Strategic objectives. [If competitors pursue aggressive growth strategies, rivalry will be more intense. If competitors are merely "milking" profits in a mature industry, the degree of rivalry is typically low.]
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THE CAR COMPANY, I HAVE SELECTED IS ''VOLVO''THE SWEDISH CAR MANUFACTURER FROM SWEDEN.
YOU MAY ASK ''WHY'', BECAUSE I WORKED WITH THE COMPANY FOR 6 YEARS.
THE VOLVO company manufactures passenger vehicles/ wagons/trucks/ heavy duty vehicles/BUSES/ penta marine engines/ construction machines.
HERE WE WILL FOCUS ONLY ON ''PASSENGER VEHICLES''.OF THE LUXURY SEGMENT.
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A luxury vehicle is a relatively expensive vehicle that includes additional features designed to increase the comfort of the driver and passengers. Luxury vehicles usually place more emphasis on comfort, appearance, and amenities such as technological upgrades and higher quality materials than on performance, economy, or utility. Luxury vehicles are often built in smaller numbers than more affordable mass-market vehicles. Luxury vehicles are historically 5 or 6-passenger four-door sedans. Recently the term "luxury" has been stapled onto other vehicles, including coupés, hatchbacks, station wagons, roadsters, and even trucks, such as light pickup trucks or sport utility vehicles.General definition While defining what constitutes a "luxury car" is somewhat subjective, guidelines such as price, design, comfort, and prestige can be used to help define the term. Luxury cars also offer a higher degree of comfort than their mainstream counterparts as well as a highly sumptuous interior with a strong emphasis on design and beauty. Features such as interior leather and polished "woodgrain-look" dashboards are common amenities.Luxury cars typically carry prestige, which means the allure that the car carries. Some automakers develop luxury or halo vehicle from their mass production models by product differentiation, effective marketing mix modifications (particularly by charging a higher price for relatively minor changes and use of more up-market advertising), and buyer driven market segmentation through product placement. As a result, "luxury" is sometimes only in the perception of the consumers.As well, there are vehicles with luxury car-like prestige and/or pricing that do not offer the degree of comfort required for them to actually be considered luxury vehicles, such as the Hummer H1, the Chevrolet Corvette and the Dodge Viper.Many high priced prestige vehicles, such as the Porsche 911, Alfa Romeo GTV, most Ferraris and many Lamborghinis are classed as luxury vehicles, when they lack many of the amenities of typical luxury vehicles and are better fitted to be called exotic (with the exception of the Porsche).
--------------------------------------------------------------------------------ManufacturersManufacturers are classified in many groups, but they do not have specific names. Car fans argue on whether a certain brand can be compared with another one or not, even in the same country or region.Jaguar, Audi, BMW, and Mercedes-Benz are the traditional luxury manufacturers, but manufacturers such as Saab, and Volvo are now considered by many to fall into this category. Lexus has met with limited but growing success across Europe even though it is a top selling luxury carmaker in the United States.[1] At the top end of the spectrum, Bentley, Maybach, and Rolls Royce are generally considered more prestigious than any other luxury car brandsSports car manufacturers are usually considered apart (and distinguished by their exclusivity, mainly by their production numbers), although some of them produce luxury sports cars (mainly grand tourers), such as Aston Martin, Porsche, and Maserati). Such sports cars are also known as "performance cars" that are designed to emphasize performance before luxury.Kaiser Jeep created the luxury four-wheel drive category in 1966 Super Wagoneer (first SUV to offer a V8 engine, automatic transmission, as well as all the luxury features and appointments) continuing through the segment leading Wagoneer Limited models.
These are luxury car manufacturers whose models are currently on the market.• Acura • Alfa Romeo • Audi • Aston Martin • Bentley • BMW • Bugatti • Buick *Cadillac • Chrysler • Ferrari • Infiniti • Jaguar (includes Daimler) • Koenigsegg • Lamborghini • Lancia *Land Rover • Lexus • Lincoln • Maserati • Maybach • Mercedes-Benz • Mercury • Morgan *Pagani • Porsche • Rolls-Royce • Saab • Spyker Cars *Volvo Cars ======================================
Segments
ENTRY LEVEL
The entry-level luxury forms the beginning classification of the luxury vehicles; competition in this segment is typically fierce. It features vehicles with an MSRP approximately between $26,000 and $36,000 (though with options, particularly on the BMW 3 Series and Mercedes-Benz C-Class, they can creep well into the $40,000 to $60,000 range), a relatively high degree of comfort is manufactured by luxury brand. If the vehicle is manufactured by a non-luxury marque its base MSRP should exceed approximately $36k and it must place an emphasis on comfort. The equivalent classification in Britain is compact executive car.This segment mostly includes the bottom vehicles in the line-up of luxury brands as well as the top-of-the-line models of some non-luxury brands. Vehicles in this segment include the Acura TSX, Acura TL, Alfa Romeo 159, Buick Lucerne, BMW 3 Series, Cadillac CTS, Chrysler 300, Mercury Grand Marquis, Lexus IS, Lexus ES, Audi A4, Mercedes-Benz C-Class, Infiniti G35, Lincoln MKZ,Volvo S60, Volvo S40, Volvo V50, Saab 9-3, and the Jaguar X-Type
------------------------------------------------------
MID LUXURY
In order to be considered part of the middle-luxury segment, a vehicle should feature a base MSRP between approximately $36k and $60k[2], have a very high degree of comfort, and should have the latest or near latest technological and safety innovations. Customers in this segment also yield some priority to performance. Therefore, many car manufacturers produce these cars with V8s and some highly sophisticated 6-cylinder engines. In Britain, these models are commonly referred to as executive cars. Vehicles in this segment include the mid-range models of several luxury car manufacturers such as the Mercedes-Benz E-Class, BMW 5 Series, Holden Caprice, Holden Statesman, Audi A6, Saab 9-5, Lexus GS, and Jaguar S-Type/XF. There are also some flagship sedans in this segment. The Citroën C6, Alfa Romeo 166, Cadillac STS, Cadillac DTS, Chrysler 300C, Lincoln Town Car, Peugeot 607, Renault Vel Satis, Infiniti M35, Volvo S80, and Acura RL are all considered to be part of the mid-luxury segment due to their relatively low base MSRPs despite their rank as a "flagship sedan" and high-end like interiors.This market is operated under western nameplates with some Japanese representation. It is mainly controlled by Germans, Americans, and Japanese.
--------------------------------------------------------------------
HIGH END LUXURY
This category includes many flagship vehicles of luxury brands such as the BMW 7-Series, Mercedes-Benz S-Class, or Lexus LS. Currently, all vehicles priced between the range of $60k and $100k are a part of this exclusive club.[2] The vehicles in this segment offer extremely high levels of quality and latest technological developments, as well as degrees of comfort at least equal to those found in mid-level luxury vehicles. There is no precise term in the United Kingdom; such a car would be simply called a luxury car.Vehicles in this category include some of the models from the flagship lines of luxury car brands. Vehicles in this segment include the Cadillac STS-V, Lincoln Town Car L Series, Lexus LS, Mercedes-Benz S-Class, BMW 7 Series, Audi A8, Infiniti M45, and the Jaguar XJ. Mercedes' E-Class based Mercedes-Benz CLS-Class is also in this segment. The Volkswagen Phaeton is the only high-end luxury vehicle that is not sold under a luxury nameplate. The Phaeton is no longer sold in the United States due to low consumer demand, as many consumers were unwilling to spend upwards of US70,000 for a non-luxury nameplate.This segment is operated under various German and British marques, with some limited Japanese and American nameplates
---------------------------------------------------------------------------------
ULTRA LUXURY
Currently, all cars in the ultra-luxury segment are priced at approximately $100k or higher, however the category also contains lower-level luxury cars with optional engine choices. [5] They may or may not be better in quality and refinement than some of the more affordable luxury cars, but due to their high MSRP, they guarantee exclusivity and help to get their owners noticed. This segment includes the entire lineup of Rolls Royce, Bentley, Maserati, Aston Martin and Maybach. Many "flagship sedans" from car companies whose average car sells in a lower class are actually in this category. For example, vehicles such as the Mercedes-Benz S600, Cadillac XLR-V, BMW 760, Lexus LS 600h L[6][7], Volkswagen Phaeton W12 or the W12 version of the Audi A8 can be included in this category.This category is operated mostly by European nameplates and controlled mainly by British and German marques.
===================================================================
THE VOLVO PASSENGER VEHICLES ARE OF THE CATEGORY''SEMI LUXURY '' AND ''LUXURY '' MODELS.-it is one of the largest manufacturers of vehicles in the world.-it is one of the safest cars in the world.-its fuel injection system is unique in the world.-it is the original manufacturer of the ''ALUMINIUM ALLOY ENGINE''.-It has assembles cars in sweden / us/ thailand/china.
==================================================
* Economies of scale.[IN EUROPE/IN USA, IT HAS THE BENEFIT OF THE BIG VOLUMEAND IMAGE AND HENCE IT WILL BE DIFFICULT TO COMPETE.
----------------------------------------------------------------------------------------------- * Capital / investment requirements.[THE COMPANY HAS MADE HUGE INVESTMENTS IN EUROPE/UK/ US IN PARTS/ ASSEMBLING PLANT]
--------------------------------------------------------------------------------
* Customer switching .[CUSTOMER LOVE TO SWITCH FROM LESS EXPENSIVECARS TO VOLVO -- PRESTIGE / LUXURY/ SAFETY BEING THE REASONS.
--------------------------------------------------------------------------
* Access to industry distribution channels.[THE VOLVO CAR COMPANY HAS ONE OF THE BEST DEALER NETWORK DISTRIBUTION IN THE WORLD,AS THE COMPANY SPENDS RESOURCES TO SELECTTHE BEST AGENT ]
--------------------------------------------------------------------------------------
* Access to technology.[THE COMPANY HAS THE BETTER R&D RESOURCETO DEVELOP ITS OWN TECHNOLOGY ]
----------------------------------------------------------------------------------------
* Brand loyalty. Are customers loyal?[WHEN IT COMES TO BRAND LOYALTY THERE ISNO ONE TO MATCH VOLVO OWNERS LOYALTYFOR THEIR CARS]
-------------------------------------------------------------------------------------------
* The likelihood of retaliation from existing industry players.[VOLVO'S PRODUCT IMAGE / REPUTATION WILL MAKEIT DIFFICULT FOR RETALIATION DIFFICULT. THERE IS COMPETITION , NO DOUBT, FROM BMW etc.
--------------------------------------------------------------------------------------------
* Quality. [volvo's quality is unique, unmatched by competition]
----------------------------------------------------------------------------
* The relative price and performance.[volvo's pricing in the market segment is value for money.]
------------------------------------------------------------------------------------------------- * Branding. [volvo has one of the best / strongest brand in the passengervehicle market ]------------------------------------------------------------------------------------------ ]
* Profitability of suppliers. [volvo company has been a very profitable companyamong the vehicle manufacturers.]
--------------------------------------------------------------------------
* Role of quality and service.[the quality and service plays a significant rolein the marketing of the volvo cars.
--------------------------------------------------------------------------------------------
* The structure of competition. [the market segment falls into categories like entry level, mid level,high end and ultra luxury ]
------------------------------------------------------------
* Degree of product differentiation. [products are differentiated through brand positioning .]------------------------------------------------------------------------------------------------- * Strategic objectives. [If competitors pursue aggressive growth strategies, rivalry will be more intense. If competitors are merely "milking" profits in a mature industry, the degree of rivalry is typically low.]
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MS-11 Question 3
Assume that you are in the top management cadre of commercial airlines, which is competing with the low cost strategy. Frame an appropriate organization culture for your organization so that it can maintain its position in the market.
WHAT ARE THE MECHANISMS FOR CHANGING THE CULTURE?
Critical instrumental mechanisms for changing and managing culture include
-Strategic planning and the identification of necessarily cultural requisites
-Ensuring consistency of culture with mission, goals, strategies, structures and processes
-Creating formal statements of organizational philosophy and values
-Establishing consistent incentives, recognition systems, and performance measurement
-Maintaining appropriate error-detection and accountability systems
-Coaching, mentoring, informal and formal training, and identifying role models
-Embracing appropriate rites, rituals, symbols, and narratives
-Taking advantage of the growth of subcultures
-Managing and promoting strong communities of practice .
Several requisites for organizational success that organizational culture must now take into account:
-The organization must be proactive, not just reactive.
-The organization must influence and manage the environment, not just adapt.
-The organization must be pragmatic, not idealistic.
-The organization must be future-oriented, not predominantly present/past oriented.
-The organization must embrace diversity, not uniformity.
-The organization must be relationship-oriented, not just task-oriented.
-The organization must embrace external connectivity, as well as promote internal integration.
These fundamental assumptions are key to eliminating obstacles that will inhibit the kinds of internal and external organizational adaptations necessary for future success. They are not, however, sufficient. They must be reinforced by values, behavioral norms and patterns, artifacts and symbols, as well as accompanied by a particular mission, set of goals, and strategies.
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Four essential strengths of the organizational culture approach:
It focuses attention on the human side of organizational life, and finds significance and learning in even its most mundane aspects (for example, the setup in an empty meeting room). It makes clear the importance of creating appropriate systems of shared meaning to help people work together toward desired outcomes. It requires members—especially leaders—to acknowledge the impact of their behavior on the organization’s culture. People should ask themselves: "What impact am I having on the social construction of reality in my organization?" "What can I do to have a different and more positive impact?" It encourages the view that the perceived relationship between an organization and its environment is also affected by the organization’s basic assumptions.
Morgan says:
We choose and operate in environmental domains according to how we construct conceptions of who we are and what we are trying to do. . . . And we act in relation to those domains through the definitions we impose on them. . . . The beliefs and ideas that organizations hold about who they are, what they are trying to do, and what their environment is like have a much greater tendency to realize themselves than is usually believed.
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FOR THE AIRLINES TO MAINTAIN THE POSITION,IT MUST DEVELOP AND MAINTAIN THE CULTURE OF PRODUCTIVITY AND COMPETITIVENESS.
COMPETITIVENESS IS A CULTURE BY ITSELF.THE ''COMPETITIVE CULTURE'' SHOULD BE INTRODUCED/ NOURISHED/ CHERISHED/EMBEDDEDTHROUGHOUT THE ORGANIZATION FROM THE ''CEO'' TO THE ''DESPATCH CLERK'', BEFORE IT CAN HAVE AN IMPACT ON THE ORGANIZATION.
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BUT WHAT IS ORGANIZATION CULTURE ??HOW AN ORGANIZATION's CULTURE CAN BE KNOWN ?
Organization culture can be a set of key values , assumptions,understandings and norms that is shared by members of anorganization.
Organization values are fundamental beliefs that an organizationconsiders to be important , that are relatively stable over time,and they have an impact on employees behaviors and attitudes.
Organization Norms are shared standards that define what behaviors are acceptable and desirable within organization.
Shared assumptions are about how things are donein an organization.
Understandings are coping with internal / external problemsuniformly.=======================================================================================================Competitiveness: The ability of an entity to operate effectively / efficiently and productively in relation to other similar entities.
COMPETITIVENESS / PRODUCTIVITY is a product of Resource utilization whose skills encompass all areas of business management from strategy design, to management of production, marketing, export transactions, and e-competencies.
COMPETITIVENESS / PRODUCTIVITY is a culture of its ownwhich must be embedded in the organization.Selecting businesses that have the greatest potential to become competitive; -Providing assistance to them in building strategies; -Building consortiums to provide of the needed resources. -Select the businesses with the highest potential; - Determine their managerial skill requirements and design programmes to meet those needs; - Assist businesses to design competitive strategies; - Prepare resource requirement plans; - Provide assistance with the acquisition and allocation of resources from a consortium of resource providers; - Help managers implement their strategies.
The Key Role of COMPETITIVENESS / PRODUCTIVITY “COMPETITIVENESS / PRODUCTIVITY isn’t everything, but in the long run it is almost everything.”
COMPETITIVENESS / PRODUCTIVITY is the measure of output per unit of input . COMPETITIVENESS / PRODUCTIVITY is therefore increased by improvements in FINANCE and labour productivity. “ competitiveness is increasing productivity while raising the sales and the market share of the company.
What Improves COMPETITIVENESS / PRODUCTIVITY The factors that enable COMPETITIVENESS / PRODUCTIVITY include the following considerations:
FINANCIAL Investment
– the greater the resulting productivity.
Skills/Human
– the skilling-up of the workforce through training and education is also an investment therefore, leading to the development of ‘Human Capital’. Education therefore, and the ability and willingness of the workforce to learn new skills becomes a key competitive driver to longer-term business growth
Total Factor Productivity
– different ways of working
– meaning how firms are organised, structured, use technology and are managed.
Innovation and/or ‘Technological Progressiveness’
– i.e the ability to develop new products, services and ways of doing things that enable a competitive advantage to be sustained. In addition to improving performance and creativity (i.e. creating ideas), this means translating R&D into productivity gains.
Competition
– the more competitive the business the faster its growth.
Information Communications Technology. BUSINESSES that made the largest investment in IT [computer hardware, software and telecoms) have shown the largest COMPETITIVENESS / PRODUCTIVITY growth .
HOW DO WE INTRODUCE THE CULTURE OFCOMPETITIVENESS/PRODUCTIVITY IN AN ORGANIZATION
====================================
Step One: Define Vision and MissionA company must get buy-in from its management and its employees, before getting involved in the COMPETITIVENESS / PRODUCTIVITY journey. To create buy-in a company must first recognize the fears that both management and employees will have. Management may fear losing authority when employees are encouraged to take control of what they are doing and employees may fear loss of job security as efficiency is improved, workloads are increased and employees are being asked to expand their comfort zone. Methods of getting management buy-in include obtaining support from the top, strategic planning, keeping managers informed, and providing networking systems. Methods of getting employee buy-in include providing proper tools and training, keeping them informed and providing networking systems.Once buy-in is obtained or at least starting to bud, then the COMPETITIVENESS / PRODUCTIVITY journey can begin. The first step is to develop vision and mission statements for the company or to revisit existing ones to ensure that they still fit the company and where it is going. These statements help solidify the goals and objectives and provide a common focus point. One key advantage of a common focus point is that it gives direction to all personnel and helps them determine how to prioritize their activities. Company success is strongly dependent upon the extent to which efforts and resources are concentrated towards a common focus.
Explanation of Step One - Defining Vision and MissionThe first step of the COMPETITIVENESS / PRODUCTIVITY journey is developing a company's vision and mission statements. With input from all employees, these two statements are used as guides for the rest of the COMPETITIVENESS / PRODUCTIVITY journey.It is important to tie COMPETITIVENESS / PRODUCTIVITY into the overall company vision so that each department or area of the company realizes that COMPETITIVENESS / PRODUCTIVITY is important to the company.VisionA vision statement outlines what a company wants to be. It focuses on tomorrow; it is inspirational; it provides clear decision-making criteria; and it is timeless. MissionA mission statement outlines what the company is now. It focuses on today; it identifies the customer(s); it identifies the critical process(es); and it states the level of performance. It has been said that a vision is something to be pursued, while a mission is something to be accomplished.Developing guidance for the company is not that easy - it takes time to get it right. These visions, missions, and values must be aligned with the company or they are just rhetoric.The overall objectives are achieved - they explain what the company is today; what it wants to be in the future; and the key factors that guide its decision making.
Impact of Vision and Mission on the Company When a company collaboratively decides to express its vision, beliefs, goals, values and mission in words, it will give direction to everyone in the company. Therefore, it is important to involve all employees and give them a chance to indicate how they perceive the company and to identify what is important to them, i.e., things the company must not lose sight of as it continues on its journey. If this step is done right, it will not be viewed as the latest gimmick.The way that the vision and mission are communicated is important. This requires full commitment from senior management and may result in several changes depending on where the company presently is and how well it presently represents its vision. Quality must be recognized not as a separate entity but as an integral part of a person's overall job. This communication process can take time and much effort but does become easier as people see that the company truly uses these statements in their decision process and refers to them for guidance on a regular basis.Once the direction is defined, then it will impact such things as strategic planning, objectives and goals. Strategic planning includes reviewing the vision and mission of the company and then determining what has to be done in order to achieve the goals of these statements. This normally translates into Objectives (Strategic Focus). Next, the company determines how it will know when the statements have been achieved. This translates into Objective Measures. From the measures, each department can set goals, objectives and measures that will help the company achieve its strategic objectives (and, therefore, its mission as well as get closer to its vision).
Tools and Assessments for Vision and MissionToolsThe visioning process consists of eight steps:1) Collect input - to be most effective, the vision should represent the ideals of the entire organization. The vision can be created most successfully by a representative group of five to seven people. Other people can be surveyed for their input by using the following types of questions: What would be the perfect organizational culture? What would the perfect organization do for its members' growth and development? What products or services would the perfect organization provide to customers and the community? What else would the perfect organization do or be? 2) Brainstorm - using the data collected, have the visioning group brainstorm ideas with the same questions used in step one. The goal is to record ideas and words to describe the perfect organization.3) Shrink the mess - the large number of ideas generated must be shrunk down to a smaller, more manageable number without losing content by eliminating duplication, grouping ideas into suitable categories, and eliminating ideas that aren't appropriate or don't fit. With the ideas grouped, choose the word or words that best represent each group.4) Develop a rough draft - work with the words (that represent the groups of ideas) and rough out a statement for each component: culture, people, and product or service.5) Refine the statements - use words that create pictures. Consider content and style as well. This step deserves the appropriate time and energy.6) Test the criteria - before taking the vision to the organization, test it against the following criteria: Is your vision timeless, inspirational, and does it provide decision-making criteria for employees faced with tough situations? If it passes, continue to the next step. If it doesn't pass, then work on improving only those parts that don't meet the criteria.7) Obtain organization approval or modify - present the vision to the entire organization for approval. This step is essential if everyone is to "own", and commit to, the vision. When soliciting the approval of other employees, explain the process the team went through, explain the vision, and be open to modifications. All suggestions should be considered.8) Communicate and celebrate - sometimes a vision will stand alone. If yours does, go out and celebrate. Usually, the vision will require some explanation, clarification, and application. Every word should have a purpose. To bring the vision from the idea world into the physical world, a flexible strategic plan is needed.
============================================
Step Two
- Document Processes
Now that the company knows what it is and where it wants to go, the next step in the COMPETITIVENESS / PRODUCTIVITY journey is to determine how it presently does its business. To accomplish this the company must focus on its processes. It must know how it presently does things and be able to measure its ability to be consistent in meeting customer requirements. It has been said that customers remember a company's name under two conditions: When the company provides extremely poor products or service. When the company provides surprisingly good products or service. In order to provide surprisingly good products or service (output), companies must look at what is involved in delivering that output. It is the business processes that deliver the output. Therefore, companies must focus on the process in order to keep customers coming back and staying loyal to the product or service.To truly address the output, companies must start focusing on the processes that control the customer interfaces, rather than the organizational structure.In Business Process Improvement, this comparison shows the difference between an organizational focus and a process focus.
Organizational Focus
Process Focus
Employees are the problem
The process is the problem
Employees People
Doing my job
Help to get things done
Understanding my job
Knowing how my job fits into the total process
Measuring individuals
Measuring the process Change the person Change the process Can always find a better employee Can always improve the process Motivate people Remove Barriers Controlling employees Developing people Don't trust anyone We are all in this together Who made the error? What allowed the error to occur? Correct errors Reducing variation Bottom line driven Customer driven Companies that focus on delivering surprisingly good output and building their reputations will be more successful than companies that just focus on the bottom line as the bottom line will not bring customers back. And the only way to determine how to consistently deliver this type of output is by focusing on processes within your company/business.
Explanation of Step Two
- Documenting Processes Every product/service (output) is the result of a process. A process can be defined as any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or external customer. The key elements of a process are: inputs, activities, outputs, customers, resources (materials, dollars and person/processing time), and cycle time (how long does it take). When documenting a process, all these key elements need to be identified.A company must first document the current state - define what the company does, who does it and how and why it is done. A common approach is to draw a process picture (called process mapping), identify inputs, actions, decisions points as well as time and cost inputs. This process picture permits common understanding, enables measurement and develops a common language.There are several ways to "map" a process. Some companies describe the flow of information and activities between departments in step form. Other companies use flowcharting tools.A caution is worthy of note here - most companies organize themselves in a vertical format (for example, accounting department, shipping/receiving department and customer service department). However, processes tend to flow horizontally and connect more than one functioning group. This horizontal work flow combined with a vertical organization results in voids and overlaps and process problems.Because of the difference in directional flow, it is important that all groups know how they interrelate and how the various outputs are used by others.When starting to map a company's processes, some of the things to identify are the objectives of the process (performance targets, financial, quality, operational, behavioural), the inputs and outputs, and the measures (how will the progress be monitored, internally and externally).A common concern about process mapping is determining where to start and what to map. If a process consists of several subprocesses then it may be easier to start mapping at the subprocess level. Depending on the detail required, activities can be mapped individually.The next question might be, how is a process mapped? There are numerous ways to map a process and there are several tools available on the market (e.g., software programs). Flowcharting is the most popular and can be simple or complex.Flowcharts Flowcharts graphically represent the activities that make up a process. Flowcharts are useful because they illustrate how the different elements fit together and provide discipline in thinking. Comparing a flowchart to the actual process will highlight the areas in which rules or policies are unclear or are not being followed and may highlight areas in which unclear procedures disrupt quality and productivity. Flowcharts also facilitate communication about problem areas since all inputs and outputs are identified.There are many different types of flowcharts: Block diagrams provide a quick overview of a process. The American National Standards Institute (ANSI) standard flowcharts analyze the detailed interrelationships of a process. Functional flowcharts depict the process flow between organizations or areas. Geographic flowcharts illustrate the process flow between locations (e.g., distribution systems).
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Step Three - Establish MeasurementsThe next step in the COMPETITIVENESS / PRODUCTIVITY journey is to set standards and measures for each process, product and service. Within the whole organization (production, sales, administration, shipping, agents) while moving down the COMPETITIVENESS / PRODUCTIVITY road, the focus must be on improving the customer's perception of the company, its products and services. To do this the company must measure customer satisfaction.Companies need to determine precisely where they stand in their customer's eyes by engaging in ongoing information gathering activities to measure customer satisfaction. Listening to customer complaints, identifying and measuring critical processes that are responsible for generating poor service or products, and implementing corrective action are integral in developing a quality management philosophy.The old sayings: What Gets Measured, Gets Managed and Never Assume You Know What The Customer Wants, sound like common sense, but many companies fail to develop even the most basic methods of gathering information and establishing performance measures.Companies need to: know on an ongoing basis what their customers are thinking, analyze their own structures and processes to ensure that they do not hinder or interfere with customer satisfaction, and, implement measures to monitor the effectiveness of all critical processes that impact customer satisfaction.
Explanation of Step Three - Establishing Measurements The focus of standards and measures is to ensure that the processes are meeting requirements and that customers are satisfied.Standards Standards are yardsticks for measuring performance, quality, and duration. Normally companies are concerned with two types of standards: work standards that measure performance and customer service standards that measure the quality of service to the customers.Standards must be realistic. Setting standard too low creates complacency but setting them too high may make them uneconomical to reach. If standards are set too high, resources may be diverted in order to achieve them and this might interfere with improvement in other areas. Standards are not set in stone, they must be adjusted to reflect changes in customer requirements or processes.Examples of standards include: When more than five people are in queue, another checkstand is to be opened immediately - operated by supervisory or management personnel, if necessary. Process and post credit memos within 7 days of receiving them. Post all adjustments within 7 days. All adjustments must be current at month's end. Ship 98 percent of orders to A customers within 24 hours. Maintain 99.5 percent accuracy on order entry and assembly. Order turnaround: 93 percent of orders filled completely within 72 hours. Measures A company needs to determine what to measure and how to measure it in order to deliver the outputs the customer wants.Here are some guidelines to use for establishing measurements: Find out why the key customers (the ones that account for a large portion of the company's dollar sales) keep coming back instead of going to the competition. Find out how good the entire company must be - not just your products or services. Use surveys, interviews, point of sale/service and follow-up calls. Determine the obstacles to excellent service for external and internal customers. Look at company structure, work flows, and evaluate personnel abilities/skills/knowledge. Use tools such as employee attitudinal surveys and exit interviews and develop formal/informal feedback mechanisms. Determine which processes are critical to the delivery of products or services to the customers or the ones that affect the criteria that the customer uses to evaluate the company's performance. Develop measurements that strike a balance between cost, quality and cycle time. Use as many proactive measurements as possible because they provide immediate feedback and allow time for corrective action before problems have any impact on the customer. Use some reactive measures to take advantage of feedback after the product or service has been purchased by the customer. Examples of these are warranty claims, customer complaints, and surveys. Measure quality standards in both production and service.
Impact of Measurements on the Company Employee Concerns
When a company starts the measurement step, employees are often concerned about what is being measured and how the information will be used. Keep communication open with all personnel and stress that the measures are needed to ensure the process effectiveness and customer satisfaction (internal and external).Performance Evaluation The standards and measures for work, customer service and performance must be carried forward into the performance evaluation process. Performance evaluations, whether of the company or the employee, should be based on standards linked to customer requirements, customer satisfaction, and competitive performance. If performance evaluations do not tie into the quality journey, then the company is defeating itself.TrainingPeople doing performance evaluations need to be trained to evaluate fairly and consistently. As well, employees will need to be advised about the performance measures and evaluation criteria.Process improvement teams will need to be trained in problem-solving and information analysis. As well, employees will need to be trained to use statistical tools.Tools and Assessments for MeasurementsThe Basic Quality ToolsFLOWCHARTS , which are used during process mapping, are considered a basic quality tool.
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Step Four
- Control Processes Using Measurements
The goal in this step of the COMPETITIVENESS / PRODUCTIVITY journey is to use the measurement results to fine tune processes and align them with the desired outcomes and standards. Processes, standards and measures need to be controlled and aligned to ensure that the company is serving its customers and supporting the people who are serving the customers or producing the products or services. Measurement allows management to "Manage by Fact" rather than managing by intuition or judgment by providing facts about the operating environment and performance. Based on the vision and the objectives desired, management can use those facts for analysis and decision making.There are two primary uses of "Management by Fact". They are:
Manage service quality - Manage the processes and the deliverables to make sure they meet customer requirements/specifications.
Manage process improvement - Identify opportunities for process improvement, and then implement them.
The obstacles of "Management by Fact" include: Unreliable, invalid measures. If the measures are not reliable and are not valid, they are not believable and will not be used. Measuring individuals instead of groups/teams or projects. When measurements are thought to be individual performance indicators, the tendency is to manipulate those measures to make personal performance look better. Non-timely recording of manual measures. When people are asked to keep manual logs, they frequently do not keep them up to date, resulting in inaccurate data. Misuse of measurement data by management. If data is used to punish employees rather than improve processes, the measurement concept will be undermined. Statistical methods need to be used to ensure that the information used for decision making is statistically valid otherwise the decisions may not be good ones and may actually create more problems.DATA collected during the measurement stage are used to control and align operational processes and systems to the company's values and vision.
Explanation of Step Four
- Control and Alignment The information collected during measurement is called "measurement data". It may be survey feedback, sales per month, number of deliveries made each shift, number of errors in billing, etc.Measurement data can be used to: Ensure that the outputs of a process meet the requirements. Identify where a process needs to be adjusted to meet the customer requirements Monitor the defined/desired standards. (As customer needs and requirements change, standards will have to be adjusted and the process may also have to be adjusted.) When there is a large amount of data, it is helpful to display it using more than one method. The reason for this, is that trends and other issues, can be easily seen when data are shown as a graph or bar chart. These methods make data more user friendly.
Impact of Control and Alignment on the Company Vertical Organization Affected Process improvement will have an affect on systems. Systems are basically the vertical organization of a company such as human resources, shipping/receiving or distribution, customer complaints or customer relations, purchasing, and accounting. As processes are controlled, improved and aligned, other parts of the company will be effected and may need to change and realign to ensure that the company VISION, goals and objectives are met.Firing on All Cylinders offers these examples of realignments that were needed to support continuous improvement principles.[In summary, the new appraisal process consisted of a meeting of the employee and supervisor where they agreed on job responsibilities, priorities, opportunities and training needs; a review meeting for the employee to give an update on progress; feedback on employee's performance by other employees; review of feedback and development of the next year's plan.]Continual Training and Use of Teams and Statistical Tools Teams will need training in statistics and the various tools as needed to ensure that they are kept up-to-date with new methods. As well, teams will need training in team building, effective brainstorming and problem solving techniques.Management PracticesManagement must start to manage using facts such as using monthly summaries of data in management meetings to keep up-to-date with operational changes needed or impacting another part of the company.As well, management needs to review measurements, process improvements and other realignments during STRATEGIC PLANNING meetings to ensure they support the overall goals and direction of the company.
Tools and Assessments for Controlling Based on Fact There are many tools that can be used during this stage of the quality journey. The statistical methods and tools that were explained in Step Three - Establish Measurements are also used in Step Four. Basically, the control and alignment step involves problem analysis as well as problem solving tools. The techniques used by companies vary based on the type of services they provide and their company's values and mission. In general, they follow a similar pattern and involve more than one technique.
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Step Five
- Implement Continuous ImprovementIn Step Five of the COMPETITIVENESS / PRODUCTIVITY , the company continues doing what it has been doing; that is mapping its processes, establishing standards and measures and then controlling the processes based on the measurement data. But in addition, the company starts expanding what is has been doing to all aspects of its business.From this point on, the company needs to continue its focus on customer requirements and improving value to customers and improvement of the overall company performance and capabilities. But the company must also start learning from others and assessing its progress. Using benchmarking or comparing the company to competition standards are ways to assess the improvement progress.
Explanation of Step Five
- Continuous Improvement Successful companies that are truly world class and that demonstrate COMPETITIVENESS / PRODUCTIVITY principles possess common characteristics : LEADERSHIP and management commitment: unrelenting constancy of purpose Total customer delight: no ifs or buts Long-range effort: no instant pudding Teamwork and partnerships: with employees, suppliers, and customers Employee involvement and satisfaction: diversity and empowerment Ongoing training: from the chief executive officer to the lowest ranks Statistical measurement of progress CONTINUOUS IMPROVEMENT : an unending journey BENCHMARKING against the best in class Total, open communication with employees, suppliers, and customers The company needs to continue using the basics to improve its business. This is the foundation that will allow the company to be successful at implementing and using other tools, techniques and programs. It is necessary to review : Vision and mission statements as well as goals and objectives to ensure they still fit the company and its market. Procedures and processes in case new techniques become available that could streamline or improve the efficiency of them. · Measurement tools because there may be better ones and internal/external standards or requirements may change. · New methods for controlling processes. The COMPETITIVENESS / PRODUCTIVITY improvement process must be integrated into the normal day-to-day operations. Quality and business need to become one with a focus on total customer satisfaction.
Impact of Continuous Improvement on the Company When a company truly commits to becoming world class and successful, all employees realize that this is it. If a change in culture has not already occurred, it will happen now.
Tools and Assessments for Continuous Improvement The tools that were mentioned in the other steps apply here as well. Communication, statistical tools, training, ongoing assessment of customer satisfaction criteria, and teamwork are some of the tools that will help with the journey.Benchmarking Benchmarking is a management technique that improves business performance by showing where the company stands compared to others. Before benchmarking, ensure that you have defined the goals and objectives and that you have looked at your own process and made improvements to it. Next, get training and assistance to help in preparing for and following up on the benchmarking findings.Criteria for COMPETITIVENESS / PRODUCTIVITY PERFORMANCELeadership Strategic planning Customer and market focus Information and analysis Human resource development and management Process management Business results
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WHAT ARE THE MECHANISMS FOR CHANGING THE CULTURE?
Critical instrumental mechanisms for changing and managing culture include
-Strategic planning and the identification of necessarily cultural requisites
-Ensuring consistency of culture with mission, goals, strategies, structures and processes
-Creating formal statements of organizational philosophy and values
-Establishing consistent incentives, recognition systems, and performance measurement
-Maintaining appropriate error-detection and accountability systems
-Coaching, mentoring, informal and formal training, and identifying role models
-Embracing appropriate rites, rituals, symbols, and narratives
-Taking advantage of the growth of subcultures
-Managing and promoting strong communities of practice .
Several requisites for organizational success that organizational culture must now take into account:
-The organization must be proactive, not just reactive.
-The organization must influence and manage the environment, not just adapt.
-The organization must be pragmatic, not idealistic.
-The organization must be future-oriented, not predominantly present/past oriented.
-The organization must embrace diversity, not uniformity.
-The organization must be relationship-oriented, not just task-oriented.
-The organization must embrace external connectivity, as well as promote internal integration.
These fundamental assumptions are key to eliminating obstacles that will inhibit the kinds of internal and external organizational adaptations necessary for future success. They are not, however, sufficient. They must be reinforced by values, behavioral norms and patterns, artifacts and symbols, as well as accompanied by a particular mission, set of goals, and strategies.
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Four essential strengths of the organizational culture approach:
It focuses attention on the human side of organizational life, and finds significance and learning in even its most mundane aspects (for example, the setup in an empty meeting room). It makes clear the importance of creating appropriate systems of shared meaning to help people work together toward desired outcomes. It requires members—especially leaders—to acknowledge the impact of their behavior on the organization’s culture. People should ask themselves: "What impact am I having on the social construction of reality in my organization?" "What can I do to have a different and more positive impact?" It encourages the view that the perceived relationship between an organization and its environment is also affected by the organization’s basic assumptions.
Morgan says:
We choose and operate in environmental domains according to how we construct conceptions of who we are and what we are trying to do. . . . And we act in relation to those domains through the definitions we impose on them. . . . The beliefs and ideas that organizations hold about who they are, what they are trying to do, and what their environment is like have a much greater tendency to realize themselves than is usually believed.
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FOR THE AIRLINES TO MAINTAIN THE POSITION,IT MUST DEVELOP AND MAINTAIN THE CULTURE OF PRODUCTIVITY AND COMPETITIVENESS.
COMPETITIVENESS IS A CULTURE BY ITSELF.THE ''COMPETITIVE CULTURE'' SHOULD BE INTRODUCED/ NOURISHED/ CHERISHED/EMBEDDEDTHROUGHOUT THE ORGANIZATION FROM THE ''CEO'' TO THE ''DESPATCH CLERK'', BEFORE IT CAN HAVE AN IMPACT ON THE ORGANIZATION.
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BUT WHAT IS ORGANIZATION CULTURE ??HOW AN ORGANIZATION's CULTURE CAN BE KNOWN ?
Organization culture can be a set of key values , assumptions,understandings and norms that is shared by members of anorganization.
Organization values are fundamental beliefs that an organizationconsiders to be important , that are relatively stable over time,and they have an impact on employees behaviors and attitudes.
Organization Norms are shared standards that define what behaviors are acceptable and desirable within organization.
Shared assumptions are about how things are donein an organization.
Understandings are coping with internal / external problemsuniformly.=======================================================================================================Competitiveness: The ability of an entity to operate effectively / efficiently and productively in relation to other similar entities.
COMPETITIVENESS / PRODUCTIVITY is a product of Resource utilization whose skills encompass all areas of business management from strategy design, to management of production, marketing, export transactions, and e-competencies.
COMPETITIVENESS / PRODUCTIVITY is a culture of its ownwhich must be embedded in the organization.Selecting businesses that have the greatest potential to become competitive; -Providing assistance to them in building strategies; -Building consortiums to provide of the needed resources. -Select the businesses with the highest potential; - Determine their managerial skill requirements and design programmes to meet those needs; - Assist businesses to design competitive strategies; - Prepare resource requirement plans; - Provide assistance with the acquisition and allocation of resources from a consortium of resource providers; - Help managers implement their strategies.
The Key Role of COMPETITIVENESS / PRODUCTIVITY “COMPETITIVENESS / PRODUCTIVITY isn’t everything, but in the long run it is almost everything.”
COMPETITIVENESS / PRODUCTIVITY is the measure of output per unit of input . COMPETITIVENESS / PRODUCTIVITY is therefore increased by improvements in FINANCE and labour productivity. “ competitiveness is increasing productivity while raising the sales and the market share of the company.
What Improves COMPETITIVENESS / PRODUCTIVITY The factors that enable COMPETITIVENESS / PRODUCTIVITY include the following considerations:
FINANCIAL Investment
– the greater the resulting productivity.
Skills/Human
– the skilling-up of the workforce through training and education is also an investment therefore, leading to the development of ‘Human Capital’. Education therefore, and the ability and willingness of the workforce to learn new skills becomes a key competitive driver to longer-term business growth
Total Factor Productivity
– different ways of working
– meaning how firms are organised, structured, use technology and are managed.
Innovation and/or ‘Technological Progressiveness’
– i.e the ability to develop new products, services and ways of doing things that enable a competitive advantage to be sustained. In addition to improving performance and creativity (i.e. creating ideas), this means translating R&D into productivity gains.
Competition
– the more competitive the business the faster its growth.
Information Communications Technology. BUSINESSES that made the largest investment in IT [computer hardware, software and telecoms) have shown the largest COMPETITIVENESS / PRODUCTIVITY growth .
HOW DO WE INTRODUCE THE CULTURE OFCOMPETITIVENESS/PRODUCTIVITY IN AN ORGANIZATION
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Step One: Define Vision and MissionA company must get buy-in from its management and its employees, before getting involved in the COMPETITIVENESS / PRODUCTIVITY journey. To create buy-in a company must first recognize the fears that both management and employees will have. Management may fear losing authority when employees are encouraged to take control of what they are doing and employees may fear loss of job security as efficiency is improved, workloads are increased and employees are being asked to expand their comfort zone. Methods of getting management buy-in include obtaining support from the top, strategic planning, keeping managers informed, and providing networking systems. Methods of getting employee buy-in include providing proper tools and training, keeping them informed and providing networking systems.Once buy-in is obtained or at least starting to bud, then the COMPETITIVENESS / PRODUCTIVITY journey can begin. The first step is to develop vision and mission statements for the company or to revisit existing ones to ensure that they still fit the company and where it is going. These statements help solidify the goals and objectives and provide a common focus point. One key advantage of a common focus point is that it gives direction to all personnel and helps them determine how to prioritize their activities. Company success is strongly dependent upon the extent to which efforts and resources are concentrated towards a common focus.
Explanation of Step One - Defining Vision and MissionThe first step of the COMPETITIVENESS / PRODUCTIVITY journey is developing a company's vision and mission statements. With input from all employees, these two statements are used as guides for the rest of the COMPETITIVENESS / PRODUCTIVITY journey.It is important to tie COMPETITIVENESS / PRODUCTIVITY into the overall company vision so that each department or area of the company realizes that COMPETITIVENESS / PRODUCTIVITY is important to the company.VisionA vision statement outlines what a company wants to be. It focuses on tomorrow; it is inspirational; it provides clear decision-making criteria; and it is timeless. MissionA mission statement outlines what the company is now. It focuses on today; it identifies the customer(s); it identifies the critical process(es); and it states the level of performance. It has been said that a vision is something to be pursued, while a mission is something to be accomplished.Developing guidance for the company is not that easy - it takes time to get it right. These visions, missions, and values must be aligned with the company or they are just rhetoric.The overall objectives are achieved - they explain what the company is today; what it wants to be in the future; and the key factors that guide its decision making.
Impact of Vision and Mission on the Company When a company collaboratively decides to express its vision, beliefs, goals, values and mission in words, it will give direction to everyone in the company. Therefore, it is important to involve all employees and give them a chance to indicate how they perceive the company and to identify what is important to them, i.e., things the company must not lose sight of as it continues on its journey. If this step is done right, it will not be viewed as the latest gimmick.The way that the vision and mission are communicated is important. This requires full commitment from senior management and may result in several changes depending on where the company presently is and how well it presently represents its vision. Quality must be recognized not as a separate entity but as an integral part of a person's overall job. This communication process can take time and much effort but does become easier as people see that the company truly uses these statements in their decision process and refers to them for guidance on a regular basis.Once the direction is defined, then it will impact such things as strategic planning, objectives and goals. Strategic planning includes reviewing the vision and mission of the company and then determining what has to be done in order to achieve the goals of these statements. This normally translates into Objectives (Strategic Focus). Next, the company determines how it will know when the statements have been achieved. This translates into Objective Measures. From the measures, each department can set goals, objectives and measures that will help the company achieve its strategic objectives (and, therefore, its mission as well as get closer to its vision).
Tools and Assessments for Vision and MissionToolsThe visioning process consists of eight steps:1) Collect input - to be most effective, the vision should represent the ideals of the entire organization. The vision can be created most successfully by a representative group of five to seven people. Other people can be surveyed for their input by using the following types of questions: What would be the perfect organizational culture? What would the perfect organization do for its members' growth and development? What products or services would the perfect organization provide to customers and the community? What else would the perfect organization do or be? 2) Brainstorm - using the data collected, have the visioning group brainstorm ideas with the same questions used in step one. The goal is to record ideas and words to describe the perfect organization.3) Shrink the mess - the large number of ideas generated must be shrunk down to a smaller, more manageable number without losing content by eliminating duplication, grouping ideas into suitable categories, and eliminating ideas that aren't appropriate or don't fit. With the ideas grouped, choose the word or words that best represent each group.4) Develop a rough draft - work with the words (that represent the groups of ideas) and rough out a statement for each component: culture, people, and product or service.5) Refine the statements - use words that create pictures. Consider content and style as well. This step deserves the appropriate time and energy.6) Test the criteria - before taking the vision to the organization, test it against the following criteria: Is your vision timeless, inspirational, and does it provide decision-making criteria for employees faced with tough situations? If it passes, continue to the next step. If it doesn't pass, then work on improving only those parts that don't meet the criteria.7) Obtain organization approval or modify - present the vision to the entire organization for approval. This step is essential if everyone is to "own", and commit to, the vision. When soliciting the approval of other employees, explain the process the team went through, explain the vision, and be open to modifications. All suggestions should be considered.8) Communicate and celebrate - sometimes a vision will stand alone. If yours does, go out and celebrate. Usually, the vision will require some explanation, clarification, and application. Every word should have a purpose. To bring the vision from the idea world into the physical world, a flexible strategic plan is needed.
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Step Two
- Document Processes
Now that the company knows what it is and where it wants to go, the next step in the COMPETITIVENESS / PRODUCTIVITY journey is to determine how it presently does its business. To accomplish this the company must focus on its processes. It must know how it presently does things and be able to measure its ability to be consistent in meeting customer requirements. It has been said that customers remember a company's name under two conditions: When the company provides extremely poor products or service. When the company provides surprisingly good products or service. In order to provide surprisingly good products or service (output), companies must look at what is involved in delivering that output. It is the business processes that deliver the output. Therefore, companies must focus on the process in order to keep customers coming back and staying loyal to the product or service.To truly address the output, companies must start focusing on the processes that control the customer interfaces, rather than the organizational structure.In Business Process Improvement, this comparison shows the difference between an organizational focus and a process focus.
Organizational Focus
Process Focus
Employees are the problem
The process is the problem
Employees People
Doing my job
Help to get things done
Understanding my job
Knowing how my job fits into the total process
Measuring individuals
Measuring the process Change the person Change the process Can always find a better employee Can always improve the process Motivate people Remove Barriers Controlling employees Developing people Don't trust anyone We are all in this together Who made the error? What allowed the error to occur? Correct errors Reducing variation Bottom line driven Customer driven Companies that focus on delivering surprisingly good output and building their reputations will be more successful than companies that just focus on the bottom line as the bottom line will not bring customers back. And the only way to determine how to consistently deliver this type of output is by focusing on processes within your company/business.
Explanation of Step Two
- Documenting Processes Every product/service (output) is the result of a process. A process can be defined as any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or external customer. The key elements of a process are: inputs, activities, outputs, customers, resources (materials, dollars and person/processing time), and cycle time (how long does it take). When documenting a process, all these key elements need to be identified.A company must first document the current state - define what the company does, who does it and how and why it is done. A common approach is to draw a process picture (called process mapping), identify inputs, actions, decisions points as well as time and cost inputs. This process picture permits common understanding, enables measurement and develops a common language.There are several ways to "map" a process. Some companies describe the flow of information and activities between departments in step form. Other companies use flowcharting tools.A caution is worthy of note here - most companies organize themselves in a vertical format (for example, accounting department, shipping/receiving department and customer service department). However, processes tend to flow horizontally and connect more than one functioning group. This horizontal work flow combined with a vertical organization results in voids and overlaps and process problems.Because of the difference in directional flow, it is important that all groups know how they interrelate and how the various outputs are used by others.When starting to map a company's processes, some of the things to identify are the objectives of the process (performance targets, financial, quality, operational, behavioural), the inputs and outputs, and the measures (how will the progress be monitored, internally and externally).A common concern about process mapping is determining where to start and what to map. If a process consists of several subprocesses then it may be easier to start mapping at the subprocess level. Depending on the detail required, activities can be mapped individually.The next question might be, how is a process mapped? There are numerous ways to map a process and there are several tools available on the market (e.g., software programs). Flowcharting is the most popular and can be simple or complex.Flowcharts Flowcharts graphically represent the activities that make up a process. Flowcharts are useful because they illustrate how the different elements fit together and provide discipline in thinking. Comparing a flowchart to the actual process will highlight the areas in which rules or policies are unclear or are not being followed and may highlight areas in which unclear procedures disrupt quality and productivity. Flowcharts also facilitate communication about problem areas since all inputs and outputs are identified.There are many different types of flowcharts: Block diagrams provide a quick overview of a process. The American National Standards Institute (ANSI) standard flowcharts analyze the detailed interrelationships of a process. Functional flowcharts depict the process flow between organizations or areas. Geographic flowcharts illustrate the process flow between locations (e.g., distribution systems).
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Step Three - Establish MeasurementsThe next step in the COMPETITIVENESS / PRODUCTIVITY journey is to set standards and measures for each process, product and service. Within the whole organization (production, sales, administration, shipping, agents) while moving down the COMPETITIVENESS / PRODUCTIVITY road, the focus must be on improving the customer's perception of the company, its products and services. To do this the company must measure customer satisfaction.Companies need to determine precisely where they stand in their customer's eyes by engaging in ongoing information gathering activities to measure customer satisfaction. Listening to customer complaints, identifying and measuring critical processes that are responsible for generating poor service or products, and implementing corrective action are integral in developing a quality management philosophy.The old sayings: What Gets Measured, Gets Managed and Never Assume You Know What The Customer Wants, sound like common sense, but many companies fail to develop even the most basic methods of gathering information and establishing performance measures.Companies need to: know on an ongoing basis what their customers are thinking, analyze their own structures and processes to ensure that they do not hinder or interfere with customer satisfaction, and, implement measures to monitor the effectiveness of all critical processes that impact customer satisfaction.
Explanation of Step Three - Establishing Measurements The focus of standards and measures is to ensure that the processes are meeting requirements and that customers are satisfied.Standards Standards are yardsticks for measuring performance, quality, and duration. Normally companies are concerned with two types of standards: work standards that measure performance and customer service standards that measure the quality of service to the customers.Standards must be realistic. Setting standard too low creates complacency but setting them too high may make them uneconomical to reach. If standards are set too high, resources may be diverted in order to achieve them and this might interfere with improvement in other areas. Standards are not set in stone, they must be adjusted to reflect changes in customer requirements or processes.Examples of standards include: When more than five people are in queue, another checkstand is to be opened immediately - operated by supervisory or management personnel, if necessary. Process and post credit memos within 7 days of receiving them. Post all adjustments within 7 days. All adjustments must be current at month's end. Ship 98 percent of orders to A customers within 24 hours. Maintain 99.5 percent accuracy on order entry and assembly. Order turnaround: 93 percent of orders filled completely within 72 hours. Measures A company needs to determine what to measure and how to measure it in order to deliver the outputs the customer wants.Here are some guidelines to use for establishing measurements: Find out why the key customers (the ones that account for a large portion of the company's dollar sales) keep coming back instead of going to the competition. Find out how good the entire company must be - not just your products or services. Use surveys, interviews, point of sale/service and follow-up calls. Determine the obstacles to excellent service for external and internal customers. Look at company structure, work flows, and evaluate personnel abilities/skills/knowledge. Use tools such as employee attitudinal surveys and exit interviews and develop formal/informal feedback mechanisms. Determine which processes are critical to the delivery of products or services to the customers or the ones that affect the criteria that the customer uses to evaluate the company's performance. Develop measurements that strike a balance between cost, quality and cycle time. Use as many proactive measurements as possible because they provide immediate feedback and allow time for corrective action before problems have any impact on the customer. Use some reactive measures to take advantage of feedback after the product or service has been purchased by the customer. Examples of these are warranty claims, customer complaints, and surveys. Measure quality standards in both production and service.
Impact of Measurements on the Company Employee Concerns
When a company starts the measurement step, employees are often concerned about what is being measured and how the information will be used. Keep communication open with all personnel and stress that the measures are needed to ensure the process effectiveness and customer satisfaction (internal and external).Performance Evaluation The standards and measures for work, customer service and performance must be carried forward into the performance evaluation process. Performance evaluations, whether of the company or the employee, should be based on standards linked to customer requirements, customer satisfaction, and competitive performance. If performance evaluations do not tie into the quality journey, then the company is defeating itself.TrainingPeople doing performance evaluations need to be trained to evaluate fairly and consistently. As well, employees will need to be advised about the performance measures and evaluation criteria.Process improvement teams will need to be trained in problem-solving and information analysis. As well, employees will need to be trained to use statistical tools.Tools and Assessments for MeasurementsThe Basic Quality ToolsFLOWCHARTS , which are used during process mapping, are considered a basic quality tool.
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Step Four
- Control Processes Using Measurements
The goal in this step of the COMPETITIVENESS / PRODUCTIVITY journey is to use the measurement results to fine tune processes and align them with the desired outcomes and standards. Processes, standards and measures need to be controlled and aligned to ensure that the company is serving its customers and supporting the people who are serving the customers or producing the products or services. Measurement allows management to "Manage by Fact" rather than managing by intuition or judgment by providing facts about the operating environment and performance. Based on the vision and the objectives desired, management can use those facts for analysis and decision making.There are two primary uses of "Management by Fact". They are:
Manage service quality - Manage the processes and the deliverables to make sure they meet customer requirements/specifications.
Manage process improvement - Identify opportunities for process improvement, and then implement them.
The obstacles of "Management by Fact" include: Unreliable, invalid measures. If the measures are not reliable and are not valid, they are not believable and will not be used. Measuring individuals instead of groups/teams or projects. When measurements are thought to be individual performance indicators, the tendency is to manipulate those measures to make personal performance look better. Non-timely recording of manual measures. When people are asked to keep manual logs, they frequently do not keep them up to date, resulting in inaccurate data. Misuse of measurement data by management. If data is used to punish employees rather than improve processes, the measurement concept will be undermined. Statistical methods need to be used to ensure that the information used for decision making is statistically valid otherwise the decisions may not be good ones and may actually create more problems.DATA collected during the measurement stage are used to control and align operational processes and systems to the company's values and vision.
Explanation of Step Four
- Control and Alignment The information collected during measurement is called "measurement data". It may be survey feedback, sales per month, number of deliveries made each shift, number of errors in billing, etc.Measurement data can be used to: Ensure that the outputs of a process meet the requirements. Identify where a process needs to be adjusted to meet the customer requirements Monitor the defined/desired standards. (As customer needs and requirements change, standards will have to be adjusted and the process may also have to be adjusted.) When there is a large amount of data, it is helpful to display it using more than one method. The reason for this, is that trends and other issues, can be easily seen when data are shown as a graph or bar chart. These methods make data more user friendly.
Impact of Control and Alignment on the Company Vertical Organization Affected Process improvement will have an affect on systems. Systems are basically the vertical organization of a company such as human resources, shipping/receiving or distribution, customer complaints or customer relations, purchasing, and accounting. As processes are controlled, improved and aligned, other parts of the company will be effected and may need to change and realign to ensure that the company VISION, goals and objectives are met.Firing on All Cylinders offers these examples of realignments that were needed to support continuous improvement principles.[In summary, the new appraisal process consisted of a meeting of the employee and supervisor where they agreed on job responsibilities, priorities, opportunities and training needs; a review meeting for the employee to give an update on progress; feedback on employee's performance by other employees; review of feedback and development of the next year's plan.]Continual Training and Use of Teams and Statistical Tools Teams will need training in statistics and the various tools as needed to ensure that they are kept up-to-date with new methods. As well, teams will need training in team building, effective brainstorming and problem solving techniques.Management PracticesManagement must start to manage using facts such as using monthly summaries of data in management meetings to keep up-to-date with operational changes needed or impacting another part of the company.As well, management needs to review measurements, process improvements and other realignments during STRATEGIC PLANNING meetings to ensure they support the overall goals and direction of the company.
Tools and Assessments for Controlling Based on Fact There are many tools that can be used during this stage of the quality journey. The statistical methods and tools that were explained in Step Three - Establish Measurements are also used in Step Four. Basically, the control and alignment step involves problem analysis as well as problem solving tools. The techniques used by companies vary based on the type of services they provide and their company's values and mission. In general, they follow a similar pattern and involve more than one technique.
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Step Five
- Implement Continuous ImprovementIn Step Five of the COMPETITIVENESS / PRODUCTIVITY , the company continues doing what it has been doing; that is mapping its processes, establishing standards and measures and then controlling the processes based on the measurement data. But in addition, the company starts expanding what is has been doing to all aspects of its business.From this point on, the company needs to continue its focus on customer requirements and improving value to customers and improvement of the overall company performance and capabilities. But the company must also start learning from others and assessing its progress. Using benchmarking or comparing the company to competition standards are ways to assess the improvement progress.
Explanation of Step Five
- Continuous Improvement Successful companies that are truly world class and that demonstrate COMPETITIVENESS / PRODUCTIVITY principles possess common characteristics : LEADERSHIP and management commitment: unrelenting constancy of purpose Total customer delight: no ifs or buts Long-range effort: no instant pudding Teamwork and partnerships: with employees, suppliers, and customers Employee involvement and satisfaction: diversity and empowerment Ongoing training: from the chief executive officer to the lowest ranks Statistical measurement of progress CONTINUOUS IMPROVEMENT : an unending journey BENCHMARKING against the best in class Total, open communication with employees, suppliers, and customers The company needs to continue using the basics to improve its business. This is the foundation that will allow the company to be successful at implementing and using other tools, techniques and programs. It is necessary to review : Vision and mission statements as well as goals and objectives to ensure they still fit the company and its market. Procedures and processes in case new techniques become available that could streamline or improve the efficiency of them. · Measurement tools because there may be better ones and internal/external standards or requirements may change. · New methods for controlling processes. The COMPETITIVENESS / PRODUCTIVITY improvement process must be integrated into the normal day-to-day operations. Quality and business need to become one with a focus on total customer satisfaction.
Impact of Continuous Improvement on the Company When a company truly commits to becoming world class and successful, all employees realize that this is it. If a change in culture has not already occurred, it will happen now.
Tools and Assessments for Continuous Improvement The tools that were mentioned in the other steps apply here as well. Communication, statistical tools, training, ongoing assessment of customer satisfaction criteria, and teamwork are some of the tools that will help with the journey.Benchmarking Benchmarking is a management technique that improves business performance by showing where the company stands compared to others. Before benchmarking, ensure that you have defined the goals and objectives and that you have looked at your own process and made improvements to it. Next, get training and assistance to help in preparing for and following up on the benchmarking findings.Criteria for COMPETITIVENESS / PRODUCTIVITY PERFORMANCELeadership Strategic planning Customer and market focus Information and analysis Human resource development and management Process management Business results
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MS-11 Question 2
What is the purpose of SWOT analysis? Why is it necessary to do a SWOT analysis before selecting a particular strategy for a business organization?
Definition of SWOT
SWOT analysis is a general technique which can be applied across diverse functions and activities, but it is particularly appropriate to the early stages of planning for CORPORATE STRATEGY . Performing SWOT analysis involves generating and recording the strengths, weaknesses, opportunities, and threats relating to a given task. It is customary for the analysis to take account of internal resources and capabilities (strengths and weaknesses) and factors external to the organisation (opportunities and threats).THE NECESSITY FOR SWOTStrengthsStrengths usually describe things that the company excels at doing. All strengths listed should support a competitive advantage that the corporation has over its rivals. These can be tangible (fast delivery of products to customers) or intangible (excellent customer service promotes very high customer satisfaction). As these are internal attributes they should all be within the company’s control.
Ask questions such as:
• What does the company do well?
• What resources (physical and personnel) does the company possess?
• What advantages does the company have over its rivals?
Do not forget to include key strengths that the people in the organization possess which includes things such as their experience, knowledge, educational background, business connections, and job skills. Tangible assets such as plant capacity, state of the art equipment and facilities, strong supply chains, available capital (or access to credit), loyal customers, patents, copyrights and superior information systems.
Strengths
The Strengths can be considered as anything that is favourable towards the business for example:Currently in a good financial position (few debts, etc) Skilled workforce (little training required) Company name recognized on a National/Regional/Local level Latest machinery installed Own premises (no additional costs for renting) Excellent transport links (ease of access to/from the Company) Little/non-threatening competition
THE SWOT ANALYSIS --STRENGTHS -helps to identify the core compentences -helps how to maximize the strengths to gainthe maximum results --sales/profit/market share/competitive position.
========================================
WeaknessesWeaknesses are factors that the company controls that impair its ability to compete with other firms. Weaknesses are any areas in which you need to improve to maintain a competitive edge in your market. Ask questions such as:
• Which departments need to be improved?
• What resources does the company lack?
• What skill sets do the employees lack that competing firm’s workforces have?
• What services does the company fail to offer?
WeaknessesRecognizing the Weaknesses will require you being honest and realistic. Don’t leave anything out as this is an important part as to realize what needs to be done to minimize this list in the future. Here are a few examples:Currently in a poor financial position (large debts, etc) Un-Skilled workforce (training required) Company name not recognized on a National/Regional/Local level Machinery not up to date (Inefficient) Rented premises (Adding to costs) Poor location for business needs (Lack of transport links etc) Stock problems (currently holding too much/too little) Too much waste THE SWOT ANALYSIS --WEAKNESS-helps to identify the weak points in terms of skills/manpower/resources etc-how to improve / overcome these weak factors.
==================================================
Opportunities
Opportunities are the external factors that will allow your business to succeed against its rivals. Since these are external factors, they may not be under control of the company. Ask questions such as:
• What opportunities for new products or services exist in your market?
• Are new markets available that could provide opportunities for growth?
• Have new technologies been developed that will allow us to compete more effectively?
• Have consumer lifestyles, wants and desires shifted?
• Are the target customers economically healthy?
• Do previously resolved internal problems give the company a competitive edge?
Usually, opportunities reflect the areas where you can excel by changing the company’s marketing strategy.
Should new products be launched?
Should existing products be promoted to new customer groups?
If possible, identify the time frame for each opportunity. Is it something the company must capitalize on by a certain date or will the opportunity last indefinitely?
Opportunities Keeping in mind what you have listed as your Company Strengths, SWOT Analysis can now influence the Opportunities for the business. These can be seen as targets to achieve and exploit in the future for example: Good financial position creating a good reputation for future bank loans and borrowings Skilled workforce means that they can be moved and trained into other areas of the business Competitor going bankrupt (Takeover opportunity?) Broadband technology has been installed in the area (useful for Internet users) Increased spending power in the Local/National economy Moving a product into a new market sector
THE SWOT ANALYSIS -- OPPORTUNITIES-helps to identify gaps in the market which can be converted intoopportunities.-helps to identify the gaps in performance , which can be exploited.
=======================================
Threats
Threats are factors beyond the control of the company that reduces its competitiveness in the marketplace, adversely affect marketing strategy, or in a worst case scenario, potentially lead to the total demise of the business (think buggy whip manufacturers when automobiles became popular). Although the company has no control over external factors, the key is to identify the threats and draw up contingency plans to negate the threat or soften the impact should an event arise. Ask questions such as:
• Are consumer preferences shifting away from company business lines?
• Is price competition from competitors affecting company profit margins?
• Are new technologies making the company’s products or processes obsolete or unaffordable?
• Are new competitors entering the market space?• Are suppliers increasing prices?
• Are raw material costs going up due to scarcity or catastrophic events?
• Is the general economy on the downswing?
Classifying threats by the degree of impact and the likelihood of their occurrence is often useful to help identify which threats need to be planned for immediately.
ThreatsThe final part of the analysis will also be seen as the most feared- the Threats. It has to be done and therefore taking into account what you have listed as your weaknesses, the threats will now all seem too clear. Examples Large and increasing competition Rising cost of Wages (Basic wage, etc) Possible relocation costs due to poor location currently held Local authority refusing plans for future building expansion Increasing interest rates (increases borrowing repayments, etc) End of season approaching (if you depend on hot weather, etc) Existing product becoming unfashionable or unpopular THE SWOT ANALYSIS --THREAT-helps to identify the various threats likecompetition/social /political/economic/technological etcand to take preventive action.
=========================================
THE SWOT ANALYSIS --STRENGTHS
-helps to identify the core compentences
-helps how to maximize the strengths to gainthe maximum results
--sales/profit/market share/competitive position.
THE SWOT ANALYSIS --WEAKNESS
-helps to identify the weak points in terms of skills/manpower/resources etc
-how to improve / overcome these weak factors.
THE SWOT ANALYSIS -- OPPORTUNITIES
-helps to identify gaps in the market which can be converted intoopportunities.
-helps to identify the gaps in performance , which can be exploited
THE SWOT ANALYSIS --THREAT
-helps to identify the various threats likecompetition/social /political/economic/technological etcand to take preventive action.
The Benefits of these FOUR SWOT Analyses
The main thrust of the exercise is to determine how the company’s strengths can be used to take advantage of opportunities and minimize critical threats. Eliminating weaknesses can also provide resources to capitalize on opportunities or ward off threats. Identifying the most critical issues provides a game plan for the business to follow based on an honest assessment of the firm’s potential.
THIS HELPS TO DEVISE THE MOST EFFECTIVE CORPORATE STRATEGY.WHICH IN TURN HELPS TO DEVELOP THE MOST EFFECTIVE STRATEGIC PLANNING.
SWOT analysis can provide:A framework for identifying and analysing strengths, weaknesses, opportunities and threats. The impetus to analyse a situation and develop suitable strategies and tactics. A basis for assessing core capabilities and competences. The evidence for, and cultural key to, change.
Benefits of Strategy / its associated plan.Strategic planning serves a variety of purposes in organization, including to:
1. Clearly define the purpose of the organization and to establish realistic goals and objectives consistent with that mission in a defined time frame within the organization’s capacity for implementation.
2. Communicate those goals and objectives to the organization’s constituents.
3. Develop a sense of ownership of the plan.
4. Ensure the most effective use is made of the organization’s resources by focusing the resources on the key priorities.
5. Provide a base from which progress can be measured and establish a mechanism for informed change when needed.
6. Bring together of everyone’s best and most reasoned efforts have important value in building a consensus about where an organization is going.
7. Provides clearer focus of organization, producing more efficiency and effectiveness
8. Bridges staff and board of directors (in the case of corporations)
9. Builds strong teams in the board and the staff (in the case of corporations)10. Provides the glue that keeps the board together (in the case of corporations)
11.Produces great satisfaction among planners around a common vision
12. Increases productivity from increased efficiency and effectiveness
13. Solves major problems
Definition of SWOT
SWOT analysis is a general technique which can be applied across diverse functions and activities, but it is particularly appropriate to the early stages of planning for CORPORATE STRATEGY . Performing SWOT analysis involves generating and recording the strengths, weaknesses, opportunities, and threats relating to a given task. It is customary for the analysis to take account of internal resources and capabilities (strengths and weaknesses) and factors external to the organisation (opportunities and threats).THE NECESSITY FOR SWOTStrengthsStrengths usually describe things that the company excels at doing. All strengths listed should support a competitive advantage that the corporation has over its rivals. These can be tangible (fast delivery of products to customers) or intangible (excellent customer service promotes very high customer satisfaction). As these are internal attributes they should all be within the company’s control.
Ask questions such as:
• What does the company do well?
• What resources (physical and personnel) does the company possess?
• What advantages does the company have over its rivals?
Do not forget to include key strengths that the people in the organization possess which includes things such as their experience, knowledge, educational background, business connections, and job skills. Tangible assets such as plant capacity, state of the art equipment and facilities, strong supply chains, available capital (or access to credit), loyal customers, patents, copyrights and superior information systems.
Strengths
The Strengths can be considered as anything that is favourable towards the business for example:Currently in a good financial position (few debts, etc) Skilled workforce (little training required) Company name recognized on a National/Regional/Local level Latest machinery installed Own premises (no additional costs for renting) Excellent transport links (ease of access to/from the Company) Little/non-threatening competition
THE SWOT ANALYSIS --STRENGTHS -helps to identify the core compentences -helps how to maximize the strengths to gainthe maximum results --sales/profit/market share/competitive position.
========================================
WeaknessesWeaknesses are factors that the company controls that impair its ability to compete with other firms. Weaknesses are any areas in which you need to improve to maintain a competitive edge in your market. Ask questions such as:
• Which departments need to be improved?
• What resources does the company lack?
• What skill sets do the employees lack that competing firm’s workforces have?
• What services does the company fail to offer?
WeaknessesRecognizing the Weaknesses will require you being honest and realistic. Don’t leave anything out as this is an important part as to realize what needs to be done to minimize this list in the future. Here are a few examples:Currently in a poor financial position (large debts, etc) Un-Skilled workforce (training required) Company name not recognized on a National/Regional/Local level Machinery not up to date (Inefficient) Rented premises (Adding to costs) Poor location for business needs (Lack of transport links etc) Stock problems (currently holding too much/too little) Too much waste THE SWOT ANALYSIS --WEAKNESS-helps to identify the weak points in terms of skills/manpower/resources etc-how to improve / overcome these weak factors.
==================================================
Opportunities
Opportunities are the external factors that will allow your business to succeed against its rivals. Since these are external factors, they may not be under control of the company. Ask questions such as:
• What opportunities for new products or services exist in your market?
• Are new markets available that could provide opportunities for growth?
• Have new technologies been developed that will allow us to compete more effectively?
• Have consumer lifestyles, wants and desires shifted?
• Are the target customers economically healthy?
• Do previously resolved internal problems give the company a competitive edge?
Usually, opportunities reflect the areas where you can excel by changing the company’s marketing strategy.
Should new products be launched?
Should existing products be promoted to new customer groups?
If possible, identify the time frame for each opportunity. Is it something the company must capitalize on by a certain date or will the opportunity last indefinitely?
Opportunities Keeping in mind what you have listed as your Company Strengths, SWOT Analysis can now influence the Opportunities for the business. These can be seen as targets to achieve and exploit in the future for example: Good financial position creating a good reputation for future bank loans and borrowings Skilled workforce means that they can be moved and trained into other areas of the business Competitor going bankrupt (Takeover opportunity?) Broadband technology has been installed in the area (useful for Internet users) Increased spending power in the Local/National economy Moving a product into a new market sector
THE SWOT ANALYSIS -- OPPORTUNITIES-helps to identify gaps in the market which can be converted intoopportunities.-helps to identify the gaps in performance , which can be exploited.
=======================================
Threats
Threats are factors beyond the control of the company that reduces its competitiveness in the marketplace, adversely affect marketing strategy, or in a worst case scenario, potentially lead to the total demise of the business (think buggy whip manufacturers when automobiles became popular). Although the company has no control over external factors, the key is to identify the threats and draw up contingency plans to negate the threat or soften the impact should an event arise. Ask questions such as:
• Are consumer preferences shifting away from company business lines?
• Is price competition from competitors affecting company profit margins?
• Are new technologies making the company’s products or processes obsolete or unaffordable?
• Are new competitors entering the market space?• Are suppliers increasing prices?
• Are raw material costs going up due to scarcity or catastrophic events?
• Is the general economy on the downswing?
Classifying threats by the degree of impact and the likelihood of their occurrence is often useful to help identify which threats need to be planned for immediately.
ThreatsThe final part of the analysis will also be seen as the most feared- the Threats. It has to be done and therefore taking into account what you have listed as your weaknesses, the threats will now all seem too clear. Examples Large and increasing competition Rising cost of Wages (Basic wage, etc) Possible relocation costs due to poor location currently held Local authority refusing plans for future building expansion Increasing interest rates (increases borrowing repayments, etc) End of season approaching (if you depend on hot weather, etc) Existing product becoming unfashionable or unpopular THE SWOT ANALYSIS --THREAT-helps to identify the various threats likecompetition/social /political/economic/technological etcand to take preventive action.
=========================================
THE SWOT ANALYSIS --STRENGTHS
-helps to identify the core compentences
-helps how to maximize the strengths to gainthe maximum results
--sales/profit/market share/competitive position.
THE SWOT ANALYSIS --WEAKNESS
-helps to identify the weak points in terms of skills/manpower/resources etc
-how to improve / overcome these weak factors.
THE SWOT ANALYSIS -- OPPORTUNITIES
-helps to identify gaps in the market which can be converted intoopportunities.
-helps to identify the gaps in performance , which can be exploited
THE SWOT ANALYSIS --THREAT
-helps to identify the various threats likecompetition/social /political/economic/technological etcand to take preventive action.
The Benefits of these FOUR SWOT Analyses
The main thrust of the exercise is to determine how the company’s strengths can be used to take advantage of opportunities and minimize critical threats. Eliminating weaknesses can also provide resources to capitalize on opportunities or ward off threats. Identifying the most critical issues provides a game plan for the business to follow based on an honest assessment of the firm’s potential.
THIS HELPS TO DEVISE THE MOST EFFECTIVE CORPORATE STRATEGY.WHICH IN TURN HELPS TO DEVELOP THE MOST EFFECTIVE STRATEGIC PLANNING.
SWOT analysis can provide:A framework for identifying and analysing strengths, weaknesses, opportunities and threats. The impetus to analyse a situation and develop suitable strategies and tactics. A basis for assessing core capabilities and competences. The evidence for, and cultural key to, change.
Benefits of Strategy / its associated plan.Strategic planning serves a variety of purposes in organization, including to:
1. Clearly define the purpose of the organization and to establish realistic goals and objectives consistent with that mission in a defined time frame within the organization’s capacity for implementation.
2. Communicate those goals and objectives to the organization’s constituents.
3. Develop a sense of ownership of the plan.
4. Ensure the most effective use is made of the organization’s resources by focusing the resources on the key priorities.
5. Provide a base from which progress can be measured and establish a mechanism for informed change when needed.
6. Bring together of everyone’s best and most reasoned efforts have important value in building a consensus about where an organization is going.
7. Provides clearer focus of organization, producing more efficiency and effectiveness
8. Bridges staff and board of directors (in the case of corporations)
9. Builds strong teams in the board and the staff (in the case of corporations)10. Provides the glue that keeps the board together (in the case of corporations)
11.Produces great satisfaction among planners around a common vision
12. Increases productivity from increased efficiency and effectiveness
13. Solves major problems
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