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1 Leading and Managing Change Lecture Eight based on Beech & Macintosh textbook.

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Presentation on theme: "1 Leading and Managing Change Lecture Eight based on Beech & Macintosh textbook."— Presentation transcript:

1 1 Leading and Managing Change Lecture Eight based on Beech & Macintosh textbook

2 Chapter 8 recapitulation Change and personal identity Issues of ‘identity work’ as a tool in the process of managing change 2

3 Chapter 9 (of B&M) overview The concept of segmenting customers and competitors in change management The segmentation choices and the resulting implications on managing organizational change 3

4 External focus of a change scenario The origin of change can be external (prescriptive) or internal (constructive) re: the foci and mode framework Yet changes almost invariably entail subsequent changes in the external environment  In terms of customer groups served  In terms of competitors faced with 4

5 Externally focused repositioning (not necessarily in terms the concept of repositioning in marketing) affect or be affected by changes internally in corporate, business and/or operational level strategies Corporate, business strategy changes in  Vision/mission  SBU focus/diversification  Target customers 5

6 Operational strategy (tactical) change in  Merger and acquisition  Organization structure  Cultural characteristics (in the cultural web) In essence, matching internal arrangements with the external environment 6

7 Choosing customers Customers (private sector) and service users, beneficiaries (public sector and non-profits) are influential in the definition of an organization  What the organization does and does not do (Ellis et al, 2010) Ultimately how resources are to be deployed from corporate to operational level strategies 7

8 In a ‘horizontal’ context, the organization needs to consider whether to move to be embedded in a new network of internal and external linkages  Suppliers  Sub-contractors  Alliances  Complementors (J&S Ch.2) 8

9 Customer segmentation Identifying current and potential customer groups that have similar needs in terms of price, quality, service, usage occasions, motivations and other buyer behaviour Segmentation involve some sacrifice  by focusing in one group, other groups are less satisfied 9

10 Choosing customer segment The ‘prescriptive’ or ‘constructive’ originated change scenario could imply the need to consider new relationship between organization and customer group 10

11 Figure 9.1 The adapted Ansoff growth matrix Keep the same offering Develop a new offering Keep the Find new same customerscustomers 11 A Consolidate relationship C Expand relationship B Change existing relationship D Transform relationship

12 The original Ansoff growth matrix Penetration/consolidation(A) New product development(B) New market development(C) Diversification(D) 12

13 Two change considerations between organization and customer  First – relationship with same or new customer group  Second – basis of relationship to be current products or new products 13

14 A.Consolidate – same group with current products  Could still require tinkering of operational process  Such as to maintain and strengthen the vitality and/or culture of organization  Rolex as an example for persistently providing the same quality timepiece to the same premuim class customer for over a century 14

15 B.Change – same group with new products  Such as line extension/brand extension  Overlapping between many types of product to same segment  Tesco as example selling traditional groceries plus electronics, financial services and more  Internal change might entail changes in organization structure/chain of command because of the very difference in product nature 15

16 C.Expand – same products to new customers  Geographical expansion e.g. selling to a new country  Products for new usage occasions e.g. Coke for breakfast, NeoZep for influenze (not just for allergies), Ribena for lemonben ( 檸賓 ) in Cha Chan Tangs, Luminesce, a skin care product, for Excema remedy  Logistics arrangement, promotional mix, channel connections might have to be changed to enable the ‘expansion’ 16

17 D.Transform – new products to new customers  Related and unrelated diversification  Babcock International Group went from selling military goods to airport baggage handling equipment  The only commonality is that the two kinds of products both involve satisfying complex requirements for complex customers  Other examples could include the PowerChip inventory management system by FedEx and the Concession negotiation service by Shell 17

18  Transformation could also be about cannibalizing our base of success in a hypercompetitive (J&S Ch.6) market  The higher risk of ‘transform’ probably calls for risk mitigation strategy through balancing that against lower risk ‘consideration’ for example  ‘Portfolio manager’ structure to manage the ‘unrelated’ SBUs likely to be appropriate 18

19 Overall  In fact, this last point on cannibalism could also be applicable to the other A,B,C customer relation change situation  Such as the budget airlines, selling life insurance coverage for the older segment by phone, Enjoy Visa card, self-serve retailing etc. 19

20 Choosing competitors Change could also likely introduce new competitors to the organization The concept of ‘strategic group analysis’ is relevant in the analysis of competitors (Hunt 1972) Strategic group of organizations is that subset of firms in an industry with similar strategy, similar business model and similar market positioning competing for the patronage of a similar group of customers 20

21 Competition within a strategic group of companies is therefore especially intense What is of critical importance is the definition of market boundary Implications for rivals vying for supremacy within the strategic group would include changes in geographic market, distribution method, product differentiation, emphasis on linkages and alliances and other implementation tactics (re: 5-forces implications)  Be vigilant of the risk of being myopic in market analysis 21

22  Be clear about the concepts of the ‘needs’ and the ‘wants’ of customers  Different products in form could be serving the very same need in the market place e.g. haute couture could be serving the need for status symbol as expensive watches and therefore are competing with each other  Products often transcend market boundaries these days as smart phones are eroding the market share of PC and cameras. Supermarket pre-cooked, ready to serve dishes crossing into restaurant business is example in the similar vein  Newspaper industry with broadsheets and tabloids is also a good example (B&M textbook) 22

23 Strategic group mapping analysis On the basis of two criteria that differentiate players in the same market, the various competitors are grouped into strategic groups Competitive clusters and conversely uncontested, blue ocean positions could be identified Choose another criteria as the basis, the players positions could be shuffled to various extent creating new clusters and blue oceans A word of advice is that pricing and quality should not be the two basis for mapping analysis as the two are closely correlated and they form a diagonal line-up for all players – positions off the line-up generally make no strategic sense 23

24 Mini-case 9.1: AVI Hi-Fi A niche, top-of-the-line hi-fi system marketer changing its product from CD players, as the product sale whithered, to iTune delivered, PC compatible, high quality speakers to be sold to a digital generation customers through the internet By changing distribution partner, new technologically innovated product, customer groups and competitors, AVI had successfully move from a niche player to a much larger (fivefold in sale turnover) company 24

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