CH10
Strategy and the organization:
An organization mission: P200
- An organization mission statement sets out what the organization wants to be. It should be the starting point for setting objective and making strategic decision.
- Mission statement containing one or more of the following four components:-
1. The orgnisation philosophy.
2. Specification of the product/ market domain.
3. The orgnisation key values.
4. Factor for success in market place.
* Developing on organization vision:-
- Mission is usually focused on the tangible goals of the organization.
- Vision includes quite abstract ( مجرد) elements.
- An organization vision is a frame work that includes the guiding philosophy, beliefs and purpose from which the mission statement is developed.
- The purpose of developing an orgnisation vision is to encourage management terms to think in detail about what they are trying to create.
- An effective vision holds various dimensions in balance so
* There will be reference to an idealistic (مثالي) future but based in the present.
* It will have an outward focus but realize of inner strength and weakness.
* It will be broad enough to inspire to differentiate the particular product of the organization from any other.
- The six F test: - help to indentify how will vision likely to be embraced.
1. Is it fantastic: Does it grap attention?
2. Is it feasible? Can it be achieved with recourse and time?
3. Is it focused? Could doesn’t be the outcome of a number of other projects?
4. Is it flexible? Is there rooms for maneuver (يحتضن) if the key players change?
5. Is faxable? Can it be remembered easily?
6. Is it fun? Is it positive?
The future environment:-
* The STEEP model
- The STEEP model help to construct a long term forecast for orgnisation.
- STEEP analyses lead to scenario planning; you need information for your analysis
And scenarios include:-
- Change in government policy
- Social trends such as age.
- Technological changes (computer and internet).
STEEP stand for:-
§ Social: - Attitudes and behavior.
§ Technological: - Technology be available to customer and compotation.
§ Economic: - Salaries – Taxation – interest rates.
§ Environmental: - Environmental matters.
§ Political: The laws and legislation.
* The PEST and PESTLE models:-
PEST: using for forecasting demand by studying current and post patterns.
PESTLE which include legal and Environmental.
Analyzing the competition
- Portr's five forces of competition help managers to analyse the near environment.
- It used as a means of understanding the structure of an industry or sector and as framework within which to identify structural changes.
- It concerned with maintaining competitive advantages.
- Portr's model identify five types of competitive pressure within sector
1. Established competition.
2. New entrants to the market.
3. Substitute products
4. The bargaining (مفاوضة هو مساومة) power of suppliers.
5. The bargaining power of customers.
- The degree of competitiveness within an industry depends on avaibility of substitutes, the strength of suppliers and buyers and the threat of new entrants.
- Suppliers are important because their relative power can determine what proportion of the price of the final product they capture.
- Organisations need to consider not only the behavior of the current competitors but also the potential for other organization to enter the market.
- An organization need to consider not only the competitors offering similar products but also those offering products that may act as substitutes.
* The Value Chain
The value chain shows the activities or function within an organization that contribute to the creation of the products or services that is delivered to external customers.
* Porter's value chain model
- There are five primary activities that are strategically important for the organisation.
Inbond logistic / Operation / Out bound logistics / Marketing and sales / After sales service- The first three activities contain an input/ transformations/output model.
- In bound logistics refers to the management of the flow of inputs of the organisation.
- The operation is what the organisation does to the imputs in order to transform them into the goods and services that the orgnisation sell it for customer.
- The out bound logistics are those activate that deal with the initial (البداية) storage and then the distribution of the outputs for customer
- Porter regards two further ones as being primary activities.
- First Marketing and sales contain those activities that are intended to achieve the safe of the output.
- Second the after sales services are directed towards people who have bought the output.
- The primary activities are supported by four activities that include
"Procurement"(الشراء او التحصيل) deals with the purchasing of the inputs.
- All activities reflect the current state of "technology development".
- HRM deals with management staff.
- Firm infrastructure covers the other supporting activities.
* Assessing the competitive position: -
- The SWOT model is used to assess the competitive position.
- The strength and weakness provide an internal picture.
- The opportunities and threats provide an external picture.
- Porters value chain aid the strength and weakness analysis with in SWOT.
- Porters five forces of competition and STEEP inform the opportunities and threat analysis
- SWOT model contributes to a long term.
Approaches to Strategy:-
-Strategy is the pattern of activities of an organization in pursuit of this long term purpose.
- Have three ways to understand strategy
1. Strategy is concerned with the broad pattern of organization activities not the day to day detail.
2. Strategy is concerned with the long term.
3. Strategy is concerned with organization purpose.
* Strategy- planned or emergent:-
- Planned strategy involves a formal, rational and process of strategic choices.
- Emergent strategy it's what the situation brings forth from the organization rather than an agreed plan.
- The quality of an organization emergent strategy is as much determined by its system and routines for responding to crises (الأزمات)and opportunities by the quality of its formal strategic planning process.
* A market based approach
- This approach starts by analyzing the environment outside the organization, and then seeks to fit the resources of organization to its environment, through a process of further analysis and planning.
* A resource- based approach:-
- This approach shifts the emphasis from the external to the internal context the focuses is placed on the resources that an organizations possesses.
- Possesses is a resource determine the deference between organizations.
- Resources are not productive they need to be converted into capabilities by being managed or coordinates.
- It is capabilities based on the resources that, if hard to imitate (يقلد), give the main source of competitive advantages.
- Strategy from the resource perspective is therefore about:-
Choosing from and committing to long term paths of capability development.
* Strategic planning:-
- Strategic planning draws on market and resource-based perspective.
- The market based approach start by analyzing the near environment and the organization resources.
- The resource based approach start with account of organization capabilities and seeks to find synergy (تآزر) with opportunities occurring in the external environment.
Strategic choices:-
Porter's generic strategies
In the figure provide the
Basis for a structure analysis
Of your own organization
- This model based on two key measures:-
1. Competitive scope: - This defines the range of products or market over which an organisation chooses to compete on a narrow or on a broad front.
2. Competitive advantage: this refer to edge that an organisatoin has over it competitors, the degree that persuades customers to bring their business to the organisation.
- The search for competitive advantages is at the heart of organisatoinal strategy.
* Two sources of competitive advantage
1- Cost leadership: The organisation set out to be
· Low cost producer.
· Exploiting all possible source of cost advantage.
· Low cost production should compatible with low pricing.
· Low production cost reflected in prices to the consumer.
2- Differentiation
- The organisation offer extra advantages to its customer to be able to charge a premium price for its products or services to recover its higher costs and increase it s margin and profit.
* Ansoff matrix:-
ProductMission / Present / New
Present / Market penetration (تغلغل) / Product development
New / Market development / Diversification (تنويع)
- Ansoff matrix is a way of presenting the strategic option that are open to an organisation in relations to its products or services.
- The matrix allows four options to be generated depending on whether present or new markets or products are involved.
1- Market Penetration (Present/Present)
- This option penetrates the market to seek extra sales for the product in the present market, so increase the market share.
- It is not option if a market reach saturation point.( التشبع)
- It is risky option because it uses the organisation existing capability and resources
2- Market development (Present/New)
- This option seeks a new market for present product.
- This option is risky than the first than the first because it involves expansion into a new market.
- This option is good for an organisation whose core competencies relate to its products rather than particular segment of market.
3- Product development: (new/present).
- This option the organisation seek customer for the new product in the present market.
- This strategy is good for organisation whose strength lie in their customer and market rather than their specific products.
- Risky like market development.
4- Diversification (New/New)
- New product to new market
- High risk than the other because it requires the development of both product and market.
- The organisation core competencies maybe inadequate for such undertaking.
* New product development process:-
- The key stages of the new product development process are:-
1- Concept tests
2- Test marketing.
3- Product development.
4- Product and services testing.
* Identifying gaps in the market:-
- Gap analysis is a technique that can help analyse in consumer – oriented terms.
- Gaps come from four main causes.
1. Usage gap:- this gap is between the total potential for the market and the actual current usage by all customers in the market.
2. Access gap:- this gap caused by limits of the availability of the product, to avoid this maximise distribution.
3. Product / service gap: Exclude the organisation because the characteristics of product or service, because parts of market have different needs and orgnisation does not offer for each of these groups segments.
4. Competitive gap:- this gap relate to the organisation competitive performance.
- Once these gaps are identified, the new product development process will be successful.
Understanding Your Own Organisation
Organisation structure:-
- The structure of the organisation provides a framework for understanding people's relationship to each other in the organisation.
* The formal structure:-
- The formal structure described in an organisation chart and in the various staff job description.
- The chart and the job description describe the way that each part in the organisation is related to the others.
- From these chart and description it's clear
1. The number of managerial levels in organisation.
2. The extent to which important decision are takes.
3. The extent to which jobs are specialized or more general.
4. The lines of communication between people.
* Informal structure:-
- Informal structure is about network of different kinds such as the alliances between managers.(تحالف المدراء)
- A manager who wants to be effective within the organization needs to be sensitive to these informal structures.
* The network or virtual organization:-
- A net work or virtual organization consists of a partnership of several organization instead of differentiated functional departments bound together in one organization.
- This approach are described as follow
1. Network seems most likely to form when organization face shorted product cycle and fragmented specialized market.
2. A network can be result of massive outsourcing or collaboration between small firms whose scale of operations would not allow them to compete in international markets by themselves.
- When all the task activities are outsourced and activities of organisation are moved outside the organisation boundary there is virtual organisation.
* The Benetton organisation:-
- Most of Benetton manufacturing is subcontracted and most of its shops are operate in exclusive franchise(امتياز حصري) so Benetton is very much a net work organisation.
- Benetton keeps the capabilities that it sees as giving it competitive advantage.
* The Organisation Culture:
- It refers to the atmosphere within the organisation and to the values that influence the way that people work and are managed.
- The culture will be expressed publicly in the mission statement in the organisation logo in the financial account present………
* Some example of organisation culture:-
- Customer first culture: - The stuff will be imbued (مشبع)with the view that customers are important, any activity on behalf of a customer in general will be applauded.
- Tough guy culture: - You are as good as your last job, to know more or less about achieving goals.
- Quality culture: - There is an orgnisation- wide commitment to high quality outputs.
* Orgnisation change
- Orgnisation approaches to change
- Orgnisation approaches to change focus on changing what the orgnisation is like.
Restructuring:-
- Orgnisation has restructured them to operate more efficiently in the face of globalization.
- The intention of restructuring has been to eliminate the levels on management hierarchy. one aim being to improve efficiency by speeding up communication and decision making.
- Some organisation there is three layers between the most junior and most senior hierarchy.
-Restructuring of this kind referred to as "delayering or downsizing".
- As result of downsizing organisation focus their core competencies, these competencies are an organisation source of competitive advantages, this kind of restructuring manifests(يتجلى) itself as.