Sa’adat Ali Mughal
Strategic management 6AL. 1 what is strategic management STRATEGIG MANAGEMENT Strategic management asks questions of the future. What are the forces driving change in the marketplace? What are the new competencies we will need to meet them? How will we have to change ourselves to build those competencies? Strategic management is a process for developing and enacting plans to reach a long-term goal that takes into account internal variables and external factors. Strategic management encompasses an integrated, future-oriented managerial perspective that is · outwardly focused · forward-thinking · performance-based Strategic managers identify long-range targets, scan their operating environments, evaluate their organization’s structures and resources, match these to the challenges they face, identify stakeholders and build alliances, prioritize and plan actions, and make adjustments to fulfill performance objectives over time. Strategic management comprises five key facets: goal-setting, analysis, strategy formation, strategy implementation, and strategy monitoring.
These are the integral elements that, when applied together, distinguish strategic management from less comprehensive approaches, such as operational management or long-term planning. Strategic management is an iterative, continuous process that involves important interactions and feedback among the five key facets, which are explained in more detail in Table below.
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Sa’adat Ali Mughal
Five facts of strategic management
The strategic management process
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Sa’adat Ali Mughal 6AL. 2 Strategic analysis
SWOT ANALYSIS SWOT analysis came from the research conducted at Stanford Research Institute from 1960-1970. The background to SWOT stemmed from the need to find out why corporate planning failed. The research was funded by the fortune 500 companies to find out what could be done about this failure. The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of situations in business and organizations. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. The SWOT analysis headings provide a good framework for reviewing strategy, position and direction of a company or business proposition, or any other idea. SWOT analysis also works well in brainstorming meetings. SWOT analysis is used for business planning, strategic planning, competitor evaluation, marketing, business and product development and research reports. A SWOT analysis measures a business unit, a proposition or idea; a PEST analysis measures a market. A SWOT analysis is a subjective assessment of data which is organized by the SWOT format into a logical order that helps understanding, presentation, discussion and decision -making. The SWOT analysis template is normally presented as a grid, comprising four sections, one for each of the SWOT headings: Strengths, Weaknesses, Opportunities, and Threats Here are some examples of what a SWOT analysis can be used to assess: · a company (its position in the market, commercial viability, etc) · a method of sales distribution · a product or brand · a business idea · a strategic option, such as entering a new market or launching a new product · a opportunity to make an acquisition · a potential partnership · changing a supplier · outsourcing a service, activity or resource · an investment opportunity Strength These are the things that a business and its staff do. Possible strengths of a company could be: · Advantages of proposition? · Capabilities? · Competitive advantages? · USP's (unique selling points)? · Resources, Assets, People? · Experience, knowledge, data?
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Sa’adat Ali Mughal · · · · · · · · ·
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?
Weakness These are the things that a business does badly, that is ineffective at or it has a poor reputation for. It also includes the factors that cause losses, hardship, disputes, grivences and complaints for a business. Possible weaknesses of a company could be: · · · · · · · · · · · · · · ·
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?
Opportunities These are the directions that the business could profitably take in future because of its strengths or because of the elimination of its weaknesses. This involves a consideration of business environment from the widest and most creative possible stand points. Possible opportunities of a company could be: · · · · · · ·
Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets?
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Sa’adat Ali Mughal · · · · · · · ·
Geographical, export, import? New USP's? Tactics - surprise, major contracts, etc? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?
Threats Threats to a business arise from the activities of competitors and from failing to take opportunities or to build on successes. Threats also come from complacency, a lack of rigour, and from falling profits, perhaps due to rising costs. Possible threats of a company could be: · · · · · · · · · · · · · · ·
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? SWOT / TOWS Matrix Strengths
Weaknesses
Opportunities S-O strategies W-O strategies
Threats
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S-T strategies W-T strategies
S-O strategies pursue opportunities that are a good fit to the company's strengths. 5
Sa’adat Ali Mughal · · ·
W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.
PEST ANALYSIS PEST Analysis is a simple, useful and widely-used tool that helps you understand the "big picture" of your Political, Economic, Socio-Cultural and Technological environment. As such, it is used by business leaders worldwide to build their vision of the future. It is important for following reasons: First, by making effective use of PEST Analysis, you ensure that what you are doing is aligned positively with the powerful forces of change that are affecting our world. By taking advantage of change, you are much more likely to be successful than if your activities oppose it. Second, good use of PEST Analysis helps you avoid taking action that is doomed to failure from the outset, for reasons beyond your control; Third, PEST is useful when you start operating in a new country or region. Use of PEST helps you break free of unconscious assumptions, and helps you quickly adapt to the realities of the new environment. PEST is a simple mnemonic standing for Political, Economic, Socio-Cultural and Technological. To use this tool, follow this three stage process: Brainstorm the relevant factors that apply to you; Identify the information that applies to these factors; and Draw conclusions from this information. Political: This is concerned with how political developments, regionally, nationally and internationally might affect a business’s strategy. It might include: · Government type and stability · Freedom of press, rule of law and levels of bureaucracy and corruption · Regulation and de-regulation trends · Social and employment legislation · Tax policy, and trade and tariff controls · Environmental and consumer-protection legislation · Likely changes in the political environment
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Sa’adat Ali Mughal Economic: This might involve the analysis of a variety of economic factors and their effects on business. These might include: · Stage of business cycle · Current and project economic growth, inflation and interest rates · Unemployment and labor supply · Labor costs · Levels of disposable income and income distribution · Impact of globalization · Likely impact of technological or other change on the economy · Likely changes in the economic environment Socio-Cultural/social What competitive advantage might a business gain by social changes taking place out side of the businesses? These changes could be: · Population growth rate and age profile · Population health, education and social mobility, and attitudes to these · Population employment patterns, job market freedom and attitudes to work · Press attitudes, public opinion, social attitudes and social taboos · Lifestyle choices and attitudes to these Socio-Cultural changes/Technology Organizations need to review the impact of new technologies upon their activities. Products can become obsolescent quickly and production methods can become out of date. The firms must consider with: · Technological Environment · Impact of emerging technologies · Impact of Internet, reduction in communications costs and increased remote working · Research and Development activity · Impact of technology transfer BOSTON MATRIX One of the main problems with the product life cycle actually knows which stage our product has reached. To analyse this and other problem the Boston consulting group from USA developed a well known product portfolio which relates market growth to market share. The Boston box ties in closely with the product life cycle. To see how this is so, we start with problem children and then move in an anti-clockwise direction around the box. Problem children or question mark are products that have just been launched. This is an appropriate name because many products fail to move beyond this phase. Sometimes these products are referred to as question marks it is possible to develop these products and tern them into the stars and cash cows of the future by heavy financial support. Stars are products that have successfully reached the growth stage in the life cycle. Although these products too will require a lot of financial support, they will also provide
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Sa’adat Ali Mughal high cash return. On balance they will provide a natural cash flow and are good ‘prospects’ for the future. Cash cows have reached the maturity stage in their product life cycle and are now 'yielder'. They have a high market share in market that is no longer rapidly expanding. Because the market is relatively static, they require few fresh injections of capital. For example, advertising and promotion may be requires injecting a little fresh life from time to time. However, the net effect is of a positive cast flow. Cash generated by the cows may be used to help the problem children. Dogs are in decline. These have a low market share in a low growing or declining market. As they begin to generate a negative cash flow, they will usually be disposed of. In order to maintain an effective portfolio development, it is important to have a balance of product at any one time. An organization will require number of cash cows to provide its ‘breads and butter’. At the same time, it is important to develop the cash cow of the future by investing in the problem children. Fortunately, the stars should pay their own way. It is also important to identify the dogs and cut them out. Products in the top half in the Boston box are in the earlier stages of the product life cycle and so are in high growth markets. Those in lower half of the box are in the later stages and so are in markets where growth will have slowed down or even stopped.
PORTER’S 5 FORCE ANALYSIS FOR BUSINESS STRATEGY The model of the Five Competitive Forces was developed by Michael E. Porter. Now it has become an important tool for analyzing an organizations industry structure in strategic processes. Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, 8
Sa’adat Ali Mughal competitive strategy should base on and understanding of industry structures and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry. The Five Competitive Forces The Five Competitive Forces are typically described as follows:
1 Bargaining Power of Suppliers The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services. Supplier bargaining power is likely to be high when: · The market is dominated by a few large suppliers rather than a fragmented source of supply · There are no substitutes for the particular input · The suppliers customers are fragmented, so their bargaining power is low · The switching costs from one supplier to another are high · There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. This threat is especially high when · The buying industry has a higher profitability than the supplying industry · Forward integration provides economies of scale for the supplier · The buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products) · The buying industry has low barriers to entry 9
Sa’adat Ali Mughal In such situations, the buying industry often faces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization. 2 Bargaining Power of Customers Similarly, the bargaining power of customers determines how much customers can impose pressure on margins and volumes. Customers bargaining power is likely to be high when · They buy large volumes, there is a concentration of buyers, · The supplying industry comprises a large number of small operators · The supplying industry operates with high fixed costs, · The product is undifferentiated and can be replaces by substitutes, · Switching to an alternative product is relatively simple and is not related to high costs, · Customers have low margins and are price sensitive, · Customers could produce the product themselves, · The product is not of strategically importance for the customer, · The customer knows about the production costs of the product · There is the possibility for the customer integrating backwards. 3 Threats of New Entrants The competition in an industry will be the higher; the easier it is for other companies to enter this industry. In such a situation, new entrants could change major determinants of the market environment (e.g. market shares, prices, customer loyalty) at any time. There is always a latent pressure for reaction and adjustment for existing players in this industry. The threat of new entries will depend on the extent to which there are barriers to entry. These are typically: · Economies of scale (minimum size requirements for profitable operations), · High initial investments and fixed costs, · Cost advantages of existing players due to experience curve effects of operation with fully depreciated assets, · Brand loyalty of customers · Protected intellectual property like patents, licenses etc, · Scarcity of important resources, e.g. qualified expert staff · Access to raw materials is controlled by existing players, · Distribution channels are controlled by existing players, · Existing players have close customer relations, e.g. from long-term service contracts, · High switching costs for customers · Legislation and government action 4 Threats of Substitutes A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing
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Sa’adat Ali Mughal players. This category also relates to complementary products. Similarly to the threat of new entrants, the treat of substitutes is determined by factors like · Brand loyalty of customers, · Close customer relationships, · Switching costs for customers, · The relative price for performance of substitutes, · Current trends. 5 Competitive Rivalry between Existing Players This force describes the intensity of competition between existing players (companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. Competition between existing players is likely to be high when · There are many players of about the same size, · Players have similar strategies · There is not much differentiation between players and their products, hence, there is much price competition · Low market growth rates (growth of a particular company is possible only at the expense of a competitor), · Barriers for exit are high (e.g. expensive and highly specialized equipment). Use of the Information form Five Forces Analysis Five Forces Analysis can provide valuable information for three aspects of corporate planning: Statical Analysis The Five Forces Analysis allows determining the attractiveness of an industry. It provides insights on profitability. Thus, it supports decisions about entry to or exit from and industry or a market segment. Moreover, the model can be used to compare the impact of competitive forces on the own organization with their impact on competitors. Competitors may have different options to react to changes in competitive forces from their different resources and competences. This may influence the structure of the whole industry. Dynamical Analysis In combination with a PEST-Analysis, which reveals drivers for change in an industry, Five Forces Analysis can reveal insights about the potential future attractiveness of the industry. Expected political, economical, socio demographical and technological changes can influence the five competitive forces and thus have impact on industry structures. Useful tools to determine potential changes of competitive forces are scenarios. Analysis of Options Porters model of Five Competitive Forces allows a systematic and structured analysis of market structure and competitive situation. The model can be applied to particular companies, market segments, industries or regions. Therefore, it is necessary to determine the scope of the market to be analyzed in a first step. 11
Sa’adat Ali Mughal Critique/problems with the model Porter’s model of Five Competitive Forces has been subject of much critique. In general, the meaningfulness of this model is reduced by the following factors: · In the economic sense, the model assumes a classic perfect market. The more an industry is regulated, the less meaningful insights the model can deliver. · The model is best applicable for analysis of simple market structures. · The model assumes relatively static market structures. This is hardly the case in today’s dynamic markets. · The model is based on the idea of competition. It dos not really take into consideration strategies like strategic alliances, electronic linking of information systems of all companies along a value chain, virtual enterprise-networks or others. 6AL. 3 Strategic choice ANSOFF’S MATRIX The article focuses on the main aspects of Ansoff analysis. The four strategic options entailed in the Ansoff matrix are discussed along with the risks inherent with each option. The Ansoff matrix presents the product and market choices available to an organisation. Herein markets may be defined as customers, and products as items sold to customers The Ansoff matrix provides the basis for an organisation's objective setting process and sets the foundation of directional policy for its future. The Ansoff matrix is used as a model for setting objectives along with other models like Porter matrix, BCG, DPM matrix and Gap analysis etc. The Ansoff matrix is also used in marketing audits. The Ansoff matrix entails four possible product/market combinations: 1. 2. 3. 4.
Market penetration Product development Market development Diversification
The four strategies entailed in the matrix are elaborated below.
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Market penetration Market penetration occurs when a company penetrates a market with its current products. It is important to note that the market penetration strategy begins with the existing customers of the organisation. This strategy is used by companies in order to increase sales without drifting from the original product-market strategy. Companies often penetrate markets in one of three ways: by gaining competitors customers, improving the product quality or level of service, attracting non-users of the products or convincing current customers to use more of the company's product, with the use of marketing communications tools like advertising etc. This strategy is important for businesses because retaining existing customers is cheaper than attracting new ones, which is why companies like BMW, Toyota and banks like HSBC engage in relationship marketing activities to retain their high lifetime value customers. Product development Another strategic option for an organisation is to develop new products. Product development occurs when a company develops new products catering to the same market. Note that product development refers to significant new product developments and not minor changes in an existing product of the firm. The reasons that justify the use of this strategy include one or more of the following: to utilise of excess production capacity, counter competitive entry, maintain the company's reputation as a product innovator, exploit new technology, and to protect overall market share. Often one such strategy moves the company into markets and towards customers that are currently not being catered for.
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Sa’adat Ali Mughal Market development When a company follows the market development strategy, it moves beyond its immediate customer base towards attracting new customers for its existing products. This strategy often involves the sale of existing products in new international markets. This may entail exploration of new segments of a market, new uses for the company's products and services, or new geographical areas in order to entice new customers. For example, Arm & Hammer was able to attract new customers when existing consumers identified new uses of their baking soda. Diversification Diversification strategy is distinct in the sense that when a company diversifies, it essentially moves out of its current products and markets into new areas. It is important to note that diversification may be into related and unrelated areas. Related diversification may be in the form of backward, forward, and horizontal integration. Backward integration takes place when the company extends its activities towards its inputs such as suppliers of raw materials etc. in the same business. Forward integration differs from backward integration, in that the company extends its activities towards its outputs such as distribution etc. in the same business. Horizontal integration takes place when a company moves into businesses that are related to its existing activities. It is important to note that even unrelated diversification often has some synergy with the original business of the company. The risk of one such manoeuvre is that detailed knowledge of the key success factors may be limited to the company. While diversified businesses seem to grow faster in cases where diversification is unrelated, it is crucial to note that the track record of diversification remains poor as in many cases diversifications have been divested. Scholars have argued that related diversification is generally more profitable. Therefore, diversification is a high-risk strategy as it involves taking a step into a territory where the parameters are unknown to the company. The risks of diversification can be minimised by moving into related markets. How to write a Good Ansoff Analysis It is important for analysts to acknowledge that different strategic options are suitable for companies operating in different types of industries and markets. No one strategic option for growth is appropriate for all types of companies at all times. The business environment, including competitive activity, also plays a key role in determining which strategic choice is most appropriate for a company. It is not possible to write a good Ansoff analysis without looking at the various factors in the business environment, which impact the choice of a firm's strategic options. Market penetration, for example, may prove to be a wise strategy only when the overall market is growing. In a growing market, companies are often able to increase sales to existing and some new customers without increasing their relative market share. Note that companies with low market share in a growing market can make gains by attacking a competitor head on. For example, Burger King (relatively low market share) to an extent has been successful at attacking McDonald's sales (relatively high market share). However, it is more difficult to reap benefits of market penetration strategy in a
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Sa’adat Ali Mughal declining market. Note that each strategic option brings with it some inherent risks, which can be reduced through careful planning and implementing control mechanisms. Overall, market penetration strategy is a low risk strategy as the business parameters of product and market more or less remain the same. It is important to discuss the benefits and appropriateness of the strategic option for an organisation while mentioning the risks inherent with each strategic option. While writing about the product development strategy, it is important to mention that it is often a part of the natural growth of organisations. Look for the reasons as to why the company selected the strategy and explain the reasons and implications. In many cases, innovation serves as the most important reason as it may present an opportunity to take market share from competitors or a threat to an existing product line. Product development strategy can in some cases be risky, as was the case of the New Coke. While customers liked the taste of the New Coke in the taste tests conducted by Coca Cola, customers of the brand favoured Classic Coke over the new product. Clearly remember the differences between market penetration and product development strategies, as it may be easy to confuse the two strategies if the analysis is not performed carefully. Note that the core competency of a firm becomes crucial in case of the market development strategy. For example, Glaxo has been able to develop new markets for its anti-ulcer drugs by developing and marketing a lower-strength version of the drug in many countries that can be sold without prescription as a stomach remedy. Market development strategy, like other strategic options, entails certain risks also. McDonald's entered a number of new markets in the wake of globalisation with its existing products. Due to the nature of the company's products, McDonald's had to make changes in the ingredients of its burgers in order to cater to the market. It is imperative for analysts who are trying to identify the growth strategies or are formulating proposals for such strategies for a particular firm, that firms in today's fiercely competitive business environment often pursue multiple strategies. In fact, most big businesses today pursue multiple strategies for growth at the same time in order to achieve their strategic objectives. For example, the two Internet incumbents of Amazon and E*Trade are both operating in a fast evolving, uncertain business environment and have pursued multiple and high-risk growth strategies, which include market development, product development and diversification strategies. Amazon focused more on the diversification strategy while E*Trade focused on market development. The differences in strategic choices in this case were due to the differences in the type of markets in which both companies operate. Notably Amazon operates in a wider retail setup while E*Trade operates in a narrower are of financial services retailing. Both companies chose product development as the second most preferred strategic option, which shows commitment to innovation in products and services. Another similarity that comes across in the analysis of the two incumbents is that the low risk strategy of market penetration was the least favourite option for both companies. Therefore, it is crucial to note that one firm may be pursuing multiple strategies and it is important to write about all the strategic options that the firm is pursuing.
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Sa’adat Ali Mughal Where to find information for Ansoff Analysis Analysts can explore various sources to find information necessary for conducting Ansoff analysis. Possible sources of information include company and competitor websites as they would highlight the portfolio of products and services and how the company may have diversified over time. Up to three years of annual reports of the company can be analysed to see how the company has changed its business focus, according to changes in the business environment. Marketing communications tools used by the company can reflect which growth strategy is being pursued by the company. For example, corporate advertisements along with adverts of products and services can show whether the company is targeting existing or new customers and/or existing or new markets. Press releases are also a useful source for evaluating the growth strategy that a firm is pursuing or should pursue. Journal articles, trade publications and magazines are useful sources of information to identify growth strategies. Limitations of Ansoff Analysis While Ansoff analysis helps in mapping the strategic options for companies, it is important to note that like all models, it has some limitations. By itself, the matrix can tell one part of the strategy story but it is imperative to look at other strategic models like SWOT analysis and PESTLE in order to view how the strategy of an organisation is formulating and might change in the course of its future. For example, the Ansoff analysis of Virgin Cola shows that the brand has been launched in the UK and USA using a market penetration strategy, which essentially reflects that the brand needs to increase its brand recognition (Vignali, 2001). The SWOT analysis conducted by Vignali (2001) showed an opportunity that Virgin Cola could explore diversification into new ranges of Virgin Cola products. PESTEL analysis of Virgin Cola showed that there was need to constantly evaluate the soft drinks industry in all countries, in order to reflect customer trends, thereby allowing the brand to gain market share and also predict trends faster than the competition. Therefore, the steps to be taken while conducting a strategic analysis of an organisation include SWOT analysis, PESTEL and Ansoff matrix as fundamental models of analyses, which should be used in conjunction and not in isolation, to view the complete strategic scenario. Also, recommendations made on the basis on only one of the models are not concrete and lack in depth. The above is also supported by the example of M&S where the company was not able to keep up with the trends and suffered from decline in sales due to competitors like Next, which were relatively more aware of customer trends and needs. Marks and Spencer came up with the Per Una range of clothing in order to compete effectively and gained market share. M&S would not have been able to identify which strategy to opt for growth, if a PESTEL analysis was not conducted. While the role of analysis in making strategic choices cannot be undermined, it is imperative to note that judgement plays a crucial role in making critical strategic choices that may change the future of the firm. Lastly, the use of Ansoff matrix as a marketing
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Sa’adat Ali Mughal tool may not be really useful as the matrix is critical for analysing the strategic path that the brand may be following, and does not essentially identify marketing options. FORCE FIELD ANALYSIS Force field analysis is a valuable change-management tool. This management technique was developed by Kurt Lewin, an expert in experiential learning, group dynamics and action research. Although Kurt Lewin contributed greatly to the field of social science, he is best-known for his development of the Force field analysis model in 1947. Lewin’s force field analysis is evaluates the net impact of all forces that influence change. These forces can be divided into two groups: driving forces and restraining forces. Driving forces are all forces that push for and promote change. These change drivers promote and encourage the change process. Some examples of driving forces are executive mandate, customer demands, and increased efficiency. Restraining forces are forces that make change more difficult. These forces counteract driving forces and lead to the avoidance or resistance of change. Some examples of restraining forces are fear, lack of training, and the lack of incentives. When these two sets of forces are equal change is in a static state of equilibrium meaning that no movement towards or away from change is happening. To better understand the connection between driving and restraining forces and how they impact change; a simple metaphor is of use (see illustration below). Suppose a group of helium-filled balloons are attached to a set of weights. The helium in the balloons creates an upward lift of five pounds. The weight of the attached weights is also five pounds. Because both the driving forces (balloons) and the restraining forces (weights) are equal, the balloons are unable to lift off the ground towards change. However, the addition of a single balloon or the removal of a single once of weight would change the balance and would start the system rising towards the envisioned change.
Implementation Although there are several different methods and variations for conducting force field analysis, there are commonalities among all of them. The steps outlined below capture 17
Sa’adat Ali Mughal many of these commonalities and represent the process needed for successful implementation of a typical force field analysis. 1. Identify and understand the current state 2. Identify and understand the desired goal state relative to the proposed change. 3. Identify and list driving forces acting to support the change. It is important to list all forces regardless of their seemingly small influence. Driving forces are forces acting to move the current state towards the goal state. 4. Identify and list restraining forces acting to hinder the change. Remember restraining forces are forces holding the current state back from the goal state. 5. For each force, designate the level of influence using a numerical scale e.g. 1=extremely weak and 7=extremely strong. 6. Chart the forces by listing the driving forces on the left and restraining forces on the right. Also chart the numbers allocated in step 5 next to their related force. 7. Evaluate the chart and determine whether change is viable. 8. Discuss how the change can be affected by decreasing the strength of the restraining forces or by increasing the strength of driving forces. 9. Discuss action strategies to eliminate the restraining forces and to capitalize on the driving forces. Through conducting this process, a force field diagram like the one shown in figure below should be created.
As shown in the above force field diagram, the total point value for restraining forces exceeds the total value of the driving forces. This means that the proposed change would likely fail if nothing is done to change the balance. To increase the likelihood of success, management can attempt to reduce restraining forces, increase driving forces, or some 18
Sa’adat Ali Mughal combination of the two. In changing the impact of one force, the impacts of other forces often change as well. One example of this interdependency would occur if management decides to reduce the level of employee fear be providing extra training and resources. The impact of fear as a restraining force may drop from a 7 to a 4, but the capital investment restraining force may increase from a 3 to a 7 resulting in a higher restraining force than before the change. The relationships among the many forces must be understood and evaluated before strategies to eliminate the restraining forces and to capitalize on the driving forces are implemented. Applications Force field analysis is being used for many different applications in a wide variety of industries. There are three main applications of the force field analysis tool: 1. Change management (which has been the focus of this article) 2. productivity improvement 3. decision making Change management is the primary application for force field analysis. One industry that has embraced the usefulness of this tool is the health care industry. Change is a regular occurrence in the healthcare environment. One area of change in which the health care industry has used force field analysis is in the computerization of nursing systems. Nurses have widely varying attitudes toward computers and change in the workplace. To help in the transition, managers are evaluating the forces that encourage and the forces that impede the change. Based on the force field analysis, strategies must be developed to assist nurses in moving forward with the transition. Productivity improvement is the second main application of force field analysis. This universal application of how to increase employee productivity demonstrates a powerful need for the force field analysis tool. Instead of looking at factors promoting and inhibiting change, managers can look at forces promoting and inhibiting productivity. This analysis can shed light on methods, strategies, and systems that can promote longterm improvements in employee productivity. Force field analysis is also a powerful decision-making tool. By evaluating the forces supporting and opposing a specific decision, managers can know the likelihood of acceptance and can also manage the influencing forces to maximize the potential for acceptance and success. The force field model is a valuable tool for use in these three applications; however, it is not limited to these forms of application. By understanding the principles of force field analysis, managers can customize the technique for use in a large variety of situations. By recognizing that every decision and every change has forces that promote the change and forces that impede the change, managers can make smarter decisions and can use force field analysis to effectively manage change in their organizations. DECISION TREE Decision trees can be used to decide on the best form of a range of strategic options. At the end of the tree are number of different development opportunities. The decision tree approach sets out to rank options by progressively eliminating the weaker ones.
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Sa’adat Ali Mughal A major problem of decision tree is that they can tend a bit simplistic. At each stage you need to be able to rank and quantify options. If you put the wrong number in at any stage, the whole exercise becomes distorted. Decision trees are most effective when alternatives can be given clear numerical values. Be wary about using them when making decisions that cannot be clearly quantified. Features of decision trees Decision points - These are points where decisions have to be made in a decision tree. These are represented by squares. Out comes - Points where there are possible outcomes in a decision tree are represented by circles and are called chance nodes at these chance nodes, it can be shown that a particular course of action might result in a number of outcomes. Probability or chance- the likelihood of possible outcomes happening is represented by possibilities in decision trees. If the outcome is certain then the probability is 1. Alternatively, if there is no chance at all of a particular outcome occurring, the probability is 0. In practice the value will lie between 0 and 1. Probability = Number of favorable outcome Total number of outcomes Example: What is the probability of head in a toss of a coin? Solution. Probability = 1 / 2 = 0.5 Expected value- this is the final outcome of a decision. It is shown at the right hand side as a solution. Example: Using the decision tree, calculate the expected return from manufacturing.{N03 P3}
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Solution:
Example:
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6AL. 4 Strategic implementation BUSINESS PLANS A business plan is a document designed to provide sufficient information about a new or existing business to convince financial backers to invest in the business. Every business whether new or established, large or small, need a plan for future. In the case of large and established companies planning will be done by strategiied or consultants. In small firms and new business start-ups, the owner of the business is likely to be both manager and planner. Purposes of businerss plan To clearify the idea- the process involved in creating a business plan means that the enterpreneure has to ask a number of key questions about their idea. This should ensure that before starting up, the business idea has been considered with care. To gain finance- the plan will often be used as a means of showing potential investors or lenders why the business will succeed. Banks insist on seeing a business plan before any loan or overdraft is granted. To monitor pregress over time- the business plan can be used as a working document for the owner. This can be the start of an ongoing monoitoring process to help the owner run an efficient organization in the future. Key elements of a business plan Executive summery The executive summary is designed to pique the interest of decision makers. It should contain a brief overview of the most important aspects of the business plan. In particular,
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Sa’adat Ali Mughal it should highlight the product or service, the value to the customer, the relevant markets, management expertise, financing requirements, and possible return on investment. Readers should be able to read and comprehend the summary in five to 10 minutes. Test it. Give your executive summary to someone who has no previous knowledge of your business concept or its technical or scientific basis. Product or service Your business plan derives from an innovative product or service and its value to the end consumer. It is important to indicate how your product differs from those that are now or will be on the market. A short description of how far development has progressed and what still needs to be done is also essential. Management team It explains whether the management team is capable of running a promising business. Entrepreneurs frequently underestimate the significance of this question and make the mistake of skimping on content and making do with meaningless phrases. Market and competition Thorough understanding of customers and their needs is the foundation of every successful business, for it is the customers who give company a reason for being. And in the end, by buying – or not buying – your product, or service, they will decide if and how successful the company will be. Only those customers, who are convinced they are getting a greater value than they would from a competing product, or by not buying a product at all, will buy your product. Knowing your market and competition well is thus critical to the success of your undertaking. Market size and growth A dramatic increase in the value of the company can be expected only if the market holds great potential. The market size should be presented in figures representing the number of customers, unit sales, and total dollars in sales. It should also indicate what main factors are now influencing or may influence the given industry segment. Show what factors will affect developments (technology, legislative initiatives, etc.) and what relevance these factors have for the business. Market segmentation Follow up of general explanations with choice of target customer and planned market success (sales volumes, sales revenues, market share, and profit). To do this, one must segment the market. The choice of segmentation criteria is up to entrepreneur, as long as he is certain that the number of customers in each segment - as well as his behavior - can be determined, and that the customers within each segment can be reached by means of the same marketing strategy. Define the potential sales revenues for a given period per segment. Take sales strategy and the behavior of the competition into consideration.
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Sa’adat Ali Mughal Competition Define the strengths and weaknesses of competitors. To do this, evaluate major potential competitors using the same criteria, such as sales volume and revenues (pricing), growth, market share, cost positioning, product lines, customer support, target groups, and distribution channels. In the interest of brevity, forgo the use of a great deal of detail. Marketing and sale Key elements of a well-conceived business concept are well-planned marketing and sales activities. They require a persuasive description of strategies for market launch, marketing, and the measures planned for sales promotion. A skeleton framework to follow is that of the four "Ps": product, price, place, and promotion. A. Product After a closer analysis of the needs of various customer segments, business plan now must evaluate whether the product actually meets them or to what extent it may require adaptation. This raises the question of whether business should manufacture one single product for all segments or whether to adjust the product to meet the needs of individual segments. B. Price The basis for an attainable price is the willingness of customers to pay the price asked of them. This contradicts the conventional wisdom that price is derived from costs. Of course, cost is a considerable factor, but the cost-price ratio only becomes critical when the price asked will not cover costs within the foreseeable future. In this case, it is advisable to get out of the business as quickly as possible or, better yet, never to go into the business in the first place. The price asked depend entirely on how much the value of product is worth to the customer. It has defined, and perhaps quantified, the customer value in the business concept or product description. Now define a price bracket based on the quantified customer value of the product. C. Place The product or service will somehow have to reach the customer physically. Although this may sound simple, it involves another monumental marketing decision: In what way, via which distribution channel, do you want to deliver your product? Various distribution channels are available and the business decides any one on the basis of various factors like budget, management/expertise required, culture, competitor’s channel of distribution etc D. Promotion Before potential customers can appreciate the product, they have to hear about it. And to achieve this, the business must advertise to attract attention, inform, persuade, and inspire confidence. Those are the objectives of communication. Communication must explain the value of product or service to the customers, as well as convince customers that your product meets their needs better than competing or alternative solutions. There are various ways of getting the customer's attention:
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Sa’adat Ali Mughal · · · · ·
Classic advertising: newspapers, magazines, trade journals, radio, TV, movie theaters Direct marketing: direct mail to select customers, telephone marketing, Internet Public relations: articles in print media about your product, business or you, written by you or a journalist Exhibitions, trade fairs Customer visits
Business system Every entrepreneurial assignment is comprised of the interplay of a number of individual activities. When they are presented systematically in relation to one another, a business system results. The business system model maps out the activities necessary to prepare and deliver a final product to a customer.
Organization It is essential that tasks and responsibilities are clearly delegated and that business plan design a simple organization with few levels. The organization must be flexible and always adaptable to new circumstances. Decide who is responsible for what in each business area (delegation of tasks and responsibilities). If the organization is kept simple, staff members will know which assignments he or she must complete and can carry them out independently. On the other hand, everyone should be in a position to fill in for another team member for a short time if necessary.
Opportunities and risks
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Sa’adat Ali Mughal The object of this exercise is to identify a margin of error for departures from your assumptions. If possible with reasonable effort, it is advisable to draw up best-case and worst-case scenarios involving key parameters to identify the opportunities and risks. These calculations will allow venture capitalists to judge how realistic your plans are, and to better assess the risk of their investment. Financial planning and financing Financial planning assists in evaluating whether the business concept will be profitable and can be financed. To this end, the results of all preceding chapters must be compiled and consolidated. Projected growth in value results from the planned cash flows from your operative business. These are revealed through liquidity planning, which also provides information on your various financing needs. In addition, the profit situation of your business can be seen in the income statement. This statement is also necessary according to commercial and tax law. There are many ways to present the figures. The appendix contains sample tables of how to perform liquidity planning and make up an income statement, as well as a balance sheet. Business plan appendix The document should use the appendix to your business plan for supplementary information, such as organization charts, important ancillary calculations, patents, management resumes, or advertisements and articles. Take care that the appendix is kept manageable and does not include excessive data. Advantages of business plan The benefits of having a business plan include: · · · · · · · · ·
·
·
It can be a tool for obtaining financing. It will help unite venture partners in a common goal. It can serve as a feasibility study. It will serve as a goal and blueprint for your new business. Helping you to clarify your vision and deciding whether or not to forge ahead with the idea. Determining if your product and/or service has a sufficient market to support it and whether or not it will be profitable. Providing an estimate of your start-up costs and how much you'll need to invest or finance. Convincing investors and lenders to fund your business. Defining your target market (who your customers are or will be) and how to best reach them through strategic marketing actions or expanding market coverage or reach. Establishing or reevaluating your competitive position within the marketplace, by conducting a thorough analysis of the competition (finding out where your competitor's weaknesses are and how you can take advantage of them). Defining corporate objectives and programs to achieve those objectives.
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Helping your business make money from the start by developing effective operational strategies. Understanding the risks involved and anticipating potential problems so you that can solve them before they become disasters. Setting a value on a business for sale or for legal purposes.
CORPORATE CULTURE Originally an anthropological term, culture refers to the underlying values, beliefs and codes of practice that makes a community what it is. The customs of society, the self – image of its members, the things that make it different from other societies, are its culture. Culture is powerfully subjective and reflects the meanings and understandings that we typically attribute to situations, the solutions that we apply to common problems. Organizations are only one constituent element of society. People enter them from the surrounding community and bring their culture with them. It is still possible for organizations to have cultures of their own as they possess the paradoxical quality of being both ‘part’ of and ‘apart’ from society. They are embedded in the wider societal context but they are also communities of their own with distinct rules and values. Culture is symbolic and is described by telling stories about how we feel about the organization. A symbol stands for something more than itself and can be many things, but the point is that a symbol is invested with meaning by us and expresses forms of understanding derived from our past collective experiences. The sociological view is that organizations exist in the minds of the members. Stories about culture show how it acts as a sense - making device. Culture is unifying and refers to the processes that bind the organization together. Culture is then consensual and not conflictual. The idea of corporate culture reinforces the unifying strengths of central goals and creates a sense of common responsibility. Culture is holistic and refers to the essence – the reality of the organization; what it is like to work there, how people deal with each other and what behaviours are expected. All of the above elements are interlocking; culture is rooted deep in unconscious sources but is represented in superficial practices and behaviour codes. Because organizations are social organisms and not mechanisms, the whole is present in the parts and symbolic events become microcosms of the whole. Organizational culture and strategic management Culture has long been on the agenda of management theorists. Culture change must mean changing the corporate ethos, the images and values that inform action and this new way of understanding organizational life must be brought into the management process. There are a number of central aspects of culture: There is an evaluative element involving social expectations and standards; the values and beliefs that people hold central and that bind organizational groups.
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Culture is also a set of more material elements or artefacts. These are the signs and symbols that the organization is recognized by but they are also the events, behaviours and people that embody culture. The medium of culture is social interaction, the web of communications that constitute a community. Here a shared language is particularly important in expressing and signifying a distinctive organizational culture. Types of organizational culture Role Culture It is highly formalized, bound with regulations and paperwork and authority and hierarchy dominate relations. Task Cultures These are the opposite, the preserve a strong sense of the basic mission of the organization and teamwork is the basis on which jobs are designed. Power Cultures These have a single power source, which may be an individual or a corporate group. Control of rewards is a major source of power. Adaptive culture In such businesses managers are able to introduce a culture that allows a business to adapt to changes more likely to survive in a changing environment. Features of business with an adaptive culture include: · Employees are encouraged to be entrepreneurial and take risks. Managers have a ‘hands on’ approach. · The company sticks to ‘what it knows best’. It also emphasizes close relations with customers. · The organization should be lean and decision making should be decentralized. Inert culture These are businesses where managers all accept the values and norms of the business, which never change. Such culture promotes inertia. Decision making is often centralized Networked organizations These have high sociability and low solidarity. Examples might be Heineken and Phillips. Such a culture encourages team working, creativity and openness. Workers enjoy working. However, decipline may be difficult because of friendship and productivity may suffer. There may also be an over-concerned with compromise, rather than the best solution.
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Sa’adat Ali Mughal Mercenary organizations These have low sociability and high solidarity. Examples may be Pepsi Co and Mars. The culture is about getting things done, now. Targets are set. Rules are clearly defined. People consider: ‘what’s in it for me’ when working. With this culture businesses have a focus and can respond to threats and do not tolerate poor performance. Fragmented organizations These have low sociability and low solidarity. Examples might be law firms, consultancies or newspapers. This form of culture is best suited to businesses where individuals do not need to work with each other. Collaborate (Clan) Culture It is an open and friendly place to work where people share a lot of themselves. It is like an extended family. Leaders are considered to be mentors or even parental figures. Group loyalty and sense of tradition are strong. There is an emphasis on the long-term benefits of human resources development and great importance is given to group cohesion. There is a strong concern for people. The organization places a premium on teamwork, participation, and consensus. Create (Adhocracy) Culture It is a dynamic, entrepreneurial, and creative place to work. Innovation and risk-taking are embraced by employees and leaders. A commitment to experimentation and thinking differently are what unify the organization. They strive to be on the leading edge. The long-term emphasis is on growth and acquiring new resources. Success means gaining unique and new products or services. Being an industry leader is important. Individual initiative and freedom are encouraged. Control (Hierarchy) Culture It is a highly structured and formal place to work. Rules and procedures govern behavior. Leaders strive to be good coordinators and organizers who are efficiency-minded. Maintaining a smooth-running organization is most critical. Formal policies are what hold the group together. Stability, performance, and efficient operations are the long-term goals. Success means dependable delivery, smooth scheduling, and low cost. Management wants security and predictability. Compete (Market) Culture A results-driven organization focused on job completion. People are competitive and goal-oriented. Leaders are demanding, hard-driving, and productive. The emphasis on winning unifies the organization. Reputation and success are common concerns. Longterm focus is on competitive action and achievement of measurable goals and targets. Success means market share and penetration. Competitive pricing and market leadership are important. The Need for Culture Change No organization in the 1990s would boast about its constancy, sameness, or status quo standing compared to ten years ago. Stability is interpreted more often as stagnation than
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Sa’adat Ali Mughal steadiness, and organizations that are not in the business of change and transition are generally viewed as recalcitrant. The frightening uncertainty that traditionally accompanied major organizational change has been superseded by the frightening uncertainty that is now associated with staying the same. Such change in organizations is pervasive because of the degree and rapidity of change in the external environment. The conditions in which organizations operate demand a response without which organizational demise is a frequent result. Similarly, nearly every organization of moderate size or larger has engaged in downsizing in the last decade. Downsizing has been another attempt to improve productivity, efficiency, competitiveness, and effectiveness. Unfortunately, two thirds of companies that downsize end up doing it again a year later, and the stock prices of firms that downsized during the 1980s actually lagged the industry average at the beginning of the 1990s. A third common approach to enhancing organizational performance has been reengineering, or the attempt to redesign completely the processes and procedures in an organization. Similar to TQM and downsizing initiatives, however, evidence suggests that this approach to change has also had a checkered success record. The successful implementation of TQM and downsizing programs, as well as the resulting effectiveness of the organizations’ performance, depended on having the improvement strategies embedded in a culture change. When TQM and downsizing were implemented independent of a culture change, they were unsuccessful. When the culture of these organizations was an explicit target of change, so that the TQM and/or downsizing initiatives were a part of an overall culture change effort, they were successful. This dependence of organizational improvement on culture change is due to the fact that when the values, orientations, definitions, and goals stay constant--even when procedures and strategies are altered--the organization returns quickly to the status quo. Without an alternation of the fundamental goals, values, and expectations of the organization, change remains superficial and short-term in duration. And failed attempts to change, unfortunately, frequently produce cynicism, frustration, loss of trust, and deterioration in morale among organization members. As Cameron and his colleagues found in their research, the organization may be worse off than had the change strategy not been attempted in then first place. Modifying organizational culture, in other words, is a key to the successful implementation of major improvement strategies (e.g., TQM, downsizing, reengineering) as well as adaptation to the increasing turbulent environment faced by modern organizations. Importance of organizational culture Organizational culture is even more important today than it was in the past. Increased competition, globalization, mergers, acquisitions, alliances, and various workforce developments have created a greater need for:
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Coordination and integration across organizational units in order to improve efficiency, quality, and speed of designing, manufacturing, and delivering products and services Product innovation Strategy innovation Process innovation and the ability to successfully introduce new technologies, such as information technology Effective management of dispersed work units and increasing workforce diversity Cross-cultural management of global enterprises and/or multi-national partnerships Construction of meta- or hybrid- cultures that merge aspects of cultures from what were distinct organizations prior to an acquisition or merger Management of workforce diversity Facilitation and support of teamwork.
In addition to a greater need to adapt to these external and internal changes, organizational culture has become more important because, for an increasing number of corporations, intellectual as opposed to material assets now constitute the main source of value. Maximizing the value of employees as intellectual assets requires a culture that promotes their intellectual participation and facilitates both individual and organizational learning, new knowledge creation and application, and the willingness to share knowledge with others. Culture today must play a key role in promoting: · Knowledge management · Creativity · Participative management · Leadership Cultural Change Cultural change typically refers to radical versus limited change. It is not easy to achieve; it is a difficult, complicated, demanding effort that can take several years to accomplish. There are three basic types of cultural change: · Revolutionary and comprehensive efforts to change the culture of the entire organization · Efforts that are gradual and incremental but nevertheless are designed to cumulate so as to produce a comprehensive reshaping of the entire organizational culture · Efforts confined to radically change specific subcultures or cultural components of the overall differentiated culture. Strategies for effecting cultural change include: · Unfreezing the old culture and creating motivation to change · Capitalizing on propitious moments—problems, opportunities, circumstances, and/or accumulated excesses or deficiencies of the past · Making the change target concrete and clear · Maintaining some continuity with the past
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· · · ·
Creating psychological safety through a compelling positive vision, formal training, informal training of relevant groups and teams, providing coaches and positive role models, employee involvement and opportunities for input and feedback, support groups, and addressing fears and losses head on Selecting, modifying, and creating appropriate cultural forms, behaviors, artifacts, and socialization tactics Cultivating charismatic leaders Having a realistic and solid transition plan Exercising risk management by understanding and addressing the risks and the benefits as well as the potential inequitable distribution of these risks and benefits.
CONTINGENCY PLANNING A contingency plan is a structured way of deciding what to do if key operations are disrupted or key personnel are not available. It can help you identify and prevent or modify the impact of unacceptable risks. It helps you recognize the best possible options and ensures that your risk management dollars are spent wisely. A contingency plan consists of six main sections: Executive Summary It covers a brief view of the plan. Risk Management Goals In this section, you should identify your risk management goals. The purpose of risk management goals is to reduce uncertainty. For example, you may want to reduce employee absence or accidents, which reduces uncertainty about labor availability. Risk management goals can also be about managing business opportunities. For example, you may want the business or farm to stay within the family, which reduces uncertainty about the continuation of the business. Risk management goals help you decide which opportunities and risk management strategies to pursue. Risk Assessment This section of the contingency plan is about identifying and assessing the risks to the business. You should pinpoint the events that could cause financial or operational harm to the business. For each event, evaluate both the probability of occurrence and the consequence or impact of occurrence on a scale of 1 to 10, where 1 is low and 10 are high.
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Risk Matrix Business Impact Analysis You can assess the impact of an event on a business in three ways: operating impact, financial impact, and legal impact. Operating impact is loss of operating efficiency, such as decrease of sales or production volume due to the absence of key employees. It can be as simple as not having someone to answer the phone. Loss of customers, increased costs, and cash flow problems are examples of financial impact. Legal impact involves the inability to fulfill business contracts with suppliers, customers, or vendors. This section also includes identifying critical functions within the business and how the loss of key personnel will affect those functions. Risk Management Strategies Now that you have identified the risks to the business, their probability, and their consequences, you should prioritize and begin to establish management strategies for those risks. As a small business owner, you can decide to retain, reduce, avoid, or transfer the risks you detailed in the risk assessment section. The risk matrix can then guide your choice of risk management strategy.
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Choice of risk management strategy Plan Maintenance It is important that you keep the contingency plan up to date and revise it at least once a year. The plan should reflect any changes in the business. You should identify ways to keep the plan fresh and relevant.
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Session Paper Q no Question
1 W2008 2 W2008
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6 7(a) 7(b) 5(a) 5(b) 6 7(a) 7(b) 5(a)
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Topic
Marks
Nature
H H
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Essay Essay
Discuss how, and to what extent, break-even analysis might be used as an aid to decision making in a large manufacturing buisiness
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Essay
Information is collected by the Human Resources Department (Personnel). Explain how a business might use this information.
H I E E H M M E
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Essay Essay Essay Essay Essay Essay Essay Essay
E H O O H H F M M F M E M H E H I F E E M H F E
12 20 8 12 8 12 20 8 12 8 10 6 6 8 10 8 4 12 8 6 10 6 8 10
Essay Essay Essay Essay Essay Essay Essay Essay Essay CS CS CS CS CS CS CS CS CS CS CS CS CS CS CS
Management has been described as getting things done through people. Given this description, explain the importance of 5(a) management for a large business organisation 5(b) Discuss the view that a manager will be more effective by adopting a democratic rather than an autocratic style
Discuss the limitations of using purely numerical data when making business decisions Explain how a business might be affected by political and legal constraints Discuss how the objectives of a manufacturing business might be affected by ethical issues Discuss the qualities required by effective business leaders Explain how the product life cycle might be used by the finance manager of a business Discuss how and why promotional activity might change at different stages of a product life cycle Analyse the benefits which a private limited company might gain by beoming a public limited company Discuss how different stakeholder groups might view the decision to change from a private limited company to a public limited 5(b) company 6 Discuss the extent to which financial rewards are a good way of motivating employees 7(a) Explain how JIT could be used to manage stocks in a manufacturing business 7(b) Discuss why businesses need an effective method of stock management 5(a) Outline the factors which a manager of a large hotel might consider when carrying out manpower planning 5(b) Discuss the extent to which the hotel manager might improve workers' motivation by re-designing their jobs 6 Discuss the suitability of the various sources of finance a large business might use when replacing old machinery 7(a) Outline the main determinants of demand for consumer goods in your country 7(b) Discuss how a clothes retailer might segment the market for its goods 1(b) Question on cash flow in the context of a school shop 1(c) Advise Ling on the factors that she will need to consider in recommending a marketing mix for PC 1(d) Briefly analyse the factors that might limit the succes of PC 2(b) Question on Elastcity 2(c) Anayse the Human Resource Mangement issues for CC if the planned international expansion takes place 2(d) Discuss the implications for CC of its ethical approach to business activities 1(b) Discuss how EFWP could reduce the need to "keep on recruiting seasonal workers" 1(c) Identify information that EFWP needs to collect before it can make a decision about the expansionp 1(d) Investment appraisal question 2(b) Analyse how the government might influence the activities of GC 2(c) Describe how lean production techniques might be used at GC 2(d) Discuss the factors that would influence GC's choice of marketing mix 1(b) Explain the arguements that the work force of Zeta Oil might use to justify their demand for a 10% increase in wages 1(c) Analyse the main uses of Zeta Oil's accounts for stakeholders other than workers 1(d) Discuss how the Government might affect the activities of Zeta Oil
Case
Paper Clips Paper Clips Paper Clips CC Cosmetics CC Cosmetics CC Cosmetics East Farm Wildlife Park East Farm Wildlife Park East Farm Wildlife Park Ganmor Cars Ganmor Cars Ganmor Cars Zeta Oil Zeta Oil Zeta Oil
36 W2007 37 W2007 38 W2007
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2(b) Question about break even 2(c) Discuss the factors that ET will need to consider when marketing their courses to schools and colleges 2(d) Identify and briefly analyse how ET might recruit suitable trainers
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Excellent Training Excellent Training Excellent Training
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1(c) 1(d) 2(b) 2(c) 2(d) 1 2(a)
M O F F O F H
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CS CS CS CS CS CS CS
Technew Technew Bee's Meals Bee's Meals Bee's Meals Tanroh's Dilemma Tanroh's Dilemma
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W2008 W2008 W2008 W2008 W2008 W2008 S2008 S2008 S2008
3 3 3 3 3 3 3 3 3
H O M F E E H H O
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CS CS CS CS Essay CS CS CS CS
Tanroh's Dilemma Tanroh's Dilemma Tanroh's Dilemma Tanroh's Dilemma Tanroh's Dilemma Tanroh's Dilemma Pyramid Televisions Pyramid Televisions Pyramid Televisions
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F E E E
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Pyramid Televisions Pyramid Televisions Pyramid Televisions Curry Cuisine
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3 3 3 3 3
2(a) 2(b) 3(a) 3(b) 4
Evaluate the appropriateness of Ling's approach to managing staff within the Curry Cuisine Restaurant Draw up a forecasted Profit and Loss Account for 2008 Briefly assess two ways in which the gross profit margin could be raised for the take away products To what extent do you agree with Ling that the business would have problems raising capital?
H H F F F
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CS CS CS CS CS
Curry Cuisine Curry Cuisine Curry Cuisine Curry Cuisine Curry Cuisine
66 W2007
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Evaluate the advantages and disadvantages to Curry Cuisine of using batch production methods for the "ready made meals" project.
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Curry Cuisine
67 W2007
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Discuss the extent to which the successful expansion of a business such as Curry Cuisine is helped or constrained by external factorsb
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Essay
Curry Cuisine
Discuss the marketing and other factors that Tariq should consider before deciding whether to sell components on the Internet
Using the information in table 2, explain one method of stock control that TN could use to improve its management of stock Question on depreciation Discuss possible internal sources of finance for BM's proposed expansion Discuss the impact on BM and its workers of a change from batch to floe production Analyse the benefits to Tanroh of producing cash flow forecasts Analyse the importance to Tanroh of human resources planning Do you agree withAbi that Tanroh will need to delegate if more staff are employed? Give reasons for your answer, explaining the 2(b) possible advantages and disadvantages to Tanroh 3 CPA question and interpretation 4 Recommend to Tanroh a possible marketing strategy for the safari lodge project. 5 Investment appraisal question and interpretation 6 Discuss whether the government should support and protect important industries in your country 7 To what extent will the future succes of Tanroh's business depend on him setting clear objectives? 1(a) Discuss how PT's management might reslove the pay dispute with the workers 1(b) Asees the advantages and disadvantages to th R&D department of changing the organisational structure of the business 2 Analyse possible reasons why average total costs have increased following the increase in capacity utilisation Which of the two options for solving the capacity problems would you recommend? Support your answers by analysing Table 2 and 3 other useful information. 4
Marketing strategy question including Income elasticity Assume you are PT's bamk manager. Discuss the accounting data and ratios you would need before deciding whether to lend PT finance. Would you recommend PT to take over the TV4U chain of shops? Evaluate what you consider to be the most important internal and external factors that could determine the succes of PT. Discuss the strengths and weaknesses of Chas and Ling's original business start up Analyse two possible problems that might result from the appraoch to managing staff used within the Asian Experiences kitchen
68 69 70 71 72 73 74
W2007 S2007 S2007 S2007 S2007 S2007 S2007
3 3 3 3 3 3 3
7 1 2(a) 2(b) 3 4 5
75 S2007
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Assume that Chas and Ling decide to go ahead with the "ready made meals" proposal. Evaluate the arguments for and against developing a marketing plan. Discuss the risks and rewards to Ade resulting from his original decision to set up his own business Profit calculation resulting from stopping production A Stopping production decision Evaluate the likely impact on the business of the forecast economic conditions.c Using ratios to evaluate and act on financial efficiency Evaluate the importance to Craft Designs of effective market segmentation Discuss the relative importance of the factors apart from external economic conditions that are most likely to affect the future succes of Craft Designs
M E F F E F M
20 14 6 10 14 22 14
CS CS CS CS CS CS CS
Curry Cuisine Craft Designs Craft Designs Craft Designs Craft Designs Craft Designs Craft Designs
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Craft Designs
