工商管理专业MBALectu(2).ppt

REVISION LECTURE MONDAY,Vertical Integration Definitions,Vertical Integration: refers to a firmss ownership of the vertically related activities. The greater the firms ownership extends over successive stages of the value chain for its product, the greater the degree of vertical integration. The extent of vertical integration is indicated by the ratio of a firms value added to its sales revenue: the more a firm makes rather than buys, the greater its value added relative to its sales revenue. Vertical integration can be either backward, where the firm takes ownership and control of producing its own or other inputs, or forward, where the firm takes ownership and control of activities previously undertaken by customers. Vertical integration may be full or partial. Some Wineries are fully integrated: they produce the wine from the grapes they grow, and the sell it all through direct distribution. Some wineries in California and France do this. Most are partially integrated: home grown grapes supplemented with purchased grapes; they sell some wine through own tasting rooms, but most through independent distributors.,Strategies: DIVERSIFICATION,Diversification two broad types: Related diversification is development beyond the present product and market, but still within the broad confines of the industry. For Example Unilever is a diversified corporation, but virtually all its interests are in the consumer goods industry. (a) Backward integration refers to inputs into the current business further back in the value system e.g. Raw materials, machinery, labour (b) Forward integration refers to activities which are concerned with the companys outputs e.g. Transport, distribution, repairs, and servicing. These are further forward in the value system (c) Horizontal integration refers to activities which are competitive with or directly complementary to a companys present activities Unrelated diversification refers to activity development beyond the present industry into products/markets, which at face value, may bear no clear relationship with present products/markets.,Some Reasons for related Diversification,Dr Ita ODonovan Beechgrove Associates,Some reasons for unrelated diversification,Dr Ita ODonovan Beechgrove Associates,5,Portfolio Analysis,Market Power and Market Share are important concepts for a strategic business unit to consider. Relative market share means the amount of market share a firm has relative to it competitors There is an established relationship between market power and performance in commercial organisations. Useful to break down market share by segments and to examine market share within those segments What is important is to see which market segments are important from corporate/profit point of view. Segment may be more competitive or growing more or bigger,Dr Ita ODonovan Beechgrove Associates,6,? Low unstable, analyse to see Whether business can be grown into a star or will it degenerate into a DOG,STAR High, stable growing Invest for growth,DOGS Low Unstable Cash flow neutral Or negative,Cash Cows High Stable High Earnings Good Cash flow,A N N U A L R A T e O F M A R K E T G R O W T H (%) n,High,L O W,Low Relative Market Share High,THE BCG GROWTH SHARE MATRIX,A star is an SBU which has a high market share in a growth market. The firm may be spending heavily to gain that share , but experience curve benefits should mean that costs are reducing over time and at faster rate than competitors The question mark is an SBU with high growth but does not have a high market share. Firm could be spending heavily but not reducing costs and not making inroads on competition The Cash Cow has a high market share in a mature market. Low growth market conditions stable,need to spend is less. High relative market share means SBU able to maintain unit cost levels below competitors. Dogs have low share in static or declining markets, worst of all combinations, may drain cash and use disproportionate amount of time and resources.,Dr Ita ODonovan Beechgrove Associates,8,Growth Share Matrix for Portfolio Analysis,Collaborative arrangements are there for all to see they include: Strategic alliances; joint ventures; public private partnerships; Co-ordinated service delivery; supply chain agreements; joint marketing arrangements; research and development partnerships etc. Public and voluntary sectors have many examples as well, from joint delivery of services, co-ordinated delivery of services ; partnerships to tackle social care issues to economic development,Rapid economic and technological change A declining growth rate and competitive pressures Global interdependence Blurred boundaries among business, government and labour Shrinking federal revenues for social programmes Dissatisfaction with the judicial process for solving complex problems Differing perceptions of environmental risk,10,09/07/2019,Dr Ita ODonovan Beechgrove Associates,Grays Seven Factors that contribute to Collaboration,Leader Behaviour Style,Participative: a consultative style that involves seeking suggestions and ideas from subordinates and involving them in decisions. Directive: subordinates are told clearly what is expected of them, and given specifics about how to achieve that Supportive: falls between the two previous, and is characterised by the creation of a warm, friendly atmosphere in the group and consideration for the needs of sub-ordinates Achievement orientated: Using non directive ways to set challenging goals and seeking improved performance. Often using excellent standards as a model to be achieved and showing confidence that these can be achieved by employees.,11,beechgroveassociates,Key point leadership occurs when one attempts to influence the behaviour of an individual or group Three core skills involved Diagnosing cognitive skill Adapting a behavioural skill Communicating a process skill,Some Key Internal Skills of Leaders.,Management of Attention : Communicate direction and objectives to others Management of meaning: ability to create and communicate meaning so that others understand Management of Trust: authenticity and consistency in messages Management of Self: knowing oneself and to work with that Management of the situation and the task,Broad Categories are: Set Strategic Direction, Set and Communicate the Values; Support the implementation through resource allocation and problem solving Design systems in support of action; review structures Focus on the manageable; Develop skills in people Symbolise the company to the outside world Preserve what makes the company special Set the standard for performance Motivate employees and develop new skills and competences Provide role models Make success attainable and human Ensure that their are resources available,Lets look at some tools leaders have,Planning & Design School.,The design school is based on the idea of rational planning, based on strategic analysis of the internal and external environment. The idea is that managers engage in deliberate, rational analysis. The design school does allow for the idea of creativity. This is in terms of the original conception of the idea/ concept/ strategy, and how it alters overtime as the realities of the internal and external environment are considered by the strategists. A good way to think of this is if you were designing and building a house. Concept alters as the concept and ideas become realities. Tools you use are SWOT analysis see slides Lecture 2 , and next 2 slides Key points Design school Consistency: the strategy must not present mutually inconsistent goals and policies Consonance: the strategy must represent an adaptive response to the external environment and to the critical changes occurring within it. Advantage: the strategy must provide for the creation/maintenance of competitive advantage in the selected area of activity Feasibility: The strategy must neither overtax available resources nor create unsolvable sub problems,14,Entrepreneurs Emergent,Here the emphasis is on the leader and on mental states such as: judgement, intuition, wisdom, experience, insight. Vision and perspective are key ideas here ( remember the working definition of creativity by Sternberg and Lubart (1991) SLIDE 12 Vision serves as both an inspiration and a sense of what needs to be done a guiding idea. Entrepreneurial concept comes for economics in particular Joseph Schumpeter (1950) Schumpeter was concerned with how organisations keep surviving in changing situations. He was concerned with how the leader created ideas, new ways of doing things: within this he introduced the notion of creative destruction Schumpeter was aware that economists like to deal with such things as money, machinery, land. He was concerned with things that are less tangible. Schumpeter held the view: That entrepreneurs have not accumulated any kind of goods, nor created original means of production but have employed existing means of production differently, more appropriately, more advantageously. They have carried out new combinations And their profit, the surplus to which no liability corresponds, is an entrepreneurial profit. The key thing here is doing things in new ways and the capitalist bore the risk. Importantly Schumpeter thought that once the founder /leader ceased to innovate he/she was no longer an entrepreneur. Richard Branson is someone who fits the idea of an Entrepreneur.,Key points of Entrepreneurships,Strategy exists in the mind of the leader as perspective, this is a long term direction, a vision of the organisations future. The process of strategy formation is semiconscious at best, rooted in leaders experience and intuition, the strategy may be conceived or adopted from others, but the Leader will internalise it in his or her own behaviour. The Leader promotes the vision single-mindedly, maintained close personal control of implementation The strategic vision is thus malleable, the strategy can be deliberate and emergent, deliberate in vision and emergent is how it unfolds. The organisation is equally malleable, responsive to the leaders directives, many of the procedures and power relationships are suspended to allow leader to manoeuvre Entrepreneurial strategy tends to form of a niche, one or more positions in market protected form the forces of outright competition Richard Branson CEO Virgin Corporation classic Entrepreneur,An issue we return to,Intentionality versus emergent strategies Intentionality implies; , planning, thinking, writing things down, monitoring and reporting on plan, learning and adaptation A way of demonstrating clear doing, direction, commitment etc.,Emergence implies: a pattern of thinking and doing Flexibility, opportunism, adaptive, flexibility/ alternatives/options Entrepreneurship Strategic Incrementalism New strategies emerge over time Flexibility, shaping Gradually blend a coherent set of actions over time.,Strategy Formation Key Points,Strategy formulation is primarily concerned with the how question, with process: How are strategies formed, implemented and changed? We have discussed several ways of thinking about strategies a broad perspective would suggest the process is seen variously: Rational, Intentional, Goal- directed , as well as Intuitive. What is clear is that their in not one unifying theory of how it is. Not necessarily a problem FOUR PHASES OF FORMULATION Identification, Mission Setting, Agenda Setting Diagnosis: External Assessment Internal Assessment Conception: Option Generation, Option selection Realisation : Action taking, Performance control ( SEE PYRAMID DIAGRAM) Performance Management,Roles of Strategy,Strategy as a planning tool which gives direction to the organisation- a plan of what to do and aim for. Strategy as a support to decision making , strategy gives coherence to the decisions of an individual and the organisation. Bounded Rationality of our decisions. We are limited by the amount of information the human brain can handle. Strategy helps in several ways: Simplifies decision by constraining the range of decision alternatives By acting as a heuristic rule of thumb that reduces the search for suitable solutions A strategy making process permits the knowledge of different people to be polled and integrated A strategy making process facilitates the use of analytic tools and frameworks ( SWOT, PEST) Strategy as a co-ordinating device: The greatest challenge of managing an organisation is co-ordinating the actions of different organisational members. Communicating the vision, goals, objectives and position of the company is an important role of the CEO and Top Management Team. The strategic planning process can provide a forum for this to take place. Here it is important that all groups in the organisation take part. Once this is implemented then the next phase is to ensure that all organisation members are working and moving forward in the same direction. The name for this is performance management, which is a series of goals, targets, and performance measures for individuals and groups, divisions, department , throughout the organisations.,PERFORMANCE MANAGEMENT FRAMEWORK,SERVICE/BUSINESS PLANS,DIRECTORATE PLANS & STRATEGIES,CORPORATE PLANS & STRATEGIES,STRATEGIC PLAN,ORGANISATION WIDE,LOCAL,STRATEGIC,OPERATIONAL,COMPETITIVE ADVANTAGE,INDIVIDUAL STAFF PERFORMANCE , ACCOUNTABILITY & APPRAISALS,Strategic Change Key points Strategic Change is an intellectual challenge in terms of thinking through the approach to be adopted, as well as a process of assisting people to deal with change and uncertainty. In broad terms strategic change is concerned with findings ways of successfully dealing with changes in markets, government policies, competitiveness, technologies etc. Key to change is the ability of the firm to maintain position in the market while undergoing a major change process. The challenge of dual strategies how a company manages its existing activities while also nurturing new initiatives that will form the basis for its business in the future. Key concern can be the existing capabilities of the firm and the individual competencies of employees e.g. Management systems and employee skills Example: British Airways and Continental failed to establish low budget airlines. Others like Google and 3M have managed dual strategies. HSBC Banking has managed the dual strategy of cost leadership and differentiation in full service banking and internet banking,A Framework for a Change architecture Clarity in governance and accountability Engagement for key stakeholders in appropriate ways Securing alignment from the majority of the key stakeholders to the change process