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Techniques used for gathering data in 3 env
Resource based - micro Value chain analysis - micro SWOT - all 3 Environmental scan - external env Porter’s five forces field - external
env PESTLE - external
env
Sectors in macro-env Primary
Extraction of raw material from nature Farming, mining, forestry
Secondary
Process raw materials into finished or semi-finished goods
Tertiary
Where goods are sold Include various services (banking, insurance, transport
etc)
Consumer goods
Convenience goods - bread, milk etc Shopping goods - shoes,
clothing Speciality goods - cars Industrial goods - to make
something else Services - transport,
insurance, grading, storage
Micro-environment
Vision stmt• Dream of the buss• Inspires and remind stakeholders
what is important• Must be easily understood• Ambitious
Mission stmt
• Describes buss customers• Major products or services• Differentiating qualities• Social responsibility• Environmental concerns
Also deals with values of buss ie
Honesty, integrity, transparency, innovation
Starting point for all major strategic initiatives
Long term objectives
Must be measurable Compare actual performance against the
objectives- Includes- Improving POI- Keeping costs low- Maintain or improve market share- Employee development- Public and social responsibility elements
Structure of the buss
Way in which labour, authority, responsibility and other resources are organised to make sure they all work together
Take into account the following when deciding on org structure
Range of control Ability to delegate Authority Responsibility accountability
LINE ORGANISATION - CHARACTERISTICS
Supervisors make all the decisions and give all the instructions
Instructions received from the person immediately superior
Only one person gives the orders
LINE AND STAFF ORGANISATIONAL STRUCTURE
Line authority – right to command Staff authority – right to give advice Incorporates functional managers and
consultants/ advisors Managers give order, advisors give
advice. Line and staff personnel work closely
together
ADVANTAGES
Easy to understand Only one manager giving instructions
within a department Manager assisted by advisors Greater specialization Span of control is limited Greater division of labour Quicker decision making
DISADVANTAGES
More complex structure Some experts know more than their
superiors Channels of communication can be
distorted Advice can be too theoretical Advisors are expensive Managers can become too dependent on
their advisors.
FUNCTIONAL STRUCTURE
Specialized staff with authority in their own departments
Workers have the benefit of specialized direction
Advice is available from other experts
PROJECT ORGANISATIONAL STRUCTURE
Specialists from various departments are brought together fro a specific project
Temporary structure for the duration for the project
Structure dissolved once the project has been completed
Disadvantage - same team seldom work on same projects
Difficult to get to know each other
Matrix
Projects move between specialist departments
Staff members not transferred back to original depts
Improves productivity More permanent structure
Strategic Buss Units (SBU) Buss establish buss units according to products
or geographical regions If there are different buss units, management
must make sure units have same strategies which may include IT or product strategies
Virgin - brand image amongst all units Main adv - unlocks value in the supply
chain and helps to build a competitive adv based on co-operation
Individual buss are worth far more in the CORPORATE structure than if they were independent
Networking or virtual structures
With use of technology, units operate across traditional buss units and often across regional boundaries
Require fewer middle managers because they are flatter and leaner structures
Culture of the buss
Values or attitudes that is shared in the buss
These shared values motivate people to act in a certain manner
Can be changed if it is not in line with the strategy of the buss
Difficult, time consuming process
Resources in the buss
Physical resources - assets, financial resources
Also knowledge Knowledge – human capital Line managers must make sure that
valuable staff are retained
Functions in buss
General manager must ensure there is co-ordination between the activities that make up the auxiliary functions of the buss
Purchasing Production Marketing Financial Administrative Personnel Public relations
Functional managers plus every employee must be aware of buss objectives
Internal co-operation is critical Must have an understanding of how
they are going to work together
Market environment
When investigating the market environment, Porters Five Forces Model is used:
1. Level of rivalry in the market
2. Availability of substitute products
3. Threat of new entrants into the market
4. Power of suppliers
5. Power of buyers
Other models add in Trade unions
Model the buss use is not important, but rather that the buss scans the environment to pre-empt events
Level of rivalry
Porter separates competition from substitute products (look at them together)
Competitors may be more than people selling the same product
Who will be the competitors of Simba Chips?
Lays, Willards - Chip suppliers Snack mixes like peanuts, rice cakes,
biscuits, popcorn
Buss must find out as much as possible about competitor
Include: Ownership structures Location Financial performance (where?) Products, including patents, quality,
brand loyalty, new products, market share, promotion strategies, distribution channels,
Organisational culture and oral
Is it legal ? (ethical?) Doing a competitor profile is not illegal Get to know your enemy Also look at future competitive threats
Threat of a new entrant The greater the opportunity for profits, the
more likely a new entrant will enter the market
Also true if there is not enough suppliers to meet demand
Threat diminished if certain barriers
Barriers1. Brand loyalty2. Govt policies (BEE)3. Huge capital outlays4. Ltd distribution channels
Barriers to the adv of existing com, but makes it difficult for the buss should we like to branch out
Power of suppliers
Raw materials or products to be sold The right quality and the right quantity at the right
time at a reasonable price
Costs involved if buss has a stock-out1. Loss of production2. Idle time of machinery3. Difficult to negotiate discounts4. Loose customer goodwill
What about labour suppliers (strike)?
The buyer
Buyer is more than final consumer Include intermediaries (agents,
wholesalers etc) Control intermediaries
Sole agency1. Sole right to sell in a specific area2. Wholesaler gets commission3. Wholesaler agrees to sell at prescribed
price and not to sell similar goods
Contract system (price binding)
1. Manufacturer offers a discount to retailer, but has to sell at prescribed price
2. Not honoured, dealer is blacklisted
Financial control
1. Dealer gets fin assistance2. Manufacturer gains control over
dealer force him to sell only his goods
3. Petrol companies help garages selling their brands
Buss sells to final consumer, must know who customers are
Geographic profile :Age, gender, income etc Lifestyle criteria : Hobbies, religion, cultural
etc
Liquor Store scenario
Distribution channels on pg 99.
Macro (External) Environment
Increasing globalisation, technological advances makes macro env exciting and volatile
Events in macro-env occur in 2 ways
1. Trends - predictable- buss can plan for them- impact difficult to predict- technological change
, labour developments etc
2. Crisis - unexpected, unplanned
- throw buss intounstable situation
- natural disasters, war
- labour strikes, diseases
Strategies as tools
Strategy - specific plan of action, formulated to set in motion the effective use of resources with the aim of achieving the org objectives
Without strategy Haphazard decision making Ineffective use of resources Frustrated employees (not knowing what to
expect etc)
Advantages of strategy
Gives direction to buss Ensures consistent decision making Differentiates management roles and
areas of responsibility Puts buss and role in the broader eco
in perspective Anticipates change in internal and
external env
Steps in implementing a management strategy (x8)
Define buss mission, vision and objectives
Analyse the different env in detail using a SWOT analysis for micro and marker env and a PESTLE analysis for macro env
Identify strategic options available
Issues to consider - ROI
- Financial and physical risk- potential for buss growth- image of buss- effect on ownership and control- political and social issues
Evaluate and analyse the viability of each option ( in order of priority)
Plan the implementation of the chosen strategy
ImplementMonitor and control of strategy
PESTLE Analysis (very NB)
P - Political factors E - Economic factors S - Social factors T - Technological factors L - Legal factors E - Ethical factors
Extension of PESTLE analysis
Depending on type of buss, some buss may use PESTLE where
* physical environment (mining) * ethical environment (p64)
Events in external environment
Pre-empt what is going to happen, plan ahead
Environmental scanning -keeping a watchful eye on the economy that might affect your buss
NB to watch competitors
Competitors - what they do may give them edge or give good indication what not to do
Similar industries may also give clues Developing eco look at other
developing nations Seasonal or occasional trends – load
shedding (devise better strategies)
Crisis in external environment
Crisis management part of every happenings in buss
Always unforeseen circumstances Must have contingency plan to cope with
happenings
2 Strategies to cope with crisis management A. risk management assessment strategy B. decision tree strategy Very complex (serve only as an introduction)
Risk management assessment strategy Quantifying possible risks is not an
exact science, but pre-deciding “what would happen if” is a good idea
Use this to assess potential physical or health risks, put plans is lace
Occupational Health and Safety Act No 85 of 1993
Employers must take precautions for all possible risks
Insurance co’s use this to assess your risk profile
Factory would do risk assessment for occurrences such as fire, flood, labour unrest etc
Risk assessment plan Who would be in charge in an emergency? Critical duties (demarcation of safe areas,
media liaison, crowd control etc Emergency equipment such as spare
phones, radios etc Escape routes and procedures Workers must be trained in emergency
procedures
Decision tree
Used to graphically compare different options available when making a decision
Aim - Promote rational decision making and clarify available options
Benefit - each decision option is quantified, so each decision process can be calculated and a value is reached which shows the probability of success of each option
Simpler version is used for risk management
Scenarios are brainstormed with decisions noted
Case of a crisis, decision tree is used to apply to a specific situation
Because possibilities were analysed in a calm way when there was no crisis, it eliminates the possibility of overlooking an important option
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