A2 - Chapter 9 - Corporate Planning And Implementation PDF

Unit 1 The main objectives for the key departments of the business derived from Chapter 9 the overall objective. Corporate Planning and Implementation Introduc...

Unit 1 The main objectives for the key departments of the business derived from Chapter 9 the overall objective. Corporate Planning and Implementation Introduction Once the strategies have been implemented, the results should be Developing new business strategies does not mean that senior business measured and evaluated. The results are then compared with the original managers’ work is completed. Strategies need to be introduced effectively objectives. They will also be used to help determine the corporate objectives within the business and this process starts with a corporate plan. for the next period. Corporate planning Planning to develop and implement future strategies is an important function of senior managers. The planning process is aided by the development of a detailed corporate plan. A typical corporate plan will include: The overall objectives of the organisation to be achieved within a given time frame. These could be profit target-related, sales growth-related, or market share target-related. Potential limitations, The strategy or strategies to be used to attempt to meet these Unexpected changes internally or from the external environment can make objectives. For example, to achieve plans out-of-date. Therefore, Corporate planning should be as adaptable - sales growth, the business could consider the choices as and flexible as possible to allow plans to continue to be relevant and useful analysed by the Ansoff matrix: during periods of change. - increase sales of existing products – market penetration - develop new markets for existing products – market The main influences on a corporate plan development Internal - research and develop new products for existing markets – Financial resources product development Operational capacity - diversify – new products for new markets. Managerial skills and capacity 1  Staff number and skills: workforce planning Role culture: This is most associated with bureaucratic Culture of the organization organisations. People in an organisation with this culture operate External within the rules and show little creativity. The structure of the Macro – economic conditions: recession organisation is well-defined, and each individual has clear Central bank and government policy changes delegated authority. Power and influence come from a person’s Technological changes position within the organisation. Competitor actions Task culture: Groups are formed to solve particular problems and Corporate culture there will be lines of communication similar to a matrix structure. Corporate culture means the values, attitudes and beliefs of the people Such teams often develop a distinctive culture because they are working in an organisation that control the way they interact with each empowered to take decisions. Team members are encouraged to other and with external stakeholder groups be creative. Corporate culture if simply put, is the way things are done in a particular Person culture: There may be some conflict between individual organisation. How employees behave and react to particular things. goals and those of the whole organisation, but this is the most Different organisations have distinctive cultures. The culture of a particular creative type of culture. organisation gives it a sense identity. The values, attitudes and beliefs have Entrepreneurial culture: Success is rewarded in an organisation very powerful influence on the way staff behave and take decisions. That with this culture. However, failures not necessarily criticised as it is defines the “norm” in firms. considered an inevitable consequence of showing initiative and The main types of corporate culture risk-taking. Many management writers have used different ways to identify and classify Changing corporate culture different types of organisational culture. These are the most widely recognised culture types: Power culture: This is associated with autocratic leadership. Power is concentrated at the centre the organisation. Swift decisions can be made as so few people are involved in making them. A traditional family firm, which has always promoted members of the family into senior posts, converts to a public limited company. New investors 2 demand more transparency and recognition of natural talent from Concentrate on the positive aspects of the firm and concentrate on externally recruited employees. those A product-led business needs to respond to changing market Obtain the full commitment of the people conditions by encouraging more worker involvement. A team- or Establish new objective and mission statements in line with the task-based culture may need to be adopted. new value system A recently privatised business used to operate on bureaucratic Encourage” bottom up” participation of the workers when defining principles when it was government owned. It now needs to become existing problems and devising solutions more profit-oriented and customer-focused. An entrepreneurial Train staff in new procedures and new ways of reflecting changed culture may need to be introduced for the first time. value system A takeover may result in the business that was bought out adapting Change the “reward system” to avoid rewarding success in the “old its culture to ensure consistency within the newly created larger ways” and ensure that appropriate new behaviour is recognized. company. Corporate culture and business decision-making Declining profits and market share may be the result of poorly Different organisations with different culture introduces change in a motivated workers, low quality and poor customer service. A different manner, person-based culture might help to transform the prospects of this Power-culture: does not consult staff affected by major strategic business. changes, this may stir up staff resentment and resistance to change and cooperation of the workforce is most unlikely to obtained in Changing the beliefs and the value systems of a business and attitudes of the future. The changes will be imposed with a “take it, or leave it” the staff is never an easy task. This process can take several years before all attitude staff and processes are fully converted. Task- or people-based culture: does consult staff affected by major It can also involve substantial changes of personnel, job description, strategic changes, staff are more likely to participate through two- communication methods and working practices. way communication and are more likely to accept and contribute to successful change The best way to bring about change to a firms culture is, 3 The other factor between corporate culture and strategic implementation is acceptable for an organisation to offer bribes to gain a large the strength of the organisational culture. contract? A strong culture is one which is deeply embedded into the ways a Culture determines the way in which managers and workers treat business or organisation does things. With a strong culture, each other. If the chief executive is open and receptive to new ideas employees and management understand what is required of them from senior managers, then this approach is likely to filter through and they will try to act in accordance with the core values. A key the whole organisation. benefit of a strong culture is that there is less need for detailed A distinctive organisational culture can support a business’s brand policies and procedures because the "way things are done around image and relationships with customers. For example, The Body here" is well understood and accepted. Shop almost invented the ethical trading culture. Some analysts A weak culture can arise when the core values are not clearly believe that the business changed its approach after its takeover by defined, communicated or widely accepted by those working for L’Oréal. the organisation. It can also occur if there is little alignment Culture determines not just how strategic decisions are made and between the way things are done and the espoused values. This can implemented, but also the type of strategic decisions that are lead to inconsistent behaviour of people in the organisation taken. A business with a people-based culture is most unlikely to Strong cultures promote successful strategy implementation through take decisions that would damage workers’ health or the local proper communication and empowering. Weak cultures provide little or no environment. assistance to strategic implementation. Corporate culture is linked to the performance and long-term The importance of corporate culture success of businesses. Companies dedicated to continuous The impact of culture goes beyond the desire of most people to accept the improvement with workers’ involvement have been shown to be same values. It can have a significant impact on how new strategies are more profitable in the long term. Toyota is a prime example of decided and implemented. success based on this principle. The following examples help to reinforce the importance of corporate Transformational leadership culture: Transformational leadership is a leadership style in which leaders The values of a business establish the norms of employee encourage, inspire and motivate employees to innovate and create change behaviour – what is and what is not acceptable. For example, is it that will help grow and shape the future success of the company. This is 4 accomplished by setting an example at the executive level through a strong The importance of transformational leadership sense of corporate culture, employee ownership and independence in the Transformational leadership increases the chances of successful workplace. change within a business. Change that is supported by employees and benefits from their input is likely to lead to continued business Transformational leaders inspire and motivate their workforce without success. micromanaging — they trust trained employees to take authority over It increases the flexibility and adaptability of a business to cope decisions in their assigned jobs. It’s a management style that’s designed to with frequent change. The business world is becoming more give employees more room to be creative, look to the future and find new dynamic and one change may be followed by the need for further solutions to old problems. Employees on the leadership track will also be flexibility in future. prepared to become transformational leaders themselves through It focuses on leading change, not forcing it on employees with an mentorship and training. autocratic style. That encourages workers to accept change and work towards making it a success. A transformational leader is someone who: It improves employee motivation and performance. Encouraging Encourages the motivation and positive development of followers workers to achieve above the normally expected level will benefit Exemplifies moral standards within the organization and both the business and the worker. encourages the same of others Fosters an ethical work environment with clear values, priorities Managing and controlling strategic change and standards. Change management means the planning, implementing, controlling and Builds company culture by encouraging employees to move from reviewing the movement of an organisation from its current state to a new an attitude of self-interest to a mindset where they are working for one the common good Holds an emphasis on authenticity, cooperation and open 1. Understand what change means communication Change management is an important aspect of management that tries to Provides coaching and mentoring but allowing employees to make ensure that a business responds to the environment in which it operates. decisions and take ownership of tasks Change is a rule and a constant and the firms need to take control of it and 5 ensure that it is positive and not a negative process. Change management is 2. Recognise the major causes of change a process that requires a firm to be able to cope with the dramatic one-off changes as well as the evolutionary changes: Evolutionary or incremental change occurs quite slowly overtime. Example the swing towards fuel efficient cars has been happening for several years. Dramatic or revolutionary change if unanticipated can cause many problems. In extreme cases it can lead totally rethinking the operations of an organization. This is called the “business process re-engineering” Business Process re-engineering: fundamentally rethinking and redesigning the process of a business to achieve a dramatic improvement in performances 3. Understand the stages of the change process Senior managers should follow this checklist: Where are we now and why is change necessary? It is important to recognise why a business needs to introduce change from its current situation. New vision and objectives: For substantial changes, a new vision for the business may be needed. This must be communicated to those affected by the change. Ensure resources are in place to enable change to happen: Starting a change and then finding that there is too little finance to complete it could be disastrous. 6  Give maximum warning of the change: Employees should not be Resources – staff and finance – need to be made available for the taken by surprise by change. This increases resistance to it. changes to be implemented Involve employees in the plan for change and its implementation: Appropriate action need to be taken – checked on – to ensure the This will encourage them to accept change and lead to proposals planned changes are introduced from them to improve the change process. Communicate: The vital importance of communication with the Leading the strategic change is more than just managing the change. Clear workforce runs through all these other stages. leadership involves a greater vision. Leading change means: Introduce initial changes that bring quick results: This will help all Dynamic leaders who will shake an organisation out of its involved in the change to see the point of it. complacency and way from resistance to change Focus on training: This will allow employees to feel that they are Motivation of staff throughout the organisation so that change is able to make a real contribution to the changed organisation. looked upon as a positive force Sell the benefits: Employees and other stakeholders may benefit Ensuring that acceptance of change is a part of the culture of the directly from changes so these need to be explained to them. organisation Remember the effects on individuals: A soft human resource Visible support of all senior managers who will help the change approach will bring future rewards of employee loyalty, if the process to be accepted at all levels and within all departments of workforce has been supported and communicated with. the business Check on how individuals are coping and support them: Some people will need more support than others. Not supporting Project champions employees will damage the business if it leads to low-quality output Project champion: A project champion is a person assigned to support and or poor customer service because of poor motivation. drive a project forward who explains the benefits of change and assists and supports the team putting change into practice 4. Lead change, not just manage it All strategic change must be managed, The project champion is the person within an organization implementing a New objectives need to be established that recognizes the need for project who takes on the burden of ensuring everyone involved is on board change and behind the ultimate success of the project. 7 The Project Champion is someone who: 1. Establishing a Sense of Urgency Advocates for the project by constantly praising its benefits During this first step it is essential to acquire the cooperation of many (strategic advantage, ROI, etc…) to the stakeholders, individuals and to ensure they are motivated to participate. Kotter Is a fierce supporter of the project writes in the article that well over 50% of the companies he watched Provides (often moral) support for both the Project Manager and failed in this first phase. the Project Team by liaising with upper management to address their worries and/or obstacles in the project 2. Forming a Powerful Guiding Coalition Form a powerful coalition is terms of titles, information and expertise, Project groups reputations, and relationships. Project groups: Project groups are created by an organisation to address a problem that requires input from different specialists 3. Creating a Vision A project group work with the manager responsible for introducing change. A vision beyond the numbers that clearly define, where the organization This is a team of experts providing a rigorous exchange of views that will is going. Clear and precise project plans that take the organization in the lead to an appropriate action plan being developed and agreed. The direction it needs to move to achieve the vision. responsibility of the projects lies with the manager but he will be better equipped to solve the problem with the help of the project group. 4. Communicating the Vision Brighten up the company’s existing communications methods. Try new Promoting change and different methods for sharing the vision. Gaining acceptance of change by both the workforce and other stakeholders is more likely to lead to a positive outcome than imposing change on 5. Empowering Others to Act on the Vision unwilling people. According to John Kotter, a leading writer on Action is essential in getting rid of obstacles to change and in time, the organisational change, the best way to promote change in any organisation big ones must be confronted and removed. Empower people to is to adopt the following eight-stage process: maintain the credibility of the change effort as a whole, to try new approaches, to develop new ideas, and to provide leadership. 8 6. Planning for and Creating Short-Term Wins False beliefs about the need for change: thinking that the existing Develop clear performance improvements goals and measurement system will work out eventually is a way of fooling themselves to systems and reward the people involved when they are achieved. avoid change Lack of trust: Not trusting the management based on past 7. Consolidating Improvements and Producing Still More Change experience Use increased credibility from early wins to change 'the old way we do Inertia: reluctance to change and try to maintain status quo things around here' systems, structures, and policies that are undermining the vision and have not been confronted before. The importance of the “resistance factors will vary from business to business. In firms that closely communicate with employee’s resistance to 8. Institutionalizing New Approaches change will be less than firms where employees do not trust managers Communicate frequently how the new approaches, behaviours, and attitudes have improved performance. Create leadership development Contingency planning and crisis management and succession plans consistent with the new approach. Contingency plan: A contingency plan means preparing an organization’ resources for unlikely events Resistance to strategic change Also known as “business continuity planning” or “disaster recovery This is one of the biggest problems any organisation will face when planning”. Organisations prepare contingency plans in recognition of the attempting to introduce change. The managers and workers of a fact that things do go wrong from time to time business may resent and resist strategic change for any of the following Contingency planning involves: reasons: Preparing for predictable and quantifiable crises Fear of the unknown: uncertainty makes people uncomfortable Preparing for unexpected and unwelcome events and increases they anxiety The aim is to minimise the impact of a foreseeable event and to plan for how Fear of failure: new change requires new capabilities and skills the organisation will resume normal operations after the crisis which scares people Losing something of value: losing status and job security because of a change can affect them 9 The key steps in contingency planning are: have practice dry runs of 1. Identify the potential disasters that could affect the business: what to do in the event Some of the disasters are common while some can be specific to of: fire, IT failure, terrorist particular industries. attack etc 2. Assess the likelihood of these occurring: Some of these are more - Reassures staff and - Needs to be constantly likely to happen than others and the degree of impact varies as customers that concerns updated well. The most uncertain disasters have a great risk to the for safety are priority business’s future. Managers must plan thoroughly for these - Public relation response - Needs staff training unlikely occurrences. should be speedy and constantly 3. Minimise the potential impact of crises: Effective planning can appropriate sometimes cut potential risk altogether if not; the key is to - Avoiding disaster is minimize the damage. Not just protecting assets and humans but always better than also protecting the firm’s good will and reputation. Staff training planning for what to do if and practice drills with mock events are often most effective ways they occur of preparing to minimize negative impact. 4. Plan for continued operations of the business: Prior planning can help with alternative accommodation and IT data – the sooner the business can begin trading again, the less the impact is likely to be on customer relationships. Benefits Limitations - Minimizes negative - Costly and time- impact on customers and consuming – not just the suppliers in the event of a planning process but the major disaster need to train staff and 10