Presentation is loading. Please wait.

Presentation is loading. Please wait.

Management, Organizational Policies and Practices

Similar presentations

Presentation on theme: "Management, Organizational Policies and Practices"— Presentation transcript:

1 Management, Organizational Policies and Practices
Lecture 4

2 Recap Lecture 3 Industrial Organizational View
Macro Environment – PESTEL Industry Environment – Porter Five Forces Competitive – Strategic Groups

3 The Internal Assessment
Lecture 4 Dr Amna Yousaf PhD-HRM 4/13/2017

4 Basis for objectives & strategies:
Clear statement of vision and mission External opportunities/threats Internal strengths/weaknesses 4/13/2017

5 Internal Audit Gather & assimilate information from:
Management Marketing Finance/accounting Production/operations Research & development Management information systems Key to organizational success: Coordination and understanding among managers from all functional areas Are quality-control policies and procedures effective? Are facilities, resources, and markets strategically located? Does the firm use strategic-management concepts? Are company objectives and goals measurable and well communicated? Do managers at all hierarchical levels plan effectively? Do managers delegate authority well? Is the organization’s structure appropriate Does the firm have technological competencies? Are job descriptions and job specifications clear? Is employee morale high? Are employee turnover and absenteeism low? Are organizational reward and control mechanisms effective? Does the firm conduct market research? Are product quality and customer service good? Are the firm's products/services priced appropriately? Does the firm have an effective promotion, advertising, and publicity strategy? Are markets segmented effectively? Is the organization positioned well among competitors? Has the firm’s market share been increasing? Are present channels of distribution reliable and cost effective? Does the firm have an effective sales force? Are marketing planning and budgeting effective? Do the firm’s marketing mangers have adequate experience and training Where is the firm strong and weak as indicated by financial ratio analysis? Can the firm raise needed short-term capital? Can the firm raise needed long-term capital through debt and/or equity? Does the firm have sufficient working capital? Are capital budgeting procedures effective? Are suppliers of raw materials, parts, and subassemblies reliable and reasonable? Are facilities, equipment, machinery, and offices in good condition? Are inventory-control policies and procedures effective? Are dividend payout policies reasonable? Does the firm have good relations with its investors and stockholders? Are the firm’s financial managers experienced and well trained? 4/13/2017

6 External Analyses’ Outcomes
Opportunities and threats By studying the external environment, firms identify what they might choose to do. 4/13/2017 3–6 6

7 Internal Analyses’ Outcomes
Unique resources, capabilities, and competencies (required for sustainable competitive advantage) By studying the internal environment, firms identify what they can do 4/13/2017 3–7 7

8 Resource Based View Organizational Resources provide competitive advantage that can be sustained Traditional resources such as labor costs, access to financial resources and raw materials continue to be sources of competitive advantage but to a lesser degree Globalization and openenss of markets make these resources accessable worldwide and mobile Need to identify new sources of competitve advantage- do the internal audit 4/13/2017

9 Key Concepts - Resources
Types of Resources Tangible resources Financial resources Physical resources Technological resources Organizational resources Intangible resources Reputation Innovation Resources Are a firm’s assets, including people and the value of its brand name. Represent inputs into a firm’s production process, such as: Capital equipment Skills of employees Brand names Financial resources Talented managers Raw Material Strategic Location 4/13/2017 3–9 9

10 Types of Resources Threshold Resources
The resources needed to meet customer’s minimum requirements and therefore to continue to exist Retailer requires the supplier to posses a powerful IT infrastructure to meet retailing requirements. 4/13/2017

11 Threshold Competences
Activities and processes needed to meet customer’s minimum requirements and therefore to continue to exist Supplier should be able to use IT systems effectively Threshold level changes over time as CSF’s change; Traditional banking versus online internet banking (branchless) 4/13/2017

12 Redundancy & Complementarily
Get away with redundent Resources & Competencies Competitive rivalry may make cost efficency threshold comeptnece Complementarity of resources and competencies essentail Brand name as resource but no marketing processes Lack of understanding – out of the game 4/13/2017

13 Unique Resources & Core Competences
Unique resources can not be easily imitated and critically underpin competitive advantage Powerful Brand Kallogs Core competences are the activities and processes through which an organziation deploys the resources effectively to achieve competitive advatnage in ways non imitable by competitors. Unique ways of providing service or relationship building with retailers/distributors/suppliers McKinsey & Co. recommends identifying three to four competencies to use in framing strategic actions. 4/13/2017

14 Cost Efficiency Economies of Scale Supply costs Experience
Product/process design 4/13/2017

15 Robustness of Strategic Capabilities
Rarity Collection of unique books in a library Intellectual capital-particularly talented individuals Relationships with key customers Harmoniuos functioning of the firms Capabilities around resources may not be rare as IC may move – competences may be rare and non transferable 4/13/2017

16 Robustness of Strategic Capabilities
Non-imitability Causal ambiguity Competences get embedded in organizational culture Tacit knowledge on organizational processes built in one culture – may not be readily idetifiable; counter cultural for comeptitor logical path can not be explicilty defined; taken for granted Formal and informal ways Linkage ambiguity Whcih activities or processes dependent on which other. What is the chain of linkages? The way customers are dealt on phone, return policies on goods, flexibility in deliveries 4/13/2017

17 Robustness of Strategic Capabilities
Valuable Unique capabilities may not lead comepttive advantage Customer value Non substitutable Competencies may also be situtation dependent – MNC’s have different competences accross the globe Competences can be created within organziation and outside with suppliers and distributors 4/13/2017

18 Dynamic Capabilities Danger of redundancy of strategic capability – strategic drift M&S kept inventing value based on past success; faced losses in 1990’s Dynamic capabilities refers to an organization’s abilities to develop and change competencies to meet the needs of rapidly changing environments Stable environment, competitive advatange more durable and vice versa 4/13/2017

19 Core Competencies—Cautions and Reminders
Never take for granted that core competencies will continue to provide a source of competitive advantage All core competencies have the potential to become Core Rigidities Core Rigidities are former core competencies that sow the seeds of organizational inertia and prevent the firm from responding appropriately to changes in the external environment Strategic myopia and inflexibility can strangle the firm’s ability to grow and adapt to environmental change or competitive threats 78

20 Case Examples (1) Caterpiller; construction manufacturing company dealing with a range of diversified products such as construction and mining equipment, gas engines attributes success to the technology it uses and resources it spends to update its internal environment Spends $ 4 million per day to mainintain competitive advantage through technology 4/13/2017

21 Case Examples (2) Enterprise Rent-A-Car – 5000 plus offices worldwide and continually expanding CEO attributes success to employee’s efforts and the intellectual capital they represnt Japneese Automobile reduced GM Motors dominence with narrow asset base Lowered costs Improved quality Fast production processes 4/13/2017

22 Creating Value Value is measured by product’s performance characteristics and by its attributes for which customers are willing to pay. Increasing perceptions of higher value in global than local brands Firms create value by bundling resources and capabilities in ways that create value 4/13/2017

23 The Value-Creating Potential of Primary Activities
Inbound Logistics Activities used to receive, store, and disseminate inputs to a product Operations Activities necessary to convert the inputs provided by inbound logistics into final product form Outbound Logistics Activities involved with collecting, storing, and physically distributing the product to customers 4/13/2017 23

24 The Value-Creating Potential of Primary Activities (cont’d)
Marketing and Sales Activities completed to provide the means through which customers can purchase products and to induce them to do so. Service Activities designed to enhance or maintain a product’s value Each activity should be examined relative to competitor’s abilities and rated as superior, equivalent or inferior. 4/13/2017 24

25 The Value-Creating Potential of Primary Activities: Support
Procurement Activities completed to purchase the inputs needed to produce a firm’s products. Technological Development Activities completed to improve a firm’s product and the processes used to manufacture it. Human Resource Management Activities involved with recruiting, hiring, training, developing, and compensating all personnel. 4/13/2017 3–25 25

26 The Value-Creating Potential of Primary Activities: Support (cont’d)
Firm Infrastructure Activities that support the work of the entire value chain (general management, planning, finance, accounting, legal, government relations, etc.) Each activity should be examined relative to competitor’s abilities and rated as superior, equivalent or inferior. 4/13/2017 © 2007 Thomson/South-Western. All rights reserved. 3–26 26

27 FIGURE 3.3 The Basic Value Chain
4/13/2017 © 2007 Thomson/South-Western. All rights reserved. 3–27 27

28 Benefits of Value Chain
Cost benefit analysis at various levels Help identify comeptences of the firm Outsourcing decisions Identify profit pools Value network – set of inter-organizational links and relationships necessary to create valuable product Internal position vis a vis other parties 4/13/2017

29 Key Questions for Managers
in Internal Analysis How do we assemble bundles of Resources, Capabilities and Core Competencies to create VALUE for customers? And... Will environmental changes make our core competencies obsolete? Are substitutes available for our core competencies? Are our core competencies easily imitated? 14

30 Organizational Knowledge
Collective and shared experience accumulated through systems, routines and activities of sharing accross the organization Explicit Knowldge: Codified information system Implicit Knowledge: Tacit, hald to formalize, personal and context specific More likely to occur where functional boundaries are blurred; less demarcation of roles Formal and systematic system of knowledge poses greater danger of imitation Experience of groups of individuals may not be copied 4/13/2017

31 Outsourcing Firm Infrastructure Human Resource Management MARGIN
Strategic Choice to Purchase Some Activities From Outside Suppliers Firm Infrastructure Human Resource Management Human Resource Management Firms often purchase a portion of their value-creating activities from specialty external suppliers who can perform these functions more efficiently Support Activities Technological Development MARGIN Technological Development Procurement Procurement Service Service Inbound Logistics Outbound Logistics Marketing & Sales MARGIN Operations Outbound Logistics Marketing & Sales Inbound Logistics Operations Primary Activities

32 Strategic Rationales for Outsourcing
Improve Business Focus Lets company focus on broader business issues by having outside experts handle various operational details Provide Access to World-Class Capabilities The specialized resources of outsourcing providers makes world-class capabilities available to firms in a wide range of applications Accelerate Business Re-Engineering Benefits Achieves re-engineering benefits more quickly by having outsiders--who have already achieved world-class standards--take over process Share Risks Reduces investment requirements and makes firm more flexible, dynamic and better able to adapt to changing opportunities Free Resources for Other Purposes Permits firm to redirect efforts from non-core activities toward those that serve customers more effectively 67

33 Activity Maps An activity map shows how the different activities of an organization are linked together Help identify and preserve strategic capabilities Different activties must be consistent to create value Maybe reinforcing each other 4/13/2017

34 Activity Maps at Southwest
Frequent, reliable departures Lean, highly productive ground and gate crews High aircraft utliziation Very low ticket prices No meals No seat assignments No baggage transfers Automatic ticketing maxchines No connections with other airlines 4/13/2017

35 Internal Assessment Analyses
Qunatitative Analyses Balanced Scorecard Basic Financial Ratios Qualitative Analyses 4/13/2017

36 The Balanced Scorecard
Broad based criteria to assess a firm from multiple perspectives Financial Ratios Customer Value in terms of differentiation, low costs, quick response Operations Which processes need to improve? How should they be changed? Organizational Adaptability to change? Workforce commitment towards goals? 4/13/2017

37 Qualitative Analyses Qualitative information supplements quantitative informatoin Information on employee morale, commitmnet, creativity, employee views and customer views etc Motorolla invests $600m anually based on qualitative analyses. 4/13/2017

38 Discovering Core Competencies
Competitive Advantage Gained through Core Competencies Strategic Competitiveness Above-Average Returns Discovering Core Competencies Sources of Core Competencies Competitive Advantage Capabilities Teams of Resources Criteria of Sustainable Advantages Value Chain Analysis Resources * Tangible Intangible Valuable Rare Costly to Imitate Nonsubstitutable * * Outsource 85

39 Thankyou 4/13/2017

Download ppt "Management, Organizational Policies and Practices"

Similar presentations

Ads by Google