Grand Strategies Are a Means to Get to Your Ends

8/8/2019 Grand Strategies Are a Means to Get to Your Ends

http://slidepdf.com/reader/full/grand-strategies-are-a-means-to-get-to-your-ends 1/30

Grand strategies are a means to get to your ends growth, profitability, etc. The more time

that you spend researching and learning about your environment, your market and your

business, the more clearly these come into focus for you. While there is always some

uncertainty and some risk with any business decision, a strategic decision with the proper

homework done is a pretty clear cut one.The major Grand Strategies are:Concentrated GrowthIn this strategy, a firm directs it resources to the profitable growth of a dominant product, in a

dominant market, with a dominant technologyMarket DevelopmentThis strategy consists of marketing present products, often with only cosmetic modifications, to

customers in related market areas by adding channels of distribution or by changing the

content of advertising or promotion Product DevelopmentThis strategy involves the substantial modification of existing products or the creation of new,

but related, products that can be marketed to current customers through established channelsHorizontal IntegrationIn this term strategy there is growth through the acquisition of one or more similar firms

operating at the same stage of the production-marketing chain. Such acquisitions eliminate

competitors and provide the acquiring firm with access to new markets Vertical IntegrationA companys aim in this strategy is to acquire firms that supply it with inputs (such as raw

materials) or are customers for its outputs (such as warehouses for finished products). When

supplying firms are acquired, it is called Backward Vertical Integration. When output firms are

acquired, it is called Forward Vertical Integration.Concentric DiversificationThis strategy involves the acquisition of businesses that are related to the acquiring firm in

terms of technology, markets, or products. With this strategy, the selected new businessespossess a high degree of compatibility with the firms current businesses.Conglomerate DiversificationIn this strategy, a firm, particularly a very large one, plans acquire a business because it

represents the most promising investment opportunity available. The principal concern of the



acquiring firm is the profit pattern of the venture, rather than creating product-market synergy

with existing businesses TurnaroundThis is a strategy used by a firm that is in trouble. Its managers believe that the firm can survive

and eventually recover if a concerted effort is made over a period of a few years to fortify its

distinctive competences. There are two basic forms 0f retrenchment: Cost Reduction and

Asset ReductionDivestitureThis strategy involves the sale of a firm or a major component of a firm.LiquidationIn this strategy, the firm typically is sold in parts, only occasionally as a wholebut for its

tangible asset value and not as a going concern.

In the next posting, well focus on how to implement a strategy, taking a long-term plan and

breaking it up into smaller steps.explains Business Strategy: Elements in the Strategy Process

A strategy framework used to detail the steps needed to be taken and the relative order of execution in the

process of analysing, choosing and implementing a business strategy. There are two main phases: formulation and

implementation, although in practice these two usually overlap somewhat in their execution. These two phases

are further subdivided into three main areas of analysis, choice and implementation, and again into seven

individual steps. At each step, the framework identifies key questions to be asked to guide the process.

Strategic Analysis

The first stage consists of defining organisational purpose and detailing facts about the current internal and

external (environmental) situation a company is in and where exactly it wishes to be. Questions such as "What is

our purpose?", allow the company to develop a mission statement or a list of company aims. The internal/external

facts are determined by an analysis of company strengths and weaknesses.

Strategic Choice

The second stage involves comprehensively laying out a company's options, taking all factors into account including

company mission, environment, capabilities and values. The company will then examine and critically appraise

each of the strategic options available, and determine where and how it will need to direct its efforts for each

one, before selecting the best solution.

Strategy Implementation

This stage involves firstly examining the company resources and competencies to determine readiness for strategy

implementation. The company then specifies how the chosen strategy will be implemented using a task list.

Finally, the company will closely monitor the performance of the strategy during implementation to assess its

progress against the pre-agreed targets.

The strategy process is often cyclical due to constantly changing external environmental forces. In this situation,

new assumptions have to be considered and the processes of strategic analysis must be revisited. The benefits of

the strategy process are in the discussions and analysis involved in producing the plan. The robust nature of the



strategy plan benefits companies by forcing managers to:

y Plan ahead, anticipate change and consider theoretical risks and solutions

y Provide a bridge between long and short term plans (objectives and operational activities)

y Secure a unified company approach by building the core objectives of the company into the operational

activities

y Exercise performance measurement and an element of control over company strategy

Scope of change management

This tutorial provides a summary of each of the main areas for change managementbased on Prosci's research with more than 900 organizations in the last 7 years.

The purpose of defining these change management areas is to ensure that there is acommon understanding among readers. Tools or components of change management

include:

y Change management processy Readiness assessmentsy Communication and communication planningy Coaching and manager training for change managementy Training and employee training developmenty Sponsor activities and sponsor roadmapsy Resistance managementy Data collection, feedback analysis and corrective actiony Celebrating and recognizing success

Change management process

The change management process is the sequence of steps or activities that a changemanagement team or project leader would follow to apply change management to aproject or change. Based on Prosci's research of the most effective and commonlyapplied change, most change management processes contain the following threephases:

Phase 1 - Preparing for change (Preparation, assessment and strategy development)

Phase 2 - Managing change (Detailed planning and change managementimplementation)

Phase 3 - Reinforcing change (Data gathering, corrective action and recognition)

These phases result in the following approach as shown below in Figure 1.





Figure 1 - Change Management Process (the Change Management Toolkit and Change Management Pilot show you how to apply the process))



It is important to note what change management is and what change management isnot, as defined by the majority of research participants.

Change management is not a stand-alone process for designing a business solution.

Change management is the processes, tools and techniques for managing the people-side of change.

Change management is not a process improvement method.

Change management is a method for reducing and managing resistance to changewhen implementing process, technology or organizational change.

Change management is not a stand-alone technique for improving organizational

performance.

Change management is a necessary component for any organizational performanceimprovement process to succeed, including programs like: Six Sigma, BusinessProcess Reengineering, Total Quality Management, Organizational Development,Restructuring and continuous process improvement.

Change management is about managing change to realize business results.

Readiness assessments

Assessments are tools used by a change management team or project leader to assessthe organization's readiness to change. Readiness assessments can includeorganizational assessments, culture and history assessments, employee assessments,sponsor assessments and change assessments. Each tool provides the project teamwith insights into the challenges and opportunities they may face during the changeprocess.

y Assess the scope of the change, including: How big is this change? How manypeople are affected? Is it a gradual or radical change?

y

Assess the readiness of the organization impacted by the change, including:What is the value- system and background of the impacted groups? How muchchange is already going on? What type of resistance can be expected?

y Assess the strengths of your change management team.y Assess the change sponsors and take the first steps to enable them to effectively

lead the change process.





requirements will be the starting point for the training group or the project team todevelop training programs.

Sponsor activities and sponsor roadmaps

Business leaders and executives play a critical sponsor role in change management.The change management team must develop a plan for sponsor activities and help keybusiness leaders carry out these plans. Sponsorship should be viewed as the mostimportant success factor. Avoid confusing the notion of sponsorship with support. TheCEO of the company may support your project, but that is not the same as sponsoringyour initiative.

Sponsorship involves active and visible participation by senior business leadersthroughout the process. Unfortunately many executives do not know what this

sponsorship looks like. A change agent's or project leader's role includes helping senior executives do the right things to sponsor the project.

Resistance management

Resistance from employees and managers is normal. Persistent resistance, however,can threaten a project. The change management team needs to identify, understandand manage resistance throughout the organization. Resistance management is theprocesses and tools used by managers and executives with the support of the project

team to manage employee resistance.

Data collection, feedback analysis and corrective action

Employee involvement is a necessary and integral part of managing change. Managingchange is not a one way street. Feedback from employees is a key element of thechange management process. Analysis and corrective action based on this feedbackprovides a robust cycle for implementing change.

Celebrating and recognizing success

Early successes and long-term wins must be recognized and celebrated. Individual andgroup recognition is also a necessary component of change management in order tocement and reinforce the change in the organization.



The final step in the change management process is the after-action review. It is at thispoint that you can stand back from the entire program, evaluate successes and failures,and identify process changes for the next project. This is part of the ongoing, continuousimprovement of change management for your organization and ultimately leads tochange competency.

Summary

These eight elements comprise the areas or components of a change management

program. Along with the change management process, they create a system for

managing change. Good project managers apply these components effectively to

ensure project success, avoid the loss of valued employees, and minimize the negative

impact of the change

Organizational Culture: Change Process

In our installment on Organizational Culture we discussed cultural analysis as an approachto organization change. We will now look more closely at the process of culture change.

Culture change is difficult and time consuming because "culture" is rooted in the collectivehistory of an organization, and because so much of it is below the surface of awareness. Ingeneral, the process of culture change must include the following steps:

y Uncover core values and beliefs. These may include stated values and goals, butthey are also embedded in organizational metaphors, myths, and stories, and in thebehaviors of members.

y Acknowledge, respect, and discuss differences between core values and beliefs of different subcultures within the organization.

y Look for incongruencies between conscious and unconscious beliefs and values andresolve by choosing those to which the organization wishes to commit. Establish newbehavioral norms (and even new metaphor language) that clearly demonstratedesired values.

y R epeat these steps over a long period of time. As new members enter theorganization, assure that they are surrounded with clear messages about the culturethey are entering. R einforce desirable behavior.

It's clear that culture change is an ongoing process, so it¶s very hard to identifyorganizations that have "completed" a successful culture change. We can, however, find

examples of change-in-progress, in organizations that range from Harley-Davidson to thePittsburgh Symphony. As we look at several examples, in this installment and the next, wewill see some version of the process described above in each±even in organizations thatdid not originally set out to change their cultures!

Why Resistance to Change?

Most people don't like change because they don't like being changed. When change comes into view, fear andresistance to change follow ± often despite its obvious benefits.



People fight against change because they:

y fear to lose something they value, or

y don't understand the change and its implications, or

y don't think that the change makes sense, or

y find it difficult to cope with either the level or pace of the change.3

Resistance emerges when there s a threat to something the individual values. The threat may be real or it may be just a perception. It may arise from a genuine understanding of the change or from misunderstanding, or evenalmost total ignorance about it.

Top Ten Reasons People Resist Change:

1. THE RISK OF CHANGE IS SEEN AS GREATER THAN THE RISK OF STANDING

STILLMaking a change requires a kind of leap of faith: you decide to move in the direction of the

unknown on the promise that something will be better for you. But you have no proof. Takingthat leap of faith is risky, and people will only take active steps toward the unknown if they

genuinely believe ± and perhaps more importantly, feel ± that the risks of standing still are

greater than those of moving forward in a new direction. Making a change is all about managingrisk. If you are making the case for change, be sure to set out in stark, truthful terms why you believe the risk situation favors change. Use numbers whenever you can, because we in the

West pay attention to numbers. At the very least, they get our attention, and then when therational mind is engaged, the emotional mind (which is typically most decisive) can begin to

grapple with the prospect of change. But if you only sell your idea of change based on idealistic,unseen promises of reward, you won¶t be nearly as effective in moving people to action. The power of the human fight-or-flight response can be activated to fight for change, but that begins

with the perception of risk.

2. PEOPLE FEEL CONNECTED TO OTHER PEOPLE WHO ARE IDENTIFIED WITH THE

OLD WAYWe are a social species. We become and like to remains connected to those we know, those whohave taught us, those with whom we are familiar ± even at times to our own detriment. Loyalty

certainly helped our ancestors hunt antelope and defend against the aggressions of hostile tribes,and so we are hard wired, I believe, to form emotional bonds of loyalty, generally speaking. If

you ask people in an organization to do things in a new way, as rational as that new way mayseem to you, you will be setting yourself up against all that hard wiring, all those emotional

connections to those who taught your audience the old way - and that¶s not trivial. At the veryleast, as you craft your change message, you should make statements that honor the work and

contributions of those who brought such success to the organization in the past, because on avery human but seldom articulated level, your audience will feel asked to betray their former

mentors (whether those people remain in the organization or not). A little good diplomacy at theoutset can stave off a lot of resistance.

3. PEOPLE HAVE NO ROLE MODELS FOR THE NEW ACTIVITY

Never underestimate the power of observational learning. If you see yourself as a change agent,you probably are something of a dreamer, someone who uses the imagination to create new

possibilities that do not currently exist. Well, most people don¶t operate that way. It¶s great to be a visionary, but communicating a vision is not enough. Get some people on board with your



idea, so that you or they can demonstrate how the new way can work. Operationally, this canmean setting up effective pilot programs that model a change and work out the kinks before

taking your innovation ³on the road.´ For most people, seeing is believing. Less rhetoric andmore demonstration can go a long way toward overcoming resistance, changing people¶s

objections from the ³It can¶t be done!´ variety to the ³How can we get it done?´ category.

4. PEOPLE FEAR THEY LACK THE COMPETENCE TO CHANGEThis is a fear people will seldom admit. But sometimes, change in organizations necessitates

changes in skills, and some people will feel that they won¶t be able to make the transition verywell. They don¶t think they, as individuals, can do it. The hard part is that some of them may be

right. But in many cases, their fears will be unfounded, and that¶s why part of moving peopletoward change requires you to be an effective motivator. Even more, a successful change

campaign includes effective new training programs, typically staged from the broad to thespecific. By this I mean that initial events should be town-hall type information events,

presenting the rationale and plan for change, specifying the next steps, outlining futurecommunications channels for questions, etc., and specifying how people will learn the specifics

of what will be required of them, from whom, and when. Then, training programs must beimplemented and evaluated over time. In this way, you can minimize the initial fear of a lack of

personal competence for change by showing how people will be brought to competencethroughout the change process. Then you have to deliver.

5. PEOPLE FEEL OVERLOADED AND OVERWHELMED

Fatigue can really kill a change effort, for an individual or for an organization. If, for example,you believe you should quit smoking, but you¶ve got ten projects going and four kids to keep up

with, it can be easy to put off your personal health improvement project (until your first heartattack or cancer scare, when suddenly the risks of standing still seem greater than the risks of

change!). When you¶re introducing a change effort, be aware of fatigue as a factor in keeping people from moving forward, even if they are telling you they believe in the wisdom of your

idea. If an organization has been through a lot of upheaval, people may resist change just because they are tired and overwhelmed, perhaps at precisely the time when more radical change

is most needed! That¶s when you need to do two things: re-emphasize the risk scenario thatforms the rationale for change (as in my cancer scare example), and also be very generous and

continuously attentive with praise, and with understanding for people¶s complaints, throughoutthe change process. When you reemphasize the risk scenario, you¶re activating people¶s fears,

the basic fight-or-flight response we all possess. But that¶s not enough, and fear can produce itsown fatigue. You¶ve got to motivate and praise accomplishments as well, and be patient enough

to let people vent (without getting too caught up in attending to unproductive negativity).

6. PEOPLE HAVE A HEALTHY SKEPTICISM AND WANT TO BE SURE NEW IDEAS

ARE SOUNDIt¶s important to remember that few worthwhile changes are conceived in their final, best form at

the outset. Healthy skeptics perform an important social function: to vet the change idea or process so that it can be improved upon along the road to becoming reality. So listen to your

skeptics, and pay attention, because some percentage of what they have to say will promptgenuine improvements to your change idea (even if some of the criticism you will hear will be

based more on fear and anger than substance).



7. PEOPLE FEAR HIDDEN AGENDAS AMONG WOULD-BE REFORMERSLet¶s face it, reformers can be a motley lot. Not all are to be trusted. Perhaps even more

frightening, some of the worst atrocities modern history has known were begun by earnest people who really believed they knew what was best for everyone else. Reformers, as a group,

share a blemished past . . . And so, you can hardly blame those you might seek to move toward

change for mistrusting your motives, or for thinking you have another agenda to follow shortly.If you seek to promote change in an organization, not only can you expect to encounter resentment for upsetting the established order and for thinking you know better than everyone

else, but you may also be suspected of wanted to increase your own power, or even eliminate potential opposition through later stages of change.

I saw this in a recent change management project for which I consulted, when management faced

a lingering and inextinguishable suspicion in some quarters that the whole affair was a prelude tofar-reaching layoffs. It was not the case, but no amount of reason or reassurance sufficed to

quell the fears of some people. What¶s the solution? Well, you¶d better be interested in changefor the right reasons, and not for personal or factional advantage, if you want to minimize and

overcome resistance. And you¶d better be as open with information and communication as you possibly can be, without reacting unduly to accusations and provocations, in order to show your

good faith, and your genuine interest in the greater good of the organization. And if your change project will imply reductions in workforce, then be open about that and create an orderly process

for outplacement and in-house retraining. Avoid the drip-drip-drip of bad news coming out instages, or through indirect communication or rumor. Get as much information out there as fast

as you can and create a process to allow everyone to move on and stay focused on the changeeffort.

8. PEOPLE FEEL THE PROPOSED CHANGE THREATENS THEIR NOTIONS OF

THEMSELVESSometimes change on the job gets right to a person¶s sense of identity. When a factory worker

begins to do less with her hands and more with the monitoring of automated instruments, shemay lose her sense of herself as a craftsperson, and may genuinely feel that the very things that

attracted her to the work in the first place have been lost. I saw this among many medical peopleand psychologists during my graduate training, as the structures of medical reimbursement in this

country changed in favor of the insurance companies, HMO¶s and managed care organizations.Medical professionals felt they had less say in the treatment of their patients, and felt answerable

to less well trained people in the insurance companies to approve treatments the doctors felt werenecessary. And so, the doctors felt they had lost control of their profession, and lost the ability to

do what they thought best for patients.

My point is not to take sides in that argument, but to point out how change can get right to a person¶s sense of identity, the sense of self as a professional. As a result, people may feel that

the intrinsic rewards that brought them to a particular line of work will be lost with the change.And in some cases, they may be absolutely right. The only answer is to help people see and

understand the new rewards that may come with a new work process, or to see how their ownunderlying sense of mission and values can still be realized under the new way of operating.

When resistance springs from these identity-related roots, it is deep and powerful, and to



minimize its force, change leaders must be able to understand it and then address it,acknowledging that change does have costs, but also, (hopefully) larger benefits.

9. PEOPLE ANTICIPATE A LOSS OF STATUS OR QUALITY OF LIFE

Real change reshuffles the deck a bit. Reshuffling the deck can bring winners . . . and losers.

Some people, most likely, will gain in status, job security, quality of life, etc. with the proposedchange, and some will likely lose a bit. Change does not have to be a zero sum game, andchange can (and should) bring more advantage to more people than disadvantage. But we all

live in the real world, and let¶s face it ± if there were no obstacles (read: people and their interests) aligned against change, then special efforts to promote change would be unnecessary.

Some people will, in part, be aligned against change because they will clearly, and in some cases

correctly, view the change as being contrary to their interests. There are various strategies for minimizing this, and for dealing with steadfast obstacles to change in the form of people and

their interests, but the short answer for dealing with this problem is to do what you can to presentthe inevitability of the change given the risk landscape, and offer to help people to adjust. Having

said that, I¶ve never seen a real organizational change effort that did not result in some peoplechoosing to leave the organization, and sometimes that¶s best for all concerned. When the

organization changes, it won¶t be to everyone¶s liking, and in that case, it¶s best for everyone to be adult about it and move on.

10. PEOPLE GENUINELY BELIEVE THAT THE PROPOSED CHANGE IS A BAD IDEA

I¶ll never forget what a supervisor of mine said to be, during the year after I had graduated fromcollege, secure as I was in the knowledge of my well earned, pedigreed wisdom at age twenty-

two. We were in a meeting, and I made the comment, in response to some piece of information,³Oh, I didn¶t know that!´ Ricky, my boss, looked at me sideways, and commented dryly,

³Things you don¶t know . . . fill libraries.´ The truth is, sometimes someone¶s (even ± gasp! ± my) idea of change is just not a good idea. Sometimes people are not being recalcitrant, or

afraid, or muddle-headed, or nasty, or foolish when they resist. They just see that we¶rewrong. And even if we¶re not all wrong, but only half wrong, or even if we¶re right, it¶s

important not to ignore when people have genuine, rational reservations or objections.

Not all resistance is about emotion, in spite of this list I¶ve assembled here. To win people¶scommitment for change, you must engage them on both a rational level and an emotional

level. I¶ve emphasized the emotional side of the equation for this list because I find, in myexperience, that this is the area would-be change agents understand least well. But I¶m also

mindful that a failure to listen to and respond to people¶s rational objections and beliefs isultimately disrespectful to them, and to assume arrogantly that we innovative, change agent typesreally do know best. A word to the wise: we¶re just as fallible as anyone.

Restructuring and Reengineering the Organization

Point Summary

Restructuring the firm consists of altering its decision-making, operating divisions, and managementculture. Reengineering entails changing the procedures by which the work is accomplished and

products delivered.



Process restructuring, as championed by Michael Hammer and James Champy in their R eengineering the Corporatio, can deliver costs reductions of 50 percent or more. Corporate restructuring, asportrayed by John Womack and colleagues in T he Machine that Changed the World , also suggest a lawof ³halves.´ Womack and his colleagues studied the Japanese automobile industry, and their researchrevealed that Toyota and other makers ± by applying the principles of teamwork, quality control, customer focus, minimal buffers and continuous improvement ± had cut product defects by half, factory space byhalf, work-time by half, and development time by half.

While diversification had been a hallmark of good management during the 1960s, shedding unrelatedbusiness had become the measure during the 1980s and 1990s. De-diversification, back to basics, and areturn to core competencies emerged as restructuring drivers for good reason. More focused firms, asRobert Hoskisson and Michael Hitt show in Downscoping, display superior performance.

Restructuring actions taken in single areas tend to achieve few enduring gains. Downsizing theworkforce generates short-term cost savings, but in the absence of a broader reorganization, it bringsonly temporary relief. Reengineering business process creates immediate gains, but the gains are short-lived without changes in performance measures, compensation incentives, information technologies,employee skills, and organizational structure. Restructuring and reengineering, then, should be seen

as a multi-faceted revamping of the corporation.

Company restructuring has both worsened and improved the lot of those who work there. Leanredesigns, cost reductions, and repeated downsizings have terminated careers and decimatedcommunities. At the same time, reengineering, flexible work, and streamlined hierarchies haveimproved employee productivity and product quality. The process of restructuring frequently brings longwork weeks and high stress levels, but the product of restructuring also often results in greater autonomy and more challenging work. One study of restructuring experience revealed heightenedloads, diminished morale, and reduced employee commitment, but it also found enhanced quality,customer service, risk taking, workforce competence, and productivity.

The dual impact of corporate restructuring on those who experience and manage it accounts for someof the schizophrenia toward restructuring. Work environments can be filled with high anxiety and lowmorale. At the same time, however, the quality of work life often improves, with more variety,

responsibility, and teamwork. Executives experience stress as they manage the transformation, but indoing so they are also laying a framework for improved company performance, richer compensationpackages, and enhanced shareholder return.

W hat Is R eengineering?

As business process reengineering receives higher visibility in the popular press, its meaning is

often blurred, or, worse, confused with pure cost-cutting strategies such as downsizing. InWhat Is Reengineering? we define reengineering, extending the traditional definition to

include some key elements that we believe are essential for success.

eengineering, or more specifically, business process reengineering (BPR), is a term



that was launched into the forefront of the business world by Michael Hammer and James Champy in their 1993 book, Reengineering the Corporation: A Manifesto for BusinessRevolution. In this book, Hammer and Champy define reengineering as:

"the fundamental rethinking and radical redesign of the business processes to achieve

dramatic improvements in critical, contemporary measures of performance ..."

At Business Architects, we believe this traditional definition of reengineering must beextended:

"... by leveraging proven models of process, organization, and technology todramatically improve the pace of change and to compress the time to achievemeasurable business results."

This definition features a number of key words:

Fundamental

Reengineering is "fundamental" insofar as we must ask the most basic questions aboutthe company and how it operates. Before thinking about what we're doing (or whatwe're doing wrong), we must ask why we're doing it. Too often, effort is spent fixing aprocess without thinking why the process is there in the first place, and moreimportantly, whether it needs to be there at all. Only with the proper consideration forthe fundamentals of an organization can we hope to succeed at reengineering.

Radical

Another key aspect of reengineering is that it is "radical." Contrary to commonperception, this does not mean that reengineering must be revolutionary or violent.Rather, what it means is that we must focus on the "root" of the problems. (As MichaelHammer likes to point out, "radical" shares its etymology with the word "radish," one ofthe better known roots.) The important message is that reengineering is not abouttweaking existing organizations and processes, but often involves a reinventing of thoseprocesses by focusing on their roots.

Dramatic

Reengineering is about dramatic improvements. Marginal improvements such as a 10%increase in sales or a 5% cut in expenses do not require reengineering. Techniques suchas quality initiatives or process improvement will often suffice in those cases.Reengineering is required when you need dramatic improvements. So, reengineeringisn't used if you want to improve response time to customer requests by ten percent,but rather when you want to improve it tenfold.



Process

Most importantly, reengineering is about "processes." Too often, strategic initiativesfocus on tasks, jobs, or organizations. Ultimately, process redesigns drive reengineeringefforts.

But what is a process? According to Hammer and Champy, a process is:

"... a collection of activities that takes one or more kinds of input and creates an outputthat is of value to the customer."

Historically, management focused on individual, narrowly defined tasks and jobs (forexample, how to best capture a customer's merchandise order). We need to shift theemphasis towards a collection of these tasks that provide value to the customer.Continuing with our example, the real value to the customer is not necessarily how

quickly we capture the order, but also how quickly and accurately we fulfill the order(which might include many separate tasks, such as order capture, inventorymanagement, payment application, warehouse operations, and shipping).

This transition from tasks to processes is surprising difficult for many organizations toembrace. Too often, companies focus on the roles of specialists and how to make thembetter at their jobs. Unfortunately, regardless of the quality of the specialists, the moreof them that are involved in a process, the more hand-offs that the process must endure.And unnecessary hand-offs are the enemies of any good process: Hand-offs causedelays (for example, time spent in the out-basket of one specialist and the in-basket ofanother) and introduce inefficiencies (because of the needed management and tracking

of the process).

Reengineering's focus on processes ensures that we consider not only the tasks it takesto provide value to the customer, but also the delays and overhead that are introducedby the organization, processes, and systems. Only this way can we yield the dramaticbenefits demanded of reengineering efforts.

definition -

Business process reengineering (BPR) is the analysis and redesign of workflow within and between

enterprises. BPR reached its heyday in the early 1990's when Michael Hammer and James Champy

published their best-selling book, "Reengineering the Corporation". The authors promoted the idea that

sometimes radical redesign and reorganization of an enterprise (wiping the slate clean) was necessary to

lower costs and increase quality of service and that information technology was the key enabler for that

radical change. Hammer and Champy felt that the design of workflow in most large corporations was



based on assumptions about technology, people, and organizational goals that were no longer valid.

They suggested seven principles of reengineering to streamline the work process and thereby achieve

significant levels of improvement in quality, time management, and cost:

1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization and prioritize them in order of redesignurgency.3. Integrate information processing work into the real work that produces theinformation.4. Treat geographically dispersed resources as though they were centralized.5. Link parallel activities in the workflow instead of just integrating their results.6. Put the decision point where the work is performed, and build control into theprocess.7. Capture information once and at the source.

y Power/Interest Matrix

A valuable development of the power/dynamism matrix can be seen in Figure 4. Thisclassifies stakeholders in relation to the power they hold and the extent to which they arelikely to show interest in the organisation's strategies. The matrix indicates the type of relationship which the organisation will need to establish with each stakeholder group.Clearly the acceptability of strategies to the key players (segment D) should be a key

consideration during the formulation and evaluation of new strategies. Often the mostdifficult stakeholders are those in segment C. Although these stakeholders might ingeneral be relatively passive, readers are reminded that stakeholder groups tend to emergeand influence strategy as a result of specific events . It is therefore critically important thatthe likely reaction of stakeholders towards future strategies is given full consideration. Adisastrous situation can arise if their level of interest is underrated and they suddenly reposition to segment D and frustrate the adoption of a new strategy. Similarly, the needsof stakeholders in segment B need to be properly addressed -- largely throughinformation. They can be crucially important ¶allies· in influencing the attitudes of morepowerful stakeholders. The value of this type of stakeholder mapping is in assessing the

following: y W hether the political/cultural situation is likely to undermine the adoption of aparticular strategy. In other words, mapping is a way of assessing cultural fit (which will bean important consideration in strategic evaluation ). y W ho the key b loc kers and facilitators of change are likely to be, and therefore, whetherstrategies need to be pursued to reposition certain stakeholders. This could be to lessen the



influence of a key player or, in certain instances, to ensure that there are more key players who will champion the strategy (this is often critical in the public-sector context). y The extent to which m aintenance activities will be needed to discourage stakeholdersfrom repositioning themselves. This is what is meant by keep satisfied in relation tostakeholders in segment C, and to a lesser extent keep infor m ed in segment B. Side pay m ents

to stakeholders as a means of securing their acceptance to new strategies havetraditionally been regarded as a key maintenance activity.

Figure 4: Stakeholder mapping: power/interest matrix

Source : Adapted from A. Mendelow, op. cit.

These questions, of course, raise some difficult ethical issues for managers in deciding therole they should play in the political activity surrounding strategic change. For example,are managers really the h onest b rokers who weigh the conflicting expectations of stakeholders groups? Or are they answerable to just one stakeholder -- such asshareholders -- and hence is their role to ensure the acceptability of their strategies withother stakeholders? Or are they, as many authors suggest, the real power behind thethrone, constructing strategies to suit their own purposes and managing stakeholder

expectations to ensure acceptance to these strategies? These are important issues for allmanagers to consider.

Power

Sources of Power Within Organisations



Power within organisations can be derived in a variety of ways, any of which may provide an avenue whereby the expectations of an individual or group may influencecompany strategies. The following are the normally recognised sources of power:

1. H ierarc h y provides people with formal power over others and is one method by whichsenior managers influence strategy. In particular, if strategic decision making is confinedto top management, this can give them considerable power. However, it is important toremember that this type of power has a very limited effect if used in isolation. Many industrial disputes illustrate the impotence of management if they rely only on formal power.

2. I nfluence can be an important source of power and may arise from personal qualities (of leadership) or because a high level of consensus exists within the group or company (i.e.,people are willing to support the prevailing viewpoint). Indeed, there is strong support

for the view that the most important task of managers is to shape the culture of theorganisation to suit its strategy.

It is not surprising that those individuals most closely associated with the core beliefs orparadigm are likely to accrue power. In professionals organisations, key professionalshave considerable power through their influence on others (doctors in the healthservices, accountants in accountancy firms: even engineering firms tend to have qualifiedengineers as managing directors). It is important to recognise, however, that the extent to

which an individual or group can use influence is determined by a number of otherfactors. For example, access to channels of communication (e.g., the media) could be an

essential requirement.

In many situations, prior commitments to principles or specific courses of action cangive individuals influence. Some of these principles may be quite central to theorganisation·s mission. For example, following the major changes in eastern Europe in1989, many organisations were reshaped with the explicit purpose of excluding Communist Party members from senior management positions. This led to some difficultsituations in the short term, where those who had been party members for pragmaticrather than ideological reasons were sidelined while other, often less able, managersleapfrogged into senior positions.

3. C ontrol of strategic resources is a major source of power within companies. It should beremembered that the relative importance of different resources will change over time,and hence power derived in this way can show dramatic shifts. The power of organisedlabour is most potent when demand for output is high and labour supply short. Thedecline in the position of car workers in the wages league during the 1970s was evidenceof the erosion of this source of power. W ithin any one company the extent to which the

various departments are seen as powerful will vary with the company·s circumstances.



Design or R&D departments may be powerful in companies developing new products orprocesses, whereas marketing people may dominate companies which are primarily concerned with developing new markets.

4. The logical extension of the previous point is that individuals can derive power from

their specialist knowledge or s kills . Certain individuals may be viewed as irreplaceable by thecompany, and some will jealously guard this privileged position by creating a mystiquearound their job. This can be a risky personal strategy, since others in the organisationmay be spurred to acquire these skills or to devise methods of bypassing them. The power of many organisations' computer specialists was threatened with the advent of microcomputers, which provided others within the organisation with a means of bypassing those specialists. The rapid internationalisation of many organisations hasspurred individuals to improve their language skills and international experience as key requirements in the labour market.

5. C ontrol of t h e environ m ent is another source of power within organisations. Most peopleknow that events in the company·s environment are likely to influence company performance. However, some groups will have significantly more knowledge of, contact

with, and influence over the environment than others. This can become a source of power within the company, since these groups are able to reduce the uncertainty experienced by others. It is probably for this reason that financial and marketing managers have traditionally been seen as dominant in strategy determination, whileproduction managers have taken a back seat. This source of power becomes mostimportant when the environment is hostile or unpredictable. Then most of the factions

will unite behind those who are considered best able to protect the company, despite the

fact that the medicine which might be doled out could represent a denial of many of theirexpectations.

6. Ex ercising discretion is a most significant source of power within many organisations andis often overlooked. Individuals derive power because they are involved in thecompany·s decision processes by the very nature of their jobs. The execution of strategy,by its very complexity, cannot be controlled in all its minutest detail by one person orgroup. Hence many other people in the company will need to interpret and executeparticular parts of the strategy, and in doing so will use their own personal discretion.

This is a major source of power for middle management in organisations. The extent of

which discretion is allowed to influence strategy is obviously related to the types of structure and control system within the organisation.

Sources of Power for External Stakeholders

As with internal groups, those outside the organisation may have a number of sources of power which help them influence the organisation's strategies.



1. R esource dependence is a common source of power, as discussed earlier. The power thatbuyers or suppliers exercise over an organisation is also likely to depend on the extent to

which they are able to exercise control over resource provision or acquisition. Long-termdependence on a particular resource can shape the attitudes and culture of an

organisation in a way which makes ¶switching· very difficult. However, dependence may often be much wider than just suppliers or buyers. It may be ingrained in theorganisation·s routines and assumptions. This has been a problem experienced by many eastern European firms as they have switched from the state-controlled to a free-marketsituation.

2. I nvolve m ent in i m ple m entation through linkages within the value system can be animportant source of power for suppliers, channels, and buyers. One of the majorchanges since the 1960s in many industries has been a shift of power from themanufacturing sector to the distribution sector. The greater knowledge that distribution

companies have of trends in consumer tastes has allowed them to dictate terms tomanufacturers, rather than simply being outlets for goods designed and planned by manufacturing companies.

3. K nowledge and s kills critical to the success of the company are another source of power. A sub-contractor, for example, may derive power in this way, it performs a vital activity in the company·s value chain.

4. I nternal lin ks can provide a route for external stakeholders to influence company strategy. This is determined by the strategy-making processes within the organisation. At

one extreme, a highly authoritarian organisation is likely to be hostile to any attempts by outside stakeholder to be formally involved in formulation of strategy, and therefore any influence on strategy must be derived in other ways. In contrast, some organisations (e.g.,

well-run public services) actively seek to involve a wide variety of stakeholders instrategic decision making

National Culture and Organisational Strategies

STRATEGIC ISSUES APPROACH TO MANAGING ISSUES

(a) Relationshi ps with environment

C oping wit h uncertainty

I nfluencing t h e environ m ent

In that culture do managers generally:

avoid or tolerate? reduce or accept?

manage or adapt?

behave proactively or reactively?

prefer action or fatalism?



Assessing trut h/reality

Attitude to ti m e /c h ange

(b) Internal relationshi ps

P ower and status

I ndividualis m

Social orientation

analyse facts or theoretical logic?

assess inductively or deductively?

relate to past or future?

prefer continuous or step change?

use hierarchy or network?

respect individuals or groups?

emphasise tasks or social needs?

Source : Adapted from S. Schneider ( 1989 ). ´Strategy formulation: the impact of nationalcultureµ, Organisation Studies , Vol. 10, No. 2.

Although it is difficult and perhaps dangerous to stereotype nations against the checklist,two extreme stereotypes can be identified: y A culture where uncertainty is managed by attempting to reduce it; when organisationsare seen as having control and being proactive; and where the hierarchy, the individualand the work tasks are stressed. Here strategies are likely to be planned . US culture comesclose to this stereotype.

y In contrast, the adaptive model of strategic management is more likely to be found in

cultures where uncertainty is accepted as given; where the organisation has less controland is reactive; and where the orientation is towards the group and social concerns. Japanese culture is close to this stereotype.

2.2.1.2 Power/Interest matrix

This matrix maps stakeholder power against expected interest in the project or a specificrequirementand helps determine the best strategy for managing stakeholder epectations.

Level of interest

Low High

Low

Power

Minimal effort Keepinformed

High Keep satisfied Key Players



Stakeholder power vs.level of interest (Johnson

and Scholes, 2002)

Power/Interest matrix

Minimal effort: Stakeholders with low power and a low level of interest.

Response: No immediate action required - monitor carefully in case their positionin the matrix changes.

Keep informed: Stakeholders with low power and a high level of interestResponse:No immediate action required - keep informed and monitor carefully in

case their position in the matrix changes.

Keep satisfied: Stakeholders with high power and low level of interest.

Response: These are the most challenging stakeholders to maintainrelationships with as, despite their lack of interest in general, such a stakeholder

might exercise its power in reaction to a particular project or initiative.

Key players: Stakeholders with high power and a high level of interest.

Response:These stakeholders are the 'key players', their reaction towards theorganisation's projects and initiatives must be given primary consideration.

Source: Keeling (2000; 122)

Sometimes active support of high interest stakeholders can be taken as interference and thesestakeholders need to be persuaded into the Low priority quadrant.

Restructuring usually refers to ³corporate

restructuring´ ± the reorganization of a company to improve its profitability.Restructuring may occur because of company buy-outs, bankruptcy, or corporate acquisitions.

Corporate restructuring responsibilities typically belong to the company CEO. In fact,

companies will often hire a new CEO to specifically handle the restructuring process. Theresponsibilities of the CEO may include debt restructuring, implementing new technology, or

rebuilding a particular area within an organization. Unfortunately, for many company employees,corporate restructuring can also mean possible layoffs, especially if one of the changes

includes downsizing personnel.



Successful restructuring of a company should improve both the efficiency and profitability of the

business.

Restructuring is the corporate management term for the act of reorganizing the legal,ownership, operational, or other structures of a company for the purpose of making itmore profitable, or better organized for its present needs. Alternate reasons for restructuring include a change of ownership or ownership structure, demerger , or aresponse to a crisis or major change in the business such as bankruptcy, repositioning,or buyout. Restructuring may also be described as corporate restructuring, debtrestructuring and financial restructuring.

In education, restructuring refers a requirement in the No Child Left Behind act of 2001, which requires schools identified as chronically failing for 5 years or more toundertake rapid changes that affect how the school is led and instruction delivered. [1]

Executives involved in restructuring often hire financial and legal advisors to assist inthe transaction details and negotiation. It may also be done by a new CEO hiredspecifically to make the difficult and controversial decisions required to save or reposition the company. It generally involves financing debt, selling portions of thecompany to investors, and reorganizing or reducing operations.

The basic nature of restructuring is a zero sum game. Strategic restructuring reducesfinancial losses, simultaneously reducing tensions between debt and equity holders tofacilitate a prompt resolution of a distressed situation.

Steps:

y ensure the company has enough liquidity to operate during implementation of a complete

restructuring

y produce accurate working capital forecasts

y provide open and clear lines of communication with creditors who mostly control the company's

ability to raise financing

y update detailed business plan and considerations[2]

Contents [hide]

y 1 Valuations in restructuring

y 2 Restructuring in Europe

y 3 Characteristics

y 4 Results

y 5 References

y 6 External links



y 7 See also

V aluations in restructuring

In corporate restructuring, valuations are used as negotiating tools and more thanthird-party reviews designed for litigation avoidance. This distinction betweennegotiation and process is a difference between financial restructuring and corporatefinance.[2]

R estructuring in Europe

The ³London Approach´ Historically, European banks handled non-investment grade lending and capital structures that were fairly straightforward. Nicknamed the ³London Approach´ in the UK,restructurings focused on avoiding debt write-offs rather than providing distressed

companies with an appropriately sized balance sheet. This approach becameimpractical in the 1990s with private equity increasing demand for highly leveragedcapital structures that created the market in high-yield and mezzanine debt. Increasedvolume of distressed debt drew in hedge funds and credit derivatives deepened themarket²trends outside the control of both the regulator and the leading commercialbanks.

C haracteristics

y Cash management and cash generation during crisis

y Impaired Loan Advisory Services (ILAS)

y Retention of corporate management sometimes "stay bonus" payments or equity grants

y Sale of underutilized assets, such as patents or brands

y Outsourcing of operations such as payroll and technical support to a more efficient third party

y Moving of operations such as manufacturing to lower-cost locations

y Reorganization of functions such as sales, marketing, and distribution

y Renegotiation of labor contracts to reduce overhead

y Refinancing of corporate debt to reduce interest payments

y A major public relations campaign to reposition the company with consumers

y Forfeiture of all or part of the ownership share by pre restructuring stock holders (if the

remainder represents only a fraction of the original firm, it is termed a stub).

R esults

A company that has been restructured effectively will theoretically be leaner, moreefficient, better organized, and better focused on its core business with a revisedstrategic and financial plan. If the restructured company was a leverage acquisition, theparent company will likely resell it at a profit if the restructuring has proven successful



a n s o f f ' s p r o d u c t / m a r k e t m a t r i x

Introduction

The Ansoff Growth matrix is a tool that helps businesses decide their product and market growthstrategy.

Ansoff·s product/market growth matrix suggests that a business· attempts to grow depend on whetherit markets new or existing products in new or existing markets.

The output from the Ansoff product/market matrix is a series of suggested growth strategies that setthe direction for the business strategy. These are described below:

Market penetration

Market penetration is the name given to a growth strategy where the business focuses on sellingexisting products into existing markets.

Market penetration seeks to achieve four main objectives:

Maintain or increase the market share of current products ² this can be achieved by a combination ofcompetitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated topersonal selling

Secure dominance of growth markets



Restructure a mature market by driving out competitors; this would require a much more aggressivepromotional campaign, supported by a pricing strategy designed to make the market unattractive forcompetitors

Increase usage by existing customers ² for example by introducing loyalty schemesA market penetration marketing strategy is very much about ´business as usualµ. The business is

focusing on markets and products it knows well. It is likely to have good information on competitorsand on customer needs. It is unlikely, therefore, that this strategy will require much investment in newmarket research.

Market development

Market development is the name given to a growth strategy where the business seeks to sell its existingproducts into new markets.

There are many possible ways of approaching this strategy, including:

New geographical markets; for example exporting the product to a new country

New product dimensions or packaging: for example

New distribution channels

Different pricing policies to attract different customers or create new market segments

Product development

Product development is the name given to a growth strategy where a business aims to introduce newproducts into existing markets. This strategy may require the development of new competencies andrequires the business to develop modified products which can appeal to existing markets.

Diversification

Diversification is the name given to the growth strategy where a business markets new products in newmarkets.

This is an inherently more risk strategy because the business is moving into markets in which it haslittle or no experience.

For a business to adopt a diversification strategy, therefore, it must have a clear idea about what itexpects to gain from the strategy and an honest assessment of the risks.



Other Strategy Revision Notes:Ansoff Growth Matrix | BCG Matrix | Balanced Scorecard - Intro | Balanced Scorecard -Perspectives Business Planning - Intro | Business Planning - Process | Writing a Business Plan - IntroductionBusiness Plan - Contents |

Benchmarking | Change Management - Intro | Change Management - Lewin

Change Management- Barriers |Change Management - Implementation | Competitive Advantage

Competitor Analysis | Core Competencies | CSR - Intro | CSR - Issues | CSR - BITC Crisis Management - Intro | Crisis Management - Risk Management |Crisis Management - Planning

Ethics - Introduction | Ethics - Issues and Examples |GE Matrix | McKinsey Growth Model | Global Business - Intro | Global Business - Strategy

Global Business - Competitiveness | Global Business - Globalisation |Mission Statements Business Objectives | PEST Analysis | Porter's Five Forces | Resources & Strategy |Seasonality

Strategic Audit | Stakeholders - Intro | Stakeholders - Interest & Power | Strategy & Marketing SWOT Analysis | Value Chain Analysis | Vision | What is Strategy?

Sea r

¡

tutor2u Home Page | Online Store | Contact Us | About tutor2u | Copyright Info | Your Privacy |Terms of Use

Working with Our Partners

Sapphire Education | Learning Curve | Vue Cinemas | Moneypenny | Nexcess | Really SimpleSystems | Actinic | Bickster

Boston House | 214 High Street | Boston Spa | West Yorkshire | LS23 6AD | Tel +44 0844 800 0085 |



Fax +44 01937 529236

Company Registration Number: 04489574 | VAT Reg No 816865400

tutor2u is proud to sponsor TABS Cricket Club and Collingham JFC as part of its programme ofinvestment in local junior sport

?

other strategy notes

What is Strategy?

Ansoff Matrix

Boston Matrix

Benchmarking

Competitive Advantage

Competitor Analysis

Core Competencies

GE Industry Matrix

McKinsey Growth Pyramid

Mission

Objectives

PEST Analysis

Five Forces Model

Strategy and Marketing

Strategic R esources

Strategic Audit

SWOT Analysis

Value Chain Analysis

Vision



Enter your search terms Submit search formSea r

¢

£ t ¤ t¥

r ¦

¤

Web www.tutor2u.net

Documents

Grand Strategies Are a Means to Get to Your Ends