Module 3-Strategic Planning and Implementation

Level 7 Diploma in Management Studies

Strategic Planning andImplementation

rdir e s o u r c edeve l opmentinternational

© Resource Development International Consultants Ltd (RDI)

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First published in 2007 for RDI Consultants Ltd

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Strategic Planning and Implementation

Contents

How to use this workbook

IntroductionModule Objectives 0.1Summary of learning outcomes 0.1

Unit 1Management Strategy

Management strategy 1.3Summary 1.39

Unit 2Vision, mission, objectives and measures

Vision and mission 2.1Objectives and measures 2.13Summary 2.30

Unit 3Implementation of the strategy

Planning 3.1Summary 3.37

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How to use this workbook

This workbook has been designed to provide you with the coursematerial necessary to complete the module, Strategic Planning andImplementation by distance learning. At various stages throughout themodule you will encounter icons as outlined below which indicate whatyou are required to do to help you learn.

This Activity icon refers to an activity where you are required to undertake aspecific task. These could include reading, questioning, writing, research,analysing, evaluating, etc.

This Activity Feedback icon is used to provide you with the informationrequired to confirm and reinforce the learning outcomes of the activity.

This Key Point icon is included to stress the importance of a particular pieceof information.

This icon shows where the Virtual Campus could be useful as a medium fordiscussion on the relevant topic.

It is important that you utilise these icons as together they will provideyou with the underpinning knowledge required to understandconcepts and theories and apply them to the business and managementenvironment. Try to use your own background knowledge whencompleting the activities and draw the best ideas and solutions you canfrom your work experience. If possible, discuss your ideas with otherstudents or your colleagues; this will make learning much morestimulating. Remember, if in doubt, or you need answers to anyquestions about this workbook or how to study, ask your tutor.

Strategic Planning and Implementation i

How to use this workbookrdi

Strategic Planning and Implementation

Introduction

Module Objectives

This module recognises the importance of effective forecasting andplanning in the current global economy. Organisations need to beproactive, with their direction determined by logical analysis. It is notalways possible to calculate accurately future events but without anysense of progression it is easy to lose competitiveness, market positionand customer loyalty.

Learners are required to plan and develop the implementation of amanagement strategy for an organisation they know well. Learners willneed to interact with senior management and stakeholders as theemphasis is on a participative approach.

Summary of learning outcomes

To achieve this module a learner must be able to:

1. Construct a management strategy.

2. Develop vision, mission, objectives and measures.

3. Plan for the implementation of the strategy.

Strategic Planning and Implementation: Introduction

Management Research – Project and Presentation 0.1

Unit 1

Management Strategy

Unit Objectives

This unit concentrates on the involvement of those in the management ofstrategic planning and implementation. The relevance of stakeholders to theproposed strategy and the way in which they are able to determine thefeasibility and risks associated are discussed.

In addition, the unit examines issues related to costs and other resources. Italso looks at different techniques used to model the proposed changes andtheir sensitivity to variations.

The potential opportunities brought about through globalisation and the use ofthe Internet are also included.

Management strategy

Reviewing options

There is no fundamental agreement upon an accepted definition of theterm strategy, and different approaches by a wide variety of managers,writers, etc. have been offered. However, what seems clear is thatstrategic management involves diverse and often creative processes inan attempt to address the increasing complexities facing organisations.

Business strategy embraces a range of concepts, models andapproaches used to manage a business. The overall strategy of abusiness is what should give the particular business a direction or a wayforward. This, in turn, relates to the ability of a firm to identify how bestto match its competencies to the needs and opportunities that areevident in its marketplace(s).

Bruce & Langdon (2000) relate strategy to military campaigns,describing an original definition of strategy as:

‘The art of planning and directing military movements andthe operations of war.’

Strategic Planning and Implementation 1.3

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In terms of a business, their definition states:

‘A strategy maps out the future, setting out which productsand services you will take to which markets – and how.’

Norton & Irving (1999) also relate the origins of business strategy to amilitary analogy:

‘Strategy has its origins in generalship and the art andscience of manoeuvring an army. The term ‘strategy’entered business language only after the Second World Warwhen military leaders on both sides of the Atlantic cametogether to see if some of the successful elements of wagingwar could be applied to business.’

They go on to give a literal definition of strategy – as it originated fromancient Greek:

� Strategia – generalship, command of an army.

� Stratos – an army.

� Agein – to lead.

From this military standpoint, Norton & Irving go on to establish adefinition for business strategy:

‘Strategy is about what we want to do, what we want ourorganisation to be and where we want it to go.’

Whichever definition is used, it is evident that strategy is concernedwith a company’s attempts to plan for its future, using a variety oftechniques (as are seen in a war) in order to arrive at the desired state.

From this starting point, you should already be able to appreciate thatstrategy can be both developed and delivered in a variety of ways, andthat there is a clear role for strategy in determining the future oforganisations. It is this role of strategy to which we will turn to first.

The broad term ‘strategy’ has come to be associated with a wholeplethora of terminology that is used to describe it. The actual adoptionof a particular strategy by an organisation will in turn be dependent onthe particular context of the firm in question.

In this section, we will consider the broad role of strategy and thecommon terminology that is attached to this organisational approach tobusiness. A later section of this first unit will, then, consider thedifferent approaches that can be taken to strategy – both in terms of anorganisation’s context and in terms of the type of organisation beingconsidered.

1.4 Strategic Planning and Implementation

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Firstly though, we must examine in some detail what the role of strategyis in a business organisation.

Without a strategy, it is argued that a firm will not know where it isgoing. You can perhaps appreciate the tendency for all organisations toget bogged down in the day-to-day operations of a business, alongsidethe further tendency to continue operating in ways that have alwaysworked in the past.

A tendency to ‘just get things done’ in a firm can mean that the companyforgets what it is trying to achieve and where it is trying to go. Along the wayit can further mean that opportunities that arise in the company’s marketsare missed – with the competitive advantage going to a rival company.

Strategy provides an organisation with a framework for:

� Understanding its place and position in each of itsmarkets.

� A way to move forward – in terms of identified directionand purpose, and with the speed of advancement that isappropriate for its different markets.

� Identifying and developing the resources and capabilitiesthat are appropriate for the market(s) that the company is‘playing’ in.

Having a strategy means that a company can ensure that its day-to-daydecisions and actions fit within the long-term ambitions and interests ofthe organisation.

In turn, having a clear strategy means that the management and staff ofan organisation can appreciate where the company is heading, and therole they have in ensuring that the firm arrives at the desired destination.

It can be considered that the central role of any business organisation isthe achievement of superior long-term return on investment –otherwise why bother being in business at all?

In order to achieve this long-term aim, it is strongly advised – as wehave already seen – that a business should have a strategy. Such astrategy is a set of guidelines that direct the managers in an organisationto reach their desired long-term positions.

A strategy comprises the objectives that are sought for the business andthe strategic ideas that are required to accomplish the objectives. Thiscan be summarised as:

� Where do we want the business to be? – The objectives.

� How can we ensure the business gets there? – Thestrategy or strategies.


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So, a strategy is used to direct a company. Prior to looking at how thisdirecting takes place, we can finish this section with a couple ofadditional more comprehensive definitions:

Strategy is sometimes described as the direction and scope of anorganisation over the long-term: ideally, which matches its resources toits changing environment, and in particular its markets, customers orclients so as to meet stakeholder expectations.

Andrews (1989) offers a further definition of strategy

‘Strategy is the pattern of objectives, purposes or goals andthe major policies and plans for achieving these goals,stated in such a way as to define what business thecompany is in, or is to be in, and the kind of company it is,or is to be.’

ACTIVITY

Read the extract entitled ‘Approaches to Strategic Management’ fromThompson J L, Strategic Management and Awareness. Make notes as to whetheryou recognise either of the approaches to strategic management in your ownorganisation. Can you identify the reasons for this? Who is involved in theseapproaches?

APPROACHES TO STRATEGIC MANAGEMENT

THE BIRD APPROACH

Start with the entire world – scan it for opportunities to seize upon, trying tomake the best of what you find.

You will resemble a bird, searching for a branch to land on in a large tree. Youwill see more opportunities than you can think of. You will have an almostunlimited choice. But your decision, because you cannot stay up in the airforever, is likely to be arbitrary, and because arbitrary, it will be risky.

THE SQUIRREL APPROACH

Start with yourself and your company – where you are at with the skills andexperience that you have – and what you can do best. In this approach you willresemble a squirrel climbing that same large tree. But this time you are startingfrom the trunk, from familiar territory, working your way cautiously, tree forkby tree fork, deciding at each fork the branch that suits you best.

You will only have one or two alternatives to choose from at a time – but yourdecision, because it is made on a limited number of options, is likely to be moreinformed and less risky.


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In contrast with the bird who makes single big decisions, the squirrel makesmany small ones. The squirrel may never become aware of some of theopportunities the bird sees, but he is more likely to know where he is going.

ACTIVITY

Research the history and development of IKEA, or another well knownmultinational retailer, and write a brief report detailing the strategic directionadopted by the organisation.

1. In what way could the issues facing IKEA, or another retailer, bedescribed as strategic?

2. What sorts of decisions are strategic decisions, and what distinguishesthem from other decisions that were no doubt being taken in thecompany?

Using your answers, summarise the key characteristics of strategic decisions.

ACTIVITY FEEDBACK

A summary of the key characteristics should read;

Strategic decisions are concerned with;

� The scope of an organisation’s activities.

� The matching of an organisation’s activities to its environment.

� Building on, or ‘stretching’, an organisation’s resources andcompetences.

� The matching of the activities of an organisation to its resourcecapability.

� The major allocation and reallocation of resources in anorganisation.

� The values and expectations of the organisation’s key stakeholders.

� The direction an organisation moves in the long term.

� Implications for change throughout the organisation – they are likelyto be complex in nature!


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Stakeholder participation and involvement

We can view the position of stakeholders by viewing a stakeholder map,described below:

Purpose:

� Identifies all interested parties both inside and outsidethe programme; may also include individuals or groupsoutside the business.

� Used to ensure that all stakeholder interests are cateredfor by the programme, including keeping them informedand receiving feedback.

Fitness for purpose checklist:

� Have all the stakeholders and their interests beenidentified?

� Is there agreement from all interested parties about thecontent, frequency and method?

� Has a common standard been considered?

� Has time to carry out the identified communications beenallowed for in the stage plans?

Notes:

� It is important to determine the interests of all stakeholders,who may represent different customer groups, and toresolve conflicting requirements. The Cabinet Office isdeveloping guidance on customer focus, one of the PrimeMinister’s four principles of reform, for example.

Suggested content:

� Matrix showing individual stakeholders or groups ofstakeholders and their particular interests in the programme

� Communication route and frequency for eachstakeholder or group of stakeholders.

Source information:

� Blueprint.

� Programme Plan.

� Organisational structures of organisations involved in theprogramme.


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ACTIVITY

Using the stakeholder map concept described here, what does your ownorganisation offer its stakeholders?

What aspects of the stakeholder map might a stakeholder look for in yourorganisation?

Each group of stakeholders will have a different set of views andexpectation from an organisation. For example, shareholders wouldregard an organisation to be effective if it produced above-averageprofitability and growth leading to rising share prices; customers wouldemphasise things to do with value for money, quality and reliability ofgoods, courtesy of service and punctuality of delivery; suppliers wouldemphasise fair and prompt payment; employees would look at theextent to which an organisation is a good employer – paying goodwages, providing good working conditions, scope for satisfying work,security of employment, etc.

ACTIVITY

Read the following brief case study and answer the questions that follow it.

An organisation had arranged for some substantial building work to beundertaken during a particularly hot summer period. As a concessionto its employees for the inconvenience caused, it installed watercoolers in each of their offices. When the building work wascompleted, they removed the coolers. The response from theemployees was quite passionate – many felt very resentful towards themanagement. They felt that the management did not really care forthem.

Spedan Lewis, the son of the founder of the John Lewis Partnership,drew up a futuristic constitution which contained mission statementssuch as, ‘The Partnership’s ultimate aim shall be the happiness in everyway of its members’ and ‘ The Partnership shall recognise that onlyfools put business too far before pleasure, especially health andhappiness, and that there is almost infinite scope for imagination andenergy in the promotion of happiness in the more important sense ofthat word.’

To what extent do you think the management of the first organisation shouldconsider the comments of Spedan Lewis?

What experiences do you have of similar stakeholder consideration within anorganisation?


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Stakeholder expectations will vary from one organisation to another. Asuggestion of the different expectations is provided in Figure 1.1.

Criteria for judging options

In order to gain maximum benefit from the process of strategicplanning, we must develop some sort of criteria by which we are able todetermine how effective different options will be. Obviously, this is nota precise science, but the use of objective thinking and the benefit of thejoint experience of all the relevant stakeholders should enable valuedjudgements to be made. Selecting the appropriate option from a rangeof possibilities is an important part of the overall process.


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Shareholders

� Growth in dividend payments

� Growth in share price

� Consistent dividend payments

� Growth in net asset value

Customers

� Price always competitive

� Emphasis on product/service quality

� Return and replacement policies

� Product reliability

Suppliers

� Timely payment of debt by company

� Adequate liquidity

� Integrity/public standing of directors

� Negotiating ability of managers

Employees

� Good compensation and benefits

� Job security

� Sense of meeting or purpose in the job

� Opportunities for staff development

� Amount of interesting work

Government

� Efficient use of energy and resources

� Adhering to country’s laws

� Paying taxes

� Provision of employment

� Value for money in use of public funds

Lenders

� Liquidity of company

� Character and standing of management

� Quality of assets available for security

� Potential to repay interest and capital on due date

Figure 1.1. Possible stakeholder expectations.

ACTIVITY

Consider an important strategic decision made by your organisation or onethat you are familiar with. By discussing it with the decision-makers involved atthe time, find out what other options were discussed and the means by whichthe final decision was made.

Summarise your findings in a brief report.

Why carry out strategic planning in the first place? This question bringsus back to our opening thoughts at the beginning of the module.

The purpose of a strategy is to identify where the organisation is at themoment and to help direct it towards the intended objective. In order toachieve this it must be realistic in a number of ways.

The business strategy must concur with the overall corporate objectivesand strategy so that the organisation is truly pointing in the samedirection.

It must be designed to integrate all functions of the organisation. Eachfunction will need to have a clear understanding of the future goals, andhow they will affect each function.

The needs of the customer and the market must be fulfilled andsatisfied.

The strategy must achieve its objective in a simple and clear manner.Unnecessary complexity will only increase the likelihood of strategicfailure.

The cost of implementation must be adequately measured to ensurethat there is a financial benefit of the new strategy. This will bediscussed later on in this unit.

Feasibility studies

A feasibility study is the term used to describe the initial piece of workto recommend whether the organisation should invest resources tocarry out further procurement activity in a category of spend.

Depending on the size and complexity of the category, the study mighttake the form of:

� A detailed report.

� A short study.

� Other forms.


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The output of a feasibility study might be to recommend:

� A detailed category management review of a category ofspend.

� Supplier management activity.

� Tactical “quick win” style activity.

� Other recommendations.

Typically, a feasibility study would be a preliminary assessment, ratherthan a detailed investigation into a particular sub-category or productline. For example, an organisation might investigate opportunities tomake savings in a particular category of spend. A brief review of spend,suppliers and contracts might reveal that:

� A full category management cycle is likely to deliver realsavings.

� There is a short term opportunity to reduce waste bybuying in different quantities or by changing the processslightly.

� There are inefficiencies in the way in which we areworking with the supplier, which could be addressed bya supplier relationship management cycle

A feasibility study might follow a six stage process as shown in Figure1.2.

Experience suggests that the most important elements are:

� Clear Terms of Reference defined up front.

� A brief “warts and all” interim report may be useful,where the feasibility study is a large piece of work, toestablish whether the analysis is taking the expecteddirection.

Recommendations are grounded in an agreed view of:

� The category spend.

� The scope and the structure of the category intosub-categories.

� Baselines against which improvements or savings will bemeasured.

� The current contractual situation for the category ofspend; for example, understanding when contracts are upfor renewal, and what legal constraints exist.


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� A clear understanding of the costs associated with therecommendation, in particular:

� Resourcing costs and skill requirements.

� Team location.

� The likely return from any investment.

KEY POINT

The following documents will support this approach to a feasibility study:

� Terms of Reference that are agreed with the relevant stakeholders.

� A resource plan.

� A structure for reporting on risks, issues and against milestones.


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Communications - Stakeholder management - Project management

MobilisationReviewcurrent

practices

Reviewspend andcategor-isation

Reviewcommercial

arrange-ments

Undertakeopportunity

analysis

Agreefindings

ConfirmTQR

Generateinterim report

Stop/continue

Draft finalreport

Stop/continue

Finalisereport

Sign offreport

Reviewreport with

sponsor

Figure 1.2. Feasibility study example.

The output from this part of the process is a clear recommendation on if andhow to proceed.

This approach suggests that the recommendation is reviewed throughappropriate governance where a decision as to if and how to proceed is taken.

Risk assessment

In a perfect world, all managers would have all the necessaryinformation which, when combined with their own business ability,would be sufficient to make perfect decisions at all times. Not only isthis truly unrealistic, it is also impossible. (Many managers would alsoargue that the elements of challenge and expectation that would beeliminated in such a situation would result in a very dull predictablebusiness world, where everything was predictable and the consequencewould be lower returns for those taking higher risks.)

Risk means that a decision has clear targets and that good informationis available to support it. However, the future outcomes of each optionare subject to a degree of chance. The degree of risk is usually the keypoint in discussions, and it will be upon this that the final decision ismade. Statistical data will be sought to enable an optimum probabilityof a successful outcome. In strategic planning, risk might be consideredto be the probability of a recipient honouring the terms of a financialagreement, for example.

Uncertainty, however, means that decision-makers know the goals thatthey wish to achieve, but information about future events andalternatives is not complete. In this case, managers are not in possessionof enough information to make a clear estimation of the potentialprobability of success.

Risk analysis is vital when committing funds for the long-term.

ACTIVITY

Risks are an important input to the investment decision. Read the followingcase study on how the BG group evaluated risks in its investment analysis.

http://www.thetimes100.co.uk/case_study.php?cID=51&csID=218&pID=1

In developing a risk assessment policy, there are two parts to thestrategy:

1. Analysis of risk, which involves the identification and definitionof risks, plus the evaluation of impact and consequent action.


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2. Risk management, which covers the activities involved in theplanning, monitoring and controlling of actions that will addressthe threats and problems identified, so as to improve thelikelihood of the project achieving its stated objectives.

The risk analysis and risk management phases must be treatedseparately, to ensure that decisions are made objectively and based onall the relevant information.

Risk analysis and risk management are interrelated and undertakeniteratively. The formal recording of information is an important elementin risk analysis and risk management. The documentation provides thefoundation that supports the overall management of risk.

The strategy defines how risks will be managed during the lifecycle ofthe programme and is used to plan the way risks are handled within theprogramme.

The risk strategy and supporting plan must acknowledge actual andpotential threats to the successful delivery of a project and determinesthe activities required to minimise or eliminate them. The risk planneeds to be capable of integration into or co-ordination with the projectplan.


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Very high

High

Medium

Low

Very low

Very low Low Medium High Very high

Probability

Impact

Risktolerance line

= Risk

Figure 1.3. Example of a Summary Risk Profile.

A major concern is the appropriate communication of risk information,in particular where escalation is required. The ‘summary risk profile’(SRP) is a simple mechanism to increase visibility of risks. It is agraphical representation of information normally found on a riskregister. This graph should be updated in line with the risk register on aregular basis. The profile shows risks in terms of probability andseverity of impact with the effects of mitigating action taken intoaccount.

The SRP is often referred to as a probability/impact matrix. Each risk(indicated by � on the diagram) would normally have a number or otherreference and supporting details. The position of the risk tolerance linewould depend on the organisation and its project. See Figure 1.3 for anexample SRP.

A risk management check would assess an organisation’s risk provisionby considering :

� What risks are to be managed.

� How much risk is acceptable.

� Who is responsible for the risk management activities.

� What relative significance time, cost, benefits, quality andstakeholders have in the management of programmerisks.

A risk assessment framework defines how management of risk will behandled within the associated context (could be organisation-wide orfor a specific activity such as a project). It covers the lifetime of theactivity. It provides information on roles, responsibilities, processes andprocedures, standards, tools, facilities and documentation to beproduced. It sets the context in which risks are managed, in terms ofhow they will be identified, analysed, controlled, monitored andreviewed. It must be consistent and comprehensive with processes thatare embedded in everyday management.

Fitness for purpose content:

� Does the framework identify relevant standards, policiesand legal requirements?

� Does the framework identify (or validate) the context andperspective for the situation (e.g. strategic, operational?which stakeholders’ views are of primary importance?)?

� Are the stated management of risk objectives, constraintsand concerns agreed (or validated)?

� Has the framework established how a successful outcomeis to be judged?


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� Does the framework identify the tools and techniques tobe adopted?

� Does the framework identify the scale for evaluation ofrisk?

Suggested content:

It addresses how:

� Risks are identified.

� Information about their probability and potential impactis obtained.

� They are quantified, taking into account expert adviceand the degree of uncertainty.

� Options to deal with them are identified, taking intoaccount constraints, such as internal obligations.

� Decisions on risk management are made. This includesthe criteria used to decide when further risk reduction isnecessary, taking into account costs and benefits.

� These decisions are implemented. This includes theprinciples guiding the choice of how to intervene (such aseducation, information, inspection) and on whom totarget any intervention.

� Actions are evaluated for their effectiveness.

� Appropriate communication mechanisms are set up andsupported.

� Stakeholders are engaged throughout the process -especially suppliers and partners.

Where partners and/or suppliers are involved, it is essential to haveshared understanding of risks and agreed plans for managing them.

KEY POINT

There are three broad types of risk -

Business Risk

This covers the threats associated with a project not delivering products thatcan achieve the expected benefits. It is the responsibility of the Project Ownerto manage business risks.


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Project Risk

This is the collection of threats to the management of the project and hence tothe achievement of the project’s end results within cost and time. The ProjectSponsor/Project Manager may manage these on a day-to-day basis.

Operational risk

This covers ongoing risk to service delivery, which could include anything frommajor disaster to minor technical breakdown. These risks are managed in aday-to-day basis by the organisation’s service manager and the serviceprovider. Note that although the client may not have hands-on responsibilitythey must have the capability to understand what is being done on their behalfand to take appropriate action if required.

Case study

Consider a typical risk management policy, which might state thefollowing points:

Areas to probe Best Practice

1. Are there processes to identify, assess, allocate and monitorcurrent, anticipated and emerging risks?

� There must be a risk management strategy, withnamed individuals who have responsibility formanaging specific risks. For more information, seethe workbook on managing risk.

� For IT-enabled projects, the risk assessment shouldinclude information security risks.

� For construction projects, risks relating to health andsafety should be included in the project brief.

2. Have the risks for each of the options been evaluated?

� See the risk management workbook forrecommended approaches to risk evaluation.

3. Have the risks for the preferred option been fully assessed?

� Assessment of costs, benefits and risks should bedocumented in the options appraisal section of thebusiness case.

� There should be plans for managing and allocatingthe risks associated with the preferred option.


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4. Have the ‘worst case’ implications associated with these risksbeen assessed?

� Details should be set out in the Project Plan, ProjectInitiation Document or equivalent; for constructionprojects this information should be in the updatedProject Execution Plan.

� Risks should be financially assessed and anallowance quantified for the risks.

5. Are the costs and time implications of managing the risksincluded in the cost and time estimate or treated as a separaterisk allocation?

� Costs and time for managing risks should beidentified as a separate risk allocation.

� For construction projects, residual risk will also haveto be considered.

6. Has the project assessed whether it is breaking new ground inany areas?

� To make a meaningful comparison, carry out a highlevel assessment of similar projects in departmentsand/or relevant private sector projects; seek expertadvice if required, where innovation is identified ashigh risk.

� Consult with the market to help refine the approach,identify risks and ways in which risks might bemitigated.

7. Should the project be broken down into a series of small steps?(Note this is mandatory for IT-enabled projects andrecommended for complex projects.)

Modular or incremental approaches to the project help to break it downinto manageable components and reduce risk. Seek guidance on thistopic for more information on how to break the project down - and,importantly, how to reassemble the components as a coherent whole.

ACTIVITY

How might this risk management policy be adapted for use in yourorganisation?


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Reviewing additional recent material

During recent years, there has been a cumulative process of change inthe economy and corresponding changes in the nature of competitiveadvantage. Consequently, approaches toward strategic planning havealso changed. These are too lengthy to discuss in this module, but forcompleteness are briefly listed in this section.

Significant changes in the economy:

� Increasing importance of networks.

� The Internet and the separation of information flowsfrom physical flows.

� The deconstruction of the economy and its value chainsinto a greater number of separable layers, some of whichare ‘sweet spots’ of much greater value than other layers.

� The prominence of ‘increasing returns’ and ‘winner takesmost’ economics, as opposed to the traditional view thatmarkets and companies are subject to diminishingreturns.

Changes in the nature of competitive advantage affecting strategicplanning:

� The identification of ‘sweet spots’ in the value chain.

� The race to establish dominance in a ‘sweet spot’.

� The establishment of dominant standards.

� The development of skills in orchestration.

� The struggle with rival orchestrators.

� The struggle with the orchestrated.

� Increased danger that competitive advantage istemporary.

� The need to find the next frontier of customer valuecreation.

� The emergence of a new type of player – the ‘navigator’.


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ACTIVITY

Have you observed any changes in the approach to recent strategic planningwithin your own organisation or one with which you are familiar?

Summarise these observations and your opinions of them.

Cost benefit analysis

Cost Benefit Analysis is a relatively simple technique for decidingwhether it is economically viable to make a change. To use thetechnique, simply add up the value of the benefits of a course of action,and subtract the costs associated with it.

In its simplest form, cost/benefit analysis is carried out using onlyfinancial costs and financial benefits. A more sophisticated approach tocost/benefit analysis is to try to put a financial value on the intangiblecosts and benefits. This can be highly subjective and difficult to forecast.

The procedure for performing a cost/benefit analysis involves a fewsimple steps which are outlined below:

1. Identify the costs. Costs may be ongoing or a one-off.Adjustments must be made to ensure that they are included inthe calculation in a compatible way.

Costs:

10 network-ready PCs with supporting software @ £1,225 each3 printers @ £600 eachCabling and Installation @ £2300Training costs:Computer introduction - 10 people @ £ 200 eachKeyboard skills - 10 people @ £ 200 eachOther costs:Lost time: 40 man days @ £ 100 / dayTotal cost: £24,350

2. Identify the benefits. Benefits are most often received over time.

Benefits:

Increasing productivity: estimate £20,000 / yearAbility to obtain Grade 1 in inspection: estimate £10,000 / yearImproved staff efficiency and confidence estimate: £25,000 / yearTotal Benefit: £55,000/year

3. The effect of time can be built into the analysis by calculating apayback period. This is the time it takes for the benefits of achange to repay its costs. Many companies look for payback overa specified period of time - e.g. three years.


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Payback time: £24,350 / £55,000 = 0.44 of a year = approx. 3months

4. Analyse the results and assess whether the projected paybackperiod is sufficiently small to make the undertaking worthwhile.

Consistency with organisational values

If an organisations wishes to develop its strategic management in anefficient and effective way, it will need to adopt consistency in all that itseeks to achieve. It is important that all areas of the organisation are ablenot only to ‘pull together’, but to ‘pull in the same direction’. Thisapplies to organisational values as much as other areas, such asdecision-making.

There is agreement that consistent decisions would be good thing.Concern centres on making it happen because in many organisationsthere is no history of consistent decisions ever being made. This seemslike a reasonable concern. But most organisations have never had aspecific goal of achieving consistent decisions. Perhaps that’s onereason why so many inconsistent decisions are made.

The key to making consistent decisions is a reference document withshort, simple measurable goals that can be widely used as a touchstoneto help all employees make good decisions easily and confidently. Inshort, they need a plan.

Mention plans in many companies and you get one of the followingresponses. The first response is that they are intending to work on a planwhen the immediate business pressures come off. Translation: they arenever going to do it because they don’t understand the value. Thesecond type of response is a smug, knowing smile followed by astatement about how long they have spent crafting their plan. When theforklift truck delivers the plan and the desk groans under the weightyou can see why it took so long to write. Unfortunately, the end result isthat no one is ever going to read it, let alone act upon it.

The traditional, weight tested (often content free), strategic plan is oflimited or no value to help employees make decisions. So if the strategicplan is of limited value, and organisations are delaying producing themanyway, something else is needed.

The best results come when people work together with whoever in theorganisation can help them meet their goals. Making the majority ofgoals public inside the organisation really helps and a further boost isdelivered by linking goals to the compensation and appraisal systems.There are other essential steps to join up the plans but a key factor isgetting people talking.

To me one of the best things about this methodology is thatorganisations experience an increase in the consistency of decisions


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being made before the plans are even completed. That is the power ofpeople working together. In many cases significant cost reductions areachieved by relatively minor actions. This method works.

In future, whenever anyone in the organisation is faced with making adecision, they will have a touchstone to help them make the bestdecision. It’s “their” plan. Equally importantly the plan also helpspeople explain why they made a particular decision. A great help inreducing “discussions”.

The whole process of getting agreement suddenly becomes mucheasier. Decisions are no longer just driven by the person who can arguetheir position longest. Now they are made based on a logical plan andclear principles structured into about a dozen PowerPoint slides. Noworganisations can make consistent decisions.

Case study

A good example is provided by the Lanarkshire health care trust. Thefollowing extract from their website shows this:

NHS Lanarkshire will work in partnership with the people ofLanarkshire to fulfil a commitment to improving heath, reducing healthinequalities and building trust and confidence in our relationships withthe public, staff and organisations with whom we work.

In support of this commitment, we have developed a set ofOrganisational Values through meaningful public and staffcontribution.

The context for the influence of values is complex and challenging. NHSLanarkshire will manage the balance between public and staffaspirations for the NHS with our responsibility and accountability forthe proper stewardship of resources.

The values will exert significant influence over Strategy Development,Re-design and Modernisation of Clinical Services and over ourpriorities and performance as we strive for continuous improvement asan exemplar employer.

In pursuit of improvement we will value:

� Quality, patient-focused services.

� Quality, healthcare environment.

� Continuous improvement.

� Involvement.

� Communications.


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� Respect.

� Fairness and consistency.

� Competence and continuous learning.

Market position and share

To better understand the effect of strategy, it is useful to learn about atechnique of analysis known as the Ansoff matrix. This well knownmodel is a classic in strategy building. Its primary purpose is to analysethe organisation’s approaches to its products and to its market to assurethat an appropriate marketing strategy is being pursued and possibly toreveal opportunities.

Within this model is an assessment of the risks involved in pursuinggiven strategies. The model also prompts consideration of synergywhich might exist on both the product and the market axes. See Figure1.4.

Let us unpack the model a bit and interpret some of the implications ofpositions in each of the boxes.

Market penetration

This strategy involves the firm looking to increase its products’ share ofthe markets currently served by the company. Various methods areavailable to the firm under this broad market penetration strategy:

More purchasing and usage from existing customers – new products areadded to the existing product line; for example, Coca Cola and cherrycoke, Kellogg’s crunchy nut cornflakes, Virgin bank and Virgin trains.


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Marketpenetration

Productdevelopment

Marketdevelopment

Diversification

Currentproducts

Newproducts

Currentmarkets

Newmarkets

Figure 1.4. The Ansoff matrix.

Gain customers from competitors – marketing and strategic effortsdirected primarily at taking customers away from the competition. Forexample, the recent attempts by new entrants to the gas and electricityindustries trying to take customers from British Gas and otherestablished ‘players’.

Convert non-users into users – special offers for people to try HealthClub membership serves as a good example of this.

Market development

Offering existing company products to new markets is referred to asmarket development strategy. Again, two broad areas of marketdevelopment can be examined:

New market segments – examples could include McDonalds offeringtheir products with special add-on offers to the teenage market, orsolicitors offering their services to non-traditional customers –particularly the ‘no win no fee’ segment of the market.

New distribution channels – Mercedes offering their vehicles and brandthrough shop outlets rather than just dealerships, as seen at Blue Watershopping centre in Kent. A further example could include thelarge-scale development of home shopping and smaller Express storesby Tesco.

Product development

Product development incorporates three broad areas of activity. Thesecan be described as:

Product modification via new features – examples include, fan assistedovens, combined TV and DVD, car breakdown recovery servicesincorporating hotel accommodation for customers with anun-serviceable car, mobile telephones incorporating web and phototechnology, and ready meals that are microwaveable in the packaging.

Different quality levels – some product modifications can be said tooffer different quality levels to different customers. Other examplescould include car tyres, Tesco selling their basics (own label) and finestbrands of goods in the same store, and British Gas offering customersdifferent levels of service care to its customers – from 3-star to 5-starcover.

New products – the home bread maker, DVD technology and vehicletelematics could all be considered to be new products.

Market leadership

If a company pursues a strategy of market leadership, it is trying to getto a position where competing companies are always ‘playing


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catch-up’. Research strongly suggests that market leaders enjoy notonly higher sales, but also higher profits as well.

Market leadership presents many disadvantages to rival companies inthe industry. These include:

� Economies of scale.

� Research and development costs.

� Recruitment of the ‘best’ employees.

� Advertising and promotional spending capabilities.

� Access to market research.

� Brand management and brand proliferation.

The level to which these disadvantages will show themselves willlargely be dependent on the industry being considered. As an example,market leadership in an oligopolistic industry (where there are a largenumber of competing firms) that is also facing over-supply, can actuallybring advantages to followers in the industry.

Ford Motor Company serves as a good example of this, where itspursuit of market share and retention of market share leadership isplacing the advantage in many of its rivals hands. The company isfacing rapid erosion of its market share by smaller, better customer andproduct-focused companies, who are very satisfied if they can movetheir market share from 4 to 5 per cent, for example. For this examplecompany huge gains have been made. Ford, meanwhile, is facing anerosion over the past ten years of around 15 percentage points.

Diversification

This involves a company looking at entering new areas of business. Forexample, Building Societies buying Estate Agency businesses, or thetrain and bus company Arriva buying car dealerships (which werere-sold in 2003).

The Ansoff matrix is a very clear and easily understood model, widelyknown and widely used.

While the benefit of the Ansoff matrix lies primarily in examiningstrategic product/market strategy, it also has value in:

� Causing long-term evaluation of markets.

� Revealing the potential opportunities for product synergyand for market synergy.

� Focusing on competitor activity.


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Survival

This strategy can be considered the opposite of profit, and can bedescribed in terms of the avoidance of loss.

Survival may be for the short or the long term. In the short term, it couldbe a strategy that is pursued because of difficult market conditions. Inthe long term, the company may well have curtailed profits as theyinnovate and grow. The intention being that they actually begin toachieve profitability further ‘down the road’.

Marks and Spencer is a company that has had to put survival on theagenda in recent years. Though still profitable through its ‘difficultyears’ it did have to go back to basics in order to ride the wave of badfortune. Even though there are still some issues, the company isbeginning to see sales growth again – even if profits are not yet back totheir previous level.

Mergers and acquisitions

Merging with, or acquiring, another company can often be an attractiveproposition for a company strategy wise. Either to build on corecompetencies or to buy in required core competencies to meet thedemands of a changed external environment, a company pursuing thiskind of strategy will be looking to gain advantage in the marketplace.

The main ways to deliver integration – vertical, backward and so on –were considered in the activity included in the earlier section on Ansoffgrowth strategies. In this section we will not re-visit your findings fromthe activity.

One area that you possibly didn’t consider though, was the strategydefined as ‘business redefinition strategy’.

Needham et al (2002) cite the example of ICI using the businessredefinition strategy:

‘ICI has redefined its main focus of business activities frombeing focused on heavy industrial chemicals to one on highvalue-added consumer-oriented chemicals. It made thisswitch because of the weakness in its older market and thepotential in its newer market.’

Using the Ansoff matrix in conjunction with the BCG matrix, describedin the next section of this unit, the organisation can conduct a usefulstrategic review of production/market strategy and what that impliesfor achieving the organisation’s vision. In this way we are able to make aseamless transition towards techniques that are more directlyconcerned with strategic evaluation.


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ACTIVITY

Using a suitable source of reference, find out the different types ofdiversification that can be pursued by a company.

For each of the types make some brief notes to explain what each type covers.

ACTIVITY FEEDBACK

Diversification involves a company entering a new line of business outside theirnormal scope of operations.

You should have been able to find information covering the different types ofdiversification. These include:

� Forward integration.

� Backward integration.

� Vertical integration.

� Horizontal integration.

� Total diversification.

Costs and investments

An understanding of the nature of costs and investments is necessaryfor an organisation to be able to make decisions. If the aim is to expandproduction to meet rising demand, then it will be necessary to knowhow much that extra production will cost. Without this information, itwill have no way of knowing whether or not it will make any profit as aresult of this expansion.

Costs will include all the expenses that must be met in the process ofcompleting an organisation’s activities. These will be either fixed (costswhich stay the same at all levels of output) or variable (costs which aredirectly related to the output).

ACTIVITY

The student is recommended to research the topic of costs for him/herself. Itis advisable to spend some time gaining a more thorough understanding of thisarea of financial management, which will be dealt with in a later module.

There are a number of suitable texts available on the subject.


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Investment refers to the purchase of capital goods. These are used in theproduction of other goods, directly or indirectly. For example, abuilding contractor who buys a cement mixer, some scaffolding, a lorryand five shovels has invested. These goods are used directly in hisproduction process. If the contractor then buys a computer and printerfor the company’s office, this is considered an indirect investment.Although these items will not be used in production, the organisationwould not run as efficiently without them.

Investment might also refer to expenditure by a business which is likelyto yield a return in the future. For example, a business might spend£2million on research and development into a new product or invest£500,000 in a promotion campaign. In each case, money is spent onprojects now in the hope that they will generate a greater amount ofmoney in the future as a result of that expenditure.

There are two type of investment:

� Autonomous - where an organisation buys capital goodsto replace ones which have worn out.

� Induced – where an organisation purchases newequipment, etc. as a result of pressure from rising sales orexpansion.

Opportunity costs

In the context of making financial decisions, opportunity costs refer tothe value of an alternative decision that has been sacrificed in order topursue a particular course of action.

Consider this example, which may relate to you as a student studyingon this course. To complete this course, you may find it necessary totake a number of days off from your employment. If you are employedon a PAYE basis, the taking of holiday days will not result in any lostincome for you but if you are self-employed, you would be losing acertain amount of income per day taken as a result of having to study.The opportunity cost of studying would, therefore, be the income thatyou are losing.

ACTIVITY

From a business perspective, consider the following examples:

1. A company, which specialises in providing vintage cars for weddings,has a booking, which is in jeopardy because one of their cars hasbroken down. The owner of the company, therefore, has to make thedecision as to whether it to cancel the booking or hire a car from


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another company which has surplus vehicles. The cost of hire plusdriver is £250.00 and the cost of hiring a car from another company is£150.00. In both instances, therefore, the opportunity cost is theincome forgone.

What is the opportunity cost if:

a) The owner decides to cancel the booking.

b) If the owner decides to honour the booking but hire a car fromanother company.

2. An organisation has been offered the chance to invest in a newproduct. They will need to buy a new machine at a cost of £50,000.They currently have £50,000 in a deposit account which has earned 5%interest per annum. Calculate the opportunity cost.

3. An organisation is to use a factory to produce a new line of products,which otherwise would have been sold for £500,000. What is theopportunity cost?

ACTIVITY FEEDBACK

1a) If the owner decides to cancel the booking, the opportunity cost is thetotal fee of

£ 250.00

b) If the owner decides to honour the booking but hire a car fromanother company, the opportunity cost will be £ 250.00 - £ 150.00 forcar hire = £ 100.00

2. The opportunity cost would be £50,000 + £2,500 per annum interest= £52,500

3. The opportunity cost will be the sale of the factory = £500,000

A development during the late 1970s and early 1980s by Bain and Cowas the Opportunity/vulnerability matrix. This was later refined by theLEK Partnership to provide a means of describing the profitability of anaverage business segment in a particular industry. Whereas the BCGmatrix had shown that high relative market share led to highprofitability, the opportunity/vulnerability matrix set out to prove thatit should be possible to produce a ‘normative curve’ to investigateaverage segment profitability.


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Figure 1.5 shows the relationship between return on capital employedand relative market share, leading to a normative band in a convenientbanana-shaped curve.

Scenario planning

Scenario planning is a technique that allows practitioners to prepare forthe future by looking at trends in the present and mapping how theseinterrelate with each other. From this, a number of scenarios picturingpossible future worlds are drafted, along with a description of howthese futures could arise. Businesses then plan around these - withcontingency plans for undesirable elements. Key change indicators aremonitored and used to gauge how events are turning out. Companiesusing the technique have reported remarkable successes - the oilcompany Shell, for example, predicted the Oil Crisis of the 1970s, andthe changes that took place prior and immediately after the fall of theSoviet Union in the early 1990s.

Many people believe that in today’s rapidly changing world it isbecoming impossible to plan for the future. Some would even view it asa waste of time. Within the UK there is a debate about whether the UKshould enter European Monetary Union and embrace the euro. In othermarkets different issues are hot topics. The common feature is that thefuture is uncertain. Nevertheless businesses do need to anticipate thefuture. And they need to look 5, 10 or more years ahead. Pharmaceuticalcompanies do this on a routine basis - planning for when a key patentexpires. But all businesses need to look forward.


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Opportunity

0

100

10X 0.1XRelative market share

Return oncapital

employed(%)

Vulnerability

Normativeband

Figure 1.5. Opportunity/vulnerability matrix.

Traditional methods for anticipating the future extrapolate from thepresent. The problem with this approach is that the further forward onegoes the greater the error - and thus the greater the risk of making amistake. With the speed of change in some industries, extrapolationbeyond two or three years is not even possible.

KEY POINT

“A scenario is an internally consistent view of what the future might turn outto be - not a forecast, but one possible future."

Michael Porter

“Scenario planning is that part of strategic planning which relates to the toolsand technologies for managing the uncertainties of the future."

Gill Ringland

Scenario planning is not about predicting the future. It is aboutexploring the future. If you are aware of what could happen, you arebetter able to prepare for what will happen.

Scenario planning exercises involve identifying trends and exploringthe implications of projecting them forward – probably as high,medium and low forecasts. These can include political, economic, socialand technological. As different trends are chosen and differentcombinations of forecast levels are combined, a whole spectrum ofpossibilities can be identified.

Well-known examples include the end of the Berlin Wall, OPEC oilprice rises, bombs and terrorist attacks.

Simulation modelling

Simulation modelling allows managers to investigate the behaviour of asituation so that they can gain a clear understanding of the“cause-and-effect” relationships that underpin the operations in anyorganisation.

It allows managers to:

� Simulate and plan the financial effects (costs and profits)of a range of scenarios such as:

� change in demand for products and services,

� changed product volume and mix,


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� anticipated economies of scale,

� process improvements,

� outsourcing or changes to resource costs,

� step changes and the effect of capacity constraints.

� Make accurate plans for resources required, such as thenumber of full-time employees, on the basis of how yourorganisation plans to perform and what it needs todeliver.

� Analyse resource allocation and identify areas withbottlenecks and areas with excess capacity

� Facilitate the process of creating, updating andmaintaining your annual budget or rolling forecasts.

� Test alternative “what if” analyses to assess the likelyimpact on resourcing levels and future performance.

As a result, it allows managers to explore a range of possible reactionsquickly and easily, allowing the preferred option to emerge morequickly than more conventional approaches to planning and budgeting.

Simulation and planning is based upon actual cause-and-effectrelationships. The solution adds “intelligence” to your simulation andplanning. It does so by using an Activity Based Costing approach toestablish a cause-and-effect link between the organisation’s use ofresources and the products and services provided.

This relationship is often absent in traditional planning methods.

Sensitivity analysis

Once a situation has been suitably modelled and simulated, a furtherexercise that is useful for decision-making is to attempt to find out whatdifferences in output there will be for a selection of minor conditionalchanges. It might be important to know, for example, what change incosts might be observed if a supplier is changed. By inserting differentquoted prices from a number of alternative suppliers into the model, itwill become apparent if there are any advantages (and, equally, anyserious disadvantages) to be found.

It is possible that key variables such as volume of unit, sales price,project life span and materials and labour costs may change. Thefunction of sensitivity analysis is to measure how these variables maychange, and so affect investment decisions. It is usually used inconjunction with NPV or IRR computations and works on the basis thateach variable is manipulated (pessimistically or optimistically) to findwhat the impact will be on the NPV, or IRR. Using a standard


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spreadsheet package to analyse ‘what if?’ scenarios can best use theapplication of sensitivity analysis.

KEY POINT

The basic assumption here is that the estimates made for future revenues andcosts for a particular project are valid and that there are is no uncertaintyinvolved.

A simple use of sensitivity analysis is seen when the projected accountsfor a small organisation or department are presented with slightvariations in some of the variables. This allows decisions to be madebased on the probable outcomes. Perhaps a restaurant might wish todetermine the effect of changes of customer numbers, and subsequentvariations in staffing, on predicted profits. By using this so-called ‘whatif?’ method, usually within a spreadsheet, it should be possible to findthe optimum customer and staffing levels to maximise profits.

This method suffers from some drawbacks as it is only as valuable as theinformation available. If estimates become too fanciful then solutionswill be unreliable. Decisions subsequently made will then be of littleuse. However, used with appropriate caution, sensitivity analysis canbe particularly helpful.

ACTIVITY

Seek out the finance director/manager of your organisation. Ask if it is possiblefor you see how sensitivity analysis (or the ‘what if?’ method) is used in thedecision-making process.

Try to obtain a sample document and describe the process used. Can youdescribe one actual decision that has been made as a result of the use of thismethod?

Balanced scorecard approach

A new approach to strategic management was developed in the early1990s by Drs. Robert Kaplan (Harvard Business School) and DavidNorton. They named this system the ‘balanced scorecard’. Recognisingsome of the weaknesses and vagueness of previous managementapproaches, the balanced scorecard approach provides a clearprescription as to what companies should measure in order to ‘balance’the financial perspective.


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The balanced scorecard is a management system (not only ameasurement system) that enables organisations to clarify their visionand strategy, and translate them into action. It provides feedbackaround both the internal business processes and external outcomes inorder to continuously improve strategic performance and results. Whenfully deployed, the balanced scorecard transforms strategic planningfrom an academic exercise into the nerve centre of an enterprise. This isshown in Figure 1.6.

Kaplan and Norton describe the innovation of the balanced scorecard asfollows:

“The balanced scorecard retains traditional financialmeasures. But financial measures tell the story of pastevents, an adequate story for industrial age companies forwhich investments in long-term capabilities and customerrelationships were not critical for success. These financialmeasures are inadequate, however, for guiding andevaluating the journey that information age companiesmust make to create future value through investment incustomers, suppliers, employees, processes, technology andinnovation.”

The balanced scorecard suggests that we view the organisation fromfour perspectives, and to develop metrics, collect data and analyse itrelative to each of these perspectives:

� The Learning and Growth Perspective.

� The Business Process Perspective.

� The Customer Perspective.

� The Financial Perspective.

The Balanced Scorecard was developed to provide a new form ofstrategic management. The key features of the Balanced Scorecardapproach are that it:

� Has a limited number of measurements.

� Focuses on the important factors for strategic success.

� Is not overly complex.

� Does not confuse, or diffuse focus, by containing toomany objectives or too much information.

� Is broad-ranging (including strategy, customers, financialmanagement, business processes andlearning/development).


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� Relates the diverse areas together in a dynamicrelationship.

The balanced scorecard provides a simple but effective answer to thequestions “what does the organisation need to do to succeed?” and“how can we get every employee working in the same direction?”

The balanced scorecard can play a key role in achieving real change inorganisational teamwork. Although team/organisational performanceis dependent on many things, a major part is played by:

� The degree of collective focus on the overall goal.

� Simplicity of that goal.

� Clarity of visible measurement of that goal.

� Speed of communication of measurement results.

These principles makes it easier, for example, for sports teams to build aperformance culture than many businesses because:


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Financial

“To succeedfinancially, howshould weappear to ourcustomers?”

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Customer

“To achieve ourvision, how shouldwe appear to ourcustomers?”

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Learningand Growth“To achieve ourvision, how willwe sustain ourability tochange andimprove?”

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InternalBusinessProcesses“To satisfy ourshareholders andcustomers, whatbusiness processesmust we excel at?”

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Visionand

Strategy

Figure 1.6. The Balanced Scorecard.

� The goals of sports teams are very clear (e.g. to win theleague).

� Measurement is simple, both in the short term (by goalsscored) or long term (by position in the table).

� Communication of progress to organisational members,and their supporters, is clear and instant (everyone seeswhen a goal is scored, or the team wins a match, and theupdated tables are reported within minutes of eachmatch finishing).

It is often difficult to improve overall organisational performance in abusiness because the collective goals are unclear. Employees are oftenonly aware of the aims of their own “team island”, and regard otherteam islands as having a different job. Individuals are often motivatedto “do their bit”, but they lack the overall understanding of where theorganisation is going or how the various team islands are supposed towork together for collective good. Whereas a sports team is oftencharacterised by a focus on goals, results and league tables, businessesare often characterised by an absence of such a unifying force.

The balanced scorecard can help overcome such difficulties byproviding a focus that unifies all parts of the business. It provides amethodology that turns the eyes of all employees to a single direction.The balanced scorecard can, therefore, be a very effective tool forchanging the organisational culture, breaking down the barriersbetween team islands, creating an overall team culture and therebyimproving organisational performance.

Potential globalisation and internet advantages

In recent years, the potential to operate in a global market has become areality for a large number of organisations. This has been due partly tothe ease with which products can be transported across the world, andpartly to the access made possible by the Internet for communication.

Globalisation is the process whereby worldwide tastes and productofferings converge and are increasingly satisfied by global productsrather than local ones.

In reality, few global products truly exist, but it can be said that throughmany organisations globalisation has enabled the distribution andsubsequent success of many products. The global perspective oncustomers, technology, costs, sourcing, strategic alliances andcompetitors allows organisations to think in terms of a worldwideaudience. The market for these organisations’ products is whereverthere are affluent consumers or significant industrial customers. Theseorganisations must appeal to their customers wherever they are(regardless of borders), the organisation’s nationality or where itsfactories are.


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Globalisation is driven by hard economics. To compete effectively,organisations have to incur high fixed costs, forcing executives tospread these costs over higher volumes, which means trying to gainmarket share in all market economies. New technologies also getdispersed globally very quickly, so that innovators must exploit theirproperty on a global scale, if necessary by means of strategic alliances,or risk seeing it adopted or adapted by rivals.

Global competition has accelerated sharply. Between 1987 and 1992, USdirect investment outside the US rose 35 percent to $776 billion, whilethe value of foreign direct investment into the US more than doubled, to$692 billion.

The Internet has accelerated the strategic processes by separating thephysical flows and the information flows. Traditionally, these used tobe part of the same system. Amazon.com provides an excellent exampleof this. Historically, a book supplier would be both a physical entity, awarehouse taking stock from the manufacturer and supplying it to theconsumer, and a source of information, what is on the shelvesindicating what is available. However, amazon.com has managed toseparate these two flows. By providing a service that links customerneeds with suppliers, it is now in the situation of having infinite stockwith zero inventory!

ACTIVITY

Visit amazon.com and investigate the wealth of books (and other products)available from the website.

If you are able, select a book from the website and make a purchase. Follow thestages from the visit to the website through to the delivery of the book.Describe the stages of the process, including a diagram to show them.

Explain the advantages of the Internet to an organisation such as Amazon.

REVIEW ACTIVITY

Select a product of your choice that is in common use.

For this product, attempt to analyse any advantages that can be gained from ahypothetical improved version of it. Consider the application of some of thetechniques described in this unit in the determination of its potential successfor its manufacturer.

What strategic planning considerations might be appropriate?

How might modelling and analysis be useful in the decision-making process?


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What relevance could globalisation have on the future of the new product?

Describe how the Internet could be used to provide strategic direction.

Summary

Management strategy is determined by a wide range of factors,including stakeholder involvement and expectations. These determinethe support for proposed change and provide an indication of the likelyoutcome. Such techniques as feasibility studies, cost benefit analysisand sensitivity analysis enable management to make the correctdecisions for maximum growth and profit.

By using scenario modelling, it is possible to predict the behaviour of anorganisation and its market as a result of the changes that are beinganticipated.

This unit has looked at these topics and related them to strategicplanning. It has also looked at the potential benefits of globalisation andthe advantages of developing strategy that uses the Internet’scapabilities.

Further reading

Andrews, K. (1989) Concept of Corporate Strategy, Richard D. Irwin

Bruce, A. & Langdon, K. (2000) Strategic Thinking, Dorling Kindersley

Johnson, G & Scholes, K (2003) Exploring Corporate Strategy. PrenticeHall

Mintzberg, H (2000) The Rise and Fall of Strategic Planning. PrenticeHall

Norton, R. & Irving, R. (1999) Understanding Strategy, Hodder &Stoughton

Pettigrew, A., Thomas, H. & Whittington, R. (2001) The Handbook ofStrategic Management. Sage


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Unit 2

Vision, mission, objectives andmeasures

Unit Objectives

When an organisation sets out to develop a new strategy, it must have cleargoals that are to be attained. In most cases these will evolve from corporatevision and a corresponding mission statement. Both of these will, in one way oranother, state the aim and intent of the organisation’s activities themselves. Inthis unit, we shall look at the purpose of these public statements.

The key strategic objectives of an organisation then become the focus of theorganisation’s efforts and need to relate to a range of secondary issues. Theseare discussed in the second part of the unit.

Vision and mission

KEY POINT

An effective strategy will need to be based on each of the followingcharacteristics:

� It should be sustainable – once established it should be able to runand be built on over time.

� It should be distinctive from competitors – the strategy should setout to help the organisation and its activities to be different fromrivals.

� It should enable the organisation to gain a competitive advantage.

� It should exploit links with the business environment. Organisationsneed to change and adapt with the environment, and make effectivelinks with the environment – for example, by developing closerelations with customers.

� It should be based on a vision that enables the organisation todevelop better links with the environment - for example, helping


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the organisation move into bigger and better markets.

Although all these characteristics are considered in this unit, it is thefinal one that is of immediate importance here.

Core organisational values

The business environment within which an organisation is activeimposes a number of pressures that are likely to have significantinfluence. Whilst an organisation can turn its back on such pressuresand operate within its own self-imposed vacuum, it is highly unlikely togain general support and, therefore, succeed in the market place.

The objectives of any organisation should reflect its awareness of thesecontributory influences and, by adopting a policy of compliance,incorporate them into its core values. These will in turn form theframework for the organisation’s vision.

Johnson & Scholes (1998) identify three key steps in understanding thenature of core organisational values. These relate to:

� Identifying those environmental influences which haveaffected the organisation’s development and performancein the past and trying to identify those that will havesignificant effect in the future.

� Determining the certainty of the environment in whichthe organisation is operating. If it can be consideredstatic, then a historical analysis may prove useful.However, if the environment is dynamic, then anyanalysis must be forecast-based.

� A structured analysis of environmental influences shouldconfirm that core values are appropriately aligned.

An organisation’s core values will be influenced by a number of diversefactors. These may be summarised as:

� The internal environment, including the organisation’sown assets, expertise, staff qualities, etc, and the way inwhich it operates.

� The local environment, including areas in which itoperates.

� The competitive environment and markets, including themanner in which it sustains and develops its competitiveposition.


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� The global environment, including the potential foropportunities, threats and competition from all possiblequarters.

They may, in turn, be viewed as the consequences of the followingforces and pressures that the environment constantly brings to bear:

Social – the customs and priorities of the society or societies in whichthe organisation operates; the wider social respect and regard in whichthe organisation is held; social perceptions of particular objectives.

Political – in which the organisation is under pressure from politicaldrives; and also shapes its policies according to political drives (e.g.increased concern for the environment in recent years).

Economic – the availability of financial resources; the propensity to usethese resources; the order of priority in which financial resources areapportioned; external financial pressures such as inflation, interest ratesand currency exchange rates.

Technological – the opportunities that accrue from technologicalinvention and development; the availability of technology; theavailability of expertise to use and exploit the technology.

Legal – the limitations placed on activities by law; the variation of legalpressures within communities and in different parts of the world.

Ethical – the pressures brought about by what societies, and groupswithin those societies, consider to be right and wrong; the prevalenceand dominance of religious and sectarian interests; concern for issuesthat are, by common consent, important (e.g. waste disposal andpollution).

Competition – awareness of the actual and potential activities ofcompetitors; pressure brought about as the result of command orscarcity of resources and expertise.


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The use of a PEST (or PESTLE) analysis as a technique for identifyingthese influences will already be known to you. However, Figure 2.1serves as a reminder of the basic concepts.

ACTIVITY

Carry out a PESTLE analysis for your own or a similar organisation.

What do you consider the key influences on your organisation core values?

Growth

There are numerous examples of markets that have shown considerablegrowth in recent years, usually due to developments in the technologiesused. Perhaps one of the best examples comes from the world oftelecommunications. Some fifty years ago, the telephone provided a


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Political/Legal

� Employment law

� Taxation policy

� Company law

� Privatisation/deregulation policies

� Environmental legislation

� Health & Safety regulations

� Public expenditure controls

� European Union directives

� Government stability

Economic

� Interest and inflation rates

� Consumer confidence

� The business cycle

� Economic growth prospects

� Unemployment rates

� Disposable incomes

� Labour costs

� Energy availability and cost

Socio-cultural

� Demographics (population and household numbers)

� Values in society

� Changing lifestyles (family composition, changingattitudes to work and leisure)

� Changes in consumer tastes and preferences

� Levels of education

Technological

� New product potential, creating new competition

� Alternative means of providing services

� New discoveries

� Rates of government and industry expenditure onresearch and development

� Changing communications technology

� New product technology

� Rate of technological transfer

Figure 2.1. Identifying influences. (Adapted from Johnson & Scholes.)

means for people to communicate in real time with many other parts ofthe world with a fairly satisfactory degree of success. Today, we can usea wide range of methods for such communication: cordless telephone,mobile phone, VoIP internet telephony, text messaging, and so on.Many organisations involved in this market have seen substantialpotential for growth. Those who have established themselves as seriouscontenders in this market have been rewarded with enormousorganisational growth. The market is already huge and is getting biggerall the time. The range of services, as we have identified, has grown tosuch an extent that patterns of use are rapidly changing. The UKcommunications sector, alone, was worth over £50 billion in 2005 (a 5%growth from the previous year), with households spending an average£87.67 per month, which includes £30.50 on mobile phones. With such agrowth market, organisations have the opportunity for significantgrowth.

Case study

Organisations that aim to grow can do this in a number of ways. Theycan sell more of what they produce; they can move into other markets;or they can move into other products. If they move into other products,this is known as diversification.

Stelios Haji-Ionnou established a single brand that has allowed him todiversify into a range of products beyond his core business. His firstbusiness idea was easyJet – a low-cost, no frills airline, which proved sosuccessful that it has changed the shape of air travel for good.

By moving into other products he has diversified the business. Venturesinclude the car rental business easyCar, the mobile phone businesseasyPhone and the easyInternetcafe. His latest venture, using thedistinctive corporate colour of bright orange, is a cruise liner calledeasyCruise 1. It is based on the same principles as easyJet – no frills andlow prices. Passengers pay on a ‘room only’ basis and have to buy theirown food and drink. If it proves successful, Haji-Ionnou will havediversified, and his organisation grown, once again.

ACTIVITY

Find three other examples of significant growth into new markets forwell-known organisations.

Write a short summary of each organisation’s activities.


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An organisation grows to take advantage of new markets, to competewith rivals, to increase its market share and to gain economies of scale.Such savings come about through decrease in unit cost from productionor operation on a greater scale. The usual scale economies are:

� Financial – it is easier and cheaper to borrow money.

� Technical – mass production lowers the average cost ofproducing a single item.

� Marketing – national television and posteradvertisements are used by large organisations and areextremely effective; they are , however, beyond the reachof smaller businesses.

� Mangerial – the best managers can be employed, andsometimes even tempted away from other organisations.

� Risk-bearing – losses can be made on new products orideas until they are established and successful.

Growth is often called integration. This means vertical (merging with abusiness at a different stage of production in the market) or horizontal(merging with a business at the same stage). Growth in thetelecommunications industry has been horizontal and has taken thedirection of more ‘bundled’ services, usually as a result of takeovers andmergers by existing operators. The first bundles, available in 2005,paired just two services – Internet and television, television and mobilephone, or television via the Internet. These quickly grew to the ‘tripleplay’ or even ‘quad play’ services of today.

It is important to evaluate whether you want to consolidate yourbusiness’ position or find ways to grow.

If you decide that your priority is growth then you need to plancarefully if it is to succeed. It can be risky, but the right strategy candeliver stability, security and long-term profits. Once you’ve assessedthe current strengths, weaknesses, opportunities and threats to yourbusiness and how well it’s equipped to handle them, you can move onto the next stage - building a strategy for growth.

This section describes how to choose the right strategy for yourbusiness, when to launch it and what finance options suit whichbusinesses. It looks at the pros and cons of diversifying and what otherconsiderations you must think of to ensure development is smooth, ontime and on target.

Your business focus changes as it moves beyond the start-up phase.Identifying opportunities for growth becomes a priority to ensure theenterprise’s sustainability.

You can measure growth by looking at numbers such as:


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� Turnover.

� Market share.

� Profits.

� Sales.

� Staff numbers.

However, determining which measure delivers the most accuratepicture of your business performance depends on both your type ofbusiness and what stage it has reached.

For example, a retail business may have a high sales volume, but narrowmargins on stock. These could mean low profits that undermine thebusiness viability.

In general, a combination of sales and profits is the preferred way ofmeasuring growth.

Profit

The prime aim of almost any business is to make profits if they intend togrow. However, an organisation has responsibilities that extendbeyond its accepted commercial intentions. It should, therefore,construct its activities in such a way that it can meet all theseresponsibilities and still enjoy some level of profitability.

In the Practice of Management (1995), Drucker states, ‘It is the first dutyof a business to survive. The guiding principle of business economics, inother words, is not the maximisation of profits; it is the avoidance ofloss.’

Without building up funds, through profits year on year, fordevelopment, it will not be possible for an organisation to grow. It will,therefore, be unable to fulfil its social responsibilities, including those toits own stakeholders. However, Drucker views that, ‘… profit is not acause. It is the result of the performance of the business in marketing,innovation and productivity.’

The amount of profit a business makes is a measure of how well it isperforming. Those businesses that supply quality products which areefficiently produced and sold at prices which are attractive toconsumers will tend to be more profitable. However, there are otherfactors which affect the performance of a business, such as amount ofmarket power a business enjoys. From an accountant’s point of view,profit is the money left over in a particular trading period when allbusiness expenses have been met. Profit can then be:


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� Retained.

� Distributed to the owner of the business.

� Used to pay tax.

KEY POINT

Profit can be found from the following relationship:

Profit = total turnover – all associated costs

ACTIVITY

What is the difference between an organisation achieving maximum profits andsatisfactory profits? Give examples of organisations for each extreme.

In which category would you place your organisation? Explain why.

Customer orientation

Customer orientation means focusing on meeting the needs of one’scustomers; both internal or external. This service establishes specificcustomer satisfaction standards and actively monitors clientsatisfaction, taking steps to clarify and meet customer needs andexpectations (both expressed and unexpressed). At lower levels theservice involves courteous and timely responsiveness to the requests ofcustomers, while at the higher levels, it involves developing therelationship of partner and trusted advisor.

For example:

People with this competency work with a genuine understanding of the“customer’s” needs and have a strong desire to provide for him/her.They are proactive in helping and in adding value. Such people oftenunderstand the needs of the customer better than the customer does andthey use this wisdom to create a win-win impact on the organisation.

ACTIVITY

What might customer orientation mean when related to the operation of apublic library? Describe the key factors that you have considered.


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ACTIVITY FEEDBACK

Getting the right book, the right service, the right piece of information ormultimedia item to the right person at the right time - this is the idea ofcustomer orientation. Public library customers expect attractive offerings andinformation services for education and training, leisure and entertainment.Libraries have to develop effective strategies in order to contend with today’sand tomorrow’s demands. Marketing, strategic management, customerretention, personalised and value-added services are just some of thechallenges public libraries have to face.

Workforce expectation

During the process of change there will inevitably be many concernsexpressed by the employees of the organisation. These are likely to becentred around doubts and uncertainties that the forthcoming changepresents.

In the normal course of events, members of the workforce are likely torespond in nine different areas:

� Process – the right processes are in place to support thebusiness.

� Role challenge – roles are perceived to be challengingand motivating.

� Values – organisational values are clear, and clearlysubscribed to by the management.

� Work/life balanced – workloads are full but notexcessive.

� Information – managers and CEO provide workforcewith appropriate level of information.

� Stake/leverage reward/recognition - people havesignificant long-term stakes, and rewards/recognitionand career leverage are competitive.

� Management – performance objectives are clear;performance is regularly reviewed and fairly managedfor ongoing improvement.

� Work environment – the work environment issupportive and empowering.

� Product – largely internal responsibility, but may needcoaching, team development and mentoring.


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If, during the process of strategic change, these nine factors can beconsidered as important from the workforce’s point of view, there is astrong chance that the management will win workforce support.Without such consideration there will almost certainly be some form ofresentment to the changes proposed.

However, there are also some expectations made by the workforce ofthe management itself. Employees have high behavioral expectations oftheir managers, and managerial behaviour meets this expectation onlyhalf of the time, according to a study by the Brussels-based companyKrauthammer.

In the core areas of management behaviour that were surveyed,amongst the biggest gaps between the expectations of employees andreality were the following:

� 95% would like their manager to analyse their taskproblems together with them, 41% experience this.

� 86% would like their manager to create the right contextprior to implementing a decision, this is the case 42% ofthe time.

� 82% would like their manager to listen to their ideas, andencourage them to continue, 56% experience this.

Employees want to be heard, and they want more involvement.Managers need to develop listening and mentoring skills.

Managers are a bit closer in meeting the expectations of their employeesin the following areas:

� 94% would expect their manager to spontaneously admittheir mistakes, and 69% actually do this.

� 90% would like to be fully involved in the definition oftheir development goals, and this is the case 68% of thetime.

� 83% would expect their manager to arbitrate conflicts,and 65% of the time this indeed happens.

ACTIVITY

Read the following extract from a key note speech entitled ‘Work life balance:Managing changing workforce expectations in today’s environment.’

www.acwa.asn.au/Conf2006/Wed_Barnes.doc

Summarise your thoughts about workforce expectation in a paper of no morethan 400 words.


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Management style

Within any organisation someone has to make the decisions about whatthe business will produce, whom it will employ, what markets it willtarget, and so on. Making these decisions and, just as importantly,communicating them to people further down the organisation is the jobof managers. The style that they choose to use will have considerableimpact on how efficiently the business operates and how the staff reactsto their decisions.

KEY POINT

Managers make decisions, set targets and check progress.

� Top managers make strategic decisions – they have an overview anddecide on the general direction of the organisation.

� Middle managers make tactical decisions – they decide onintermediate targets and how they will be reached.

� Other managers make operational decisions – these involve theday-to-day running of the business.

In terms of staff, for instance, a strategic decision might be that theorganisation should have more specialist staff; the tactical decision will bewhere and when to hire them; and the operational decision will come down tothings like hours of work and when holidays can be taken.

The type of management is important for an organisation. Employeesare likely to work much better if they are motivated, i.e. they want towork. Giving employees a say in decision-making, for example, is agood example of motivating them. For this reason, many organisationsinclude employee representatives on their management boards.

Managers can use a number of different styles of management. Themost common of these are:

Autocratic – managers make decisions on their own and tell others whatto do. This has the advantage of showing clear leadership but may upsetother people.

Democratic – managers involve others in decision-making. This helpspeople to feel involved but could lead to less effective decisions.

Laissez-faire – managers allow subordinates to make their owndecisions. This gives workers power, but runs the risk of poor decisionsbeing made.


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Bureaucratic - managers follow the rulebook. This is inflexible, buteveryone knows where they stand.

The style adopted may depend on the situation and the type of decisionbeing made. For example, to meet an order, a manager may have toenforce the method that he feels is most appropriate at the time. On theother hand, if the decision involves deciding between a number ofdifferent new products, a manager might do better asking a group tomake their own selection based on their experience and knowledge. Thefirst would be autocratic, whilst the second is laissez-faire.

KEY POINT

Successful managers adopt different styles of management to suit differentsituations.

ACTIVITY

Considers some managers within your own organisation. Using examples ofsituations that you have been involved in, decide what style of managementthey have used.

Can you give an example of a situation that you feel could have been handledmore effectively by using a different style? Describe the situation, what stylewas chosen, and how you might have used a different style to achieve betterresults.


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MANAGEMENT

Autocratic

TacticalDemocratic

Laissez-faire

Bureaucratic

Strategic

Operational

Styles Decisions

Figure 2.2. Management styles and decision types.

Objectives and measures

SMART(ER) objectives

SMARTER is an acronym; that is, a word composed by joining lettersfrom different words in a phrase or set of words. In this case, aSMARTER goal or objective is:

Specific:

For example, it’s difficult to know what someone should be doing ifthey are to pursue the goal to “work harder”. It’s easier to recognise“Write a paper”.

Measurable:

It’s difficult to know what the scope of “writing a paper” really is. It’seasier to appreciate that effort if the goal is “write a 30-page paper”.

Acceptable:

If I’m to take responsibility for pursuit of a goal, the goal should beacceptable to me. For example, I’m not likely to follow the directions ofsomeone telling me to write a 30-page paper when I also have to fiveother papers to write. However, if you involve me in setting the goal so Ican change my other commitments or modify the goal, I’m much morelikely to accept pursuit of the goal as well.

Realistic:

Even if I do accept responsibility to pursue a goal that is specific andmeasurable, the goal won’t be useful to me or others if, for example, thegoal is to “write a 30-page paper in the next 10 seconds”.

Time frame:

It may mean more to others if I commit to a realistic goal to “write a30-page paper in one week”. However, it’ll mean more to others(particularly if they are planning to help me or guide me to reach thegoal) if I specify that I will write one page a day for 30 days, rather thanincluding the possibility that I will write all 30 pages in last day of the30-day period.

Extending:

The goal should stretch the performer’s capabilities. For example, Imight be more interested in writing a 30-page paper if the topic of thepaper or the way that I write it will extend my capabilities.


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Rewarding:

I’m more inclined to write the paper if the paper will contribute to aneffort in such a way that I might be rewarded for my effort.

ACTIVITY

What are the key objectives of your organisation for the next year?

See if you can find out sufficient information to carry out your own SMARTERassessment.

Tabulate your comments on each of the seven categories.

Business ethics

Business ethics examine the ethical rules and principles within acommercial context, the various moral or ethical problems that can arisein a business setting, and any special duties or obligations that apply topersons who are engaged in commerce.

In the increasingly conscience-focused marketplaces of the 21st century,the demand for more ethical business processes and actions (known asethicism) is increasing. Simultaneously, pressure is applied on industryto improve business ethics through new public initiatives and laws (e.g.higher UK road tax for higher-emission vehicles).

Business ethics can be both a normative and a descriptive discipline. Asa corporate practice and a career specialisation, the field is primarilynormative. In academia, descriptive approaches are also taken. Therange and quantity of business ethical issues reflects the degree towhich business is perceived to be at odds with non-economic socialvalues. Historically, interest in business ethics accelerated dramaticallyduring the 1980s and 1990s, both within major corporations and withinacademia. For example, today most major corporate websites layemphasis on commitment to promoting non-economic social valuesunder a variety of headings (e.g. ethics codes, social responsibilitycharters). In some cases, corporations have redefined their core valuesin the light of business ethical considerations (e.g. the “beyondpetroleum” environmental tilt used by BP).

General business ethics

� This part of business ethics overlaps with the philosophyof business, one of the aims of which is to determine thefundamental purposes of a company. If a company’smain purpose is to maximise the returns to its


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shareholders, then it could be seen as unethical for acompany to consider the interests and rights of anyoneelse.

� Corporate social responsibility or CSR: an umbrella termunder which the ethical rights and duties existingbetween companies and society is debated.

� Issues regarding the moral rights and duties between acompany and its shareholders: fiduciary responsibility,stakeholder concept v. shareholder concept.

� Ethical issues concerning relations between differentcompanies: e.g. hostile take-overs, industrial espionage.

� Leadership issues: corporate governance.

� Political contributions made by corporations.

� Law reform, such as the ethical debate over introducing acrime of corporate manslaughter.

� The misuse of corporate ethics policies as marketinginstruments.

Professional ethics

Professional ethics covers the myriad of practical ethical problems andphenomena which arise out of specific functional areas of companies orin relation to recognised business professions.

Ethics of accounting information concern:

� Creative accounting, earnings management, misleadingfinancial analysis.

� Insider trading, securities fraud, bucket shop, forexscams: concerns (criminal) manipulation of the financialmarkets.

� Executive compensation: concerns excessive paymentsmade to corporate CEO’s.

� Bribery, kickbacks, facilitation payments: while thesemay be in the (short-term) interests of the company andits shareholders, these practices may be anti-competitiveor offend against the values of society.

Example cases: accounting scandals involving Enron and WorldCom.


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Ethics of human resource management:

The ethics of human resource management (HRM) covers those ethicalissues arising around the employer-employee relationship, such as therights and duties owed between employer and employee.

� Discrimination issues include discrimination on the basesof age (ageism), gender, race, religion, disabilities, weightand attractiveness.

� Issues surrounding the representation of employees andthe democratisation of the workplace: union busting,strike breaking.

� Issues affecting the privacy of the employee: workplacesurveillance, drug testing.

� Issues affecting the privacy of the employer:whistle-blowing.

� Issues relating to the fairness of the employment contractand the balance of power between employer andemployee: slavery, indentured servitude, employment law.

� Occupational safety and health.

Example; Ethics of sales and marketing

Marketing which goes beyond the mere provision of information about(and access to) a product may seek to manipulate our values andbehaviour. To some extent society regards this as acceptable, but whereis the ethical line to be drawn? Marketing ethics overlap strongly withmedia ethics because marketing makes heavy use of media. However,media ethics is a much larger topic and extends outside business ethics.

� Pricing: price fixing, price discrimination, price skimming.

� Anti-competitive practices: these include but go beyondpricing tactics to cover issues such as manipulation ofloyalty and supply chains.

� Specific marketing strategies: greenwash, bait and switch,shill, viral marketing, spam (electronic), pyramid scheme,planned obsolescence.

� Content of advertisements: attack ads, subliminalmessages, sex in advertising, products regarded asimmoral or harmful

� Children and marketing: marketing in schools.

� Black markets, grey markets.

Example case: Benneton


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Ethics of production

This area of business ethics deals with the duties of a company to ensurethat products and production processes do not cause harm. Some of themore acute dilemmas in this area arise out of the fact that there isusually a degree of danger in any product or production process and itis difficult to define a degree of permissibility, or the degree ofpermissibility may depend on the changing state of preventativetechnologies or changing social perceptions of acceptable risk.

� Defective, addictive and inherently dangerous productsand services: tobacco, alcohol, weapons, motor vehicles,chemical manufacturing, bungee jumping.

� Ethical relations between the company and theenvironment: pollution, environmental ethics, carbonemissions trading

� Ethical problems arising out of new technologies:genetically modified food, mobile phone radiation andhealth.

� Product testing ethics: animal rights and animal testing,use of economically disadvantaged groups (such asstudents) as test objects.

Example cases: Ford Pinto, Bhopal disaster

Ethics of intellectual property, knowledge and skills

Knowledge and skills are valuable but not easily “ownable” objects.Nor is it obvious who has the greater rights to an idea: the company whotrained the employee or the employee themselves? The country inwhich the plant grew, or the company which discovered and developedthe plant’s medicinal potential? As a result, attempts to assertownership and ethical disputes over ownership arise.

� Patent infringement, copyright infringement, trademarkinfringement.

� Misuse of the intellectual property systems to stiflecompetition: patent misuse, copyright misuse, patenttroll, submarine patent.

� Even the notion of intellectual property itself has beencriticised on ethical grounds.

� Employee raiding: the practice of attracting keyemployees away from a competitor to take unfairadvantage of the knowledge or skills they may possess.


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� The practice of employing all the most talented people ina specific field, regardless of need, in order to preventany competitors employing them.

� Bioprospecting (ethical) and biopiracy (unethical).

� Business intelligence and industrial espionage.

Example case: private versus public interests in the Human GenomeProject

Raising awareness

The development of a strategic plan needs a high level of awarenessamongst those stakeholders likely to be affected by the proposedchanges. Steps must be taken to ensure that this awareness is achieved.

The following extract is taken from the Cox Review, which looked at thebenefits of creativity in organisations undergoing change:

‘Lack of awareness of the role that greater creativity might play in thebusiness was identified as one of the key barriers to SMEs makinggreater use of creative skills. Research for the review by DurhamUniversity Business School showed that creativity and design aremostly seen as optional extras – ‘add ons’ to products or services beingdeveloped or marketed for other reasons. It is also important torecognise that creativity is not the sole province of the specialist.Creative businesses are creative throughout. Executives who thinkimaginatively are those who also understand when to call upon thespecialists and how to work with them. Creativity needs to be skilfullymanaged, not simply embraced. What is required isn’t just a readinessto consider new ideas but the ability to recognise and assess theirpotential, to decide which to back and to put them into effect.

A key task is, therefore, to tackle the issue of awareness andunderstanding in today’s businesses, particularly targeting thosecompanies with immediate potential. Of all the actions that might betaken, this would be likely to provide the quickest result.

Experience shows that smaller companies do not respond well togeneralised ‘awareness’ programmes; rhetoric washes off them. Nor dothey necessarily take advantage of government support initiatives, nomatter how well intentioned. The recent pruning of DTI schemesacknowledged that fact. SMEs need to be reached on a local basis, withactive support and a practical demonstration of the benefits on offer.This has been shown with, arguably, the most successful of the DTI’ssupport schemes, the Manufacturing Advisory Service.

The challenge is to reach as many SMEs as possible, demonstrating thepractical benefits of taking greater advantage of creative skills. There is,fortunately, a tool already available. Over the past four years, the


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Design Council, working closely with businesses and RegionalDevelopment Agencies (RDAs), has developed a programmespecifically aimed at helping smaller companies identify where suchskills could help significantly to improve their performance and thentake action based on this awareness.

It is called the Design for Business programme. Significantly, it is aimednot only at the SMEs themselves, but also at those who guide them andprovide the necessary specialist support. There are undoubtedly otherideas around aimed at the same general objective, but none socomprehensive or so fully developed in terms of tools and processes,and therefore suited to wide-scale application

Piloted with over 150 companies, the results have been impressive. Ofthe 118 that have been through the initial workshop stage, 97 per centrated the experience highly and found it of value. Of more importance,the majority of the 61 companies that have so far gone through the fulltwo-year programme have already reported significant improvementsin performance, with several showing the high degree oftransformation that can be achieved.

The Engineering Employers Federation (EEF) describes the programmeas a unique business improvement tool. “It illustrates how, by movingdesign up the boardroom agenda, companies can achieve cultural andstrategic change, thus delivering a substantially better competitiveposition”.

Aga Rayburn developed several new ranges of product, and its sales ofkitchen utensils rose from £1.5 million to £5 million per annum. Thisreinforces the point that it is companies with unrecognised potentialthat should be targeted, not just those with problems. As Geoff Harrop,Aga Rayburn’s Managing Director, said, “When you’re successful, it iseasy to become complacent and this has helped us to renew our focus”.

At Minky, sales of cleaning products rose from £500,000 to over £1.8million over 12 months. Dan Trowsdale, the company’s DesignManager, described the outcome as, “A wave of new ideas and ways ofworking, with world-class products on the way”.

Participants were all in different industries and at different stages intheir development, and the benefits accrued in different ways. Thisreflects the fact that the programme is concerned with ‘design’ in itswidest sense, from strategy to product design, packaging, productionprocesses, market positioning and communication, among others. Oneof the most pleasing aspects was that several companies reported thatthey found it easier to raise capital – the result of presenting a muchclearer and more coherent picture of where they were going.’

In many organisations, awareness is not perceived to be a two-wayprocess and subsequent complications arise as a result. It should not bethought only as a ‘top-down’ communication from management to theworkforce. As discussed earlier in this module, both formal and


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informal channels of communication offer great rewards to anorganisation that is prepared to make awareness a priority among all itsstakeholders.

The process of developing a strategy of learning through dialogue iscrucial to ensure an atmosphere of trust - and the stakeholderawareness and action that trust can support.

Promoting good practice

Best practice means finding - and using - the best ways of working toachieve your business objectives. It involves keeping up-to-date withthe ways that successful businesses operate - in your sector and others -and measuring your ways of working against those used by the marketleaders.

Best practice through benchmarking

Applying best practice means learning from and through the experienceof others. One way of doing this is through benchmarking, which allowsyou to compare your business with other successful businesses tohighlight areas where your business could improve.

Best practice through standards

Standards are fixed specifications or benchmarks, which are establishedby independent bodies such as the British Standards Institution (BSI).The BSI develops both technical and management standards. Technicalstandards are precise specifications against which a business canmeasure the quality of its product, service or processes. Managementstandards are models for achieving best business and organisationalpractice.

Applying the appropriate standards to your business will enable you toapply best practice across the organisation, and to work againstobjective criteria to achieve manufacturing or service quality.

What are the benefits to an organisation?

A best practice strategy can help your business to:

� Become more competitive.

� Increase sales and develop new markets.

� Reduce costs and become more efficient.

� Improve the skills of the workforce.

� Use technology more effectively.


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� Reduce waste and improve quality.

� Respond more quickly to innovations in your sector.

ACTIVITY

As an example of good practice, view the list provided of aspects of good racerelations practice. The points shown form the starting points for some morethorough research of the subject.

Select a number of these points and find out more for yourself.

Criminal justice: the Stephen Lawrence Inquiry and the CRE’s formalinvestigation into the prison service.

Education; two codes of practice, Learning for all: standards for racial equalityin schools, and a report on OFSTED.

Health and social care: codes of practice for primary health care and maternityservices.

Housing: the CRE’s new statutory code of practice, which took effect inOcsetober 2006.

Local government: a standard for local government and auditing advice.

Politics: good practice and conduct for political campaigners.

ACTIVITY

Visit the website shown and read the article about diversity and equalopportunities in the voluntary sector.

http://www.volunteering.org.uk/managingvolunteers/goodpracticebank/Core+Themes/equalopportunitiesdiversity/diversity-overview.htm

Role modelling

There is undoubtedly some benefit to be gained in organisations for theprovision of role models. This might be for management or for membersof the workforce. If a person can command respect from others then it isworth dwelling on that respect and attempting to recreate it in otherrelated areas of the organisation amongst other groups.

The following article appeared on the BBC News website in February2006.


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Beatles ‘are business role model’

Businesses should adapt to the modern world as quicklyas the Beatles did during the 1960s, the trade and industrysecretary is expected to say.

Alan Johnson will call on firms to “recreate the spirit ofAbbey Road” - acknowledged as one of the band’s bestalbums - and show constant creativity.

Industry must show globalisation is a “force for good”, hewill argue.

Otherwise, it could become “what Vietnam became for thebaby boom generation”, according to Mr Johnson.

In the speech, to the Lord Mayor’s dinner at the MansionHouse in London, the 55-year-old minister will call for“Sergeant Pepper Economics”, a reference to the Beatles’1967 album.

Beatles fan Mr Johnson is expected to say: “If the Beatleshad carried on producing albums like Please Please Me,they’d have ended up with a dwindling catalogue,dwindling sales and a dwindling audience.

“But, by drawing from global influences on the one hand -like the sitar, Californian harmonies and gospel; andscientific advances on the other - like multi-tracking, backloops and flanging, they made every album sound freshand new.

“We need to recreate the spirit of Abbey Road in Britishindustry.

“We also need a more creative approach in government.”

This will be particularly important with the rise of economiccompetitors like China, according to Mr Johnson.

He will say that “in some of our universities, globalisation isa dirty word. We need to cleanse it”.

Globalisation has increased life expectancy, reducedpoverty and made wars less likely, he will argue.

Britain must be the “creative hub of the world”, Mr Johnsonis expected to say.

Story from BBC NEWS:http://news.bbc.co.uk/go/pr/fr/-/1/hi/uk_politics/4744834.stm


Unit 2 rdi

Stakeholder involvement

An organisation’s relationship with its stakeholders is clearlyinfluenced by two fundamental issues:

1. The power of stakeholders; for example

� Possession of resources such as supplies, labour, etc.and the possible monopoly over such resources.

� Authority, e.g. the government or regulatoryagencies.

� Influence, e.g. lobbying, etc.

2. The level of interest which is shown by stakeholders, e.g. do theyprefer to adopt a distant approach in terms of the organisation’sdevelopment or are they actively involved in the organisation’saffairs.

Greater knowledge of the position of key stakeholders leads to morefocused predictions and scenarios, and enables clearer strategies formanaging the key stakeholders to be formulated and implemented.

In terms of stakeholder involvement in the strategic direction of anorganisation, there is a need to find answers to these importantquestions;

� Do we accurately know what the key stakeholders’expectations are, or are we making assumptions?

� What are the conflicts and possible political responses?

� What are the organisation’s current responses?

� What could/should they be?

ACTIVITY

Look at an organisation well known to you, and take a view over as long aperiod of time as possible. Estimate the impact of the environmental changeslisted in terms of their impact on this organisation. Have these triggers forchange been for the better or for the worse?

From where the organisation is now, what adjustment to these should now bemade?


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Managing diversity

Most people have heard of the term ‘equal opportunities’ at work, andthis can be broken down into three different perspectives:

A moral perspective – a concept created by society in order that thesociety in which we live is considered to be fair to all. This means that noone should suffer because of personal or external characteristics, such astheir gender or the colour of their skin. To some, the concept of equalopportunities is comparable to the principles of natural justice and tosome of the tenets of the world’s most practised religions. It is, however,important to remember that morality is often very subjective.

A legal perspective – the Sex Discrimination Act (1975), the RaceRelations Act (1976) and the Disability Discriminations Act (1995) are allexamples of legislation introduced to provide a minimum acceptablestandard of behaviour for employers and workers.

A perspective of change – organisations have used hierarchicalapproaches to management throughout history, considering peopleonly as resources. Nowadays, such an approach is no longer accepted aseffective or successful. New ways of working have been adopted, andconsiderable competitive advantage can be gained by an organisationthat values and encourages the diversity of its employees, suppliers,customers, etc.

Diversity describes the differences between people. This may be interms of race, gender, age, and other demographic categories, as well asdifferences in value, abilities, organisational function, tenure andpersonality. Diversity does not set out to label or stereotype people, itdeals with people as individuals as opposed to simply belonging to agroup.

The understanding and integration of sound diversity practices is oneof the key challenges that will determine those who achieve long-termvalue and success, and those who only achieve short-lived results. Itallows organisations to focus on dealing with the spread and spectrumof human culture within the work environment; in other words, healthyhuman relations.

Managing diversity needs to look at fundamental values, andunderstanding that all human beings are truly individuals no matter inwhich field or capacity they may operate. Effective diversity practice‘ensures that social capital factors such as trust and empowerment aredemonstrably woven into the fabric of management.’ (D Wood 2006)

Equality and diversity have always been and will always befundamental principles affecting organisational success – it is onlyfairly recently that we have started to recognise and explore this in amore structured way. They impact upon every single activity that everysingle organisation undertakes. They are implicit elements in the


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journey towards excellence, and when we learn to apply theseprinciples as an everyday habit, as opposed to any additionalconsideration, there are many ways in which both individuals andorganisations can benefit. Indeed, increasingly organisations are beingrequired by their customers, suppliers, employees, volunteers, fundersand society in general, to demonstrate that equality and diversityconsiderations are central to their policies and practices.

Figure 2.3 compares equal opportunities and diversity.

ACTIVITY

Identify any measures that your organisation takes to accommodate equalityand diversity in its practices.

Comment on your findings. Could more emphasis be placed on equality anddiversity?


Unit 2rdi

EQUAL OPPORTUNITIES DIVERSITY

Is a social construction to create a fairer society, whereall people can contribute and participate.

Is a natural tendency – think of biodiversity, everyoneis different.

Is something that we strive for continuously. Diversity alone does not ensure equality ofopportunity.

Is a journey not a destination. Valuing diversity is a way of working towards equalopportunity.

Is backed up by legislation. Focuses on the benefits of utilising the potential andstrength of different people in the organisation.

Focuses on under-represented groups, such as gender,race, and disability.

Focuses on treating people as individuals.

Figure 2.3. The relationship between equal opportunities and diversity. (D Wood 2006)

Spiritual and cultural issues

A well-known business consultant, coach, speaker and author,Lawrence Miller discloses the spiritual principles that have made hisbusiness such a success and which lie behind all successful modernorganisations. In a bold step, he sets out his conviction that there is notnecessarily any contradiction between pursuing material progress,whether in the form of a nation’s economy or personal wealth, and theteachings of religion. In fact, he states, it is the great challenge of one’spersonal spiritual struggle to remain centred in spiritual reality whilepursuing success in business.

He identifies and explores new principles of management for a new age:

� Honesty and trustworthiness.

� The spirit of service.

� Justice.

� Consultation.

� Unity.

� Moderation.

� World citizenship.

� Universal education.


Unit 2 rdi

Increased revenueGreater end-user

satisfaction

Reduced cost offailure

Reduced cost ofimplementation

Increased Profitabilityand Effectiveness

Increased Efficiency

OrganisationalBenefits

Figure 2.4. Benefits of diversity.

There is a saying that “some minds are like concrete - all mixed up andset.” When interacting across cultures, it is important to keep an openmind to other possibilities so that your mind doesn’t become set in onlyone way of seeing things. With the diversity found in the worldworkplace, there are often opportunities to view a project, idea orproposal from a different point of view. The next time an idea comes upthat is different from yours - pause and ask yourself “what can I learnfrom this” before responding. One excellent response would be to say “Ihadn’t thought about it that way, can you tell me more?” Thisdemonstrates to others that you are willing to listen and to be open totheir way of viewing the world.

The Executive Planet guides to doing business worldwide, for example,each contain the following articles:

Let’s Make a Deal - negotiating tactics, the value of connections,recommended business card style and content, business card protocol,sitting and presenting yourself in meetings, language for brochures andpromotional material, pace of business, preferred presentation styles,final agreements, thinking styles, adherance to company policy, andmore business culture info ...

Prosperous Entertaining - typical mealtimes throughout the day, bestvenues for business entertaining, punctuality for social events, dinnertable seating etiquette, mealtime etiquette, importance of alcohol,toasting, guidelines for hosting a banquet/social event, what foodsshould be served/avoided, accepting and declining invitations, andmore business etiquette info...

Appointment Alert! - typical vacation times, recommendedappointment times, length of the lunch hour, signals that indicatebeginning or end of an appointment, best arrival time (early, late, righton time), and more on business culture info...

Gift Giving - recommended gifts, gifts to avoid, good and bad coloursfor wrapping paper, how to present a gift to individuals and groups,guidelines for receiving gifts, and more on business etiquette info. . .

First Name or Title? - using titles such as ‘Doctor’, naming conventionsto avoid, when to use first names, and more business etiquette info...

Public Behaviour - how to greet strangers and introduce yourself, therules for men shaking hands with women, acceptable demeanour, rulesfor eye contact, gestures/sayings to avoid, and more on businessculture info...

Business Dress - is dress modest, conservative, etc., specific dressrequirements for men and women, what visitors should wear to socialfunctions, and more on business etiquette info...


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Conversation - welcome and unwelcome topics of conversation, therole of compliments, the tone of voice to be used, whether your hosts arephysical or more reserved, and more on business culture info.

Today’s organisations cannot get away with unacceptable labourpractices. Procuring components or services from countries that do notrespect reasonable labour practices is no longer an acceptable policy.Nike has suffered a great deal of adverse publicity for it use of cheapoverseas child labour. Other areas of concern are the lack of respect foracceptable working hours, forced labour and the exploitation ofmigrant workers.

Multinational companies are often held accountable for their direct orindirect involvement in human rights abuses. Both Google and Yahoohave come under heavy criticism for the alleged collaboration with theChinese government in monitoring Internet access and, thus, curbinghuman rights.

Some large corporations, such as oil companies, pharmaceuticals andtobacco companies, have received criticism for techniques that havelead to opportunities to buy their way into power within their hostcountries. Global entities funding projects that induce a degree ofcultural and political control within the country concerned is seen to beagainst the best interests of the population in general. Already there isample evidence of similar practices within major industrial powers,such as the United States and many European nations.

Environmental considerations

As globalisation increases its hold on modern business, its effects onsociety and the environment are constantly being challenged. There aredeep environmental consequences from operating in a global context,and every modern and forward-thinking organisation must be sensitiveto these issues and promote responsible policies.

The focus on the environmental responsibility of organisations isever-increasing. Public awareness is far higher than it ever was.Particular areas of focus include:

� Destruction of the ozone layer.

� Emission of greenhouse gases.

� Persistent organic pollutants.

� Radioactive waste disposal.

� Deforestation.

� Unsustainable agriculture.


Unit 2 rdi

Businesses that place a high emphasis on environmental protection, andintegrate environmental issues into their strategies are more likely tosucceed than those that do not.

Environmental issues are dealt with in a wide range of ways. Asexamples, the following approach is commonly found:

‘Be aware of the environmental issues that may affect your business.

Are you ozone friendly?

If your business uses refrigeration or air conditioning equipment, firefighting equipment or solvents for cleaning, check to see if they containozone depleting substances, i.e. CFC’s, HCFC’s or halons. Yourequipment supplier should be able to help. You will be affected bylegislation controlling or banning these substances. A series of free DTIleaflets is available.

Consult:

DTI leaflets in series ‘Advice on Alternatives and Guidelines for Users’(Don’t read it in public-people will think you’re a junky) contact 02072155830 or 020 72151018. Environment and Energy Helpline 0800 585794. In Scotland apply to Scottish Environment Protection Agency on01786 457700.

If your business produces, imports, exports, stores, transports, treats,disposes of or recovers waste. Waste regulations apply.

For further information :

Read the Department of Environment, Transport and the Regions(DETR) leaflets: ‘Duty of Care’ Ref:99EP0131; ‘Waste ShipmentsRegulation’ Ref:94EP245; ‘A Guide to the UK Management Plan forExports and Imports of Waste’ Ref:96EP139; ‘Applying for a WasteManagement License’ Ref:94EP126; ‘Special Waste Regulations 1996-The Controls on Special Waste’ Ref:95EP147.

If you produce, import or export packaging, or if you have packagingwaste at your back door for recycling. You are likely to be affected by theProducer Responsibility Obligations (Packaging Waste) Regulations.

Consult: DETR leaflets:

Producer Responsibility Obligations (Packaging Waste)Regulations-Summary Leaflet 96EP274, Users Guide 96EP288, ReadyReckoner 97EP102. Environmental and Energy Helpline 0800 585 794. ’


Unit 2rdi

ACTIVITY

Do you know of any organisations that produce clear and well-documentedpolicies on the type of environmental issues discussed here?

If so, collect some of these policies and determine how much of each policy isdesigned for the employees and how much is there to impress an outsideaudience.

REVIEW ACTIVITY

Select a well-known organisation.

Define its key objectives and its mission statement.

How do these relate to the workforce and other important stakeholders?

Carry out a PEST (or PESTLE) analysis of the organisations principle activities.

Summarise the organisation’s views on diversity and environmental issues.

VIRTUAL CAMPUS

Post your answers to the review activity and compare them with those ofother students.

What similarities or differences do you observe?

Summary

This unit has examined the development of the initial organisationalvision into a formal mission statement, and the relationship betweenthese and its key objectives.

The importance of core organisational values has been described, alongwith an explanation of the relevance of management style andworkforce expectation.

Spiritual and cultural issues, combined with diversity andenvironmental concerns, are also important factors to consider in thedevelopment of the objectives of a strategic plan.


Unit 2 rdi

Further reading

Drucker, P. (1995) The Practice of Management,Butterworth-Heinemann

Johnson, G. & Scholes, K. (2003) Expl

oring Corporate Strategy, Prentice Hall

Wood, D. et al (2006) Global Business Citizenship, M.E. Sharpe


Unit 2rdi

Unit 3

Implementation of the strategy

Unit Objectives

The implementation stage of a new strategy is the point in the strategicplanning where action occurs. Up until now, the development of the strategyhas involved discussion and decision-making: now the first steps are taken toapply the chosen strategy to the organisation in order to obtain the desiredresults.

Working alongside all the stakeholders makes the process much easier and,with their collaboration, more likely to produce a successful outcome. Carefultimetabling enables a smooth transition from old to new methods, andorganised and structured channels of communication allow an effectivemonitoring and evaluation control system to operate.

This unit shows the importance of all these factors and how they fit into theoverall picture of strategy implementation.

Planning

Gaining general organisational agreement

With all related sections of the organisation (or, indeed, organisationsjointly) working together, strategic change can be achieved with aminimum of problems arising. If all those involved are prepared toaccept the proposed changes, there is a greater possibility of ironing anydifficulties before they become significant problems. After all, becauseof the willingness to work together in a spirit of cooperation, it is ineveryone’s best interest to make sure the changes are successful.Collaborative working, also known as joint or partnership working, issuch a mechanism for organisations to work together to achieve goalsand aims.

Voluntary and community organisations can work together in aspectrum of ways, from informal networks and alliances, through tojoint delivery of projects and full mergers. Collaboration can be on anyarea of work, whether on ‘frontline’ activities directly enabling mission


rdi

fulfilment, or on supporting ‘back office’ functions. It can last for a fixedtime or be permanent.

Although collaboration can bring great benefits, working with otherorganisations is more complex than working alone. Its success rests on acombination of formal and informal ways of achieving good workingrelationships on both an organisational and an individual level. It is notright for every organisation in every case. Carefully identifying andaddressing issues of concern helps establish if it is the right wayforward.

The decision-making process should encourage you to think through allthe implications before you start working collaboratively. Withplanning, you can manage the risks. What is best for your beneficiariesshould be the primary consideration which underlies all your thinking.Allow yourself enough time to make an informed decision for yourorganisation. Here is a list of questions you should think about beforeyou decide to collaborate with another organisation.

About your organisation:

� What are you hoping to achieve by collaborating withanother organisation and is collaborative working thebest way to achieve this aim?

� Does it fit within your organisation’s charitable objects,your strategic vision, values and current priorities?

� Do your Directors and Chief Executive support the idea?

� Does your governing document include a powerallowing you to establish and support, co-operate with,join or amalgamate with other voluntary organisations?

� Will collaborative working ‘add value’ to yourorganisation’s work which justifies the time, effort andmoney invested in the collaboration?

� Will the structure of your organisation be affected by thechange and, if so, how will you deal with the long-termimplications?

� Will collaboration change your organisation’s otherexisting relationships?

About your potential partner:

� You may have in mind a potential partner that youalready know and trust. It is still worth asking keyquestions to ensure that your assumptions about theorganisation are correct.


Unit 3 rdi

� How might formal collaboration change an existingrelationship with your partner? Do you have clear sharedaims for the collaboration?

� Think about the other organisation’s charitable objects,philosophy, culture, governance, organisationalstructure, decision-making processes, policies, financialresources, assets and funding base. Is your organisationcompatible with the potential partner? What are theorganisational strengths and weaknesses of eachorganisation?

Management Structure

Think about who you want to involve in the project, who will managethe process, what skills and qualities are needed for the role, who needsto be involved in each stage of decision-making. Managers not used tojoint decision-making may find the process time consuming andcounter-cultural. The key is to discuss and agree roles andresponsibilities.

Also think about how you are going to lead and manage your jointproject. Many partnerships are led by a project co-ordinator from theaccountable body, with a joint steering group overseeing the work.

Staffing Joint Projects

The staff who deliver collaborative projects may do so as part of theirexisting post or they may be employed to work on a specific project.They may remain based in their own organisation or they may work inmore than one location. In each case, careful planning and regularcommunication are essential for the arrangement to work well.Clarifying the roles and responsibilities of individuals will limit thelikelihood of conflict.

It is important that staff and volunteers understand why theirorganisation is working collaboratively and have an insight intopartners’ aims and values. Time spent developing understanding ofpartners’ culture can help people from different organisations worktogether.

Funding and finances organisations vary in the funding mix they relyon to support their work, so a funding plan is needed for any joint work.This should clarify whether you aim to support the work with fundingsecured for that particular project and how much you intend to draw oneach organisation’s existing funds or unrestricted income. It isimportant to decide in advance who will be responsible forco-ordinating fundraising and which partner will act as the accountablebody for the receipt of funding.


Unit 3rdi

Structures for Joint Projects

Collaborative working can be achieved in different ways; eachorganisation can maintain its own identity, partners can together createnew organisations to run common projects and activities or they candecide to merge. Different structures are right for differentorganisations depending on their aims for the collaboration.

It is essential to discuss how you will work together, defining roles,responsibilities and contractual or other legal obligations, and to get thisin writing in a joint working agreement. Even where you have apre-existing relationship and trust on which to build, preparation,planning and a written agreement can help you avoidmisunderstandings.

Written agreements in formal partnerships aid clarity and help tomanage conflict. It is important to set out exactly what will happen if thecollaboration ends. In all but the simplest cases, a properly drafted legalagreement is recommended.

Potential risks:

� Outcomes do not justify the time and resources invested.

� Beneficiary confusion.

� Loss of flexibility in working practices.

� Complexity in decision-making and loss of autonomy.

� Cultural mismatch between organisations.

� Diverting energy and resources away from core aims.

� Change management challenges.

� Lack of consistency and clarity on roles andresponsibilities.

� Dilution of your brand.

� Damage to organisation if collaboration is unsuccessful.

� Legal obligations.

Potential benefits:

� Improved or wider range of services.

� More integrated approach to beneficiary needs.

� Financial savings and better use of existing resources.

� Knowledge, good practice and information sharing.


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� Sharing the risk in new and untested projects.

� Capacity to replicate success.

� Stronger, united voice.

� Better co-ordination of organisations’ activities.

� Positive PR opportunities around reduced duplication.

� Mutual support between organisations.

Practical hints:

� Carry out a risk assessment.

� Have a properly drafted legal agreement, stating termsand conditions of the partnership.

� Clearly define roles and responsibility to avoid conflict.

� Remember that 60 per cent of organisations respondingto a survey on collaboration between voluntaryorganisations said that ‘working with other charitiestakes more time than we expected’.

Organisational development

Organisational development (OD) is concerned with an organisation’s:

� Health.

� Effectiveness.

� Capacity to solve problems.

� Ability to adapt and change.

� Ability to create a high quality of life for its employees.

Organisational development uses a number of strategies to intervene inorganisations in order to facilitate learning and to help the organisationwith any it may have.

The steps involved in organisational development are

1. Needs assessment

2. Diagnosis

3. Design

4. Implementation

5. Evaluation


Unit 3rdi

To solve organisational problems first involves a thorough diagnosis.This diagnosis is usually based on a needs assessment. This needsassessment could involve one or a combination of the followingmethods of collecting information.

� Interviews.

� Focus Groups.

� Questionnaire.

� ‘360’ Assessment.

Once organisational need is determined a variety of methods andprogrammes can be used to help, such as:

� Teambuilding.

� Strategic planning.

� Intergroup problem solving.

� Confrontation meeting.

� Goal setting.

� Alignment of systems (i.e. performance management,human resources, communication, leadership, etc.).

� Third party facilitation.

� Peer learning.

� Coaching.

� Mentoring.

� Training.

“Change is the only constant", they say. Organisational change comes ina variety of flavours from incremental improvements to majortransformations. It is necessary to work with all kinds of change and tryto help organisations be realistic about the possibilities.

Organisation consultancy is key to New Paradigm approaches.Managers accept the insights from the developing sciences of complexsystems and try to apply them to organisations. It is recognised thatorganisations are like living systems and the relationships betweenindividuals lie at their heart. When these relationships are appropriateto its purpose and its environment the organisation will flourish. Whenthey are not - either because they are dysfunctional or because theenvironment has changed - it is necessary to review and reform them. Inother words, the paradigm needs to be changed.


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Incremental improvement

Because organisations exist in changing environments they, too, need tochange just to stand still. Adaptability has become a key organisationalcompetency in almost every sector. Sometimes this requires a majororganisational transformation; usually it requires the ability to beever-flexible, able to change constantly in almost imperceptible ways.Traditional organisations had structures and procedures which wereintended to prevent incremental change. Today such structures hindermore than help yet it is hard to move to a more flexible approach.

ACTIVITY

What details of organisational development are you familiar with through yourown organisation?

Timetable for implementation

KEY POINT

Strategic implementation is the stage of strategic management that involves theuse of managerial and organisational tools and techniques to direct resourcestoward achieving strategic outcomes.

Managers may, at this stage use persuasion, new equipment, changes inorganisational structure or some form of reward system to ensure thatemployees and resources are used to make formulated strategy areality.

Targets need to be set and are very effective in establishing definedpoints to measure progress, as well as holding project managers andtheir team accountable. Each target will have clearly defined andachievable milestones. These need to be tied to strategies to have realmeaning and they have to be clearly communicated and accepted by theteams who are to reach them.

Examples of the sort of timetables for strategic implementation can befound at

http://www.scotland.gov.uk/Publications/2005/05/12141846/19026

and from government sources at

http://www.cio.gov.uk/transformational_government/implplan/


Unit 3rdi

Business process re-engineering

KEY POINT

Business process re-engineering (BPR) attempts to remove obstacles placed inthe way of satisfying customer needs by traditional, hierarchical management.

The conventional idea of an organisation is one where a structural chartcan be drawn to provide a clear and definitive picture of the differentfunctions and their respective employees.

By contrast, BPR combines both a process view and a skills view:

The process view shows how the organisation’s employees interact inorder to produce something that the customers want. This might behow marketing and R&D jointly develop new products, or howcustomers’ orders are fulfilled.

The skills view considers how effective the organisation’s employeesare at doing what the customers want. This includes how pleased thecustomers are with the way that they are treated and what they receive,how quickly and efficiently goods are produced and delivered, or howeffectively new products are developed.

ACTIVITY

Research the topic of business process re-engineering.

Find evidence from at least one major company. Use this to produce a briefreport describing its benefits to your chosen organisation.

Management by objectives

Management by Objectives (MBO) is a process in which a manager andan employee agree upon a set of specific performance goals, orobjectives, and jointly develop a plan for reaching them. The objectivesmust be clear and achievable, and the plan must include a time frameand evaluation criteria. For example, a salesperson might set a goal ofincreasing customer orders by 15 percent in money terms over thecourse of a year.

MBO is primarily used as a tool for strategic planning, employeemotivation, and performance enhancement. It is intended to improvecommunication between employees and management, increaseemployee understanding of company goals, focus employee efforts


Unit 3 rdi

upon organisational objectives, and provide a concrete link betweenpay and performance. An important factor in an MBO system is itsemphasis on the results achieved by employees rather than the activitiesperformed in their jobs.

KEY POINT

Management by Objectives (MBO) is a system in which specific performanceobjectives are jointly determined by subordinates and their superiors,progress toward objectives is periodically reviewed, and rewards are allocatedon the basis of this progress.

MBO principles:

� Cascading of organisational goals and objectives.

� Specific objectives for each member.

� Participative decision-making.

� Explicit time period.

� Performance evaluation and feedback.

MBO is an approach used in the control and direction of many projects.The philosophy can be described as follows:

� Is proactive rather than reactive management.

� Is results oriented, emphasising accomplishment.

� Focuses on change to improve individual andorganisational effectiveness.

In a project environment, employees are evaluated according toaccomplishment rather than according to how they spend their time.Since the project manager has temporarily assigned personnel, many ofwhom may have never worked for him, it is vital that employees haveclearly defined objectives and sub-objectives. In order to accomplishthis, they should have a part in setting their own objective andsub-objective. Thus, based upon effective project/functionalcommunications and working relations, Management by Objectivesacts as a framework to promote the effective utilisation of time andother project resources.

Management by Objectives is a systems approach for aligning projectgoals with organisational goals, project goals with the goals of othersubunits of the organisation, and project goals with individual goals.


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Management by Objectives can thus be regarded as a tool for planningand obtaining project results for an organisation. It is a strategy devisedto meet individual needs and the project needs at the same time.Moreover, it serves as a method of clarifying what each individual andorganisational “unit” contribution to the project should be.

To be successful, an MBO program should be part of a small business’soverall system of planning and goal setting. The first step inimplementing MBO is to establish long-range company goals in suchareas as sales, competitive positioning, human resource development,etc. A small business owner may find it helpful to begin by defining thecompany’s current business and looking for emerging customer needsor market trends that may require adaptation. Such long-rangeplanning provides a framework for charting the company’s futurestaffing levels, marketing approaches, financing needs, productdevelopment focus, and facility and equipment usage.

The next step in establishing an MBO system is to use these long-rangeplans to determine company-wide goals for the current year. Then thecompany goals can be broken down further into goals for differentdepartments, and eventually into goals for individual employees. Asgoal-setting filters down through the organisation, special care must betaken to ensure that individual and department goals all support thelong-range objectives of the business. Ideally, a small business’smanagers should be involved in formulating the company’s long-rangegoals. This approach may increase their commitment to achieving thegoals, allow them to communicate the goals clearly to employees, andhelp them to create their own short-range goals to support the companygoals.

At a minimum, a successful MBO program requires each employee toproduce five to ten specific, measurable goals. In addition to a statementof the goal itself, each goal should be supported with a means ofmeasurement and a series of steps toward completion. These goalsshould be proposed to the employee’s manager in writing, discussed,and approved. It is the manager’s responsibility to make sure that allemployee goals are consistent with the department and company goals.The manager also must compare the employee’s performance with hisor her goals on a regular basis in order to identify any problems and takecorrective action as needed.

Formulating goals is not an easy task for employees, and most peopledo not master it immediately. Small business owners may find it helpfulto begin the process by asking employees and managers to define theirjobs and list their major responsibilities. Then the employees andmanagers can create a goal, or goals, based upon each responsibility anddecide how to measure their own performance in terms of results. In theSmall Business Administration publication Planning and Goal Settingfor Small Business, Raymond F. Pelissier recommended havingemployees create a miniature work plan for each goal. A work planwould include the goal itself, the measurement terms, any majorproblems anticipated in meeting the goal, a series of work steps toward


Unit 3 rdi

meeting the goal (with completion dates), and the company goal towhich the personal goal relates.

Small business owners may also find it helpful to break down employeegoal setting into categories. The first category, regular goals, wouldinclude objectives related to the activities that make up an employee’smajor responsibilities. Examples of regular goals might includeimproving efficiency or the amount and quality of work produced. Thesecond category, problem solving goals, should define and eliminateany major problems the employee encounters in performing his or herjob. Another category is innovation, which should include goals thatapply original ideas to company problems. The final category isdevelopment goals, which should include those goals related topersonal growth or the development of employees. Dividing goalsetting into categories often helps employees think about their jobs innew ways and acts to release them from the tendency to createactivity-based goals.

Another requirement for any successful MBO program is that it providefor a regular review of employee progress toward meeting goals. Thisreview can take place either monthly or quarterly. When the reviewuncovers employee performance that is below expectations, managersshould try to identify the problem, assign responsibility for correctingit, and make a note in the MBO files.

Implemented correctly MBO can provide a number of benefits to a smallbusiness. For example, MBO may help employees understand howtheir performance will be evaluated and measured. In addition, byallowing them to contribute to goal setting, it may increase themotivation and productivity of a small business’s employees. MBO alsostands to provide a small business’s employees with the means toprioritise their work on a daily basis. Although employee performanceevaluation is still a complex task, MBO can also provide an objectivebasis for evaluation. However, it is important to note that an employee’sfailure to meet pre-established goals can be attributed to many thingsbesides personal failure. For example, the failure to meet goals couldresult from setting the wrong objectives, not taking into accountcompany restrictions that may impinge upon performance, establishingan improper measures of progress, or a combination of all of thesefactors.

Overall, establishing an MBO system in a small business may bedifficult, but it is usually worth it. The most difficult aspect ofimplementing MBO may be simply getting people to think in terms ofresults rather than activities. Even when an MBO system isimplemented well, a small business may encounter problems. Forexample, employees may set low goals to ensure attainment. Similarly,managers’ objectives may focus on the attainment of short-term ratherthan long-term goals. Finally, employees and managers alike may fallvictim to confusion and frustration. Some of the most common reasonsfor the failure of an MBO program include lack of involvement amongthe top management of a small business, inadequate goal setting on a


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company-wide basis, implementation of an MBO system that occurs toorapidly, or the failure to instruct a company’s managers and employeesin the basics of MBO. But even though establishing an MBO programmay be problematic, it can also offer significant rewards to smallbusinesses.

VIRTUAL CAMPUS

What is your opinion on Management by Objectives?

Summarise your views and post them on the Virtual Campus.

Compare them with the views of other students.

Action planning

Action planning is a process which will help you to focus your ideas andto decide what steps you need to take to achieve particular goals. It is astatement on paper of what you want to achieve over a given period oftime. Preparing an action plan is a good way to help you to reach yourobjectives in life.

An effective action plan should give you a concrete timetable and set ofclearly defined steps to help you to reach your objective, rather thanaimlessly wondering what to do next. It helps you to focus your ideasand provides you with an answer to the question ‘‘What do I do toachieve my objective?’’.

It’s OK to have several objectives, but you will need to make a separateaction plan for each, otherwise things get confused.

Although here we shall be applying the techniques to careers, it can beused effectively to help you to reach your goals in many aspects of yourlife; for example, to pass your driving test.

The following are all valid goals for an action plan:

� To get more involved in a student society to get to knowmore people.

� Deciding what skills I need to improve and deciding howI will improve them.

� To investigate the different tools available to help me tochoose a career, such as computer-aided careersguidance.


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When action planning in a career's sense there are likely to be threemain areas in which you want to develop action plans. These are:

� Choosing the career you wish to enter.

� Working out a strategy to help you enter this career; e.g.application and interviews.

� Developing skills that you need to acquire to allow you toenter the career of your choice and to be successful in it.

Action planning model

There are many different models of action planning, but a good startingpoint is the one shown below. As you can see, action planning is acyclical process, and once you have been through one cycle, you canstart again at the beginning. Of course, in real life it’s not quite as simpleas this. The process is more organic and stages will sometimes overlap,or you may change your goals as you progress, and you must beprepared to revise your plan as circumstances dictate. In more detail,the stages are as follows:

� WHERE AM I NOW? This is where you review yourachievements and progress, and undertakeself-assessment.

� WHERE DO I WANT TO BE? This is where you decideyour goals.

� HOW DO I GET THERE? This is where you define thestrategy you will use to achieve your goals, and to breakdown your goal into the smaller discreet steps you willneed to take to achieve your target.

� TAKING ACTION. This is the nitty gritty where youimplement your plan!

� WHERE AM I NOW?

The cycle begins again with a redefinition of your goals........

The main steps in preparing an action plan are as follows:

� Have a clear objective. (‘‘Where do I want to be?’’)

� Start with what you will do NOW. There is no point inhaving an action plan that will start in six months time.

� Define clearly the steps you will take. (“How do I getthere?’’) Think of all the possible things you could do totake you closer to achieving your goal, no matter how


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small. Break down any large steps into smallercomponents, so it doesn’t seem so difficult to achieve.

� Arrange the steps in a logical, chronological order andput a date by which you will start each step. Try to setyourself weekly goals: what research you will do intojobs, what skills you will concentrate on learning, etc. It’salso a good idea to get into the habit of planning atimetable each evening listing your tasks for the next dayor two.

� Decide when you will review your progress. Keep adiary or logbook of your daily activities and record in ityour progress as things happen. A good time to startyour review is about two weeks after you have begun.Review how far you have got towards your objective,identify any mistakes you made and what you can learnfrom them, look at any new ideas or opportunities thatmay have presented themselves and then revise yourplan to incorporate these.

An example of a basic action plan for a student attempting to plan outhis/her futue career might look like this:

COMPLETED EXAMPLE ACTION PLAN

MY OBJECTIVE IS: To choose my future career!

TO ACHIEVE THIS I NEED TO DO:

� I will use the Prospects Planner computer guidancesystem to help me to identify jobs of interest. By 4thMarch

� I will use the Careers Service “Signposts” sheets to findout what jobs graduates from my subject can enter. By6th March

� I will pick up booklets from the Career Service on someof the careers suggested by Prospects Planner and browsethrough these. By 9th March

� I will see my careers adviser to discuss the ideas I havegot from the above and to narrow these down. By April

� I will try to arrange a day shadowing the work of agraduate in the career that seems to be most of interest.By mid-April

� I shall watch videos in the Careers Service video room onthe careers that seem to be of most interest.

I WILL START MY ACTION PLAN ON 3rd March


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ACTIVITY

Detailed examples of personal development action plans can be found at:

http://www.aber.ac.uk/careers/cdp/skillanal&ap.html

or

http://www.careers.ed.ac.uk/CPP/Making_Plans/action_plan.htm

Performance appraisal

Performance appraisal is an important part of performancemanagement. In itself it is not performance management, but it is one ofthe range of tools that can be used to manage performance. Because it ismost usually carried out by line managers rather than HR professionals,it is important that they understand this and how performanceappraisal contributes to performance management.

The performance appraisal or review is essentially an opportunity forthe individual and those concerned with their performance – mostusually their line manager - to get together to engage in a dialogueabout the individual’s performance, development and the supportrequired from the manager. It should not be a top down process or anopportunity for one person to ask questions and the other to reply. Itshould be a free flowing conversation in which a range of views areexchanged.

Performance appraisals usually review past behaviour and so providean opportunity to reflect on past performance. But to be successful theyshould also be used as a basis for making development andimprovement plans and reaching agreement about what should bedone in the future.

The performance appraisal is often the central pillar of performancemanagement and the CIPD performance management survey carriedout in 2004 found that 65 per cent of organisations used individualannual appraisal, 27 per cent used twice-yearly appraisals and 10percent used rolling appraisals.

However, it is a common mistake to assume that if organisationsimplement performance appraisals, they have performancemanagement. This is not the case. Performance management is a holisticprocess bringing together many activities which collectively contributeto the effective management of individuals and teams in order toachieve high levels of organisational performance. Performancemanagement is strategic in that it is about broader issues and long term


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goals and integrated in that it links various aspects of the business,people management, individuals and teams.

Performance appraisal on the other hand is operational, short tomedium term and concerned only with the individual and theirperformance and development. It is one of the tools of performancemanagement and that data produced can feed into other elements ofperformance management but in itself can never be performancemanagement.

ACTIVITY

Read the following extract from the CV Centre Consultancy website. Itprovides a further description of the performance appraisal process.

The thought of a forthcoming annual performance appraisal is enough to sendshivers down the spine of even the most hardened professional. Appraisals canbe seen as an opportunity for the manager to voice their gripes anddissatisfaction and to generally criticise their employees. However, the trueaim of an annual performance appraisal is to motivate and develop an employeeand, if approached correctly by the manager and the employee, there is noreason why the whole experience cannot be both rewarding and positive.

You should be given plenty of time to prepare for your performance appraisaland you should use this time constructively rather than just anxiously waitingfor the day to come. Remember also that your manager should try to make theexperience as relaxed and positive as possible by choosing a suitable venue andarranging the layout of the room in a way that is informal andnon-confrontational.

It is important to remember that, although formal performance appraisals aregenerally carried out on an annual basis, your performance and achievementsthroughout the entire year will be under assessment. Evidence of anindividual’s overall contribution to the business will be reviewed as will theirlevel of success in the achievement of their targets and objectives. To helpyourself prepare for your annual performance appraisal, it is helpful for you tokeep comprehensive records of exactly what you have achieved throughoutthe year and anything relating to your individual performance. Another usefulpreparation tip is to read through your formal job description, highlight howyou have fulfilled your responsibilities and what work you have done that youfeel exceeds your job role. Pay particular attention to any challenges that youwere faced with detailing exactly how you were ale to overcome them. Indeed,the performance appraisal is also a useful opportunity to discuss aspects ofyour role in which you have not been particularly successful so that you candiscuss with your manager how you can improve for the future.

Throughout the year, it is important to take a proactive approach to your owncareer development. Go out of your way to take part in any available training,workshops or seminars that may help you to develop your skills andknowledge and seek to obtain support from your employer for any external


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training or professional qualifications. An employer is keen to see their stafftaking an active interest in the development of their career as this can meanthat they are able to make a more positive contribution to the overallimprovement of the organisation. Again, make sure that you keep completerecords of all the development opportunities you have undertaken and bringthese with you to the annual performance appraisal.

By reading through the report from your previous performance appraisal, youwill be able to assess whether or not you have achieved the specific targets andobjectives set for you by your manager. Your level of performance will be usedas a benchmark in your next appraisal to enable your manager to discuss withyou what your future expectations and objectives should be. It is to theadvantage of yourself and your manager that the targets you agree are realisticotherwise you can become de-motivated, resulting in an overall decline in yourperformance. The specific targets and objectives that are set for you will beused to form the basis of your overall action plan. This should also take intoaccount your long term career aspirations which you should discuss with yourmanager to help you decide the most appropriate course of action to enableyou to effectively develop your career in the appropriate direction. Yourmanager may be able to provide you with company literature and informationthat will help you and should also be able to advise you on appropriate training.Your finalised action plan from your annual performance appraisal is a veryimportant document and you should refer back to it on a regular basis in orderto monitor your performance and ongoing development.

Because a performance appraisal should really be a positive activity, it is not theappropriate time to discuss serious grievances or disciplinary matters.However, it is a good opportunity for you to raise any questions or concernsthat you have regarding your specific role, your department or the company ingeneral. You can also work closely with your manager to identify anyweaknesses you may have and to select an appropriate method for overcomingthem. It is never pleasant to have to face criticism from your employer but, aslong as this criticism is well-founded and constructive, you should try to handlethis as positively and professionally as you can. Don’t be seen to be on thedefensive but try instead to co-operate with your manager and pay closeattention to any advice they may give you.

A performance appraisal is a valuable tool for your ongoing careerdevelopment and can even by used to assess your suitability for promotion or asalary increase so, although it should be a positive experience, it should still betaken very seriously. If handled effectively, positive relationships shoulddevelop with your manager and improved channels of communication shouldbe achieved. Don’t be too shy – if you think that you succeeded particularlywell in a certain field, be comfortable discussing it. Feel free to ask anyquestions of your manager and take on board their positive and negativeevaluations.


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How to conduct a performance appraisal

The five key elements of the performance appraisal are:

1. Measurement – assessing performance against agreed targetsand objectives.

2. Feedback – providing information to the individual on theirperformance and progress.

3. Positive reinforcement – emphasising what has been done welland making only constructive criticism about what might beimproved.

4. Exchange of views – a frank exchange of views about what hashappened, how appraisees can improve their performance, thesupport they need from their managers to achieve this and theiraspirations for their future career.

5. Agreement – jointly coming to an understanding by all partiesabout what needs to be done to improve performance generallyand overcome any issues raised in the course of the discussion.

There is no one right way to conduct an appraisal. Some companiesdevelop an appraisal form with space for appraisers to rate appraiseeson aspects of their work such as their contribution to the team, roledevelopment, effectiveness, etc. The approach will depend on thenature of the business and the people involved. However as a minimumit is helpful to have a form to collect consistent information on theappraisal. This may be in the form of a free dialogue from appraiserswith the opportunity for appraisees to reply and comment.

As a general rule it is helpful to have some information on the following:

1. Objectives - whether they were achieved and if not the reasonswhy.

2. Competence – whether individuals are performance below,within or above the requirements of the role.

3. Training – what training the individual has received in thereview period and what training or development they would liketo receive in the future.

4. Actions – a note of any actions that need to be carried out by theindividual or the appraiser.

There is a view that the content of appraisal discussions should beconfidential to the individual and the appraiser. But increasing pressureto provide information to assess the contribution of people toorganisational value makes it desirable that performance data berecorded and stored in such a way that it can be used to feed intoindicators of human capital value.


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Increasingly organisations are putting more emphasis on the kind ofbehaviour they want their employees to exhibit. Behaviour, particularlymanagement behaviour, has been identified as a significant source ofvalue. They are, therefore, not solely concerned with the achievement ofobjectives but how these were achieved. Some organisations areidentifying a set of positive management behaviours, for example, andthen rating against them. Others are identifying the behavioursassociated with excellent service and rating against these in theappraisal process. Again, the design of the process will depend on whatis important to the particular business and the achievement of theirbusiness objectives and will, therefore, be influenced by the widerperformance management process. It is important that people don’tachieve their objectives at the expense of their colleague’s morale.

Preparing for the meeting

Both parties should prepare for the meeting beforehand if a successfuloutcome is to be delivered. The person conducting the meeting or theappraiser should:

� Consider how well the individual has performed sincethe last meeting.

� Consider to what extent any agreed development plansfrom the last meeting have been implemented.

� Think about the feedback to be given at the meeting andthe evidence that will be used to support it.

� Review the factors that have affected performance, bothwithin and outside the individual’s control.

� Consider the points for discussion on the possible actionsthat can be taken by both parties to develop or improveperformance.

� Consider possible directions the individual’s career mighttake.

� Consider possible objectives for the next review period.

The individual, or appraisee, should consider the following points:

� What they have achieved during the review period, withexamples and evidence.

� Any examples of objectives not achieved withexplanations.

� What they most enjoy about the job and how they mightwant to develop the role.


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� Any aspect of the work in which improvement isrequired and how this might be achieved.

� Their learning and development needs with arguments tosupport their case for specific training.

� What level of support and guidance they require fromtheir manager.

� Their aspirations for the future both in the current roleand in possible future roles.

� Objectives for the next review period.

Self-assessment

In some instances it may be helpful to guide appraisees through aself-assessment process encouraging them to assess and analyse theirown performance as a basis for discussion and action. This can improvethe quality of the appraisal discussion because individuals feel activelyinvolved in the process and is encourages them to work through thepoints above beforehand. This can be particularly useful with morejunior staff or those not used to appraisals.

However, self assessment can only work if individuals have cleartargets and standards against which to assess themselves. It can alsoonly be effective in a climate of trust where individuals believe theirappraisers will not take advantage of an open self-assessment.

What a good appraisal looks like

A good and constructive appraisal meeting is one in which:

� Appraisees do most of the talking.

� Appraisers listen actively to what they say

� There is scope for reflection and analysis.

� Performance is analysed not personality.

� The whole period is reviewed and not just recent orisolated events.

� Achievement is recognised and reinforced.

� Ends positively with agreed action plans.

A bad appraisal meeting:

� Focuses on a catalogue of failures and omissions.

� Is controlled by the appraiser.


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� Ends with disagreement between appraiser andappraisee.

Appraisal skills

All managers expected to carry out performance appraisal should havesome training. Ideally this should not just be on the skills ofperformance appraisal – the ‘how’ to do it – but also on the reasons forperformance appraisal – the ‘why’ we do it. Managers shouldunderstand how it fits into the wider strategic process of performancemanagement and how the information and data generated contributesto the understanding of the capacity of the human capital of theorganisation to contribution to business strategy and value.

A basic requirement is that appraisers have the skills to carry out aneffective appraisal as described above. This means they ask the rightquestions, listen actively and provide feedback.

Asking the right questions

The two main issues are to ensure that appraisers ask open and probingquestions.

Open questions are general rather than specific; they enable people todecide how they should be answered and encourage them to talk freely.Examples include:

� How do you feel things have been going?

� How do you see the job developing?

� How do you feel about that?

� Tell me, why do you think that happened?

Probing questions dig deeper for more specific information on whathappened and why. They can show support for the individual’s answerand encourage them to provide more information about their feelingsand attitudes and they can also be used to reflect back to the individualand check information. Examples would be:

� That’s very interesting. Tell me more about ….?

� To what extent do you think that …?

� Have I got the right impression? Do you mean that ….?


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Listening

Good listeners:

� Concentrate on the speakers and are aware of behaviour,body language and nuances that supplement what isbeing said.

� Respond quickly when necessary but don’t interrupt.

� Ask relevant questions to clarify meaning.

� Comment on points to demonstrate understanding butkeep them short and do not inhibit the flow of thespeaker.

Giving feedback

Feedback should be based on facts not subjective opinion and shouldalways be backed up with evidence and examples. The aim of feedbackshould be to promote the understanding of the individual so that theyare aware of the impact of their actions and behaviour. It may requirecorrective action where the feedback indicates that something has gonewrong. However, wherever possible feedback should be usedpositively to reinforce the good and identify opportunities for furtherpositive action. Giving feedback is a skill and those with no trainingshould be discouraged from giving feedback.

Feedback will work best when the following conditions are met:

� Feedback is built in with individuals being given accessto readily available information on their performance andprogress.

� Feedback is related to actual events, observed behavioursor actions.

� Feedback describes events without judging them.

� Feedback is accompanied by questions soliciting theindividual’s opinion why certain things happened.

� People are encouraged to come to their own conclusionsabout what happened and why.

� There is understanding about what things went wrongand an emphasis on putting them right rather thancensuring past behaviour.

(Source: Chartered Inst of Personnel and Development)

http://www.cipd.co.uk/subjects/perfmangmt/appfdbck/perfapp.htm


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ACTIVITY

Using the notes in this section and in the previous activity, compile your owndescription of the performance appraisal process. Include information aboutthe process from your own experiences.

Structure and strategic fit

Strategic fit implies a convergence of the right set of partners, organisedin the right structure, with the right goals to achieve the desired productand/or process developments that actually yield lasting economicvalue. Unfortunately, right must be defined by the context. This meansthat a deep understanding of collaborative relationships must underpinany successful effort. This section will focus on lessons from the fielddrawn from over 20 years experience in university/industry,industry/industry and consortia collaborative activities.

Strategy of an organisation is the roadmap towards attainment of itslong term goals and objectives. Strategic management process facilitatesin the operationalization of strategy. Organisational Structure (OS) isthe framework that defines the formal reporting system and controlmechanism between employees in the organisation. OS is verysignificant towards the strategic development and exception process inthe organisation.

An organisation is a social entity composed of two or more persons whowork together towards the attainment of common goals. For theorganisation to work as a cohesive unit, it is essential that a formalstructure of reporting and control be established among the differentmembers of the organisation. This gives a definite direction to thecorporate strategy of the organisation and facilitates the strategicmanagement process. This formal structure is known as OrganisationalStructure (OS). For OS to be in place, certain characteristics have to beevolved. They include division of labour, hierarchy of authority, andspan of control.

Case study

An interesting case study is provided be the LSE and can be found at

http://www.lse.ac.uk/collections/decisionConferencing/caseStudies/decisionAnalysisSoftware/headOfficeCosts.htm

You are recommended to study this in detail.


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Developing policy

Policies are general statements which direct the thinking and action inthe process of strategy implementation. They provide a definition of thearea in which change is to be made and then ensure that such a changefocuses on the attainment of a specific objective. Examples for a largeorganisation would include strategic policies on equal opportunities,health and safety, handling customer complaints, etc.

Policies need to be formal documents that have standing within theorganisation. Management will expect all members of staff to complywith them, and have sufficient respect for the process of theirdevelopment that this will be possible. This will only be possible if theprocess of policy development is seen to be appropriate, purposeful andfair.

� It must be seen to be appropriate in so much as it isrelevant to the operations of the organisation and itsstakeholders.

� It must be purposeful in that it provides direction to theorganisation’s objectives of future success andprofitability.

� It must be fair for all the employees, who will feel thatmanagement listens to their ideas and concerns.

An example of the process of policy development is reproduced herefrom an Improvement Unit based in Scotland:

Strategic policy direction

The Business Improvement Unit supports the Council in developingits strategy and policies for the Scottish Borders.

To be effective in providing the services you need, the Council aims tofollow a clear customer focused strategy for achieving this purpose.Relevant policies based on your present needs and expectations arerequired to support Council strategy. With the right policies for theScottish Borders, the Council’s service portfolios can draw up thedetailed plans, objectives and activities which will deliver the rightservices to you - our customers - when you need them.

The Business Improvement Unit supports the Council in developing itsstrategy and policies by:

� Providing well researched and informed policy directionin a number of strategic areas such as RuralDevelopment, Regeneration, Social Justice andCommunity Safety.


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� Ensuring that the varied needs of the Scottish Borderscommunities are recognised in the preparation of Councilpolicies.

� Promoting consistent policy direction and practice acrossCouncil service portfolios and with our partners’ policies.

� Encouraging information sharing within the Council andwith our partners.

� Managing the Scottish Borders Peoples Panel and theprocess for consulting our stakeholders.

Ideas about the importance of developing policy are importantthroughout all walks of life – even the Prime Minister must follow asystematic strategic policy. A sample of this is provided in the followingextract from the Prime Minister’s Strategy Unit:

The Prime Minister’s Strategy Unit has three main roles:

� To carry out strategy reviews and provide policy advicein accordance with the Prime Minister’s policy priorities.

� To support government departments in developingeffective strategies and policies - including helping themto build their strategic capability.

� To identify and effectively disseminate thinking onemerging issues and challenges for the UK Government,e.g. through occasional strategic audits.

The Strategy Unit works closely, and often jointly, with othergovernment departments and external stakeholders on a broad range ofdomestic policy issues, published through a range of outputs includingGreen and White Papers. The Unit puts strong emphasis on analyticalrigour and an evidence based approach to developing strategy, lookingat issues from first principles. While some of its work is one-off, otherwork on issues such as public service reform and home affairs tends tobe ongoing.

This is not dissimilar to other policies to be found in businessenvironments!

ACTIVITY

By discussion with senior management, try to establish your ownorganisation's ideas on policy development.

Summarise your findings in a brief report. Comment on your observations.Can you contribute any constructive ideas about your organisation’sapproach?


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Communication systems

Communication is a two-way process. A message needs not only to besent but also to be received. Any form of effective strategicimplementation requires effective communication.

ACTIVITY

Provide three examples of the type of problems that can arise as a result ofinadequate communications.

ACTIVITY FEEDBACK

Good communication is essential for the efficient running of any organisation.There are countless examples that you might have thought of. Here are threesimple cases which are useful starting points for discussion:

� A business exporting goods abroad is likely to have majorproblems if it fails to give appropriate details of time ofdeparture to its despatch department.

� Failure to provide accurate details of a customer’s address willhave disastrous results for a courier company.

� Inaccurate information about cost price of materials and theextent of overheads is more than likely to lead to problemsassessing a true market selling price for a product.

ACTIVITY

Think of an example where communication between two people failed. Notedown why you think that happened. Can you identify the key reasons for thefailure?

Now look at a more complicated example. This time consider wherecommunication between three or more people failed. Were there otherfactors involved in this case?

Conclude this activity by providing a generalisation of the reasons forcommunication failure based on these two examples.

It is generally agreed that the best approach to effective communicationwithin an organisation is through an emphasis on employeeinvolvement. This can take the form of simple informal discussions


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where managers listen to the thoughts of a range of employees, or it canbe a more structured plan that incorporates employee input in thedecision-making process. Where this takes place, the termempowerment is used, and structured channels of communication willbe required.

The communication process essentially has to answer four keyquestions in order for the organisation to be able to use it effectively.These are:

� Who sends and receives information?

� What message is being communicated?

� What channel is being used?

� What medium is being used?

A simplified communication process is shown in Figure 3.1, whilstdifferent channels of communication are shown in Figure 3.2.


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ManagersDecision toreduce shift

working

Via Unionrepresentatives

(formal)

A writtenstatement with

explanation

Shopflooremployees in

factory

FEEDBACK

Figure 3.1. An example of a simple communication system.

Marketing employees

Marketing department Production department Finance department

Board of directors

Downward communication Upward communication

Lateral communication

Figure 3.2. Channels of communication.

Within an organisation there will be both formal and informal channelsof communication.

Formal channels are recognised and approved by employers andemployee representatives. An example would be the HRM departmentof an organisation giving notice to an employee about redundancy.

Informal communication channels are those which acknowledge theexistence of such structures as the ‘grapevine’ which provides adissemination of information through general conversation, chat andgossip. Mostly this is beneficial and allows a positive flow ofinformation without formal organisational barriers. However, it mustbe realised that there is some risk of unfounded and negativeinformation and opinions circulating through the organisation. Whilstof considerable value, care must be taken with any informationgathered from informal sources without some form of validation.

It has been found that a truly effective communication system within anorganisation is likely to place value on both styles of communication.

ACTIVITY

Within your own organisation, examine the value of both formal and informalcommunications channels.

Provide a summary of your findings, and make any suggestions that you feelmight lead the way to future improvements.

Guidelines

The delivery of implementation guidelines will reflect the goals andplans of the strategy. These will be broken down into strategic andtactical elements as follows:

Strategic goals are broad statements of where the organisation wants tobe in the future. These will be of relevance to the organisation as a wholerather than to specific departments.

Strategic plans are the action steps by which an organisation intends toattain these strategic goals.

Tactical goals define the outcomes that departments must achieve inorder for the organisation to reach its overall goals.

Tactical plans are those planes designed to help execute major strategicplans and to accomplish a specific part of the organisation’s strategy.


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Focus and realignment

Before one can begin to measure performance, there must be anunderstanding of the company’s strategic focus. There are three generalstrategic focuses a company may employ and they are described ascost-, product- or customer-based. A cost-focused strategy emphasisessupplying a standard product that meets many customers’ needswithout customisation at the lowest cost possible. A product-focusedstrategy includes custom or niche products or specialised servicesdelivered to its customers. Customer-focused companies place theiremphasis on world-class customer service.

To effectively measure corporate performance corresponding to itsstrategic focus, Key Performance Indicators (KPIs) should be created.These KPIs are metrics of how well the company is performing, and canbe at the enterprise level or specific to departments. KPIs should containboth lagging and leading indicators as it is important for the business toknow how well and in what areas it has performed in the past, whilerecognising the significant value in understanding how businessdecisions today will impact performance in the future. Laggingmeasures indicate the state of the company today; such as balance sheetdata, customer retention rate and market share. Leading measuresforecast future performance; such as customer satisfaction, trainingbudget and time to market. Each strategic focus has KPIs that arebeneficial specifically to that type of focus. Figure 3.3 lists some of themore important KPIs for each strategic focus.

Case study

The following details of strategic realignment show how one particularorganisation has approached the process. Europ Assistance is acontinent-wide supplier of vehicle recovery and other related travelservices.


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Cost-focused Product-focused Customer-focused

� Cost measurement

� Cycle time

� Standards conformance

� Quantity

� Quality

� New products in the pipeline

� Research and Developmentbudget

� Time to market

� Product customisation

� Knowledge of customers

� Environmental appearance

� Complaint management

� Employee empathy

� Product expertise

� Responsiveness

Figure 3.3. Key Performance Indicators by strategic focus.

EUROP ASSISTANCE COMPLETES STRATEGIC REALIGNMENT

Final realignment completed on the new EA Structure

Europ Assistance, the medical, motor, travel and domestic assistanceand insurance organisation, has completed the final stage of thestrategic realignment of its UK Board of Directors and CommercialDepartment, to achieve an even tighter, more efficient structure.

At the heart of the changes is a reorganisation of the CommercialDepartment – which previously managed all corporate client liaisonfrom the initial sales process through to underwriting. It has now beenregrouped, under the auspices of three Europ Assistance directors.

Charles Walckenaer, Managing Director of Europ Assistance UK andIreland, will now oversee the total Sales and Marketing function. Withinthis framework, the sales and commercial business development teamswill report to Giorgio Daboni - Managing Director, Europ AssistanceInsurance Ltd – who will be responsible for the development ofcommercial opportunities sourced by the sales and marketing team.

Overall responsibility for client services, encompassing existing EAclients and business, will be placed with Paul Everett, Client Servicesand Operations Director. The responsibilities of Finance Director TrevorChrismas and Company Secretary Dave Crapnell remain unchanged.

Charles Walckenaer comments, “Over recent months EA hasundergone changes at Board level, to enable us to maximise theopportunities presented by a fast-developing market. With thisrestructure, the final piece of the jigsaw is in place, and I believe thefuture of Europ Assistance in the UK and Ireland is very exciting.”

“The one unfortunate consequence of this restructure and reassignmentof responsibilities is that the post of Commercial Director is no longerrequired, so I would like to thank Chris Reynolds for the contribution hehas made to EA and wish him well for the future.”

Europ Assistance continues to build on its heritage as the pioneer of theassistance concept in the UK and, with its reorganisation now complete,it is better able to develop its range of services both to the corporate andconsumer markets.

Issued on 28/02/2006

http://csrc.lse.ac.uk/asp/aspecis/20020049.pdf

Contingency planning

Most organisations operate in markets where there will be some degreeof uncertainty. This will vary considerably between different markets,


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but it is unlikely that an organisation will ever find itself in a trulycertain business environment.

The greater the level of uncertainty, the more difficult it will be toimplement new strategies. The chances of a successful implementationare reduced as the market becomes more volatile. With such fluctuation,long term objectives become harder to attain and it is not surprising thatmany involved in strategic planning will feel that much time is wasted.However, planning is essential and should never be dismissed, nomatter how many times it is interrupted by market changes.

What is essential, however, is an awareness of the likely risks and somedegree of planning for events that may occur. Managers need to beflexible and prepared to react to changes enforced by the market. Suchplanning has already been discussed in a previous module, but it isuseful to reinforce some of the ideas.

Contingency planning helps organisations respond appropriately in thecases of emergencies, setbacks and unexpectedly adverse conditions.

To develop these plans, managers try to identify uncontrollable factors,such as recession, technological developments or safety accidents, andthen forecast the worst-case scenarios. They might, for example,consider how the organisation should respond in the event of asignificant drop in sales coinciding with a sudden increase in materialcosts due to inflation. Managers might, in this case, consider a freshsales drive or employee lay-offs in order to overcome the problemsfaced.

ACTIVITY

Consider the possible threats facing your own organisation that could haveserious impact on its success in the next two to three years. List these andbriefly described the possible effect on the organisation.

Now add to this list four more serious (albeit less likely) risks, such as largeincrease in interest rates, political instability or loss of consumer confidence,that would pose a major threat.

For each of the risks identified suggest a contingency plan to deal with it.Describe what measures you feel would be necessary to ensure the continuedoperation of the organisation.

Monitoring and evaluation control systems

The final stage of the strategy process is to monitor its implementation.In order to do this satisfactorily, management needs to set standards


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and targets in respect of the key objectives. It also needs to ensure thatall communication systems used are effective.

All stakeholders will want to compare performance results over time inorder to reveal trends in business activities. It is only by tracking thesetrends that an evaluation can be made of the organisation’sperformance against its objectives, and whether corrective action isneeded.

Figure 3.4 shows examples of types of analysis that are used and theareas for which they can help strategic control.

Targets will generally focus on financial and other quantitativeperformance, such as sales turnover, operating costs, profit margins andproductivity. Many of these can be found in the published annual reportof an organisation. The wide range of stakeholder interests will alsomean that other important information is made available.


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Types of analysis Used to control

Financial analysis

Ratio analysis

Variance analysis

Cash budgeting

Capital budgeting

Aspects of profitability

Costs or revenues

Cash flow

Investment

Market analysis

Demand analysis

Market share analysis

Competitive position

Competitive position

Sales analysis

Sales budgets Effectiveness of selling

Human resource analysis

Labour turnover

Work/output measurement

Workforce stability

Productivity

Physical resource analysis

Product inspection Quality

Figure 3.4. Uses of analysis for strategic control.

ACTIVITY

Consider the figures published for a large retail organisation shown here:

Indicator 2004 2005

Turnover £6,125m £5,873m

Profit before tax £512m £480m

Earnings per share 32.5p 31.6p

Annual dividendper share 22.3p 21.9p

What general observations would you make?

ACTIVITY FEEDBACK

You might have spotted, amongst other things, that despite a drop in turnoverof 4.2%, annual dividends dropped by only 1.8%.

Similarly, profit before tax was down by 6.25%, yet earnings per share was only2.8% lower.

Although monitoring is thought of as the last stage of an implementedstrategy, it is not by any means the end of the strategy process. Strategyformulation is a continuous process as organisations adapt and adjustto all the factors bringing change to the environment. Regularmonitoring of performance allows management to view changes indirection away from their organisational objectives.

Drucker, in The Practice of Management, explains that to be able tocontrol performance managers must be capable of measureperformance against objectives. Therefore, it is essential to providemanagers with adequate knowledge of the meaning of commonmeasurements in all key areas of the business.

KEY POINT

The creation of objectives, systematic appraisal and measures of performanceenable the general aims of the organisation to be translated into operationalprogrammes and activities which can be controlled by individuals at all levelswithin the organisation.

Needham (2001)


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ACTIVITY

Obtain annual reports from three well-known organisations. These are readilyavailable on the Internet. Look particularly for the summary financialstatements, not the detailed accounts.

What are the main ways that each organisation measures its performance indifferent parts of the business?

What measures does it use in respect to its ‘commitment to society’?

Is the emphasis on quantitative or qualitative data?

To whom are the measures that you have considered likely to be of mostinterest?

Dissemination and cascading processes

As stated in an earlier section, communication is a key element to thesuccess of any strategic development and, indeed, to any organisation.Without effective communication, an organisation will be unable tooperate efficiently and there are likely to be a number of significant, ifnot disastrous, breakdowns.

Having made strategic decisions, the organisation must use its channelsof communication to disseminate the information necessary to thosedepartments and their managers who need to receive it. This must bedone in such a way that it is distributed rapidly and to the right people.There have been many occasions where information has not beencurrent because of delays and this has led to wastage in terms of bothcost and labour. Also, information falling into the wrong hands can leadto confusion and cause dispute, as well as undermining the positions ofresponsibility of those managers who failed to receive it. Disseminationof information must, therefore, be considered as an important businessfunction.

To facilitate the process of dissemination, it is common for organisationsto develop a simple cascading process which ensures that everyone inneed of any particular information does, in fact, receive it. Leavingsomeone out of the knowledge area can have serious consequences,both in terms of business efficiency and personal resentment.

Consider a simple example of a coach hire business which has beenhired to take a school group to London for a day trip. Certain factorsmay arise that would have an impact on the success of the trip. Thesewill include motorway traffic congestion, reliability of timing involvingthe school and the knock-on effects of a delayed return on furtherbookings later in the day. If there is any likelihood of a delay, thisinformation will need to be passed on the head office of the coach hire


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company, the school and any later clients. For this to happen, it will beuseful for a cascade to be established which will identify specific peoplewho will be responsible for keeping others further down the cascade upto date with developments and subsequent delays.

Leaving both school and other clients uninformed will ruin customerrelations and probably risk the loss of any future custom.

A documented policy for information dissemination should be acarefully considered document. An example is given here:

A summary of National Patient Safety Agency’s disseminationprocess

The National Patient Safety Agency (NPSA) was established to managethe national reporting system for the NHS. Part of the NPSA’s role is toissue advice and solutions to NHS staff on specific safety problems.Below is a summary of the Agency’s dissemination process.

Publication formats

The NPSA has developed the following three formats to disseminate itsadvice and solutions to NHS staff:

� A patient safety alert requires prompt action to addresshigh risk safety problems.

� A safer practice notice strongly advises implementingparticular recommendations or solutions.

� Patient safety information suggests issues or effectivetechniques that healthcare staff might consider toenhance safety.

The NPSA has consistent criteria in place for determining the subjectmatter appropriate for each format and a process for handlingdissemination. In each case, a lay version is developed summarising theissue and action taken to enable the NPSA to respond to any enquiriesfrom patients and the public. Where an issue is likely to be high profileor to cause anxiety, NHS Direct and relevant patient groups are notifiedin advance.

Distribution methods

The formats are distributed electronically to the NHS via the SafetyAlert Broadcast System in England, and emailed directly to NHSorganisations in Wales (normally via a director who covers the relevantarea). An entry is always included in the chief executives’ bulletin inEngland, and chief executives are notified directly in Wales.Information is submitted to other relevant government and royalcollege bulletins, and a press release is issued to the media.


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Where the safety issue is likely to be high profile, the NPSA will hold apress briefing to put the problem in context.

Key principles defining content and dissemination

In issuing these formats, the NPSA is committed to:

� Developing content with relevant partnerorganisations/individuals which represent theprofessional and patient groups affected.

� Sharing the evidence available about the patient safetyproblem.

� Calling for actions that are clear and unambiguous andpractically achievable.

� Detailing the patient safety and other associated benefitsof the recommended actions.

� Risk-assessing the impact of any recommended changes.

� Referencing other relevant national guidance andstandards.

� Providing a timescale for national review/evaluation.

� Agreeing the final version with the Department of Healthand Welsh Assembly Government (this takes a minimumof three weeks and timescales can vary).

� Notifying all audiences about where the information hasbeen sent.

� Including a named contact point at the NPSA for furtherinformation.

ACTIVITY

Describe the process of information dissemination in your own organisationor one with which you are familiar.

How is information cascaded?

REVIEW ACTIVITY

If an organisation has decided to implement a new strategic plan, how wouldyou describe the importance of effective communication to ensure the smoothrunning of the project?


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What steps would you identify as being of considerable importance?

For each step that you have identified, explain its significance and what adviceyou would give to the strategic planner.

Summary

In this unit, we have looked at some of the elements of the strategicimplementation process. The importance of working with the supportand agreement of stakeholders to an accepted timetable is an importantinitial step. Business Process Re-engineering and Management byObjectives have been identified as two key methods.

Care taken over planning is time well spent and will allow theimplementation to proceed. The relationship between the existingpolicies and methods and those proposed should be analysed to ensurethat the strategic focus and alignment is attainable and realistic.

Despite all the time spent planning, unexpected things can crop up, andcontingency planning is essential if these are not to pose a problem.

Finally, the value of well-planned and effective communication,including dissemination and cascading processes has been explained.

Further reading

Drucker, P. (1995) The Practice of Management,Butterworth-Heinemann

Macmillan, H. & Tampoe, M. (2000) Strategic Management: Process,Content and Implementation, OUP

Needham, D. et al (2001) Business for Higher Awards. Heinemann

Pearce, J. (1996) Strategic Management: Formulation, Implementationand Control, McGraw-Hill


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Module 3-Strategic Planning and Implementation

Documents

Transcript of Module 3-Strategic Planning and Implementation